USDA to invest US$4 billion to strengthen food systems and improve supply chains

The U.S. Department of Agriculture (USDA or the department) recently announced plans to invest more than US$4 billion to strengthen critical supply chains under President Biden’s “Build Back Better” initiative. In addition to the USDA Press Release, Secretary of Agriculture Tom Vilsack hosted a webinar on 9 June to discuss the initiative and department priorities, as well as answer questions from industry. He repeated the messages from the USDA announcement that the department believes the new effort will strengthen the food system, create new market opportunities, tackle the climate crisis, help communities that have been left behind, and support jobs throughout the supply chain. Funding is provided by the American Rescue Plan Act and earlier pandemic assistance such as the Consolidated Appropriations Act of 2021.

Background

As brief background, “Build Back Better”[1] is President Biden’s three-part agenda intended to rescue, recover, and rebuild the country. It includes three plans: the American Rescue Plan; the American Jobs Plan; and the American Families Plan. Each is designed to support the economy in the wake of the COVID-19 pandemic, including direct relief to Americans, providing resources for economic recovery, rebuilding the country’s infrastructure, and rebuilding the middle class.

The USDA’s announcement falls under the American Rescue Plan, envisioned as building a bridge to economic recovery after the COVID-19 pandemic. The USDA’s announcement and Secretary Vilsack’s webinar are consistent with some of the challenges identified in “Build Back Better,” and both reflect certain aspects of the challenges and issues raised throughout the supply chain over the past 18 months. The USDA’s announcement is responding to concerns that what was thought to be a robust and resilient supply chain showed breakdown and weaknesses at all parts along the chain.

The USDA’s US$4 billion funding priorities as outlined below are intended to support food production, improve processing, invest in distribution and aggregation, and increase and improve market opportunities. The USDA states that some of its goals are “to help ensure the food system is fair, competitive, distributed, and resilient; supports health with access to healthy, affordable food; ensures growers and workers receive a greater share of the food dollar; and advances equity, as well as climate resilience and mitigation.”

Funding and priorities

Although specific plans have not yet been released, according to the press release funding announcements under the Build Back Better initiative will include a mix of grants, loans, and other innovative financing mechanisms for the following priorities:

  • Food production: Food production relies on growers, including farmers and ranchers, workers, and critical inputs. According to the USDA, one weakness is that a diminishing share of the food dollar goes to these essential workers. Under the plan, the USDA states that one focus will be to “invest in the current and future generation of food producers and workers throughout the food system with direct assistance, grants, training and technical assistance.” Secretary Vilsack commented that the USDA “will look at ways to create resilience” at the source.
  • Food processing: According to the USDA, the pandemic highlighted challenges with consolidated processing capacity and highlighted a lack of competition. The USDA stated that the pandemic “created supply bottlenecks, which led to a drop in effective plant and slaughter capacity. Small and midsize farmers often struggled to compete for processing access.” Secretary Vilsack also commented that other challenges contribute to interruptions and market stalls, e.g., cybersecurity attacks. Under the plan, one of  the USDA’s goals is to make investments to support new and expanded regional processing capacity to broaden competition and expand markets.
  • Food distribution & aggregation: The USDA states that “food aggregation and distribution relies on people working together throughout the food system and having the right infrastructure to gather, move, and hold the food where and when it is needed.” The USDA believes this system was stressed during the pandemic due to long shipping distances and lack of investment in local and regional capacity. Under the plan, one of the USDA’s goals is to invest in food system infrastructure that it believes can remain resilient, flexible, and responsive.
  • Markets & consumers: In the USDA’s announcement, it explains that the “U.S. spends more on health care and less on food than any other high-income nation; yet the U.S. has higher rates of diet-related illness and a lower life expectancy than those nations.” At the same time, the USDA is concerned that “many socially disadvantaged and small and mid-sized producers do not have equitable access to markets.” Under the plan, one of the USDA’s goals is to try and support new and expanded access to markets for a diversity of growers while helping consumers access healthy food.

As part of the Questions & Answers portion of the webinar, Secretary Vilsack addressed one industry concern that grants and other funding sources may be too complicated for small producers or establishments to access and/or understand. He stated that the USDA appreciates these challenges and will try and focus on making it more simple to access and apply for funds and other resources.

Simultaneous activities supporting the same goals

Secretary Vilsack was named co-chair of the Biden Administration’s new Supply Chain Disruptions Task Force (along with the Secretaries of Commerce and Transportation)[2]. The Task Force is charged with convening stakeholders to try and diagnose problems and surface solutions that could help alleviate bottlenecks and supply constraints related to the economy’s reopening. Specifically, it will focus on areas where a mismatch between supply and demand has been evident, including agriculture and food.

Next steps

Secretary Vilsack confirmed the USDA will continue to make announcements through the Build Back Better initiative (including relevant rules and processes for obtaining funds) in the months to come. We will keep you apprised of these developments.

References

1    USDA Press Release, USDA to Invest More Than $4 Billion to Strengthen Food System (8 June 2021), https://www.usda.gov/media/press-releases/2021/06/08/usda-invest-more-4-billion-strengthen-food-system.

2    White House Fact Sheet: Biden-Harris Administration Announces Supply Chain Disruptions Task Force to Address Short-Term Supply Chain Discontinuities (8 June 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/.

 

Authored by Elizabeth Fawell and Chris Forgues.

 

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