The Biden Administration announced Monday that they will spend $1 billion of American Rescue Plan funds to expand independent processing capacity.

Large processing firms dominate the meat and poultry markets. On the beef end, four companies make up 85 percent of the market. The four largest poultry and pork processors make up 54 and 70 percent of the market.

After analyzing nearly 450 stakeholder comments, the USDA identified a pressing need to:

  • Expand processing capacity;
  • Increase producer income;
  • Give producers the opportunity to have their own processing facilities;
  • Create stable rural jobs;
  • Increase working conditions in meatpacking jobs;
  • Collaboration among producer and workers;
  • Encourage state, tribal, and private co-investment;
  • Provide more choices.

Supporting independent processors

By increasing competition in the processing sector, producers and consumers will be given more options which will strengthen the food supply chain. To increase the number of independent processers, the USDA will be providing grants totaling up to $375 million. This spring the USDA will be publishing a Request for Proposals to help start 15 projects.

On top of this, the USDA will invest $275 million in lenders that provide loans to independent processors that need credit. Applications will be made available by summer 2022 and will focus on lenders in underserved communities.

The USDA will also back private lenders that invest in independently owned processing and distribution infrastructure. The UDSA has invested $100 million in American Rescue Plan funds to make $1 billion in loan guarantees available immediately.

How will this affect farmers and ranchers?

In 2022, the Biden Administration plans to put stronger rules in place to protect farmers, ranchers, and consumers. To do this, the Administration plans to issue stronger rules in the Packers and Stockyards Act against abuse by meatpackers and processors.

The Administration also plans to issue new “Product of USA” labeling rules to help bring more clarity as to where food comes from. Currently, the “Product of USA” label means the meat was just processed in the United States- even when the animal was raised overseas.

Getting farmers a fair price

The USDA is currently working with its existing entities to increase transparency in markets. Lack of competition and opaque contracts can lock producers into prices that are not of free and fair negotiations. The USDA began issuing new market reports back in August that helped enhance the transparency of markets. Now, the USDA is looking into more they can do.

The administration also plans to work with Congress to make markets fairer and more transparent.

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