Agriculture Secretary Tom Vilsack says a federal investment aimed at the middle of the food supply chain should improve economic conditions for producers and consumers alike.

The $100 million in funding, announced Monday, comes in the form of loan guarantees backed by USDA. They are intended to “increase the resiliency of the food supply chain” through improved processing, storage, and other aspects necessary to get food from farm to plate.

Speaking to reporters, Vilsack said the program would “reduce the risk to bankers and others who are providing the financing for such things as mobile processing facilities or cold storage capacity expansion, or producer groups establishing a co-op to brand or market their product.

“These loan guarantees are important to bankers and those who provide the financing because they may not be as familiar with the risk associated, and there’s a little reluctance on the part of commercial lenders to establish and provide the credit,” he said.

The funding comes as part of the $4 billion Congress allocated to USDA as part of the American Rescue Plan legislation passed in March. USDA has already announced a $500 million program to expand meat processing capacity from that fund, and Vilsack said more activity can be expected.

“We’re not finished yet with fully outlining how the $4 billion that Congress has provided to us in the American Rescue Plan … will be spent, but there’s still a significant amount of assistance and help that’s going to be provided to agriculture writ large.”

USDA plans to hold a lender outreach training program Oct. 14; in addition to the typical lending institutions, Vilsack says USDA plans to include Community Development Financing Institutions in the mix.

Matthew Ott, president and CEO of the Global Cold Chain Alliance, said the organization — which represents companies involved in providing temperature-controlled supply chain services for the food industry — appreciated "USDA's efforts to strengthen the food supply chain by establishing these new programs. 

"We are encouraged that aggregation and distribution were highlighted in the announcement and are hopeful that our members will be able to benefit from the program," he said. "Assistance like this will be helpful in ensuring the long-term sustainability of the food supply chain.”

Kelly Nuckolls, senior policy specialist with the National Sustainable Agriculture Coalition, called the announcement “exciting” and said NSAC is glad to see the guarantees extended to areas other than meat and poultry processing.

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That sector got the most attention during the height of the pandemic in 2020 but was not the only one to suffer from supply-chain issues, she noted.

She also said “it’s good that they’re doing outreach to lenders,” observing that private lenders are often reluctant to lend money to small meat and poultry processing operations because of their thin margins and the low value of their property as collateral.

Most small meat and poultry processors will probably wait for “either a direct loan option or a grant option” when USDA announces how it plans to spend the $500 million, which is more likely to bring about “transformative change,” she said. 

Improving the supply chain is especially important in the wake of the COVID-19 pandemic, Vilsack said.

“Everything we do is going to provide help and assistance, and I think it’s going to create a sense of confidence in the supply chain, which hopefully over time and with the expanded processing capacity, will result in fairer returns for our producers and fairer prices at the checkout counter for our consumers,” he said.

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