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

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 that plan, the administration pledged $1 billion toward expanding independent meat processing and packing. 

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

SF: Where is the $1 billion coming from to provide funding for this initiative?

JM: The money is coming from a provision in the American Rescue Plan to support supply chain resiliency. The pandemic, major fires, and recent cyber threats have all revealed America has a bottleneck in the center of our food system, which hurts farmers and consumers. There are also risks to food security from packer concentration. It's certainly not a fair system; it's not an efficient system. We’ve heard how folks had to wait 18 months or longer for a processing appointment. And they’ve told us that they have fewer options of where to sell their cattle. That's why Congress directed the USDA to enhance the resiliency of our food supply chain. We're doing that by supporting the transformation that's already ongoing, creating more market options for farmers to support a system that’s more resilient and fair.

SF: Is there a plan for how the $1 billion is going to be distributed? How much is going to packer education, to grants, etc.?

JM: The USDA is planning on using the money to do a suite of different things. The first is financing additional packing capacity This spring, the USDA will be announcing $150 million in funding to support at least 15 processing facilities. This first phase will have an emphasis on grants that have the most near-term impact. We will have a second phase this summer, with an additional $225 million in funding for longer term investments to expand capacity. In addition, the USDA will deploy $275 million in partnership with lenders to increase the access to capital, initially with an emphasis on lenders that invest in underserved communities.

SF: Other than grants for processing facilities, what other programs will this initiative be investing in?

JM: In addition to capital, there's also a need to build a pipeline of well-trained workers. We have dedicated $100 million to support workforce development of employees, safe workplaces, and good paying, high-quality jobs. For example, I can envision 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 have allocated $50 million to support these areas. This will include independent business owners, such as cooperatives and worker associations to create or expand processing capacity.

SF: What in this program encourages independent packers to be financially sustainable once this funding/support runs out?

JM: For businesses to be successful, we must have a level playing field in which they compete. That's why we are partnering with the Enforcement Division at the Department of Justice to oversee meat packing competition to strengthen and enforce existing rules.  We are creating a portal with the Department of Justice, so people can file complaints. This will tell us where the issues are or might be and lets everyone - the Department of Justice, the USDA, the Packers and Stockyards division - know. We're strengthening the rules in the Packers and Stockyards Act as well, which is a law that is designed to combat abuse by meat packers.

SF: How does this help get small packer’s meat into stores? Assistance and education help, but meat in stores is what makes a profit.

JM: Our fair and competitive markets agenda is important precisely because of the competitive practices that can stand in the way of small packers getting access to retail. We've heard these stories and we take these risks very seriously. We're partnering with the Department of Justice and the Federal Trade Commission for enforcement. We're also sending out a report with recommendations for access to retail. As I mentioned, we're revitalizing the Packers and Stockyards Act, which is the USDA's own fair and competitive markets law as well. We believe this suite of activities—the funding, the different actions that we're doing with the Packers and Stockyards Act, and enforcing competitive practices—is a full suite of tools producers and processors have access to so the vital value-added markets are available to them.

SF: How can the USDA ensure the Big 4 packing plants do not get this assistance?

JM: In this effort our funding will focus on independent processors. More information about the terms of the grant will be provided when we come out with the request for proposals later this spring. The qualifications for processors and restrictions about use of funding will also be provided on the USDA’s website at USDA.gov/meat.

SF: Why haven’t American anti-monopoly laws prevented the Big 4 problem from happening?

JM: This certainly is a big problem that has been decades in the making. We focused on a system that has exchanged resiliency for efficiency over decades. As we've seen, market disruptions in the last two years have shown us the dangers of doing that. Now is a pivotal moment of opportunity to transform the food system so that it's more fair, more competitive, and more resilient to future shocks as well.

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