Program Emphasis
Types of Assistance
Eligibility
Prerequisites
PDS Product Development Process
Financial Responsibility of the Client
Confidentiality
Evaluation of Projects
Additional Information
 

AURI provides expertise and assistance to increase value, demand and market opportunities for agriculturally-based products.

The Product Development Services (PDS) program is intended to produce value-added  products.  The PDS program is a grant program, which focuses on developing, in concert with AURI staff, a salable product, process or production technology to enhance a feasible product.  AURI personnel, labs and pilot plants are available to assist a Minnesota-based client by:

AURI’s professional and technical staff offers technical and business development assistance, including, but not limited to:

  Technical Feasibility: A project may focus on new or improved process technology or on development of new value-added food or non-food agricultural products.  The project may include an evaluation of the product's technical soundness and quality.

  Economic or Market Feasibility:  If an applicant is developing an agricultural-based product or technology with AURI assistance, a study may be cost-shared to examine the market potential and/commercialization.  This study would identify specific obstacles to commercialization and address potential solutions.  To have access to funding, an applicant must be an AURI client receiving technical assistance.

  AURI technologists/scientists are available to provide consulting and technical services with respect to product and process development; product evaluation and testing; and sourcing materials, equipment and services.

  AURI pilot plants and labs are available, on a confidential basis, to assist in product and process development, scale-up, nutritional assessment and production for market assessment.

The focus of the PDS program is AURI providing in-house lab facilities, pilot plants, and technical and business consulting that are enhanced by grant funds.  Services, which may be provided by AURI staff include, but are not limited to:
 

  Analytical testing of products or processes in development

  Product formulation

  Pilot production line development

  Laboratory scale trials

  Engineering review

  Process analysis

  Process or business evaluation

  Secondary market research

Securing grant funds is encouraged in the following areas (but not limited to):
 

  Technology development at AURI

  Technology development outside AURI

  Validating technology

  Engineering review

  Packaging feasibility and assembly design

  Prototype development costs/test market product costs

  Process feasibility

  Marketing feasibility

  Business plan with partners

  Marketing plan with partners

The PDS program is available to an applicant who can demonstrate the project will impact the use of an existing agricultural commodity or commodities, alternative crop or crops, or livestock.  The PDS program is designed to add value to an agricultural commodity or commodities and to foster long-term economic growth, but is not intended for crop or livestock production.  The project and its proposed benefits must impact commodities produced and/or processed in Minnesota.

The purpose of all of AURI’s programs is to provide technology development through its many resources, especially its professional staff, laboratories and pilot plant facilities.  The PDS program augments these AURI resources by providing funding for those services not available within AURI. The focus of PDS funding is the impact the funds will provide the project and the community in which the project is located.  The staff of AURI incorporates this focus when determining the amount of project funding to recommend.

CLIENT TIERS AND MAXIMUM FUNDING

The maximum level of funding available to a client of AURI is based upon the type of business organization the client has chosen, consideration of the impact of the project, and a demonstrated ability to bring a project to commercialization.  The tiers of maximum funding available are categorized as follows:

tier one

Tier One funding is available to a legally organized entity with less than $500,000 in yearly gross product sales.  Typically, a Tier One client will be a sole proprietorship, a partnership or a wholly owned corporation.  Co-ops or Producer Limited Liability Corporations (LLC’s) with three or more member owners (not of the immediate family) are addressed in Tier Three.  Immediate family is defined as parent, child, brother, sister, spouse, stepparent, stepbrother, stepsister, grandparent and in-law relationships.

Maximum funding is $50,000 per project, based on the demonstrated effect the funding will have upon the commodity and/or the community.  A lifetime limit of funding assistance from AURI of $100,000 per legal entity is also considered.  The lifetime limit applies to the legal entity involved in the project, as well as any general partnership, limited partnership, corporation, joint venture, trust, or joint operation, in which the funded legal entity is substantially involved in providing labor, capital, or management, or in which the funded legal entity has a greater than 30% ownership interest.  Any funds distributed under the PDS program will be taken into consideration when determining the client’s AURI lifetime funding limits of $100,000.

A recipient of Tier One funds is required to match each dollar of AURI assistance with a dollar of his/her/its own funds (1:1 cash match).  The appropriate client will receive an IRS 1099 statement at the end of the calendar year in which the funds are received.

tier two

Tier Two funding is available to a legally organized entity or group with $500,000 or more in yearly gross product sales which is not organized as a Co-op or Producer LLC with three or more members/owners (not of the immediate family).  Typically, a Tier Two client will be a sole proprietorship, a partnership or a wholly owned corporation.  Immediate family is defined as parent, child, brother, sister, spouse, stepparent, stepbrother, stepsister, grandparent and in-law relationships.

