Plus, reaction from around the RFSI community.

The U.S. Department of Agriculture (USDA) has laid out a framework for addressing many of the challenges facing the U.S. food system – especially those that have been amplified during the pandemic and Russia’s war in Ukraine.

The announcement explains, “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.”

To that end, the goals of the framework include:

• Building a more resilient food supply chain that provides more and better market options for consumers and producers while reducing carbon pollution
• 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
• Making nutritious food more accessible and affordable for consumers
• Emphasizing equity

USDA Funding Commitments Summary:

To reach the identified goals, the USDA will take a systems approach, funding programs along the supply chain using funds provided by the American Rescue Plan Act and other relief legislation. Funding commitments included in this framework include:

Food Production

• Up to $300 million in a new Organic Transition Initiative to provide comprehensive support for farmers to transition to organic production.
• Up to $75 million to support urban agriculture.

Food Processing

• Investment of up to $100 million to support development of a pipeline of well-trained workers and safe workplaces in the processing sector.
• $200 million for Food Safety Certification for Specialty Crops Program for specialty crop operations that incur eligible on-farm food safety program expenses.
• Up to $600 million in financial assistance to support food supply chain infrastructure that is not covered by the meat and poultry processing program.

Note: these new investment commitments join previous commitments:

• 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.
• 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.
• 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.
• 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.

Food Distribution & Aggregation

• 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.
• Investing $60 million to leverage increased commodity purchases through Farm-to-School.
• Investing up to $90 million to prevent and reduce food loss and waste.

Note: these new investment commitments join previous commitments:

• Investment of $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

• Increase funding to the Healthy Food Financing Initiative by $155 million.
• An additional $50 million in the Senior Farmers Market Nutrition Program.
• An additional $40 million in the GusNIP Produce Prescriptions Program.
• $25 million to support SNAP technology improvements to modernize the delivery of incentive programs through SNAP’s electronic benefit transfer (EBT) technology.
• $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.

Read the complete announcement here.

< Meaning Anchor >

What It Means

An announcement of this scale, with more than $2.1 billion of food system funding outlined to address the weaknesses of an outdated and extractive food system, appears to signify a legitimate step forward for government support of systemic transformation. But of course many questions remain:

• What does an announcement of this caliber say about the U.S. government’s commitment to move toward food system resilience?
• Will this spur private sector investment in similar initiatives?
• What can industry and private sector do?

So we asked leaders in our community what they thought.  

A New Commitment to Transformation?

Jayce Hafner, CEO of FarmRaise, is all too familiar with the capital barriers to building a more resilient food system. Capital is a (if not the) leading barrier for many operations seeking to build a more resilient food system. Traditional finance and food systems were developed to support conventional scale and production, which means those operating outside the status quo and in under-represented communities have been historically under-financed. Her company works with farmers to help them access grants, loans and farm funding. She and the FarmRaise team see this new framework as a “critical step toward shoring up resilience from the farmer’s field to the consumer’s plate.” She explains, “We’ve been amazed by the number of urban farmers, small meat producers, and farmer’s market suppliers in our customer base who have historically struggled to access crucial funding, and we remain optimistic that the Administration’s announced programs can serve these small farmers in the future.”

Regenerative poultry farmer and CEO/Founder of Regenerative Agriculture Alliance Reginaldo Haslett-Marroquin recognizes that this is the third in a flurry of incredible activity going on from the USDA – activity that seems to point to a deeper understanding and commitment to transformation than has been demonstrated by the agency in recent history. “They don’t have to do any of this, no one expects them to anymore. For the USDA to come out with this, you have to believe there is something really shaking up at the higher levels that there are some conversations recognizing how screwed up the agricultural system really is,” he explained. This point is well-taken, this most recent announcement is not an outlier but part of intentional messaging and expansion (if not shifting) of focus toward USDA funding that can address the significant breakdowns in the food system that we have experienced in recent years and continue to experience today.

