Touting Local and Regional Food Systems

HARRISONBURG, Va. (DTN) -- Peyton Fravel was 19 years old when he got lined up with a USDA beginning farmer loan and a banker willing to help him take over his grandparents' farm and start raising organic chickens for Farmer Focus.

"I was ready to jump in headfirst," Fravel said about coming out of high school and becoming a poultry farmer. "I was always very hands-on and involved when my grandparents had the farm. They had a contract with Farmer Focus, so when I bought the farm, we kept the name and just kept the ball rolling."

Asked about what's different about owning the farm, Fravel said, "There's a lot more paperwork than I remembered seeing. My grandma always took care of that, so when I had to go do it, there was a lot more paperwork than I was aware of."

Fravel, now 20, was one of two farmers spotlighted Tuesday as USDA's top leaders and Sen. Tim Kaine, D-Va., visited the Farmer Focus organic poultry processing plant as part of an announcement of $59 million in grants to five independent processors under the Meat and Poultry Processing Expansion Program (MPPEP).

Also on hand was Jules Maloney-Smith, one of the faces of Farmer Focus with her photo on some of the semitrucks that carry Farmer Focus chicken products to retailers. Maloney-Smith returned to Virginia from England with her spouse in 2019 to take over the farm from her parents who wanted to retire.

"So, we have three young kids, now 7-year-old twins, and a 4-year-old. And so, they love working on the farm with us. They love the chicken house. So, they asked to not have to go to school the day that we get chicks because they love helping with it," Maloney-Smith said.

USDA spotlighted Farmer Focus, which received a $3.6 million grant to help fund a $17.8 million expansion in its operations that will start later this year. The expansion will allow the company's two processing facilities to increase production by roughly 650,000 broiler chickens per week. It will also add another 300 or so workers to the company's 875 employees.

Right now, Farmer Focus, part of Shenandoah Valley Organic LLC, has contracts with about 80 growers, most of whom raise their flocks within about an hour of Harrisonburg. Farmer Focus sells its organic-certified chicken in more than 4,000 stores in Eastern states.

"This will also reduce the waiting list of producers who want to sell to Farmer Focus," said Corwin Heatwole, CEO of Farmer Focus, who founded the company after he had a hard time marketing chickens to one of the larger vertically integrated companies nearly a decade ago.

"Nine years ago, there was no processing facilities. But there was a dream to farm, to own our animals on the farm and have operational control, not be paid on a tournament system," Heatwole said.

Fravel has two poultry houses that can raise a total of 44,000 chickens, while Maloney-Smith runs a smaller operation that has one barn and raises a flock of about 14,000 birds at one time.

"It works really well for us partnering with Farmer Focus because we have the choice in how we raised our birds. Obviously, we have to follow guidelines from the USDA and from the company, but it works flexibly with our family," Maloney-Smith said.

Tuesday's announcement was the latest effort by the Biden administration to expand meat processing capacity. The $59 million in this round went to Farmer Focus in Virginia, but also to a poultry plant in South Carolina, as well as smaller meat processors in Idaho, Maryland and South Dakota. The funding for the packing plant expansions continues to come from funds provided to USDA in the American Rescue Plan.

Last October, USDA made similar announcements, detailing more than $223 million in loans and grants that is expected to increase processing capacity for more than 500,000 cattle, hogs and other livestock.

Talking mainly about the relationship between growers and the processing plant, Agriculture Secretary Tom Vilsack called Farmer Focus "a transformational place and moment for poultry growers in the country." He added, "These fellas have figured out the secret sauce, which is basically empowering farmers, providing them a standard that they have to meet, a value-added opportunity that allows them to make a decent living and feel good about it."

Heatwole also said farmers that sell to Farmer Focus own their poultry, and the company does not use the "tournament" ranking system for growers either. Heatwole said about the payment program with producers, "Very importantly, we came up with an alternative to the tournament pay system that uses the clear transparent pay terms alternative to the tournament-style pay systems, and most of all, opportunity for farms to be financially viable, especially to the level where they can reinvest in infrastructures of their farm."

Under tournament systems, contracts are between poultry growers and typically vertically integrated companies that often own the birds. Growers receive payments based on a grouping, ranking, or comparison of poultry growers delivering poultry to the same company during a specified period.

The tournament system has been criticized by independent growers who say companies use it to punish them for complaints. Poultry companies defend the system as a way to provide incentives for growers to be more efficient.

Vilsack noted USDA is working to change the Packers and Stockyards Act rules tied to the tournament system, and larger poultry companies "are now looking to transfer away" from the tournament system.

Kaine also pointed out the high USDA farm income reports over the past three years, including record net farm income in 2022 of $162.8 billion. Yet, net farm income is projected to fall $25.9 billion in 2023 due mainly to lower projected cash receipts in both livestock and crops.

Despite historic income levels in recent years, Vilsack said nearly 50% of farmers did not make a profit last year, and another 40% of farmers relied heavily on off-farm income to support their operations. In that regard, Vilsack said the farm economy isn't working as well for 90% of producers. He then highlighted the "local and regional" aspects of Farmer Focus that is working for smaller producers such as Maloney-Smith. He also highlighted that 80 farmers in the area raise enough chickens to market organic poultry in more than 4,000 grocery stores.

"Think of the power of that," Vilsack said. "That's exactly what this is about, and we need to do more of this in the country."

Outgoing USDA Deputy Secretary Jewel Bronaugh, in one of her final official events at the department, also spotlighted Farmer Focus's packaging, which comes with QR codes that allow consumers to see which farmers raised their products.

"It speaks to traceability, but it also speaks to consumers knowing where your food comes from," Bronaugh said, adding customers want that kind of connection with farmers.

Asked about the farm bill, Kaine pointed out he's not on the Senate Agriculture Committee, but said he keeps close connections with Chairwoman Debbie Stabenow, D-Mich. Kaine also said despite a divided Congress, the farm bill and the Defense spending bill "are two of the bills most likely to pass even in a divided Congress."

Vilsack was asked if the Rural Development funds from the American Rescue Plan would likely become a permanent fixture in the farm bill.

"The depends on if they (Congress) structure a farm bill that helps a few farmers or a farm bill that help many farmers," Vilsack said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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