Agriculture Secretary Tom Vilsack has announced that USDA will expand guidance currently in place for loans to contract poultry operations meant to protect them from questionable business practices to include contract pork operations.
USDA currently provides guidance to county offices on the analysis and evaluation of applications for direct and guaranteed loans for contract poultry operations to avoid making loans that may exacerbate integrator business practices that have left some producers suddenly without contracts and unable to pay back their FSA loans.
"Contracted poultry and pork operations face increased risk in these challenging economic times, and this additional guidance for pork, putting it in agreement with the poultry guidance, will aid the loan officers in our county offices as they continue to make informed decisions on loans for contracted pork operations, providing opportunities for producers while at the same time protecting the interests of the taxpayers who fund the loans USDA makes," Vilsack said.
Recent increases in energy and feed costs coupled with reductions in demand have affected profit margins and returns in the industry. In response to these conditions, some companies who contract with producers to supply poultry and pork have closed processing plants, reduced placements, and declined to renew contracts.