Maximum funding is $100,000 per project, based on the demonstrated effect the funding will have upon the commodity and/or the community.  A lifetime limit of funding assistance from AURI of $200,000 per legal entity is also considered.  This lifetime limit applies to the legal entity involved in the project, as well as any general partnership, limited partnership, corporation, joint venture, trust, or joint operation, in which the funded legal entity is substantially involved in providing labor, capital, or management, or in which the funded legal entity has a greater than 30% ownership interest.   Any funds distributed under the PDS program will be taken into consideration when determining the client’s AURI lifetime funding limits of $200,000.

A recipient of Tier Two funds is required to match each dollar of AURI assistance with a dollar of his/her/its own funds or with a dollar of additional capitalization (1:1 cash/capitalization match).  The appropriate client will receive an IRS 1099 statement at the end of the calendar year in which the funds are received.

tier three

Tier Three funding is available to a legally organized Co-op or Producer LLC with three or more members/owners (not of the immediate family).  Typically, a Tier Three client will be an organized grower group attempting to add value to the crops it produces.  Immediate family is defined as parent, child, brother, sister, spouse, stepparent, stepbrother, stepsister, grandparent and in-law relationships.

Maximum funding is $100,000 per project, based on the demonstrated effect the funding will have upon the commodity and/or the community.  A lifetime limit of funding assistance from AURI of $200,000 per legal entity is also considered.  This lifetime limit applies to the legal entity involved in the project, as well as any general partnership, limited partnership, corporation, joint venture, trust, or joint operation, in which the funded legal entity is substantially involved in providing labor, capital, or management, or in which the funded legal entity has a greater than 30% ownership interest and is involved with the organization.  Any funds distributed under the PDS program will be taken into consideration when determining the client’s AURI lifetime funding limits of $200,000.

A recipient of Tier Three funds is required to match each dollar of AURI assistance with a dollar of his/her/its own funds, a dollar of additional capitalization or a dollar of in-kind match (1:1 cash/capitalization/in-kind match).  The appropriate clients will receive an IRS 1099 statement at the end of the calendar year in which the funds are received.

The project for which PDS funding is sought must use a Minnesota grown commodity and must be deemed as having commercial viability by the staff of AURI.  Recipients of funding must actively work with AURI staff to develop a product or process prior to funding approval.

A client is allowed a maximum ten hours of in-house assistance prior to completion of a PDS application.  However, an application may be completed at any time a need for financial assistance is identified.

A client is encouraged to discuss the project idea(s) with AURI staff.  The staff will assist in determining eligibility for an appropriate AURI program and in initiating the application process.  Approval of a project involves the following steps:

STEP 1:     A client is required to sign an Initial Assistance Agreement (IAA), acknowledging acceptance of service by AURI staff and outlining pertinent information with regard to proposed AURI technical assistance.

STEP 2:    The client and an AURI staff member work together to complete an ATS Application, in which the client and an AURI staff member may be asked to identify:      

A.  Activities to be performed

B.  Expected outcomes

C.  Project objective(s)

D.  Approximate number of hours expected to complete the project

E.  Anticipated date of completion.
 

The ATS Application is an informal document submitted to AURI’s management team for consideration.  The AURI management team, consisting of the Regional Directors and/or the Executive Director reviews the ATS Application.  The management team decides to either accept the project and assign an appropriate project team, or deny the project and list project concerns.

NOTE:  A project team is initially approved without funding assistance.  If it is determined funding is warranted to further the project, the client and staff of the AURI will work together to define the appropriate level of funding.

STEP 3:    Once an AURI project team is appointed, the client will work with the project team to develop a project plan, including funding assistance.  In addition to technical expertise, project team members will actively research and identify:

 

STEP 4:    When the client and project team members develop a project proposal and conduct the necessary research, the client and members of the project team will work together to complete the following:

1.  AURI Project Needs Assessment

2.  AURI Product Development Services Funding Application, including the following information:

3.      AURI Client Tier Determination

STEP 5:    Upon completion of the application documents, the information is submitted to the AURI management team. The AURI management team reviews the application, considering the direct and indirect impact of the dollars requested on Minnesota, and makes a decision on the amount of funding.  A funding request of greater than $25,000 must be reviewed and acted upon by the AURI Board of Directors.

