TOPEKA, Kan. — The Butcher Block Act, a bipartisan bill that would provide critical funding to expand capacity for small, regional and independent processing facilities was introduced last week in the U.S. House. The legislation would establish a stand-alone loan program through USDA to help processors expand capacity, improve marketing options for cattle producers and encourage competitive markets and pricing for live cattle. It also authorizes the Secretary of Agriculture to establish a grant program that would support research and training efforts to strengthen the workforce and help processors become federally inspected. NCBA helped secure the introduction of the bill.
“Expanding capacity is an essential component of the multifaceted effort to increase the opportunities for profitability for cattle producers, and we’ve been hearing for months that the two biggest obstacles standing in the way of that are lack of capital and lack of labor,” said NCBA President Jerry Bohn.
A recent study by Rabobank found that under the current dynamics of supply and demand, the industry could economically accommodate an additional 5,700 hooks per day of processing capacity, or processing roughly 1.5 million additional head per year. However, access to capital is a major barrier. The average start-up cost for a beef processing facility is roughly $100,000 per hook, which means that someone trying to open a modest 25-hear-per-day facility has to secure $2.5 million in financing just to turn on the lights.
USDA has established two new grant funding opportunities for small, regional and independent meat processors using funds NCBA fought to secure during December 2020 negotiations over the Consolidated Appropriations Act of 2021. NCBA also actively engaged with USDA to ensure that increased processing capacity is a component of the $4 billion Build Back Better initiative.
— Kansas Livestock Association
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