Investments and Opportunities for Meat and Poultry Processing Infrastructure, 37728-37731 [2021-15145]

Agencies

• DEPARTMENT OF AGRICULTURE
• Office of the Secretary

[Federal Register Volume 86, Number 134 (Friday, July 16, 2021)]
[Notices]
[Pages 37728-37731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15145]


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DEPARTMENT OF AGRICULTURE

Office of the Secretary

[Docket No. AMS-TM-21-0058]


Investments and Opportunities for Meat and Poultry Processing 
Infrastructure

AGENCY: Office of the Secretary, USDA.

ACTION: Request for public comment.

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SUMMARY: On July 9, 2021, President Biden issued an Executive Order on

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Promoting Competition in the American Economy, laying out a whole-of-
government approach to promoting competition, which directs the U.S. 
Department of Agriculture (USDA) to develop strategies to improve 
competition in agricultural markets. This complements USDA's efforts to 
address meat and poultry processing bottlenecks as part of the 
Administration's Supply Chain Disruptions Task Force (Task Force) and 
to Build Back Better following the COVID-19 pandemic. To develop 
strategies that support the Executive Order and enhance competitiveness 
in the meat and poultry processing sector, USDA is seeking input from 
the public on how to invest an estimated $500 million of American 
Rescue Plan funds to improve infrastructure, increase capacity, and 
hasten diversification across the processing industry. USDA is 
interested in your comments in response to the topics, categories, and 
questions shown in the SUPPLEMENTARY INFORMATION section of this 
notice.

DATES: We will consider comments that we receive by August 30, 2021. 
Comments received after that date will be considered to the extent 
practicable.

ADDRESSES: We invite you to submit comments on this notice. You may 
submit comments by either of the following methods:
     Federal Rulemaking Portal: Go to https://www.regulations.gov and search for Docket ID AMS-TM-21-0058. Follow the 
instructions for submitting comments.
     Mail: Sarah J. Helming, Whitten Building--Suite 312-E, 
1400 Independence Avenue SW, Washington, DC 20250. In your comment, 
specify Docket ID AMS-TM-21-0058.
    Comments will be available for viewing online at 
www.regulations.gov. Comments received will be posted without change, 
including any personal information provided. In addition, comments will 
be available for public inspection at the above address during business 
hours from 8 a.m. to 5 p.m., Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Sarah J. Helming, Supply Chain 
Resiliency Coordinator (detailed), Marketing and Regulatory Programs; 
(202) 799-7014; or email: [email protected].

