U.S. Department of Agriculture (USDA) recently announced over $600 million in future investments to support and increase processing capacity through grants, loans, and technical assistance to address concentration within the meat and poultry sectors, as well as small plant fee relief.
On July 16, 2021, the USDA published a notice in the Federal Register, seeking public comments on investments and opportunities for meat and poultry processing infrastructure.
This public comment period comes in the wake of USDA’s announcement of $500 million for expanded meat and poultry processing capacity. USDA is seeking input on how to invest an estimated $500 million of American Rescue Plan funds to improve infrastructure, increase capacity, and hasten diversification across the processing industry. The deadline for submitting comments is Monday, August 30 at 11:59 pm EST.
USDA also announced $100 million in fee relief for small and very small meat and poultry slaughter and processing establishments and egg product plants, as part of the COVID-19 relief Congress provided in the American Rescue Plant Act. Interested small plants must fill out a form and submit it to the FSIS inspection personnel in their plant, preferably by August 16, 2021 to ensure a quick process.
Comments needed from farmers, small processors
The National Sustainable Agriculture Coalition (NSAC) strongly encourages small processors and impacted farmers and ranchers to comment on how USDA should invest the $500 million to support their processing needs. Several questions for consideration are included below. NSAC recommends farmers and small processors consider these prompts in their comments and describe how loans, grants, or technical assistance could help your small processing operation. NSAC also encourages all other stakeholders to consider these questions and comment as well, including what conditions should be put into place to ensure equitable practices for any federally funded projects.
Farmers and ranchers
- Does your region show demonstrated processing needs, at what levels, and for which species?
- How can USDA support access to processing services for smaller-scale producers? Are there opportunities for producers to engage in cooperative or collaborative arrangements with each other or other facilities, to both ensure access and provide a sufficient supply for a plant to operate? If so, what government assistance would be needed to facilitate that type of arrangement?
- How do processing needs and challenges vary by species and by value-added product types (e.g., organic, local, grass-fed, kosher, halal)?
- Should the processor be required to purchase a minimum volume through auctions or other public transactions?
- If contracts are utilized, should practices like tournament systems, that have been found to be prone to anti-competitive abuse, be prohibited? Should contracts have at least a portion of the payments to producers be based on wholesale meat prices?
- If contract grower relationships are used that require a purpose-built production facility, should the contract be required to cover at least the length of your loan term?
Consider your financial investment needs:
- What are the most pressing needs of the meat and poultry processing sector with regard to financing, and what action should USDA take in the immediate term to improve access to capital for small and very small meat and poultry processors? Should loans and grants be combined to support small processing facilities? How might the investment needs vary based on the size and type of the processing establishment?
- Would a small plant expansion program structured similarly to USDA’s Meat and Poultry Inspection Readiness Grant (MPIRG), but with a focus on expanding slaughter and processing capacity for small federally inspected plants, be beneficial? If so, at what award ($) level per grant and for what types of costs?
Consider workforce needs:
- How can workforce recruitment, training, and retention needs be addressed to maintain or increase processing capacity? Would pilot grants that provide awards to small plants for training and other support (e.g., cover wage gaps during apprenticeships) to develop their local workforce, be effective in addressing some of the labor challenges associated with operating a current, expanded, or new facility?
Describe what it takes to start a new facility:
- What competition challenges and risks might new entrants face from high levels of market concentration or other relevant market conditions, and how can USDA and other federal government agencies assist new entrants in mitigating those risks?
- What type of expertise is necessary to build a new facility, or expand an existing facility, and who could fund it? What level of experience is necessary for success?
- What business and operating structures (e.g. cooperatives, farmer-owned facilities, sole proprietorship, limited liability company, B corporation, etc.) can sustain new facility operations?
Describe the demand in your region
- What constitutes sufficient actual demand for small and very small processing facilities to keep a business operational with appropriate cash flow? What seasonal throughput issues (e.g., under- and over-utilization during parts of the year) or regional challenges need to be considered for plant expansion or development?
- What type of investments are needed in your region? What, if any, support have you received during COVID-19 from your state or local government?
Consider training and educational needs
- What are the top priorities for technical assistance that would facilitate processing expansion or increased capacity (e.g., butchery for key markets, HACCP, humane handling best practices for plant operators, labeling approval and processes, brand and market development)? What workforce-related technical assistance is most needed, how is it best delivered, and by whom (e.g., best industry practices, training on equipment, new tools for safety)? What partners or organizations do you find most helpful when it comes to training, education, and outreach for small processors?
How to comment
Comments can be submitted by following these steps:
- Open the Federal Register Comment Page for the Investments and Opportunities for Meat and Poultry Processing Infrastructure.
- Open the “Submit a Formal Comment” box and type the comment you want to submit.
- You do not have to provide your name if you do not want to, though it is preferable.
- Submit the comment by clicking “continue.”
Additional investment needed
In the U.S., just four companies represent 73% of beef processing, 67% of pork processing, and 5% of chicken processing. This lack of competition in meat and poultry processing leads to higher prices for consumers, lower profits for farmers and small processors, and creates a food supply chain system that is less resilient to the ever-increasing number of environmental and economic disasters. NSAC is encouraged by USDA’s acknowledgement that investments in competition can help address some of these issues and commends the Biden Administration’s recent executive order promoting fair competition in the U.S. economy.
The recent COVID-19 crisis also revealed a lack of resilience in the meat and poultry supply chains. To address these issues, NSAC encourages USDA to prioritize funding that will ensure increased support for small-and mid-sized slaughter and processing capacity to build resilience and further support for pasture-raised livestock and poultry.
The organization recommends small processors, farmers and ranchers, and advocates, include the following talking points in their comments to USDA:
- USDA should create a small plant grant program for small-scale federally inspected plants, to expand and update their infrastructure and equipment to increase their processing capacity. The grant program could also fund new plants in areas where there is an unmet need that will ensure the new plant is financially stable.
- Due to the workforce shortages in the small meat sector, USDA should fund technical assistance and support for small processors and their employees.
- USDA should prioritize funding for Black, Indigenous, and People of Color owned businesses, and plants that would increase farmer and rancher access to animal slaughter and processing options within a 200-mile radius.
- Because small processors are not always able to access sufficient capital for investments, USDA should implement a direct loan program to allow facilities to expand and serve more customers.
A more comprehensive look at NSAC’s recommendations for meat and poultry processing infrastructure and for overall supply chain reform can be found here.
“This is an important opportunity to shape the future of USDA programming and how it can build resilience in our food chains and support local farmers and ranchers,” NSAC said.