Indeed, the USDA’s announcement pointed toward the pandemic and Russia’s war as instigators of urgency for transformation. Robyn O’Brien of rePlant Capital, a firm that finances farmer transition to regenerative and organic with innovative debt-financing tools, echoed this in her response to the announcement, “The volatility of our food system has been exposed. A triple threat of climate change, a global pandemic and a war have created enormous instability, felt from farms to families to food industry boardrooms. The USDA is making important strides. You can’t fix an extractive food system with extractive capital, so investment and infrastructure are critical for food and nutritional security.”

Jenny O’Connor is Executive Director of Funders of Regenerative Agriculture (FORA), a membership group of diverse funders that work across various forms of capital in order to learn, act, and invest together. She’s spent a lot of time working to understand the barriers to a regenerative food system and along with FORA has also started to dig into the policy landscape and opportunities that exist. Jenny shared her balanced reaction to the latest USDA news, “We think it is very promising and important that the USDA is giving more attention to supply chain and infrastructure and moving beyond just the focus on meat processing. At the same time, we all remain concerned and want to remain diligent on how these funds are spent and implemented. There are always concerns that much of the public funding will actually end up mostly going to the largest commodity producers.” Concerns she also expressed in relation to the USDA’s $1 billion Partnerships for Climate-Smart Commodities program. For that program and this latest one, time will show us how it plays out.

Among those watching and waiting is Tina Owens, Entrepreneur in Residence at Applied Ecological Institute (AEI), she says, “As a non-profit consisting of early members from the regenerative community, it has been clear to us for some time that climate-resilient food systems will require deliberate disruption of the hyper-consolidation of the food system. We are greatly encouraged at the message the USDA is sending about food systems needing to be “more distributed and local.” This is an imperative for future food system reliability, human health and well-being, and long-term national security.”

What’s Next?

“Encouraged” seems the apt word to use in this situation – where one is hopeful that we are on the cusp of seeing a wholesale change in the way the U.S. government funds the food system but know it is still too soon to know how this will play out. For the cynics among us, we turn to a self-proclaimed “permanent optimist” once again…

Reginaldo outlined one way to think about the impact of this shift in focus – even if it’s not permanent, it’s not small. “The conventional system has a huge cost for every dollar – companies take everything out in that system.” The negative impact of that is felt by farmers, by consumers, the environment, our climate, and by our economy that bears the brunt of the fiscal toll of human health and climate epidemics. Put this way, systems transformation can seem daunting and this new framework not enough, but Reginaldo reminds us, “Every dollar taken out of that conventional sucking mechanism and put into a perennial giving system, regenerative systems, has massive impact on farmer welfare, animal welfare, soil restoration, water, healthy food, healthy consumers and so much more.” Because of this, he chooses to celebrate every dollar.

Beyond celebration, this can also serve as a call for others to participate in the transformation:

For his part, Reginaldo says he is looking to everyone he and his organization can support and exploring how his farm and organization can make the most of it for themselves, while it’s there.  

Jayce and FarmRaise are committed to partnering closely with their members to help them navigate these funding opportunities. They remain hopeful that “the Administration and its partners will build a simple, straightforward application process for farmers to access this funding with ease.”

Robyn sees this as an opportunity to increase investment into these efforts, “Radical transparency will be essential, and we can afford nothing less when it comes to securing our food system in the face of climate change. To make this infrastructure sound, significant investment must be made in private and public partnership. Food security is national security.”

Jenny says we’re already seeing evidence of demand for this type of collaboration. She explains, “We were encouraged to see that more than $18 billion of applications came in for the Climate Smart Commodity program. While there is only $1 billion in funding, this, hopefully, is a big indicator to legislators and USDA that the demand is enormous and will only grow. So hopefully the USDA continue to respond to the increase in demand.”

We share this hope. Adequate government funding has been and continues to be a huge missing piece to the food systems transformation puzzle – something many have recognized for years. As the USDA itself begins to recognize and address this, it should serve as a call to investors and stakeholders across the system that the time to act is now.

—

What does the announcement of this framework mean to you and your operation? Let us know here.

—

Sarah Day Levesque is Managing Director at RFSI & Editor of RFSI News. She can be reached here.