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USDA to infuse billions into transforming food supply chain

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Pandemic spotlighted many challenges farmers face in accessing markets and capturing a fair share of the food dollar.

Go to FarmProgress365.com or Feedstuffs 365 to view our exclusive interview with Ag Secretary Tom Vilsack

Every component of the food supply chain has been tested in recent years ranging from the impacts of the pandemic to climate and weather-related challenges and most recently the Russian invasion of Ukraine. USDA unveiled a framework June 1 showing how to target billions of dollars to help improve the food supply chain and create a more resilient food system.

The framework includes $300 million for transitioning to organic, $375 million for expanding independent meat and processing, $400 million to create regional food business centers and up to $600 million in financial assistance to support the food supply chain infrastructure.

“What we’ve learned is the need for a food system in the United States, not only to be incredibly productive as it is, but to continue to be resilient, to continue to find ways in which we can improve producer income, ways in which we can create greater resiliency in our system, a  commitment to sustainability and making sure that access to what is being produced is available to folks, especially underserved communities,” Secretary of Agriculture Tom Vilsack shared in an exclusive interview with Farm Progress.

When the COVID-19 pandemic began, USDA made significant investments through its Pandemic Assistance Program, providing immediate relief to producers, businesses, food workers and others. As the pandemic has evolved and Russia’s war in Ukraine has caused supply chain disruptions, USDA says the food system must be strengthened across the supply chain from how food is produced to how it is purchased and all the steps in between.

Utilizing funds through the pandemic assistance championed by Sen. Debbie Stabenow, D-Mich., and through the Commodity Credit Corporation, Vilsack outlined many of the key initiatives within the framework to address challenges throughout the supply chain.

As it relates to meat processing capacity, USDA recently closed the first window on $150 million of grant resources for expanding processing capacity. More than 200 applications came in, asking for $800 million in funding requests. USDA is increasing the $150 million level to $375 million by year’s end to support independent meat and poultry processing plant projects that fill a demonstrated need for more diversified processing capacities. This includes new construction, expansion of existing facilities and acquisition of equipment.

Another significant investment in the framework is up to $600 million in financial assistance to support food supply chain infrastructure not covered by the meat and poultry processing program. 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.

Increasing food dollar to farmers

Just 14 cents of the food dollar goes to producers on average. Vilsack says that many of the initiatives look to provide a higher value proposition to farmers so they can in fact get more than the 14 cents of every food dollar sold.

The framework calls for up to $300 million in a new Organic Transition Initiative to provide support to farmers transitioning to organic production. “Because organic obviously is a higher value production, there’s an opportunity to increase farm income in that way,” Vilsack says. The $300 million will also help fund mentorships with experienced organic producers and help beginning organic producers simplify the transition process. An additional $200 million will be made available for food safety certification for the specialty-crops program that incur significant costs to comply with regulatory requirements and market-driven food safety certification requirements.

Vilsack adds it's important to recognize the need for a stronger local and regional food system, giving market opportunities for local and regional production and the opportunity for small and mid-sized operators to be able to negotiate their own their own price. “But it's tough to set up our local regional food system that works. And that's why we're going to establish a set of regional food business centers with roughly $400 million over the next several years.”

Vilsack explains these centers will provide guidance, technical assistance and financial assistance to be able to strengthen that local and regional food system that will create a greater and more resilient food system.

As the pandemic revealed, the push to be efficient left some shortfalls in terms of lack of resiliency. But Vilsack believes as USDA looks to focus attention on resiliency, there are opportunities to learn how to do it more efficiently as well.

“I think the goal here though is to make sure that at the end of the day we don’t have the level of disruption that ultimately costs large price increases as we’ve seen when the supply chain gets disrupted, costs go up rather dramatically and rather quickly. The goal here is to make sure that over time we stabilize these food prices so that consumers aren’t shocked when they go to the grocery store every week as they have been recently,” Vilsack says.

Although there’s a lot going on in terms of energy costs and challenges in the supply chain, Vilsack says as we’re trying to deal and address many of these challenges, this new system attempts to create greater predictability and certainty that will create less of a disruption in the future whether the food supply chain is hit by a climate-related issue, an unprovoked war as what is going on in Ukraine, or another pandemic.

TAGS: Policy
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