USDA Loan Program Can Help Finance New Meat Plants
July 29th, 2011
by Kate Fitzgerald
NSAC welcomes back Kate Fitzgerald, a farm and food policy consultant, to our pages as a guest blogger. Thanks Kate!
USDA’s Know Your Farmer, Know Your Food blog published the first of two articles on Rural Development’s grant and loan programs that can be used to develop or improve small meat and poultry processing plants. The blog focuses on the Business and Industry Guaranteed Loan Program (B&I).
One of NSAC’s 2008 Farm Bill priorities was successfully winning a five percent (5%) set-side in the B&I program for local and regional food enterprises. Expanding or updating a meat processing facility to increase its capacity to sell competitively into the regional retail or institutional market is exactly the kind of loan that NSAC members hope the B&I guarantee will make happen.
Matthew Michael, Director of Program Evaluation and Improvement Staff at the USDA’s Food Safety Inspection Service (FSIS) and FSIS representative to the Know Your Farmer, Know Your Food work group said that he hopes small meat and poultry processors, in particular, take advantage of the B&I loan guarantees. Small meat and poultry processors have significant initial capital expenses, as well as one-time operating costs that could be mitigated with B&I loan guarantees.
It is heartening to see this new outreach about the program. With program tweaks that will make the guarantee easier for small-scale businesses to use and continued aggressive outreach on USDA’s part, the B&I loan guarantee can help increase the flow of credit to rural food businesses that will stimulate local economies and meet growing demand for local food.
“The Farm Credit Council promotes the idea of financing local food system aggregation, processing and distribution infrastructure such as producer-owned small meat plants, according to Gary Matteson of the Farm Credit Council. “Small meat processors can add tremendous value to local producers, particularly since direct to retail is the predominant marketing channel for livestock producers.”
Redeveloping small scale meat processing is a crucial component of vibrant regional food economies. Another successful NSAC 2008 Farm Bill priority permitted the interstate shipment of state inspected meat which removed a significant barrier to the industry’s growth. USDA finalized rules for the program in April.
Two recently released guides should make business planning and accessing credit easier for entrepreneurs. As we previously reported, the Niche Meat Processors Assistance Network (NMPAN) recently released a small business planning guide for small scale meat processors. In addition, a new Field Guide to the New American Foodshed is available to help food system entrepreneurs find and use relevant business development information about local and regional food markets.
Gradually the necessary pieces are falling into place to create the business environment that will support local, small and mid-sized farm and food entrepreneurs!