Frozen federal grants: Small producers scramble; Mobile Market to make changes

March 6, 2025

From a small farmer trying to grow her egg production business to an effort to bring affordable groceries to underserved neighborhoods, food-related enterprises are being forced to make big changes after federal funds were frozen.

The Eat Well Sioux Falls Mobile Market had received a $50,000 USDA Business Builder grant meant to support one year of salary for staff. It received $20,000 of that before learning the funding had been frozen last week.

Additionally, a grant it had applied for to further support operations likely won’t come through, said Michelle Erpenbach, president of Sioux Falls Thrive, which piloted the Mobile Market.

“So it is a big hit,” she said. “An ongoing deficit in both local and national funding sources has put the project into a precarious situation.”

Sioux Falls Thrive “is being forced to make difficult decisions about a business that is making an incredibly positive impact in the lives of our most vulnerable children and families,” she added.

The project was launched in 2023 with support from the city of Sioux Falls and has been further subsidized by the nonprofit Sioux Falls Thrive. Ongoing funding, including the support needed to pay off the purchase of the truck and trailer, came from a variety of sources such as the Wellmark Foundation, South Dakota Community Foundation and a variety of individual donors, families and churches in Sioux Falls.

“All the good things you hear about this project are right,” Erpenbach said. “We have done amazing things. We have an amazing staff and proved exactly what the city wanted to prove: If we get groceries into neighborhoods and they’re affordable, people are in need in our community. We’ve proven the need for a mobile grocery store and very likely in places across the state.”

In 2024, the Mobile Market sold almost $53,000 worth of groceries in more than 4,300 transactions. Since June 2024, the Mobile Market has consistently served seven neighborhoods, five days a week. During warmer months, weekend pop-up sales introduced it to new customers citywide.

February was the fourth-highest sales month for the project, selling more than $5,400 in inventory to 183 unique customers, Erpenbach said. The majority of customers these days are returning ones, with about 40 percent making their first purchase ever.

“It’s a remarkable story,” Erpenbach said. “Regardless of next steps, all the data points toward the need for more easily accessible and affordable groceries, particularly in the neighborhoods near our Title I schools, our senior living communities and our free health care clinics.”

USDA Business Builder awards provide direct financial assistance of up to $100,000 to eligible small and mid-sized farms and food businesses. Last month, awardees learned that their funds had been frozen as part of a Trump administration pause on all federal financial assistance, including grants.

“It’s the first grant I’ve ever applied for,” said Stephanie Peterson, owner of Fruit of the Coop, a 7-acre farm near Brandon. “Grants are a challenge. They’re overwhelming.”

She had reached out to the South Eastern Council of Governments, or SECOG, for help applying for a USDA grant and ended up being awarded $36,000 over two years. About $4,000 was for purchasing equipment related to egg distribution, and the balance was for a part-time employee to help grow the operation.

Peterson received her first payment last fall and hired an employee to help with washing eggs, packing and delivering.

“The second payment I’m anticipating I just won’t get,” she said. “I’m anticipating this whole thing is going to fall apart.”

As a small farmer, she does not quality for major ag-related government subsidies or loans, she said.

The grant “is for someone like me who wants to scale up but needs a little extra assistance to do that,” Peterson said. “I’m not using the money for myself. I’m using it to support another human.”

Funds for SECOG, which helped connect producers with the grant opportunity and assist them in applying and reporting, also have been frozen, confirmed Lynne Keller Forbes, president and CEO.

“I didn’t go out and hire staff. We just absorbed it internally, so I didn’t have to turn around and fire people,” she said. “Other planning districts actually hired staff.”

Some grant awards were paid monthly, others quarterly, and it’s not clear yet in some cases which expenses will be covered depending on timing of the decision, she said. In other cases, equipment was ordered based on grant funding with payment due on arrival.

For Peterson, it has meant no longer being able to employ her part-time assistant and served as a reminder of her need to continue diversifying her business.

“You can’t get rich on eggs unless you’re huge,” she said. “I run a farm Airbnb out here, I’m launching an event space and just expanding in agritourism. I’ve been doing more field trips.”

Meanwhile, as the weather continues to warm, there will be more eggs to manage — and unrelenting demand, she said.

“There’s never enough eggs,” Peterson said. “I turn restaurants away all the time.”

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