USDA Announces Framework for Shoring Up the Food Supply Chain and Transforming the Food System to Be Fairer, More Competitive, More Resilient

USDA Announces Framework for Shoring Up the Food Supply Chain and Transforming the Food System to Be Fairer, More Competitive, More Resilient

USDA efforts to create more and better markets will benefit both producers and American consumers through fairer prices, as well as address longstanding issues intensified by pandemic

WASHINGTON, June 1, 2022 - Today, the U.S. Department of Agriculture (USDA) is announcing details of a framework to transform the food system to benefit consumers, producers and rural communities by providing more options, increasing access, and creating new, more, and better markets for small and mid-size producers. Today’s announcement builds on lessons learned from the COVID-19 pandemic and supply chain disruptions caused by Russia’s war in Ukraine. This announcement also provides additional details on the June 2021 announcement to strengthen critical supply chains and address longstanding structural challenges that were revealed and intensified by the pandemic.

When the COVID-19 pandemic began, USDA made significant investments through its Pandemic Assistance Program, providing immediate relief to producers, businesses, food workers and others. As the pandemic has evolved and Russia’s war in Ukraine has caused supply chain disruptions, it has become clear we cannot go back to the food system we had before: the Biden-Harris Administration and USDA recognize we must build back better and strengthen the food system across the supply chain, from how our food is produced to how it is purchased, and all the steps in between.

The goals of USDA’s Food System Transformation framework include:

• Building a more resilient food supply chain that provides more and better market options for consumers and producers while reducing carbon pollution: The pandemic and recent supply chain disruptions have revealed the perils of a national food system that depends on capacity concentrated in a few geographic areas and requires many steps to get from farm to fork. In order to be more resilient, the food system of the future needs to be more distributed and local. Having more capacity to gather, process, move and store food in different geographic areas of the country will provide more options for producers to create value-added products and sell locally, which will support new economic opportunities and job creation in rural communities. Additional regional capacity will also give consumers more options to buy locally produced products—helping ensure food is available to consumers—and reduce the climate impact of our food supply chain.
• Creating a fairer food system that combats market dominance and helps producers and consumers gain more power in the marketplace by creating new, more and better local market options: Just 14 cents of the food dollar go to producers on average – in large part because producers’ power in the marketplace has declined over the past 50 years with increased consolidation in the food system. Today, just a handful of companies dominate meat and poultry processing and just a few multi-national companies produce most brands and products on supermarket shelves. Right now, input prices and food prices are up—but so are the profits of major food companies and national supermarket chains. Covid has revealed the perils of a food system dominated by a few corporate players. USDA’s investments will deliver a better deal for farmers, ranchers, growers and consumers.
• Making nutritious food more accessible and affordable for consumers: The pandemic exposed and exacerbated the challenges of food and nutrition insecurity in this country. A family in the United States not having access to affordable, nutritious foods is unacceptable. Hard-pressed families—including those who depend on school meals, SNAP, and seniors on fixed incomes—may have limited food options and some communities have been underserved by grocery stores and food retailers, making it difficult to access healthy food. USDA is committed to ensuring every American family has access to affordable, nutritious foods. That is why USDA’s Food System Transformation framework includes programs to ensure all consumers are able to access fresh, healthy, nutritious food.
• Emphasizing equity: For too long, rural communities, underserved communities, communities that experience persistent poverty, and the people who live there have been left behind. Where you live should not determine a fair shot to economic opportunity. It is in these communities where most of our food comes from; where most of the water that we drink comes from; and where most of the energy we consume comes from. USDA’s Food System Transformation investments will create more economic opportunities for these communities and allow them to retain more of the food system dollar. This will speed the transition to more equitable growth, with the wealth created from these communities remaining in small towns and underserved communities, helping to lift them out of poverty.

USDA investments through the programs included in this framework will help make this vision a reality.

Today’s announcement supports the Biden-Harris Administration’s broader work to strengthen critical supply chains as directed by Executive Order 14017 America's Supply Chains. Funding is provided by the American Rescue Plan Act and other relief legislation.

Food Production

Farmers and ranchers across this country work hard every day to produce the food that feeds their neighbors and communities. The pandemic spotlighted the many challenges they face in accessing markets and capturing a fair share of the food dollar. We know that small and mid-size operations struggle in particular and there are still too many barriers to entry for new farmers. USDA is focused on increasing options for American farmers to process locally, sell locally, and adopt practices that are both good for their businesses and the climate. Forthcoming USDA investments include:

