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The federal government hopes $100 million can keep the food supply from breaking down

SwissMeat.jpeg
Jonathan Ahl
/
Harvest Public Media
A worker at Swiss Meat and Sausage in Hermann, Missouri, prepares bacon for sale in this 2019 file photo.

The U.S. Department of Agriculture will provide loan guarantees to make it easier for processors to build new facilities, add on to existing ones and improve supply chains.

The coronavirus pandemic triggered shutdowns of meat processing plants and delayed shipments to grocery stores. That, in turn, set off shortages and higher consumer prices.

So the U.S. Department of Agriculture plans to make the food supply chain more resilient by backing loans to build meat and poultry processors of various sizes to better absorb problems if a big company hits a crisis.

Agriculture Secretary Tom Vilsack said Monday that his agency will spend $100 million in loan guarantees to address a variety of vulnerabilities in the industries that produce, process and deliver meat to grocery stores. The loan money is intended to make it easier for processors to open new facilities, expand capacity at existing sites and improve other supply chain issues like adding more cold storage sites.

“It’s going to create a sense of confidence in the supply chain, which hopefully, over time, with the expanded processing capacity, will also result in fair returns for our producers, and fair prices at the checkout counter,” Vilsack said.

The money will cut the risk to bankers to provide loans to small and medium-sized companies looking to expand, specifically in areas of mobile processing, cold storage capacity and establishing producer co-ops for production, marketing and packaging efforts.

“Banks may not be familiar with the risk associated with these kinds of things,” Vilsack said. “These loan guarantees are important to bankers.”

This funding is the latest in a series of USDA programs to improve meat and poultry supply chains. Previously, the department committed $55 million to help the country’s smallest producers expand capacity and $100 million for overtime expenses for processors who stayed open during the pandemic and took on extra work.

The rules on eligibility and how to apply for the latest round of funding will be released by the end of October.

Follow Jonathan on Twitter: @JonathanAhl

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