Value-Added Dairy Grant Application

As part of a USDA AMS grant focused on Value-Added Dairy Businesses in Tennessee, Kentucky, and North Carolina, we are providing subawards to current and prospective value-added dairy businesses across the three states. This grant application period will open July 15, 2021 and will remain open for two months. Completed applications must be received by October 1, 2021 to be considered for funding.

The scale of projects that can be funded through this phase of funding has grown. Applicants in the three states will have the opportunity to submit project proposals for up to $500,000. The program will support projects of many sizes, but those making requests exceeding $150,000 should operate a permitted dairy farm and/or dairy plant, utilize a large portion of local milk, and include a robust business plan. If you have any questions, please contact one of the state contacts listed below.

State Program Contacts

Shep Stearns (865) 974-0991
Liz Eckelkamp (865) 974-8167

Jennifer Hickerson (859) 516-2458

North Carolina:
Brittany Whitmire (828) 577-8598
Stephanie Ward (919) 515-4015

Southeast DBII Grant

Click below to download the 2021 Southeast DBII Grant Application and the Allowable/Unallowable expenses guideline.

Grant Information

The following conditions MUST be met to be eligible to apply for funding through the Southeast Dairy Business Innovation Initiatives program. Initiatives must meet the following three goals:

  • Diversify dairy product markets to reduce risk and develop higher value uses for dairy products;
  • Promote business development that diversifies farmer income through processing and marketing innovation; and
  • Encourage the use of regional milk production.

This subaward program (direct-to-business grants) is intended for existing or prospective dairy businesses. Dairy Businesses are those that that develop, produce, market, or distribute dairy products.

Subawards will only be made to prospective or current dairy businesses. Successful applications must focus on one or more of the following areas.

  • Modernization, specialization, and grazing transition on dairy farms
  • Value chain and commodity innovation and facility and process updates for dairy processors
  • Dairy product development, packaging, and marketing

Grant FAQ’s

Applicants must meet all of the following criteria: (1) operates or endeavors to operate a dairy farm or dairy plant in Tennessee, Kentucky, or North Carolina, (2) has a project that meets the following goals: (2a) diversifies dairy product markets to reduce risk and develop higher value uses for dairy products, (2b) promotes business development that diversifies farmer income through processing and marketing innovation, (2c) encourages the use of regional milk production; and (3) has no immediate family members, i.e. parents, siblings, spouse, or children, working with the Southeast Dairy Business Innovation Initiative, or serving on the subaward review committee.

Dairy businesses may apply for funding to modernize, specialize and/or to transition to grazing on their farms. This can include funding to improve or add value chain and commodity innovation and/or facility and process updates for dairy processors and to improve or add dairy product development, packaging and marketing. Some examples of how funds may be used include hiring an independent consultant to develop planning documents for the dairy business such as a feasibility study, business plan or marketing plan that will be useful in determining the likelihood of success or to develop a food safety plan. Funds may also be used to attend training to acquire skills needed to develop or market dairy products (for example, Western Kentucky University’s cheese-making short course or Ohio State’s Dairy 101: Introduction to Dairy Processing and Management short course). Funds for training may include registration fees, transportation (the lower of business class airfare or mileage at the IRS standard mileage rate) and lodging (at current rates in the continental United States “CONUS Rates”). Funds may be used to purchase specialty equipment such as pasteurizers, cheese presses, and labelers. Funds may also be used to get product development help and services in recipe development, sensory evaluation, packaging considerations or shelf-life studies from sources such as the University of Kentucky’s Food Systems Innovation Center. For a full list of allowable and unallowable expenses, see the above list under grant application or visit

New processes might include adding alternative sizes of products, or adding additional product types to the line of products you currently sell. Adding a separator or in-line pasteurizer to your facility, or HTST or UHT instead of vat pasteurization would also count.

Eligible projects involve: (a) modernization, specialization, and grazing transitions on dairy farms, (b) value chain and commodity innovation and facility and process updates for dairy processors, or (c) dairy product development, packaging, and marketing.

Projects that are ineligible involve: (a) real estate purchases, (b) repayment of loans or mortgages, (c) rent or contract payments for time periods extending beyond the 12-month period allowed for eligible projects, (d) legal fees, or (e) lobbying, fundraising, or other political activities.

The Southeast Dairy Business Innovation Initiatives Subaward Application may be found above, or it may be requested directly from Shep Stearns at or at (865) 974-0991.

The project outlined in the application must be completed within 12 months of approval. Recipients of subawards agree to provide a progress report 12 months after the project is completed, and a final report by August 31, 2023. The reports should include information about outcomes of feasibility studies, market analyses, business plans, increases in sales and markets reached, new products or processes developed and jobs obtained or created as a result of the project. Those applicants with a current dairy processing or marketing business will be asked to provide a baseline of sales in dollars and an initial customer count at the beginning of the project.

No, you will not be required to do so.

Recipients will be reimbursed in full following a receipt of a paid invoice and approval by their State Department of Agriculture (if applicable).

No, you will only be reimbursed for approved items bought after your application’s approval.

The first progress report is a written report due 12 months after the project is completed. The final report is due by August 31, 2023.

Description of the project intent, summary of the project accomplishments and outcomes, including: dollar amount of increase in sales, increase in markets reached, new products or processes developed, jobs retained or created. In addition, there should be other insights from project execution, including, wherever possible, industry-wide benefits. Side note: The University of Tennessee Extension reserves the right to modify reporting requirements during the course of the project.

Sub-Award Presentation

Video walking through who is eligible to apply and what costs are allowable