• Up to $300 million in a new Organic Transition Initiative to provide comprehensive support for farmers to transition to organic production. Organic production provides producers with the ability to demand a premium in the marketplace and thus take home a greater share of the food dollar; there can also be climate and environmental benefits. This initiative will deliver wrap-around technical assistance, including farmer-to-farmer mentoring; provide direct support through conservation financial assistance and additional crop insurance assistance and support market development projects in targeted markets.
• Up to $75 million to support urban agriculture. From farms within city boundaries to community gardens, urban agriculture plays an important role in connecting producers and consumers to food, agriculture, and one another while contributing to the local economy. The Agriculture Improvement Act of 2018 authorized the Office of Urban Agriculture and Innovative Production to award competitive grants to support urban agriculture, yet in 2020 and 2021, only six percent of all applications received were funded. USDA will invest $20 million in funding a backlog of applications as well as an additional $10 million increase in money available for the 2022 funding year. Additionally, USDA will invest $40 million in cooperative agreements with organizations to support outreach and training activities for urban farmers. These funds will expand access to nutritious foods, foster community engagement, increase awareness of climate change and mitigate the effects within urban areas, provide jobs, educate communities about farming, and expand green spaces. USDA also is supporting local production by investing $5 million through the People’s Garden initiative.

These actions build on the Organic Certification and Transition Cost Share program that was previously announced that provides pandemic assistance to producers and handlers of agricultural products who are obtaining or renewing their certification under the National Organic Program (NOP); this process can be costly and can be a barrier to market access for limited resource producers. USDA also announced earlier this year the Farm and Food Worker Relief Grant Program, which will provide support to workers in food production and processing who faced challenges during the pandemic.

Food Processing

The pandemic highlighted challenges within the middle of the food supply chain. Consolidated processing capacity 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 and were left without an avenue for getting their animals to market. Addressing these challenges is key to transforming food systems. Building more distributed, local capacity will help build resiliency in the face of market disruptions, provide more choices for producers to create value-added products and sell locally, and support new economic opportunities and job creation in rural communities. USDA has already made investments to support new and expanded regional processing capacity and address challenges in the middle of the supply chain, including underinvestment in workforce development and barriers to new entry into the sector. Previous announcements include:

• The Food Supply Chain Loan Guarantee Program, which will back private lenders that invest in independently owned food processing, distribution and aggregation infrastructure, and other projects along the middle of the supply chain. Independently owned and available infrastructure such as cold-storage, refrigerated trucks, and processing facilities are in short supply but essential to creating a more resilient food system. USDA has deployed $100 million to make more than $1 billion in guaranteed loans available immediately. The program is accepting applications.
• Deployment of up to $375 million in support for independent meat and poultry processing plant projects that fill a demonstrated need for more diversified processing capacity. These investments will be made in two phases. The first phase of the Meat and Poultry Processing Expansion Program will deploy $150 million in grants up to $25 million each to expand processing capacity through a variety of activities, including but not limited to construction, expansion of existing facilities, and acquisition of equipment. The first phase recently closed, accepting more than 200 applications, representing more than $800 million in funding requests.
• Creation of a robust technical assistance network to ensure that participants in USDA’s meat and poultry supply chain initiatives have access to a full range of technical assistance to support their project development and success. Meat and poultry processing facilities are complex, with many technical standards and requirements; the odds of successfully starting or expanding a facility are higher with access to expertise and experience. USDA is deploying $25 million through the Meat and Poultry Processing Capacity Technical Assistance Program.
• Investment of up to $275 million in partnership with lenders to address the credit access gap for meat and poultry processing projects because lenders have been reticent to invest in the meat and poultry sector without incentives to do so given the risk profile and lack of experience in the sector. USDA will work with lenders to make more capital available to independent processors that need credit, providing loans and other support to businesses at rates and on terms that increase access to long-term, affordable capital.

Additional planned investments include:

• Investment of up to $100 million to support development of a pipeline of well-trained workers and safe workplaces in the processing sector. A reliable, well-trained workforce will be essential to the success of independent meat and poultry processing facilities, but there are currently very few training programs that prepare workers for these jobs. Initially, USDA will invest $40 million into existing National Institute of Food and Agriculture (NIFA) programs, including the Extension Risk Management Education Program, Sustainable Agriculture Research Education Program, Agricultural Workforce Training Program, and Centers of Excellence specifically focused on supporting workforce development for meat and poultry processing. USDA will also make investments to promote innovation and research and development to support independent business owners, entrepreneurs, producers, and other groups, such as cooperatives and worker associations, creating new capacity or expanding existing capacity.
• $200 million for Food Safety Certification for Specialty Crops Program for specialty crop operations that incur eligible on-farm food safety program expenses. These operations incur significant costs to comply with regulatory requirements and market-driven food safety certification requirements each year and getting these certifications opens new market opportunities for the farmers. The ongoing economic challenges due to the COVID-19 pandemic have made meeting those requirements even more financially challenging and more important to have access to additional markets.
• Up to $600 million in financial assistance to support food supply chain infrastructure that is not covered by the meat and poultry processing program. Independently owned and available infrastructure such as cold-storage, refrigerated trucks, and processing facilities are in short supply but essential to creating a more resilient food system. USDA will make investments to address the limited processing, distribution, storage, and aggregation capacity for a variety of food sectors, including high equipment costs, lack of competition, and limited supply chain and value chain coordination.

