August 24, 2021
Editor’s Note: This blog post was co-authored by Matt Kneece, S.C. Policy Coordinator for Carolina Farm Stewardship Association, the lead drafter of NSAC’s Issue Brief on Financing Options for Local/Regional Meat Processing Infrastructure and Kelly Nuckolls, Senior Policy Specialist at NSAC.
As the food system begins to recover from the impacts of the COVID-19 pandemic, there is a significant need for financial investments to address the backlog at small-scale slaughter and processing facilities utilized by thousands of farmers and ranchers across the country. The backlog in slaughter and processing access is not a new concern, and has been exacerbated by the pandemic. The lack of scale appropriate processing infrastructure in some areas of the country has been a significant issue for small livestock and poultry producers for the last several decades.
Congress and the U.S. Department of Agriculture (USDA) must continue to take steps towards building more resilient meat and poultry infrastructure. The COVID-19 pandemic has displayed this sector’s infrastructure weaknesses. Recent shutdowns, which have also highlighted the impact of consolidation, caused livestock destined for slaughter at large plants to be diverted to smaller facilities that serve local and regional markets. This strained the ability of small plants to continue to process small, pasture raised, and grassfed livestock and poultry.
Small plants are critical infrastructure for food system resilience. Now is an opportune time for policymakers to help address a long-standing issue for thousands of small livestock and poultry producers because the pandemic has intensified the need for a more resilient supply chain, and Congress and USDA have committed funds to support this effort. This week, the National Sustainable Agriculture Coalition (NSAC) released an Issue Brief on Financing Options for Local and Regional Meat Processing Infrastructure to encourage further investment in the small meat processing sector to ensure that small and mid-sized farms and ranches have access to a resilient, dependable supply chain.
Issue Brief Summary
To better illustrate the scope of the problem and identify potential avenues for policy change, NSAC has now released a specific issue brief on financing options for local and regional meat processing infrastructure. This brief outlines the challenges posed by independent farmers and ranchers, already burdened by COVID-19-related impacts, who often must travel incredible distances and wait months for appointments at the overstretched, small federally-inspected processing facilities. The extra economic and physical costs are creating an increasingly untenable situation for small processors and local producers.
This brief is designed to provide legislators, policymakers and advocates with actionable policies and economic development tools to improve the processing landscape. Existing small federally inspected processors need more capital to increase their capacity to break up the bottlenecks and shorten wait times. Infrastructure cost assistance for custom-exempt and state-inspected plants would change the game entirely, allowing for a diversity of processing options at a local scale.
The brief’s section on possible financing progressions also highlights how grants alone are not sufficient in addressing the complex nature of this problem. Small plants often cannot access credit due to the lack of collateral and thin operating margins typical of small processors. A direct USDA loan with a reasonable interest rate may provide this much needed financial support. From funded feasibility studies to capital implementation programs and more, creative solutions are outlined to give processors the assistance they need.
There is a strong need to create shorter, more local supply chains that bolster small-scale meat processors and provide a resilient alternative to the fragile, complex systems of today. This brief is an important step in showing policymakers that a different approach is available and necessary.
Congressional and USDA Action to Support Processing Needs
At the federal level, the Strengthening Local Processors Act (SLPA) is a comprehensive bill that addresses these very supply chain issues. The bill includes support for small plants’ compliance with food safety monitoring plans, increased cost share for state meat and poultry inspection programs, an infrastructure grant plan program to expand small plants, and more. SLPA is one of the strongest avenues for sweeping change currently on the table.
Section 5 of the SLPA supports NSAC’s infrastructure recommendations that are mentioned in the issue brief. This section of the SLPA would create a new grant program for federally inspected, state inspected, exempt, and new small and very small plants to expand infrastructure to increase harvest and processing capacity. This grant program, if passed by Congress, would support existing plants and new, small-scale meat slaughter and processing plants, with infrastructure, equipment, as well as training needs through several funding options, including grants up to $100,000 for 90 percent of eligible costs and up to $500,000 for 75 percent eligible costs.
Congress did pass over $15 billion in funding for multiple food and farm sector COVID-19 needs, including small and mid-sized processors, in the Consolidated Appropriations Act of 2021, and the American Rescue Plan, 2021. The USDA recently announced they will utilize $500 million of this funding to expand small and mid-sized processing capacity. NSAC agrees with USDA that this $500 million can support an increase in competition in the industry, and will be essential for the success and continuation of the country’s small- and medium-sized meat processing capacity and supply chains.
USDA is seeking public comments and establishing next steps for how they will spend the $500 million to strengthen resilience in the small meat and poultry processing industry. The deadline to submit a comment is August 30, 2021.
We need your help to ensure the grassfed, pasture-raised, sustainable, and niche meat sectors remain resilient. You can advocate for Local and Regional Meat Processing Infrastructure Funding by: