The U.S. Department of Agriculture (USDA) is investing $500 million in American Rescue Plan funds to expand meat and poultry processing capacity, the agency announced.

At the same time, the agency announced it was allocating more than $155 million for existing small and very small processing facilities, and making adjustments to the Packers and Stockyards Act.

““The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike. It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else,” U.S. Agriculture Secretary Tom Vilsack said in a press release. 

“To shift the balance of power back to the people, USDA will invest in building more, better, and fairer markets for producers and consumers alike. The investments USDA will make in expanding meat and poultry capacity, along with restoration of the Packers and Stockyards Act, will begin to level the playing field for farmers and ranchers. This is a once in a generation opportunity to transform the food system so it is more resilient to shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds. I am confident USDA’s investments in expanded capacity will spur millions more in leveraged funding from the private sector and state and local partners as our efforts gain traction across the country.”

Funding for new processors

USDA is committing $500 million of its Build Back Better Initiative funds through the American Rescue Plan to support “new competitive entrants in meat and poultry processing,” the agency stated in its release.

USDA will provide grants, loans and technical assistance to address concentration within the meat and poultry sectors. In doing so, the agency hopes to bring relief to bottlenecks in the supply chain, such as those that occurred in 2020 amid the COVID-19 pandemic. Funding for such facilities is also hoped to create competitive opportunities for producers in local and regional food systems so farmers and ranchers have access to more choices an fairer prices.

A Request for Information (RFI) has been issued by the USDA to solicit public input into this strategy to improve the meat and poultry processing infrastructure. Targeted stakeholder meetings and other means to engage the public will also be held to better understand the needs.

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Funding for existing small plants

The USDA is making $55.2 million available for meat and poultry inspection readiness grants to support expanded meat and poultry slaughter and processing capacity and efficiency, while maintaining strong inspection and food safety standards.

The agency is also dedicating $100 million to help these small and very small processing plants to weather the volatility and unexpected costs that the COVID-19 pandemic imposed. These funds are aimed to reduce the financial burden of overtime inspection feeds for small plants, providing farmers with local alternatives and greater processing capacity.

Revisions to Packers and Stockyards Act

The USDA will also make changes to the Packers and Stockyards Act, with the intent of fighting unfair practices and rebuilding a competitive marketplace.

According to agency officials, the act was designed to ensure a fair and competitive marketplace and protect farmers from potential abuse from larger companies in the livestock and poultry industry, but the act was weakened by a previous administration.

Three rulemakings will be conducted by the agency to facilitate effective enforcement of the act. According to the USDA, those rulemakings will:

  • Clarify the conduct that USDA considers a violation of the act
  • Address oppressive practices in chicken processing
  • Reinforce the longstanding USDA position that is not necessary to demonstrate harm or likely harm to competition in order to establish a violation of the act