Food Distribution & Aggregation

Having the right infrastructure in the right places to gather, move and hold food where and when it is needed is key to the resiliency of our food system. Efforts to shorten the supply chain provides more income opportunities for producers and more options for consumers to buy locally produced products. At the same time, shortening the supply chain has important climate benefits. USDA will make a series of investments to strengthen local and regional food systems, including:

• Investment of $400 million to create regional food business centers that will provide coordination, technical assistance, and capacity building support to small and mid-size food and farm businesses, particularly focused on processing, distribution and aggregation, and market access challenges. The business development needs of food businesses are distinct from other small businesses and existing business support networks such as those the Small Business Administration provides are insufficient to developing robust local and regional markets where food businesses flourish. The Centers will be designed to target support to underserved communities in a particular region as identified by the applicant.
• Investing $60 million to leverage increased commodity purchases through Farm-to-School. Farm-to-school programs are a proven model of increasing markets for farmers via child nutrition programs while also providing children healthy, fresh food. These grants to states and territories administering farm to school programs will support increased procurement and use of local foods in child nutrition program meals.
• Investing up to $90 million to prevent and reduce food loss and waste. The United States wasted $408 billion worth of food in 2019 – more than a third of the total U.S. food supply. Wasted food results in unnecessary uses of energy as well as methane and CO2 emissions; reducing food waste can help the United States meet its climate commitments. USDA will invest an additional $30 million in the Community Compost and Food Waste Reduction Program and will fund a feasibility study and corresponding actions that will support a National Food Loss and Waste Strategy.

These investments build on previous announcements including $130 million increase to the Local Agriculture Marketing Program, which will fund activities that expand and strengthen opportunities for local and regional food producers to sell to institutions, such as universities, hospitals, and settings operated by local, tribal, and state governments.

Markets & Consumers

The pandemic exposed and exacerbated the challenges of food and nutrition insecurity in this country. A family in the United States not having access to affordable, nutritious foods is unacceptable. USDA will support new and expanded access to markets for a diversity of growers while helping consumers access healthy foods through the following investments:

• Increase funding to the Healthy Food Financing Initiative by $155 million. Many communities lack adequate, affordable access to healthy food and are ‘food deserts’. This program provides grants and loans to entities that offer healthy food in communities that are underserved by grocery stores and other food retailers. The program increases access to healthy foods, provides new market opportunities for farmers and ranchers, stabilizes small and independent retailers, and creates quality jobs and economic opportunity in low-income communities.
• An additional $50 million in the Senior Farmers Market Nutrition Program. This program supports nutrition security for seniors by increasing access to locally grown fruit and vegetables. Current levels of funding for this program are insufficient for all States to provide the maximum benefit of $50 per participant per season.
• An additional $40 million in the GusNIP Produce Prescriptions Program. Many prevalent health conditions stem from nutrient-deficient diets. This program funds projects that demonstrate and evaluate the impacts of fresh produce prescriptions to increase fresh fruit and vegetable consumption, improve health, and reduce food insecurity. Since launching this program following the passage of the Agriculture Improvement Act of 2018, demand has increased by 30 percent each year.
• $25 million to support SNAP technology improvements to modernize the delivery of incentive programs through SNAP’s electronic benefit transfer (EBT) technology. Reliable, affordable, user-friendly technology is important to enabling producers and food businesses to accept SNAP benefits from customers. This will support more project funds going to incentives rather than the administrative costs of delivering the incentive.
• $100 million to create a new Healthy Food Incentive Fund, which will support school food authorities to innovate and accelerate their efforts to improve the nutritional quality of school meals to children. With these funds USDA will support peer to peer learning and recognize local programs for their leadership, excellence and efforts to deliver health nutritious food.

The investments outlined above across all elements of the supply chain – from producers to consumers – deliver on the Biden-Harris Administration’s commitment to strengthen and transform critical parts of the food system in the United States, spurring economic opportunity while increasing resilience and certainty for producers and consumers alike. USDA touches the lives of all Americans each day in so many positive ways. In the Biden-Harris Administration, USDA is transforming America’s food system with a greater focus on creating new, more, and better markets to support farmers, ranchers, and consumers. USDA will do this by building more resilient local and regional food production, fairer markets for all producers, ensuring access to safe, healthy and nutritious food in all communities, building new markets and streams of income for farmers and producers using climate smart food and forestry practices, making historic investments in infrastructure and clean energy capabilities in rural America, and committing to equity across the Department by removing systemic barriers and building a workforce more representative of America. To learn more, visit www.usda.gov.