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USDA embarks on adding resilience to food system

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Vilsack announces $4 billion to strengthen food supply chain, including increasing meat processor capacity.

USDA says that it will move to strengthen and protect the country’s food and agricultural supply chain with $4 billion in funding for expanding supply chain resilience allocated in the American Rescue Plan passed earlier in 2021. During a press call following the announcement, Secretary of Agriculture Tom Vilsack shares that additional details will be shared in the coming months on how the agency hopes to strengthen the food system, create new market opportunities and support good-paying jobs throughout the supply chain.

Funding announcements under USDA’s Build Back Better initiative will include a mix of grants, loans and innovative financing mechanisms for four priorities, each of which includes mechanisms to tackle the climate crisis and help communities that have been left behind, including food production, food processing, food distribution and aggregation and markets and consumers.

“I think we’ve learned through this process that historically we’ve had a very efficient system, but efficiency comes with a price, and that price is the lack of resilience when you have a major disruption,” says Vilsack. “What we’ll have to learn is the need to better balance the need for efficiency and productivity with the need for resilience.”

Vilsack states actions are needed to ensure producers and consumers are not hurt. “At the end of the day, regardless of what might occur, whether it's another virus or whether it's some other disruption, whether it's a cyberattack, whatever it might be, that we have options and capacity to shift quickly,” he says.

Among other investments in the food system and food supply chain, Build Back Better will specifically address the shortage of small meat processing facilities across the country as well as the necessary local and regional food system infrastructure needed to support them.

The pandemic highlighted challenges with consolidated processing capacity. It created supply bottlenecks, which led to a drop in effective plant and slaughter capacity. Small and midsize farmers often struggled to compete for processing access. USDA says it will make investments to support new and expanded regional processing capacity.

Vilsack says he hopes to do a very thorough analysis of the current market and determine where additional processing capacity could come in to create more competition and potentially better income opportunities for producers.

“I would expect and anticipate that we would look for ways in which we could work with state or regions where that processing capacity would be more helpful to see if we could leverage the federal resources that we’ll make available in order to construct or retrofit a facility so that they could meet this processing demand,” Vilsack says.

He hopes farmer-owned cooperatives might be interested and as well as the opportunity for unique partnerships between those who represents workers that are in those facilities and those who benefit from selling their products to these plants. Vilsack wants to see new players in this area, as well as potentially assisting small and mid-size operators who already exist and want to expand. He also sees this as an opportunity for the investment community.

Re-evaluating transparent markets

As it makes investments through this initiative, USDA will also seek to increase transparency and competition with attention to how certain types of conduct in the livestock markets and the meat processing sector have resulted in thinly-traded markets and unfair treatment of some farmers, ranchers and small processors.

Vilsack says having additional processing capacity creates a better platform and a better source of data to make sure that there is adequate pricing and openness and transparency in terms of pricing for those in the livestock sector.

He did say USDA is looking at a number of rules that were pending during the Trump administration as it relates to the Packers and Stockyards Act, as well as those promulgated at the end of the Obama administration that he says also deserves a refresh and re-look. He says over the next few months USDA will evaluate closely what steps need to be taken to provide that clear line to provide a better understanding of what constitutes the difference between a fair and unfair practice.

“We'll take a look at both the Trump rules and the Obama rules to determine what steps need to be taken in order to provide that bright line to provide that better understanding of what constitutes a fair practice and unfair practice, and to make sure that at the end of the day, our regulatory system, our pricing efforts, our support for processing capacity all are aligned to create a more open, more transparent and fair market for our producers.”

Additional USDA focus

Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., praised USDA’s steps toward as stronger supply chain.  In the two recent COVID-19 assistance packages, Congress provided a combined $5.5 billion to help repair our broken food supply chain, protect workers, purchase surplus food for donation and improve resiliency for the future.

“The funding we fought for in the American Rescue Plan will help to protect and strengthen small and midsized meat processors, expand cold storage, increase access to healthy food, boost local and regional food systems, and support small farmers,” Stabenow says. “Overall, these investments will help the supply chain recover from COVID-19 and be better prepared to weather the next crisis too.” 

In a letter to Vilsack in late May, Stabenow asked USDA to quickly put programs in place to protect food and farm workers and secure the supply of food and agricultural products for American consumers. 

“The Build Back Better initiative will make meaningful investments to build a food system that is more resilient against shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds,” Vilsack explains.

Food aggregation and distribution relies on people working together throughout the food system and having the right infrastructure to gather, move and hold the food where and when it is needed. This system was stressed during the pandemic due to long shipping distances and lack of investment in local and regional capacity. USDA says it will make investments in food system infrastructure that can remain resilient, flexible and responsive.

Food production relies on growers, including farmers and ranchers, workers and critical inputs. But a diminishing share of the food dollar goes to these essential workers. USDA will invest in the current and future generation of food producers and workers throughout the food system with direct assistance, grants, training and technical assistance and more.

The U.S. spends more on health care and less on food than any other high-income nation; yet the U.S. has higher rates of diet-related illness and a lower life expectancy than those nations, USDA notes. At the same time, many socially disadvantaged and small and mid-sized producers do not have equitable access to markets. USDA will support new and expanded access to markets for a diversity of growers while helping eaters access healthy foods, the agency says.

Vilsack was also named co-chair of the Biden administration’s new Supply Chain Disruptions Task Force. The Task Force will provide a whole of government response to address near-term supply chain challenges to the economic recovery.

The Task Force will convene stakeholders to diagnose problems and surface solutions—large and small, public or private—that could help alleviate bottlenecks and supply constraints related to the economy’s reopening.

“I am confident USDA’s investments will spur billions more in leveraged funding from the private sector and others as this initiative gains traction across the country,” Vilsack says. “I look forward to getting to work as co-chair of the new Supply Chain Disruptions Task Force and help to mobilize a whole-of-government effort to address the short-term supply challenges our country faces as it recovers.”

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