USDA Says Meat and Poultry Processing Expansion Plans Will Level Playing Field for Farmers, Strengthen Supply Chain

On the heels of President Joe Biden signing an Executive Order to increase competition in the U.S., USDA says the President’s actions will also level the playing field for family farmers and ranchers.

During a trip to Council Bluffs, Iowa, Friday, Agriculture Secretary Tom Vilsack announced USDA is making significant investment to expand processing capacity and increase competition within meat and poultry processing. USDA says the efforts, which come in the form of $500 million in new funding, will also make agricultural markets more accessible and fair.

“The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike,” Vilsack said during the announcement Friday. “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. 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.”

Vilsack says the investments will not only expand meat and poultry processing capacity, but it will also restore the “Packers and Stockyard Act,” which USDA says will 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,” added Vilsack. “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.”

As part of the announcement, USDA says its intent is to:

• Invest $500 million in American Rescue Plan funds to expand meat and poultry processing capacity so that farmers, ranchers, and consumers have more choices in the marketplace.
• More than $150 million for existing small and very small processing facilities to help them weather COVID, compete in the marketplace and get the support they need to reach more customers.
• USDA is also holding meatpackers accountable by revitalizing the Packers and Stockyards Act, issuing new rules on “Product of USA” labels, and developing plans to expand farmers’ access to new markets.

First reported by AgWeb Friday morning, the trip’s “major announcement” to create new funding for smaller processors will likely come in the form of grants.

Cattle groups responding to the news, with National Cattlemen's Beef Association (NCBA) thanking President Biden and Secretary Vilsack for taking what NCBA calls "vital steps" in strengthening the supply chain.

“NCBA’s top priority in Washington is pushing for policies that strengthen the business climate for our producers,” said Vice President of Government Affairs Ethan Lane. “We thank President Biden and Secretary Vilsack for the leadership and swift action they've shown on some of the top issues impacting our producers, including ‘Product of the USA’ labeling and grants to expand regional, independent processing capacity. Today’s executive order is a vital next step toward securing a steady beef supply chain, and increasing opportunities for profitability for our producers. We have actively engaged the administration on these issues thus far, and we will continue to advocate for the needs of American cattle producers as the rulemaking processes begin.”

USDA’s announcement is part of a larger effort by the Biden administration to “fight monopolization and promote competition across the economy.” That included an executive order that:

• Directs USDA to consider issuing new rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.
• Directs USDA to consider issuing new rules defining when meat can bear “Product of USA” labels, so that consumers have accurate, transparent labels that enable them to choose products made here.
• Directs USDA to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly.
• Encourages the FTC to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs—such as when tractor companies block farmers from repairing their own tractors.

USDA says dominant companies can use their power to engage in abusive practices and make it harder for farmers, ranchers, and consumers to get a fair price. Farmers’ share of every dollar spent on food has declined consistently from 35 cents in the 1970s to around just 14 cents in recent years.

However, not everyone agrees with the Biden administration's actions on Friday. The North American Meat Institute issued a statement, saying the actions called for by the President won't help consumers. 

"President Biden’s executive order calling for USDA to change the Packers and Stockyards rules will have unintended consequences for consumers and producers,” said Meat Institute President and CEO Julie Anna Potts. “Government intervention in the market will increase the cost of food for consumers at a time when many are still suffering from the economic consequences of the pandemic. These proposed changes will open the floodgates for litigation that will ultimately limit livestock producers’ ability to market their livestock as they choose. These proposals have been considered and rejected before and they are counter to the precedent set in eight federal appellate circuits."

The Meat Institute says meat and poultry markets are dynamic, which was highlighted during the COVID pandemic and labor shortages. 

“The members of the Meat Institute – and their livestock suppliers – benefit from, and depend on, a fair, transparent and competitive market. The North American Meat Institute is prepared to discuss these issues and work with the Administration and the Congress on the issues facing the industry.” 

Rebecca Boehm, with the Union of Concerned Scientists’ Food and Environment program economist, says competition is good for businesses, as well as consumers, and encouraged USDA to act swiftly to develop rules and policies called for in Biden's Executive Order. 

“We’ve lost 40 percent of U.S. broiler farms over the last few decades, while Tyson and other major processing companies have consolidated and grown ever larger. In 2021, just four companies – Tyson Foods, Pilgrim’s Pride, Perdue Foods and Sanderson Farms – account for 61% of all chicken processing revenues. These new rules will give livestock farmers and ranchers more bargaining power in markets with corporate giants and protect them from retaliation for speaking out against abuse and exploitation."