Tuesday, October 05, 2021
USDA launches $500 million loan guarantee program for small meatpackers in hopes of easing supply-chain woes
The U.S. Department of Agriculture is offering new loan guarantees for small, independent meatpackers, Secretary Tom Vilsack announced Monday. The $500 million program is meant to expand capacity for meat and poultry processors and alleviate supply-chain bottlenecks caused by the pandemic.
"The Agriculture Department, along with the White House, has been targeting the meat and poultry sector for months, blasting the industry for heavy concentration that contributed to supply chain disruptions during the pandemic and following other shocks, such as the recent hack of JBS beef plants by Russian cybercriminals," Ximena Bustillo reports for Politico's Weekly Agriculture.
"A loan guarantee often means lower interest rates for a project because the USDA promises to repay most, but not all, of a loan if the borrower defaults," Chuck Abbott reports for the Food & Environment Reporting Network. "Often, the USDA guarantees 90 or 95 percent of a loan. Lenders may be more willing to extend financing since they have assurance of repayment. Loan guarantees are a way to magnify the power of USDA funding because comparatively little money is expended for each project; the borrower has to compile the funding for the project."