The United States announces new measures to strengthen food supply chains

The investment amount is 225 million dollars


calendar icon May 31, 2022

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The US Department of Agriculture announced a set of new measures that fulfill key commitments to boost competition in the US economy, including passing new rules for packaging law, making $200 million available to expand competition in meat processing, and investing $25 million in workforce training.

US Department of Agriculture (USDA) Secretary Tom Vilsack Announce more supportNew resources and rules that will strengthen the US food supply chain, promote fair and competitive agricultural markets, prevent farmers from being mistreated by poultry processors, and make prices fairer for American farmers and consumers. These measures combat the market dominance of a small number of major meat and poultry manufacturers in key markets, where excessive concentration and surveillance have led to lower prices paid to producers and higher prices paid by consumers.

“For too long, farmers and ranchers have recognized the value and opportunities they are working so hard to create far from the rural communities in which they live and work,” Vilsack said. “Under the leadership of President Biden and Vice President Harris, the USDA is committed to making investments that enhance competition — helping to support economic systems where wealth created in rural areas remains in rural areas — and strengthening rules and enforcement against anti-competitive practices. Funding and the new rule we announce will help us Today’s ultimate goal in giving farmers and ranchers a fair shake, strengthening supply chains, and making food prices fairer.”

The struggle for justice for poultry farmers

The US Department of Agriculture has announced a proposed rule under the Poultry Packing and Poultry Farming Act to protect poultry farmers from abuse. This action is the first of three legal rules the USDA will issue under the Packing and Stock Act pursuant to the President’s Executive Order Enhancing Competition in the U.S. Economy in order to stop unfair, deceptive, discriminatory, and anticompetitive practices in the meat and poultry industry.

Currently, poultry manufacturers control much of the chicken raising process through takeover or leave contracts with farmers. Under these contracts, the processors provide inputs such as chicken and feed to the poultry farmers. Poultry farmers, who often take out debt to build poultry farms, have limited vision of the true scope of the consequences and risks they face under these contracts. Furthermore, once the contracts are entered into, processors determine the payments the poultry farmers receive for their services by weighing the chickens and ranking the farmers based on how much the chickens grow. Wages are generally set based on how a farmer compares to other farmers, but farmers currently have little information on this comparison. For too long, farmers complained that the “tournament” system was ready to be abused.

Setting the new rules will require poultry handlers to provide basic information to poultry farmers in several critical steps – increasing transparency and accountability in the poultry farming system. For example, processors will be asked to disclose details of the inputs they gave to each farmer and information about input differences between the farmers they are ranked. Furthermore, the disclosures would cover the level of control and discretion exercised by the poultry handler and the financial returns that a farmer can expect from a relationship based on other farmers’ real set of experiences. Contracts will also be required to contain guaranteed annual herd placements and densities. CEOs of poultry handlers will be required to sign the compliance process to ensure that the disclosure is accurate.

In conjunction with the release of the proposed transparency rule, the USDA is opening an investigation into whether certain processor practices in the tournament system are so unfair that they should be banned or otherwise regulated. The USDA is seeking input from stakeholders to determine whether the current championship-style system of poultry farming can be restricted or modernized to create a fairer and more inclusive market.

Investing in expanded capabilities

Vilsack also announced that the USDA is providing $200 million under the new Meat and Poultry Intermediate Lending Program (MPILP) to strengthen the food supply chain and create opportunities for small businesses and entrepreneurs in rural communities. These funds will provide much-needed funding for independent meat and poultry manufacturers to start and expand their operations. By introducing competition at this major choke point in the supply chain, these investments will help increase farmers’ profits and lower prices for consumers.

MPILP will provide grants of up to $15 million to nonprofit lenders, including private nonprofit organizations, cooperatives, public agencies, and tribal entities. These brokers will use this funding to set up a revolving loan fund to finance a variety of meat and poultry processing related activities. For example, companies may use loans to acquire land and build or expand facilities and upgrade equipment.

Build a well-trained and well-paid workforce for meat and poultry processing

Vilsack also announced $25 million investment in workforce training programs for meat and poultry processing workers funded by U.S. Bailout Act Section 1001. Targeted funding is designed through new and existing NIFA programs to create and expand well-paying jobs that can To strengthen the meatpacking industry by attracting and retaining employees.

The USDA also released a new report on enhancing competition in agricultural markets, as required by President Biden’s executive order on enhancing competition in the US economy. The report details the USDA’s strategy to enhance competition in agricultural markets – including not only actions and initiatives to enhance competition in the meat and poultry markets, but also other key agricultural sectors such as fertilizers and seeds. The report also discusses the negative effects of a focus on shipping on our food supply chain and describes the efforts of the USDA to work across management to use all available tools to enhance competition.

The report includes the announcement of two new pro-competitive initiatives — initiatives that go beyond those required by the executive order. First, the USDA announces plans to complete a comprehensive review of its programs to ensure that they enhance competition. Second, the USDA announced that it will update the guidelines to strengthen verification requirements for the most frequently used “animal husbandry claims” to ensure consumers get what they pay for.