The Biden administration’s plans to invest more than $1 billion in the meat sector rolled out on Monday can be expected to invest in several different types of facilities and include provisions to keep subsidized facilities from falling into the hands of major meatpackers, Ag Secretary Tom Vilsack tells Agri-Pulse.
Speaking in an exclusive interview Monday, the nation’s top ag official said the Monday announcement from the Biden administration was necessary after the COVID-19 pandemic exposed the meat processing sector to be “highly efficient, but not particularly resilient to disruptions.”
The administration plans to invest $1 billion in the industry split between facility financing and workforce resiliency. The capacity expansion will be funded in a few different ways: some $375 million will go toward grants, another $275 million will be available in loans, and a previously-announced $100 million loan guarantee program for facility improvements. Vilsack said the structure of the funding announcement should allow for Department of Agriculture funds to go to everything from small butcher shops to mid-sized packing plants without having to carry a preference for any one style of facility.
“Because of the fact that we’ve three different pots of money — we have grants, we have loans, and we have loan guarantees — it gives us the ability to address a variety of sized operations,” he said. “I don’t think you’re necessarily going to see that all of this money is going to go into small facilities; I think you’re going to see a wide range of facilities based on need, based on the market, and based on capacity.”
The funding should be expected to include some contingencies, however, particularly to keep the new investments from being sold into the same consolidated structure the administration is seeking to address through the announcement. Vilsack said he’s asked USDA officials to make sure there are “clawback provisions” in the funding, something he said is necessary to accomplish the goals of the program.
“I think you will see some significant conditions imposed on these grants that would prevent it from being a process where you build a facility, you operate it for a couple of years, and you turn a profit by selling it to a ‘big four;’ that’s not the purpose here,” Vilsack said. “We’re obviously not going to create a system that allows the ‘big four’ to get bigger over time.”
According to a White House release, USDA plans to roll out $150 million in grant funding for an estimated 15 projects this spring; another $225 million will be rolled out in the summer. USDA plans to “ensure these funds truly expand processing capacity,” the White House noted, and said recipients would be “only independent operations.”
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Separately, USDA and the Department of Justice also announced plans to redouble their efforts on enforcing competitive concerns in the sector, including through a new portal to report Packers and Stockyards Act violations. That portal, which is expected to be online within 30 days, would serve as a centralized complaint receptacle for antitrust concerns in the meat and poultry industries.
The two departments also announced a pledge to improve information sharing between the two entities and prioritization of “matters impacting competition in agriculture” as well as a commitment to look into “areas where Congress can modernize” the federal government’s enforcement capabilities.
In a statement, American Farm Bureau Federation President Zippy Duvall said the group appreciated the portal, as well as Monday’s announced efforts to more accurately define a “Product of the USA” in grocery stores. He said more clarity there would “allow families to make more well-informed decisions at the grocery store.”
Meatpacking and poultry processing interests flagged some concerns about Monday’s announcements, with National Chicken Council President Mike Brown saying the provisions could be a “solution in search of a problem.”
Julie Anna Potts, President and CEO of the North American Meat Institute, said in a statement that the Biden Administration "continues to ignore the number one challenge to meat and poultry production: labor shortages.
“Press conferences and using taxpayer dollars to establish government-sponsored packing and processing plants will not do anything to address the lack of labor at meat and poultry plants and spiking inflation across the economy,” said Potts. “The Administration wants the American people to believe that the meat and poultry industry is unique and not experiencing the same problems causing inflation across the economy, like increased input costs, increased energy costs, labor shortages and transportation challenges. Consumers know better.”
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