SUPPLEMENTARY INFORMATION: Decades of increasing concentration in the 
meat and poultry processing sector have harmed farmers and ranchers and 
created a bottleneck and vulnerability in America's food supply chain. 
During the COVID-19 pandemic, this bottleneck grew tighter when massive 
disruptions occurred across livestock operations, processing 
facilities, and retail, with some consumers experiencing constrained 
supplies of meat and poultry products due to processing shortages and 
panic buying. In parallel, those raising, processing, and preparing our 
food earn less each year in a system that continues to reward size 
without regard to resiliency or vulnerability of the system to shocks. 
The Biden-Harris Administration aims to Build Back Better and 
strengthen the food system by addressing the growing concentration and 
lack of competition that have plagued the meat and poultry processing 
sector for decades. By making strategic investments in the addition and 
expansion of small- and medium-sized processing facilities, the 
technical assistance necessary to bolster local and regional capacity 
and markets, and high-quality workforce development and creative 
partnerships that build local support for the sector, the 
Administration will support the market's transition towards a more 
diversified, transparent, and robust meat and poultry processing 
system.
    This is consistent with the Executive Order on Promoting 
Competition in the American Economy that President Biden signed on July 
9, 2021, laying out a whole-of-government competition policy. Designed 
to address the growing concentration that has a direct financial impact 
on American families, farmers and ranchers, and small businesses, the 
Executive Order directs USDA, among other agencies, to develop a range 
of strategies to enhance the competitive landscape in American 
agriculture. Identifying opportunities to invest directly in 
competition is one such strategy which may be particularly beneficial 
in addressing the challenges that farmers and ranchers in livestock and 
poultry face from high levels of market concentration in meat and 
poultry processing. Furthermore, increasing capacity will help relieve 
bottlenecks stemming from concentration in meat and poultry processing 
and complements work to address vulnerabilities and mismatches in 
America's supply chains, commenced under a new Supply Chain Disruptions 
Task Force (Task Force), led by the Secretaries of Commerce, 
Transportation, and Agriculture and in support of ongoing supply chain 
work across the government in response to Executive Order 14017 
``America's Supply Chains.'' The Task Force provides a whole-of-
government response to address near-term supply chain challenges to our 
nation's economic recovery, with a focus on areas where there is a 
mismatch between supply and demand. In furtherance of both the 
Executive Order on competition and the Task Force effort, USDA is 
interested in addressing competition constraints and supply chain 
bottlenecks through strategic investments in expanding meat and poultry 
processing capacity. To support increased capacity and competition 
across agricultural markets, USDA anticipates committing $500 million 
in American Rescue Plan funds to address challenges in meat and poultry 
processing infrastructure and capabilities through a combination of 
loans, grants, and technical assistance projects, as part of a broader 
post-pandemic Build Back Better effort.
    Through this notice, USDA is soliciting public comments on how to 
best address challenges and increase competition in meat and poultry 
processing through $500 million in infrastructure and other 
investments. USDA is looking at existing programs, combinations of 
programs, and potentially new programs that can leverage the federal 
funds in combination with other funding sources (e.g., state and local 
investment, private, or philanthropic investment) to expand and 
diversify meat and poultry processing capacity and make the supply 
chain more resilient. In addition, USDA is considering how to 
incorporate other priorities--including climate, racial equity, 
creating good-quality jobs and support for underrepresented 
communities--into these programs. While USDA has identified a general 
direction to target these through a combination of partnerships, loans, 
grants, and technical assistance projects, we have a number of specific 
questions related to implementation (e.g., which mix of loans and 
grants would be most impactful to support competitiveness, increased 
capacity, and build resilience; what type of customized investments are 
needed in different regions and for different size facilities; which 
technical assistance partners would be most effective and efficient to 
develop, deliver, and fill training gaps; what types of partnerships 
will best leverage the federal investment and encourage local support 
and long term viability). To guide implementation of these funds in an 
efficient and impactful way, USDA is interested in your comments in 
response to the topics, categories, and questions identified below.
    USDA requests input from a range of stakeholders including, but not 
limited to, producers, meat and poultry processors, food supply chain 
workers, private sector, not-for-profits, trade

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associations, commodity boards, worker organizations, workforce 
training programs, lenders, community development organizations, State 
and local governments, community-based organizations, retailers, tribal 
organizations and governments, and others involved in this part of the 
supply chain (e.g., supplying and/or transporting animals to processors 
and products from processors, expanding or investing in processing 
facilities, providing technical support or training for such 
facilities). Submissions will be most helpful if they include reference 
citations or website links to research, economic analyses, feasibility 
studies, evaluations or other supporting documentation that support the 
comments provided. Consortia responses are also encouraged. USDA also 
notes that the information received through this notice will supplement 
our ongoing work to identify credit sources available for existing and 
new potential processors and to conduct a study to examine the role of 
credit and financing in expanding processing capacity as directed by 
the Consolidated Appropriations Act, 2021.