STEP 6:    Upon approval of a funding request, the AURI project team and client will be notified, a grant agreement prepared, and the client will receive the following:

1.  Grant Agreement

2.  Client Reference packet, including forms and information with respect to:

a.  Request for Disbursement

b.  Progress Report

c.  Final Project Report

3.  If the AURI project team has agreed upon specific funding items, a contract addendum will be issued noting:

a.  The specific item funded and amount of funding

b.  The expiration of the Addendum (the activity must occur before this date)

c.  NOTE:  Although a Grant Agreement may be issued, a specific project activity is NOT authorized until a contract addendum has been issued.
 

To guarantee funding availability, the client must sign and return the Grant Agreement within 60 days of AURI approval.

STEP 7:    As a project task is finished, the Request for Disbursement form is completed by the client and mailed to the AURI State Office in Crookston. Additionally, a project progress report is due every ninety days from the approved start date of the project.  Additional information on disbursements and progress reports is found in the AURI Client Reference packet.  A client is encouraged to remain in frequent communication with the AURI project team during the duration of the project.

STEP 8:    Upon completion of the project, a final report, including a financial summary, must be submitted to the AURI State Office in Crookston.  After the completion of the project, the client may receive periodic requests to complete project progress and impact update reports in order to allow AURI to track the actual impact of the project on a commodity or community.

At a minimum, a funded entity must match in accordance with its appropriate funding tier.  Cash, in-kind services, capitalization or a combination of each may be used according to the assigned funding tier.  Matching funds may not come from an AURI affiliated program. AURI funds must be used to obtain technical research and business assistance not available within AURI.  AURI funds may not be used for legal fees, salaries of existing employees or officers, travel, websites, vehicles, equipment, buildings, real estate, slotting fees, packaging design, printing or items relating directly to the client’s costs of full-scale production (Cost of Goods Sold).  AURI staff approves funding and the subsequent use of funds; however, projects requesting an aggregate of $25,000 or greater must be reviewed and acted upon by the AURI Board of Directors. 

Agreement to fund a project under the PDS program requires AURI and the client enter into a written agreement which establishes the terms and conditions of AURI funding.  AURI may request a security interest or other legal interest in intellectual property developed/enhanced with the assistance of AURI.  In the event the client breaches the written agreement, AURI funds are subject to immediate repayment in full, plus interest at the rate of interest prescribed by Minnesota Statutes with respect to judgments.

Upon presentation of invoice(s) and completion of an updated progress report, funds will be disbursed in accordance with AURI draft policy:  if paid invoice(s) are presented, a single-party draft payable to client will be issued; if unpaid invoice(s) are presented, a two-party draft payable to client and vendor involved will be issued.  Required client match must be documented with respect to the amount requested prior to fund disbursement.

The client/recipient is required to submit to the AURI State Office the following:

1.  Progress reports, submitted when requesting disbursement of funds, describing activity to date and documenting match.

2.  A final narrative report, including any appendices or materials developed and supporting documentation, describing the work performed and the results obtained.

3.  A final financial report of expenses incurred within the scope of the project.

AURI will treat all mutually agreed upon information provided by an applicant as confidential. Information provided to or gathered by AURI related to funding programs shall be treated as private data.  Such data includes:

  Financial data, statistics and information furnished in connection with AURI financial assistance, including credit reports, financial statements of net worth, income tax returns (either personal or legal entity) and any other personal or legal entity financial records;

  Security information, trade secret information, or labor relations information disclosed to members of the Board of Directors or employees of AURI.

Proprietary information provided to AURI should be limited, set apart from the text of the application, and clearly marked as CONFIDENTIAL.  AURI will limit the dissemination of proprietary information to staff and project reviewers on a confidential basis; but in any event, AURI does not assume any liability for inadvertent disclosures.

AURI will not, consistent with relevant law, make public any information disclosing product, process, commodity, invention, technology, innovation, or service funded pursuant to the PDS program until a patent, copyright or trademark is applied for, or for two years after completion of the project, whichever occurs first. AURI does not assume liability for any inadvertent disclosure.

AURI assistance is intended to occur early in the existence of a product or process during which feasibility is determined.  A request for AURI assistance is analyzed with respect to a project’s positive impact on Minnesota and its agriculture.  A project is reviewed and evaluated based upon the following criteria:

The answers to each of these questions will determine the extent to which AURI may assist a client. A project, which demonstrates significant positive impact, is likely to receive more assistance than one showing minimal impact.  Some projects may be eligible for technical assistance only, while others may be eligible for financial and technical assistance.

Additional information regarding AURI’s programs and services, as well as necessary forms and guidelines, may be obtained by contacting one of the field offices listed above.