USDA announces new food and supply chain framework

Photo courtesy of Envato Elements

From staff reports

With continued lasting effects as a result of the pandemic and now the Russia-Ukraine conflict causing supply chain shortages, the U.S. Department of Agriculture has announced a major change to the food system that the USDA says will create more options, markets, and opportunities for small to mid-size producers. The framework is also intended to strengthen supply chains and remedy structural challenges that existed before the pandemic. 

The USDA Food System Transformation framework includes several pieces. It includes making food distributed on a more local basis so that it is not concentrated in distribution locations, it decreases market concentration and increases healthy food options in underserved communities. Money will also go toward employee workforce and safety training and creating food centers, increased food purchases for schools and for senior citizens, and projects to limit food waste. 

USDA will allocate money to programs that benefit small and mid-size operations to help them overcome barriers to access markets and capture a fair share of the food dollar. For example, up to $300 million will go to a new Organic Transition Initiative and up to $75 million to support urban agriculture. 

USDA is also addressing consolidated processing capacity by building more local capacity by using programs that have been initiated and are in place.

The Food Supply Chain Loan Guarantee Program, which will back private lenders that invest in independently owned food processing, distribution and aggregation infrastructure, and other projects along the middle of the supply chain. Independently owned and available infrastructure such as cold-storage, refrigerated trucks, and processing facilities are in short supply but essential to creating a more resilient food system. USDA has deployed $100 million to make more than $1 billion in guaranteed loans available immediately. The program is accepting applications.

Deployment of up to $375 million in support for independent meat and poultry processing plant projects that fill a demonstrated need for more diversified processing capacity. These investments will be made in two phases. The first phase of the Meat and Poultry Processing Expansion Program will deploy $150 million in grants up to $25 million each to expand processing capacity through a variety of activities, including but not limited to construction, expansion of existing facilities, and acquisition of equipment. The first phase recently closed, accepting more than 200 applications, representing more than $800 million in funding requests.

Creation of a robust technical assistance network to ensure that participants in USDA’s meat and poultry supply chain initiatives have access to a full range of technical assistance to support their project development and success. Meat and poultry processing facilities are complex, with many technical standards and requirements; the odds of successfully starting or expanding a facility are higher with access to expertise and experience. USDA is deploying $25 million through the Meat and Poultry Processing Capacity Technical Assistance Program.

Investment of up to $275 million in partnership with lenders to address the credit access gap for meat and poultry processing projects because lenders have been reticent to invest in the meat and poultry sector without incentives to do so given the risk profile and lack of experience in the sector. USDA will work with lenders to make more capital available to independent processors that need credit, providing loans and other support to businesses at rates and on terms that increase access to long-term, affordable capital.

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