The USDA Healthy Food Financing Initiative

The USDA Healthy Food Financing Initiative

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September 15, 2022
The USDA Healthy Food Financing Initiative
According to the U.S. Department of Agriculture (USDA)
access was not fully funded by Congress. Over the past 10
Economic Research Service (ERS), approximately 13.8
years, Congress has funded two out of the three
million households in the United States were food-insecure
departments to work on HFFI activities but has not funded
in 2020. ERS defines food-insecure households as
all three departments at the same time. See Table 1.
“households that had difficulty at some time during the year
providing food for all of their members because of a lack of
From FY2011 to FY2016, Congress appropriated annual
resources.” One component of food insecurity is food
funding to HHS and Treasury for their HFFI activities.
access, or the ability of people to find grocery stores or
During this time, Congress did not appropriate funding to
other food retail outlets that provide healthy and affordable
USDA for HFFI activities.
food in their community. Studies have found that low-
income communities tend to have fewer supermarkets than
Congress provided funding to HHS to create an HFFI track
high-income communities. Similarly, communities of color
within its Community Economic Development Program.
(particularly predominantly Black and Hispanic
The HFFI track provided competitive grants to community
communities) tend to have fewer supermarkets than
development corporations for projects that financed grocery
predominantly White communities.
stores and other retail outlets that provide healthy foods in
low-income communities. Congress also provided funding
In 2010, the Obama Administration introduced a plan for
to Treasury to create an HFFI track within its Community
the Healthy Food Financing Initiative (HFFI), which would
Development Financial Institutions (CDFI) Program. The
increase access to healthy food retail outlets in underserved
HFFI track provides grants, training, and technical
communities. An underserved community is an urban, rural,
assistance to community development financial institutions
or Indian tribal community with “limited access to
so they can provide loans for local projects that increase
affordable, healthy foods, including fresh fruits and
access to healthy foods in underserved communities.
vegetables, in grocery retail stores or farmer-to-consumer
direct markets; and a high rate of hunger or food insecurity
From FY2017 to FY2022, Congress provided annual
or a high poverty rate.” (7 U.S.C. §1932(g)(9)).
appropriations for Treasury and USDA to conduct HFFI
activities. See “Program Overview,” below, for more
HFFI was created to be a partnership between USDA, the
information on the USDA HFFI program. During that time,
Department of the Treasury (Treasury), and the Department
Congress did not appropriate funding to HHS for its HFFI
of Health and Human Services (HHS). This In Focus
activities.
provides an overview of the USDA Healthy Food Financing
Initiative, compares the USDA program to the Treasury and
Table 1. Healthy Food Financing Initiative Funding by
HHS programs, and provides some potential considerations
Federal Department: FY2011 to FY2022
for Congress.
Fiscal
USDA
HHS
Treasury
The USDA HFFI Program
Year
Funding
Funding
Funding
Background
FY2011
$0
$10 mil ion
$22 mil ion
The Obama Administration’s plan for HFFI was to utilize
FY2012
$0
$10 mil ion
$22 mil ion
diverse strategies across multiple federal departments to
FY2013
$0
$10 mil ion
$22 mil ion
help increase food access in underserved communities.
HFFI would be a partnership among USDA, Treasury, and
FY2014
$0
$10 mil ion
$22 mil ion
HHS. Each federal department would take a different
FY2015
$0
$10 mil ion
$22 mil ion
approach to increasing food access. USDA would expand
demand for farm products and locally produced foods at
FY2016
$0
$10 mil ion
$22 mil ion
retail outlets in underserved communities. Treasury would
support private sector financing for healthy food projects.
FY2017
$1 mil ion
$0
$22 mil ion
HHS would finance community-based projects. In FY2011,
FY2018
$1 mil ion
$0
$22 mil ion
the Administration requested $20 million for HHS, $25
million for Treasury, and $50 million for USDA to carry
FY2019
$2 mil ion
$0
$22 mil ion
out HFFI activities.
FY2020
$5 mil ion
$0
$22 mil ion
Comparing HHS, Treasury, and USDA Funding
FY2021
$5 mil ion
$0
$23 mil ion
The concept of HFFI as a partnership across three
FY2022
$160 mil ion
$0
$23 mil ion
departments working simultaneously on increasing food
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The USDA Healthy Food Financing Initiative
Source: Compiled by CRS from annual appropriations acts and
the USDA HFFI program. The USDA HFFI program
congressional justification reports from the federal departments.
provides grants and technical assistance to food retailers
and food enterprises to expand healthy food access in
Notes: USDA = U.S. Department of Agriculture; HHS =
underserved communities. The grants range from $20,000
Department of Health and Human Services; Treasury = Department
to $200,000. Grants can pay for expenses associated with
of the Treasury. USDA funding for FY2022 includes $5 mil ion from