1. General Considerations

     What competition challenges and risks might new entrants 
face from high levels of market concentration or other relevant market 
conditions, and how can USDA and other Federal government agencies 
assist new entrants in mitigating those risks? What resources exist at 
the State, tribal, and local level, as well as at academic research 
centers, to assist new entrants in addressing competition challenges, 
and how can the Federal government support the effectiveness of those 
resources?
     What type of investor, developer, or new entrant would be 
best positioned to build a new facility, or expand an existing 
facility, and who could fund it? What level of experience is necessary 
for success?
     What business and operating structures (e.g., 
cooperatives, farmer-owned facilities, sole proprietorship, limited 
liability company, B corporation, etc.) can sustain these operations?
     How can workforce recruitment, training, and retention 
needs be addressed to maintain or increase processing capacity?
     What key job working conditions, salary, benefits, and 
other facility and community attributes are needed to create and 
maintain an adequate workforce?
     What information is available to help guide USDA's 
understanding of workforce needs of very small, small, and larger 
processors (e.g., access to labor, training, safety considerations), 
particularly as related to regional considerations and solutions?
     What factors should be considered when siting and 
designing a facility or renovation related to environmental justice to 
encourage energy efficiency and minimize the climate and environmental 
impacts of the facility?
     What regions show demonstrated processing needs, at what 
levels, and for which species?
     What constitutes sufficient actual demand for small and 
very small processing facilities to keep a business operational with 
appropriate cash flow? For context, USDA defines a ``small'' 
establishment as those with 10 or more employees but fewer than 500 
employees; a ``very small'' establishment is one with fewer than 10 
employees or less than $2.5 million in annual sales. Any establishment 
with 500 or more employees is considered ``large''; there is no mid-
scale size category.
     How can USDA support access to processing services for 
smaller-scale producers? Are there opportunities for producers to 
engage in cooperative or collaborative arrangements with each other or 
other facilities to both ensure access and provide a sufficient supply 
for a plant to operate? If so, what government assistance would be 
needed to facilitate that type of arrangement?
     What metrics illuminate the extent of the competitive 
environment for the products or services that producers and growers 
offer, including at the local level? What factors up and down the 
supply chain affect that competitive environment?
     What seasonal throughput issues (e.g., under- and over-
utilization during parts of the year) or regional challenges need to be 
considered for plant expansion or development?
     How do processing needs and challenges vary by species and 
by value-added product types (e.g., organic, local, grass-fed, kosher, 
halal)? Do these needs require special types of funding (e.g., to 
encourage continued innovation)?
     How can USDA and industry stakeholders partner with 
institutions of higher education, including community colleges and 
other academic institutions invested in the local community, such as 
Tribal colleges or land grant institutions, or other partners to start 
up or expand meat and poultry operations including workforce 
development and training programs related to entrepreneurship, meat 
cutting, or other necessary skills? Could these programs serve as 
technical education opportunities for non-university students? What 
type and level of funding would be required to support such programs?

2. Fair Treatment of Farmers and Workers and Ownership Considerations

     What conditions should be placed on federally funded 
projects to ensure fair and equitable outcomes (e.g., requirement that 
jobs that can support families; transparency in pricing; fair dealing)?
     What conditions should be included related to the sources 
of materials being used to construct or expand the facility (e.g., buy 
American)?
     What steps would require or encourage the creation of 
high-quality jobs for workers employed during construction and within 
the operational facility (e.g., prevailing wages and fair opportunities 
to collectively bargaining)?
     What health and safety standards would encourage a safe 
and healthy workplace?
     Should USDA have the ability to block the sale of 
processing facilities built or invested in through federal funds to 
large or foreign-owned corporations? What other options should USDA 
consider in order to prevent new, expanded, and successful facilities 
from being acquired by the large corporations whose consolidated 
operations can suffer from bottlenecks and create significant supply 
chain vulnerabilities?
     Should the processer be required to purchase a minimum 
volume through auctions or other public transactions?
     If contracts are utilized, should practices like 
tournament systems that have been found to be prone to anti-competitive 
abuse be prohibited? Should contracts have at least a portion of the 
payments to producers be based on wholesale meat prices?
     If contract grower relationships are used that require a 
purpose-built production facility, should contract be required to cover 
at least the length of the loan term?

3. Loans and Other Financing Considerations

    While USDA is requesting feedback in the following three sections 
on loans, grants, and technical assistance, our intention is to combine 
and integrate these tools together along with strategic partnerships to 
achieve the right mix of investments and support for processors. To 
that end, we have specific questions on partnerships and combined 
funding opportunities in the last numbered section.

