The Biden administration has announced new funding to help food supply chains

The Biden administration has announced new funding to help food supply chains

June 1, 20223:56 PM ET

Ximena Bustillo

Agriculture Secretary Tom Vilsack speaks at Georgetown University in Washington, D.C., on Wednesday.

Bloomberg via Getty Images

Agriculture Secretary Tom Vilsack unveiled $2 billion in new funding to strengthen food supply chains hard hit by the pandemic, causingfood shortages and higher prices.

The move follows a series of past investments from the Biden administration aimed at helping small meatpacking plants and local foodbanks expand to serve more people. The new funding is made available through the March 2021 COVID relief package, the American Rescue Plan and other relief legislation.

"The pandemic and ensuing inflation caused by supply chain disruptions and Putin’s war against Ukraine underscores the difficulty of providing healthy and nutritious food for all when markets are disrupted," Vilsack said Wednesday. "The pandemic also exposed for us how many food banks and pantries had difficulty accepting fresh fruit and vegetables and dairy products due to a lack of warehouse and refrigeration capacity."

The pandemic also highlighted major bottlenecks in the food supply chain as meatpacking plants were forced to close and slow production due to workers getting sick, the transportation industry faced additional labor shortages and input costs for farmers rose.

As a result, the Biden administration has gone after the four big meatpacking companies — Tyson Foods, JBS, Cargill and National Beef — blaming them for inflating grocery store prices. To address this, USDA created new grant and loan programs to help smaller meatpacking plants expand, hire workers and transport their products. The big meatpackers, meanwhile, argue the administration is ignoring other causes of inflation.

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Food prices across the board have gone up: They increased 0.9 percent in April, the seventeenth consecutive monthly increase, according to the Consumer Price Index.

"The pandemic underscored the weakness in our processing capacities when we had so few processing facilities," Vilsack said. "We created this very efficient system. The problem was and is, that it needs to be resilient. …One way to do that is by making sure we have a local and regional system that is supportive of, complimentary to and to a certain extent, competitive to a larger, national processing effort."

So far, past investments include $1 billion in loans for projects that tackle supply chain expansions for small and medium sized meatpacking plants.

A slew of new funding

The $2 billion of upcoming funding, according to Vilsack on Wednesday, includes $300 million in a new Organic Transition Initiative to provide comprehensive support for farmers to transition to organic production, $75 million to support urban agriculture, $100 million to support a meat processing workforce and $600 million in financial assistance to support food supply chain infrastructure.

USDA is also investing $100 million in a newer program dubbed the Healthy Food Incentive fund, which will focus on partnerships between the food industry and schools to improve nutrition in school meals, Vilsack said.

"I don’t think anybody, including the largest farm and the most successful farmer in the country wants a situation where we only have large farms," he said. "I think generally in farm country and rural America would like to see farmers of all sizes be able to stay in business and profit."