Legislation that would set up a USDA grant program for the expansion or construction of small, regional and independent meat facilities was approved last week by the House Agriculture Committee. The "Butcher Block Act," sponsored by Reps. Abigail Spanberger (D-Va.) and Dusty Johnson (R-S.D.), also would establish grants for increasing hiring and capacity at meatpacking and processing plants.
Although smaller facilities are an important part of the meat supply chain, the National Pork Producers Council has urged USDA to focus on larger, more efficient — and federally inspected — operations, pointing out in comments on the agency's efforts to increase capacity that "studies suggest that larger plants significantly benefit from economies of scale."
In March, USDA made grant funding of $150 million — out of a $375 million total — available for increasing packing capacity, with individual grants of up to $25 million. The remaining $225 million will be available this summer, along with $275 million in lending capital.
In the comments, NPPC states its support for USDA's commitment to increasing meatpacking capacity in the United States.
"For producers, the economics are simple: more capacity means better prices for hogs. With that said, it is important to remember that barriers such as labor availability and the New Swine Inspection System line speed decision are major – if not the primary – contributors to restrained capacity. Lasting and ongoing increases in capacity will only happen if issues such as those are addressed in tandem with new access to capital.
"USDA has many choices with regard to how it uses $500 million to spur capacity growth. While NPPC represents hog growers, not meat processors, our industries are inextricably linked. Larger, more sophisticated plants are capable of significant output relative to labor and other expenses, and we urge the administration to use each dollar spent through this program as efficiently as possible."
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