How will independent meat processors and packers benefit from Biden’s $1 billion pledge?

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On January 3, President Biden announced the Biden-Harris administration’s action plan for a fairer, more competitive, and more resilient meat and poultry supply chain. In this plan, the administration pledged $1 billion for the expansion of independent meat processing and packaging.

Since that announcement, farmers and ranchers have had many questions about the plan and how it will be implemented. Successful Farming sat down with Jenny Lester Moffitt, USDA Undersecretary for Marketing and Regulatory Programs, to answer a few of those questions.

SF: Where does the billion dollars come from to finance this initiative?

JM: The money comes from a provision of the US bailout aimed at supporting supply chain resilience. The pandemic, major fires, and recent cyber threats have all revealed that America has a bottleneck at the center of our food system, which is hurting farmers and consumers. The concentration of conditioners also poses food safety risks. It’s certainly not a fair system; it is not an efficient system. We have heard that people have to wait 18 months or more for a treatment appointment. And they told us they had fewer options of where to sell their cattle. That’s why Congress asked the USDA to improve the resilience of our food supply chain. We do this by supporting the transformation already underway, creating more market options for farmers to support a more resilient and equitable system.

SF: Is there a plan for the distribution of the billion dollars? How much goes to packer education, grants, etc.?

JM: The USDA plans to use the money to do a range of different things. The first is the financing of additional packaging capacity. This spring, the USDA will announce $150 million in funding to support at least 15 processing facilities. This first phase will focus on grants that have the greatest short-term impact. We will have a second phase this summer, with additional funding of $225 million for longer-term investments to increase capacity. Additionally, the USDA will deploy $275 million in partnership with lenders to increase access to capital, initially focusing on lenders investing in underserved communities.

SF: In addition to grants for processing facilities, what other programs will this initiative invest in?

JM: In addition to capital, it is also necessary to build up a pool of well-trained workers. We have dedicated $100 million to support employee workforce development, safe workplaces, and high-paying, high-quality jobs. For example, I can imagine a community college getting funding for a training program for processing workers. We know it’s very important to support technical assistance, innovation, and research and development as well, so we’ve allocated $50 million to support those areas. This will include independent business owners, such as cooperatives and worker associations, to build or expand processing capacity.

SF: What is it about this program that encourages independent packers to be financially viable once that funding/support runs out?

JM: For businesses to succeed, we need to have a level playing field in which they compete. That’s why we partner with the Department of Justice’s Enforcement Division to oversee meat packaging competition to strengthen and enforce existing rules. We are creating a portal with the Ministry of Justice, so that people can file complaints. This will tell us where the problems are or could be and let everyone – the Department of Justice, the USDA, the Packers division and Stockyards – know. We are also strengthening the rules of the Packers and Stockyards Act, which is a law designed to combat abuse by meat packers.

SF: How does that help get meat from small packers into stores? Aid and education help, but the meat in the shops is what makes the profit.

JM: Our fair and competitive marketplace program is important precisely because of the competitive practices that can prevent small packers from gaining access to retail. We have heard these stories and we take these risks very seriously. We partner with the Department of Justice and the Federal Trade Commission for enforcement. We also send a report with recommendations for retail access. As I mentioned, we are revitalizing the Packers and Stockyards Act, which is also the USDA’s Fair and Competitive Procurement Act. We believe that this suite of activities – financing, the various actions we take with the Packers and Stockyards Act and the application of competitive practices – is a comprehensive suite of tools that producers and processors have access so that vital value-added markets are available to them.

SF: How can the USDA ensure that the 4 major packing plants do not receive this aid?

JM: In this effort, our funding will focus on independent processors. More information on the terms of the grant will be provided when we publish the Request for Proposals later this spring. Processor qualifications and restrictions on the use of funding will also be provided on the USDA website at USDA.gov/meat.

SF: Why didn’t America’s anti-monopoly laws prevent the Big 4 problem from happening?

JM: This is certainly a big problem that has been going on for decades. We focused on a system that replaced resilience with efficiency over the decades. As we have seen, market disruptions over the past two years have shown us the dangers of such a practice. Now is a pivotal time to transform the food system so that it is fairer, more competitive and more resilient to future shocks.

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