The Biden administration earmarked $4 billion on Tuesday to strengthen the U.S. food system, including an expansion of local and regional food processing capacity. Aiming to increase competition, Agriculture Secretary Tom Vilsack said he hoped to see “new entries” in the highly concentrated processing sector.
Vilsack said the four-point initiative could result in “transformational change” in the food sector as the economy recovers from the coronavirus. Meat prices spiked as a result of Covid-19 outbreaks in slaughter plants during spring 2020 and there were spot shortages of dairy products as restaurants closed and Americans, advised to stay at home, swarmed grocery stores.
Analysts have since called for a more resilient and flexible food system that could withstand the shocks of catastrophic events. But some cautioned that a larger network of processing plants, while offering reserve capacity, would be more expensive than the current system, especially for meat, that relies on large-volume plants with little leeway for mishaps.
“I suspect a significant amount” of the $4 billion will be disbursed within a year, said Vilsack during a teleconference. He declined to say how the money might be allocated among the four areas of food production, food processing, food distribution and food marketing. States and investors may share in some undertakings, which would multiply the impact of USDA’s funds. As an example, farmer-owned cooperatives might want to work with USDA, he said.
He also said, when talking about an expansion of processing capacity, “My hope would be new entries” as well as existing processors.
New processors also would improve price transparency in livestock marketing, said Vilsack. Only a fraction of cattle, for instance, are sold on the cash market, which is a major issue for cattle ranchers. A month ago, six cattle and farm groups called for “investment in, and development of, new, independent, local and regional packers” and demanded a Justice Department report on suspected anticompetitive practices by meatpackers. Vilsack said the USDA would examine its tools to assure fair prices for livestock.
“We are encouraged by the steps USDA is taking … to strengthen local and regional food processing infrastructure, which will create a buffer for future shocks to our food system,” said Rob Larew, president of the National Farmers Union. “Ideally, the agency will follow up with greater protections for farmers and regulatory reforms that prevent anticompetetive behavior.”
There is “still work to be done in the Senate,” he said, to secure passage of the Farm Workforce Modernization Act, which would provide legal status to undocumented farmworkers and modernize the H-2A visa program for guest workers. The House passed the bill in March for the second time since 2019. Vilsack said he spoke to senators about the ag labor bill earlier on Tuesday.
Meanwhile, the Justice Department has not decided whether to appeal an April 1 federal court ruling that limits slaughter line speeds in hog plants, said Vilsack. The ruling affects six large pork plants that operate under USDA’s New Swine Inspection System. U.S. District Judge Joan Ericksen said the USDA failed to consider the impact on worker safety by allowing plants to speed up the slaughter line.
In announcing the $4 billion initiative, the USDA said it would “strengthen the food system, create new market opportunities, tackle the climate crisis, help communities that have been left behind, and support good-paying jobs throughout the supply chain.”
As part of the initiative, USDA said it would seek greater transparency in livestock prices and increase competition among processors “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.” The Build Back Better” initiative “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,” it said.
Similarly, the USDA said it would provide “direct assistance, grants, training and technical assistance” to food producers and workers.
The four-point initiative follows last week’s announcement of $1 billion to bolster food banks and other organizations that provide emergency food aid to hungry Americans, also branded as a Build Back Better activity.
The United States has a higher rate of diet-related disease than other advanced nations despite its vaunted “most affordable food supply,” said the USDA. “At the same time, many socially disadvantaged farmers and small and medium-sized producers do not have equitable access to markets.”