Five Takeaways from the USDA's 97th Annual Ag Outlook Forum
Farm Bill Blog Series (Part 1 of 5)
The U.S. Department of Agriculture (USDA) held its 97th Annual Agricultural Forum (Forum) on Feb. 24-25, 2022. This Farm Bill blog provides five key takeaways from the Forum.
1. USDA Is Using COVID-19 Relief and Bipartisan Infrastructure Law (BIL) Funding to Invest in U.S. Supply Chain Infrastructure
From ports to meat-packing facilities, the COVID-19 pandemic exposed weaknesses in United States agricultural infrastructure. To overcome these shortfalls, the USDA has begun investing heavily in infrastructure that gets products to the domestic and foreign market quicker and ensures a return on investment for U.S. farmers, ranchers, producers and food processors.
Most recently, the USDA announced a $215 million investment in small- and medium-sized meat and poultry processing facilities in an effort to strengthen the food supply chain, create jobs and bolster rural economies. Of these funds, $150 million is available through competitive grants to fund startup and expansion activities in the meat and poultry processing sector, $40 million is available for workforce development and training, and $25 million is being used to provide technical assistance to grant applicants. This announcement follows the USDA's plan to issue $100 million in loan guarantees and to invest $500 million to expand meat and poultry processing capacity. The USDA pledged to announce additional investments later this summer.
Industry presentations examined the factors that contributed to the supply chain and shipping crises, including the increase in consumer spending caused by the COVID-19 pandemic and slim profit margins leading to consolidation in the shipping industry. To provide immediate relief to food and agriculture exporters, the USDA partnered with the Port of Oakland, California, to create a new 25-acre "pop-up" site to fill empty shipping containers with U.S. food and agriculture products. The USDA will cover 60 percent of the pop-up site's startup costs and additional movement logistics costs at $125 per container.
2. Slaughter Rates are Leveling Out and Food Costs are Decreasing
The USDA acknowledged that slaughter rates of livestock were volatile and contributed to a significant rise in food prices during the COVID-19 pandemic. Multiple other challenges, including supply chain disruptions, the closure of meat and poultry processing facilities, worker shortages and shifts in consumer demand, complicated efforts to address the availability of many foods and price spikes. With recent investments in the United States' supply chain infrastructure and slaughter rates beginning to more accurately reflect demand, food prices are beginning to stabilize.
3. China Is a Critical Trade Partner, but Additional Markets Are Required to Avoid Volatility
On Feb. 8, 2022, the U.S. Department of Commerce reported that in 2021, exports of U.S. agricultural products totaled $177 billion, an increase of 18 percent from 2020. U.S. exports to China set a new record of $33 billion in 2021, up 25 percent from 2020, but China failed to meet its agricultural purchase commitments under the Phase One Agreement. While these purchase commitments are not enforceable, the United States has called on China to take steps to increase its purchases of U.S. manufactured, agricultural and energy products. The USDA and industry experts acknowledged the need to reduce U.S. dependence on China by developing other critical export markets.
4. A Major Priority for USDA Is Advancing Climate-Smart Agriculture
USDA Secretary Tom Vilsack and many of his colleagues stressed the need to deploy new technologies and time-tested practices to meet the challenge of increasing agricultural productivity, while reducing agriculture's environmental impact and contributions to greenhouse gas emissions. The Forum sessions highlighted: extreme weather preparedness efforts; drought risk; forest resilience; the bio-based economy; sustainable agriculture practices; and climate change mitigation and adaption. Farm Bill reauthorization will be central to the USDA's efforts to implement its climate-smart agriculture agenda.
5. USDA Is Committed to Addressing Discrimination and Promoting Equitable Access to Its Programs
Throughout several of its sessions, USDA leadership discussed its efforts to overcome discrimination and increase equitable access in the delivery of USDA programs and services. One of its recent efforts includes the establishment of the USDA Equity Commission. On Feb. 28, 2022, the USDA held the first USDA Equity Commission meeting. Members introduced themselves and called for public input from agricultural stakeholders on how the USDA can be more equitable – both for employees and those utilizing USDA programs. Recommendations sought included statutory, regulatory, congressional and budget, among others that address historical discrimination in the agency.
Holland & Knight's Farm Bill blog series will provide insight into what is in the package, emerging areas of interest at the federal level, and how to ensure that your priorities are included in the final package. For more information on the 2023 Farm Bill and the latest information on Farm Bill negotiations, please email at Kayla Gebeck, Isabel Lane and Peter Tabor.
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