U.S. Agriculture Secretary Unveils Initiatives Aimed at Small and Midsized Operations

U.S. Agriculture Secretary Tom Vilsack on Monday announced new steps the Department of Agriculture is taking to recenter U.S. agriculture and benefit small and midsized operations, including a proposed new “Product of USA” labeling rule and an $89 million expansion of the USDA intermediary lending program.

At the National Farmers Union conference in San Francisco, Vilsack also discussed creating a new “seed liaison” in the department to increase fairness in the commodity biotech industry, and proposed changes to the Packers and Stockyards Act. The Packers and Stockyards Act governs competition in the livestock and poultry industries, and prevents unfair market manipulation or consolidation.

The secretary said these developments mark progress in the Biden administration’s approach to transform the existing food system, and increase resilience and profitability.

“I want this audience — and every audience I’ve been speaking to —  to understand that it’s not just this ‘organic over here, and local original food over here, and processing over here,’” Vilsack said.

“It’s part of a concerted effort to create another model. One that doesn’t necessarily require us to not produce — we want to produce what the world needs us to produce. But one that creates more revenue opportunities within that same small and midsize farming operation.”

The National Farmers Union is a nonprofit organization with the mission to “protect and enhance the quality of life of American family farmers and ranchers and their communities,” according to its website. 

Negative farm income

Vilsack, a former governor of Iowa, broke out a whiteboard and marker to illustrate the challenges American farmers are facing with land consolidation and declining returns. He said that despite record farm income in 2022, 50% of farms nationwide brought in negative farm income.

The secretary added that while 10% of farms made a net profit, nearly 40% of these profitable farms were owned by investment banks and large landholders who bring in more than $1 million per year in revenue.

Vilsack attributed this imbalance to the “get big or get out” structure of production-based agriculture, which took hold in the 1970s. He noted that his Trump administration predecessor, former Agriculture Secretary Sonny Perdue, was honest about this reality. Yet Vilsack said the approach is one he refuses to accept.

“That does raise the question of what do we do,” Vilsack said. “This is the game, but it’s based on production. I think we’ve got to develop a new game. A game where farmers can not only raise crops and sell them, and raise livestock and sell them, and get government payments, but they can get other ways to make money from the same landmass.”

Loan program 

To punctuate his vision, Vilsack announced new investments in diversifying local and regional meat processors, including $89 million in guaranteed loans through the USDA’s intermediary lending program.

The loan program will provide credit to independently owned-and-operated meat processing facilities to expand or purchase equipment. The investment comes in addition to the more than $100 million being invested in grants this year to expand processing supply chain capacity.

“These are resources that didn’t exist before, that creates competition to create better value,” Vilsack said.

Vilsack also mentioned a USDA rule proposed Monday that would alter the criteria for a product to use a “Product of USA” label. The secretary noted that while producers voluntarily put this label on packages for marketing purposes, prior criteria only required that labeled food products be processed in the United States. As such, the primary agricultural product could be grown, slaughtered, or raised outside the country.

Vilsack said that the new rule would require goods that use a “Product of USA” label to have their whole production cycle based in the United States.

Vilsack also said that the USDA was releasing a “seed report” on Monday, which details agency plans to provide oversight on intellectual property within the plant science sector. He said that the report outlines plans to create a “seed liaison” through the Agricultural Marketing Service, which will address concerns over intellectual property claims in the commodity seed market.

Vilsack said that this individual’s responsibility would be to gather input from farmers and breeders on the fairness of a given patent claim during the process of approval.

“They will now have a place and person to go to, to share information and to make sure that information is supplied in the complex formal process of a patent,” Vilsack said. “This now gives these folks an opportunity to have input.”

Vilsack added that the USDA will also partner with the U.S. Patent and Trade Office on a task force designed to limit unnecessary trait-stacking in genetically modified seeds, and encourage seed market competition.

Packers and Stockyards Act

Vilsack also addressed the USDA’s proposed changes to the Packers and Stockyards Act, and efforts to bring increased fairness to the meat industry

The secretary noted that the department expects to push through four new rules related to the act over the next two years, which would drive market competition and open space for small and mid-sized producers to prosper.

The first rule Vilsack discussed would require increased financial disclosures for large-scale processors and integrators in the poultry supply chain. The secretary noted this first rule is in the comment analysis period, and will likely be approved in 2023.

The other rule Vilsack expects the agency to issue this year would prohibit large-scale operations from retaliating against independent producers if these large commercial farms are reported to a regulatory agency. He said that this rule is currently in the comment gathering stage, and will likely become law in 2023.

The third Packers and Stockyards rule would alter the structure of the tournament system, in which poultry breeders are forced to compete over processor markets. Vilsack said he expected the process of approving this rule to “bleed over into 2024.”

“That rule is in the process of being worked on as a kind of a new concept,” the secretary said. “When we first started this, we weren’t actually thinking about it. But by virtue of the comments that we got, we thought we needed to do that.”

Vilsack also touched on a fourth rule which is in the process of being written. The rule will address the scope of harms required to bring an unfair competition or injury claim under the Packers and Stockyards Act.

“It is the most complicated rule,” Vilsack said. “That rule is obviously going to attract a lot of attention.”

Vilsack said the goal would be to have all four rules in place by 2024.

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