project development, renovation, and expansion. The grants
the Consolidated Appropriations Act, 2022 (P.L. 117-103) and $155
provide a one-time investment of capital into the projects to
mil ion from the American Rescue Plan Act of 2021 (ARPA; P.L. 117-
help applicants overcome initial economic barriers in
2, Title 1, §1001). The ARPA funding to USDA for its HFFI program
locating healthy food retail outlets in underserved
remains available until expended.
communities. Funded grant projects have used a wide range
of strategies to increase food access, including developing
Program Authority
food incubator kitchens, expanding cold storage within
In 2014, Congress authorized USDA to establish its HFFI
existing grocery stores, and creating mobile markets that
program through the Agricultural Act of 2014 (P.L. 113-79,
deliver healthy food to remote communities.
Title IV, §4206). Congress created the USDA HFFI to be a
stand-alone program, rather than a track within an existing
In addition to grants, the USDA HFFI program provides
program. Congress authorized USDA to provide loans,
technical assistance to eligible entities in the early stages of
grants, and technical assistance to food retailers to help
planning food retail or enterprise projects. Technical
them place grocery stores and other healthy food retail
assistance can include market analysis, feasibility studies,
outlets in underserved communities. Congress also directed
and financial modeling.
USDA to select a community development financial
institution to administer HFFI on USDA’s behalf.
Potential Considerations for Congress
Congress reauthorized the USDA HFFI program in the
Overseeing the Awarding of Supplemental Funding
Agriculture Improvement Act of 2018 (P.L. 115-334, Title
In FY2022, Congress allocated $160 million to the USDA
IV, §4204). Among other changes, Congress expanded
HFFI program. This funding is more than 30 times as much
eligibility for USDA HFFI loans, grants, and technical
funding as USDA received for this program in any previous
assistance to include food enterprises (7 U.S.C. §6953).
year. Congress may consider whether USDA has sufficient
Food enterprises are businesses and organizations that
program staff in place to administer the distribution of the
operate along the food supply chain in areas such as
FY2022 funds and over what time frame these funds will be
aggregation, processing, distributing, manufacturing, and
distributed. Interested congressional stakeholders may
retail markets. Food enterprises can also provide technical
oversee the planning and implementation strategies
assistance to food entrepreneurs. These entities do not
developed by USDA for this funding. Another
necessarily sell food directly to consumers.
consideration for Congress may be how this increase in
funding might impact the quality of the applications that are
Program Funding
funded. Congress may consider what procedures USDA has
From FY2017 to FY2022, Congress provided annual
in place to assess qualified applications and ensure funded
appropriations to USDA for its HFFI program ranging from
applications meet specified criteria.
$1 million to $5 million per year. Congress provided this
funding to USDA for grants and technical assistance. To
Impact of Supplemental Funding on Statewide
date, Congress has not provided funding to USDA to issue
Initiatives
loans through its HFFI program.
Some state legislatures have enacted, or are enacting,
policies that create state-level healthy food financing
In 2022, USDA designated $155 million of supplemental
initiatives similar to the USDA HFFI program. Many of
funding to the USDA HFFI program. The funding came
these statewide initiatives also offer grants and technical
from the American Rescue Plan Act of 2021 (ARPA; P.L.
assistance to improve healthy food access for underserved
117-2, Title I, §1001). Congress provided $4 billion within
communities. Congress may consider how the FY2022
the law to address disruptions in the food supply chain and
funding provided for the USDA HFFI program (i.e., $160
agricultural production system caused by the Coronavirus
million) may impact these statewide HFFI initiatives. For
Disease 2019 (COVID-19) pandemic. Congress provided
example, Congress may assess whether providing more
the funds to USDA to remain available until expended.
federal funding for HFFI projects may result in statewide
initiatives receiving less funding in the future from state or
USDA stated in a June 2022 press release that the
private funders that may see the state initiatives as
“pandemic exposed and exacerbated the challenges of food
duplicative. Congress may consider strategies to ensure that
and nutrition insecurity in this country.” It stated that the
USDA HFFI projects complement statewide initiatives
additional funds allocated to the USDA HFFI program
rather than duplicate statewide initiatives.
would “support new and expanded access to markets for a
diversity of growers while helping consumers access
Lisa S. Benson, Analyst in Agricultural Policy
healthy foods.”
IF12214
Program Overview
In 2017, USDA selected the Reinvestment Fund, a
community development financial institution, to administer
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The USDA Healthy Food Financing Initiative

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