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     What financing tools facilitate access to capital for 
small meat and poultry processing companies? In your response, please 
consider the stage of corporate development (e.g., startup, onsite 
expansion, restarting an idled facility, new location), the potential 
use of funds (e.g., working capital, construction, credit lines, 
equipment), and the type of financing (e.g., grants, installment loans, 
balloon payment loans, equity like investments). Please also consider 
the prospective borrowers' type of business model (e.g., cooperative, 
farmer joint-ownership, employee-ownership, mobile meat- and poultry 
processing operations).
     What financing tools facilitate provision of capital by 
lenders who finance meat and poultry processors? In your response, 
please consider the type of lender (e.g., bank, credit union, loan 
fund) and the type of tool (e.g., loan guarantee, direct loan, debt to 
establish a revolving loan fund, grant to establish a revolving loan 
fund).
     What are the barriers or challenges to financing tools 
(e.g., gap between local lender expertise to support meat and poultry 
processing and the need for processing capacity), and are there changes 
that can be made to existing programs to mitigate these challenges?
     What type of upstream analysis of customers/product demand 
is needed to justify the level of lending or financial support?
     What barriers, if any, exist that reduce the ability of 
meat and poultry processor lenders to extend their geography?
     What barriers, if any, exist that reduce the ability of 
meat and poultry processor lenders to provide capital for multiple 
types of meat and poultry processors (e.g., different meats and 
poultry, different size processors, cooperatives, tribally owned or 
tribally affiliated operation)?
     What barriers, if any, exist that reduce access to capital 
for very small and small meat and poultry processors? In your response, 
consider collateral, capital, capacity, and other factors.
     What are the most pressing needs of the meat and poultry 
processing sector with regard to financing, and what action should USDA 
take in the immediate term to improve access to capital for small and 
very small meat and poultry processors?
     What types of technical assistance or capacity building 
support would be useful to lenders interested in starting or expanding 
their meat and poultry processing lending?
     What types of technical assistance or capacity-building 
support would be useful to lenders interested in starting or expanding 
lending to tribally owned or affiliated meat and poultry processing 
operations?
     What types of technical assistance or capacity building 
support would be useful to lenders interested in starting or expanding 
lending to meat and poultry processing cooperatives?
     How could federal funds be best leveraged with state and 
local resources (matching funds, in-kind support, government 
assistance)?

4. Grant Considerations

     Would a small plant expansion program structured similarly 
to USDA's Meat and Poultry Inspection Readiness Grant (MPIRG), but with 
a focus on expanding slaughter and processing capacity for small 
federally inspected plants, be beneficial? If so, at what award ($) 
level per grant and for what types of costs?
     What types of planning grants are necessary that are not 
already covered by an existing USDA grant or other financial assistance 
program? What other federal programs could finance or have funded 
processing efforts and with which USDA could partner? Are sufficient 
grants available now for business planning for new ventures, or is that 
a gap that needs to be filled?
     Are grant funds (or other funds) needed for marketing or 
outreach activities, including recruiting new participants in the 
industry?
     Would pilot grants that provide awards to small plants for 
training and other support (e.g., cover wage gap during 
apprenticeships) to develop their local workforce be effective to 
address some of the labor challenges associated with operating a 
current, expanded, or new facility?

5. Technical Assistance Considerations

     What are the top priorities for technical assistance that 
would facilitate processing expansion or increased capacity (e.g., 
butchery for key markets, HACCP, humane handling best practices for 
plant operators, labeling approval and processes, brand and market 
development)?
     Would regional or local cooperative agreements with 
strategic partners be the best way to provide this type of assistance, 
or are alternative ways preferable and more effective?
     In what ways could technical assistance support best be 
deployed to enhance competition and address challenges in the 
marketplace, how is it best delivered, and by whom?
     What workforce-related technical assistance is most 
needed, how is it best delivered, and by whom (e.g., best industry 
practices, training on equipment, new tools for safety)?

6. Partnerships and Combined Funding Considerations

     Who can USDA partner with to best leverage the federal 
funds (e.g., State and local governments, private investors, 
philanthropic organizations)?
     Should loans and grants be combined to support these 
facilities? If so, what criteria should be used to determine what 
portion of the funds are offered as loans versus grants?
     What conditions should be placed on grants or loans? If 
those conditions are not met, should the grants require repayment? If 
the conditions are met, should the loan be forgivable?
    In coordination with this public comment process, USDA anticipates 
hosting a series of stakeholder meetings to learn more about existing 
plants that could serve as a model for other regions; identify plants 
that are looking to expand; identify strategies to overcome barriers to 
building new, maintaining, or expanding existing processing facilities; 
scope out financial needs to expand processing capacity; scope out the 
workforce challenges, including safety considerations, and needs for 
research, innovation, and investment to address workforce and workplace 
issues; and understand the non-financial barriers that USDA can break 
down to expand this sector.

Mae Wu,
Deputy Under Secretary for Marketing and Regulatory Programs, U.S. 
Department of Agriculture.
[FR Doc. 2021-15145 Filed 7-15-21; 8:45 am]
BILLING CODE 3410-90-P