Posted: Tuesday, February 26, 2013 9:56 AM
By CAROL RYAN DUMAS
Industry insiders say the furlough of USDA meat inspectors because of budget sequestration would be devastating, but have mixed opinions as to the likelihood it will happen.
Unless Congress acts, the 2011 Budget Control Act will require the federal government to make $85 billion in across-the-board cuts to defense and domestic spending on March 1.
USDA Secretary Tom Vilsack has said the agency would be forced to make more than $2 billion in cuts, including a furlough of as much as 15 days for inspectors at almost 6,300 U.S. meat, poultry and egg processing plants.
Federal law mandates the inspection of meat, poultry and eggs. Without the inspectors, insiders say, and production at processing plants will shut down, disrupting markets and production cycles in all directions of the supply chain.
Meat industry officials are taking the possibility of idled plants seriously, but they are mixed in their opinion as to how likely it is to happen.
USDA is suggesting the furloughs are possible and is reserving them as an option, but it just seems unlikely, said Jeremy Russell, director of communications and government relations for the North American Meat Association.
Loss of frontline inspection in processing plants would cause a huge disruption in the food-supply chain, and that's why it's unlikely, he said.
Mandatory inspection was determined by Congress more than 100 years ago, and USDA furloughs in the past have not affected frontline inspectors. It would be unprecedented, he said.
National Cattlemen's Beef Association is not as confident and is extremely concerned, said Kristina Butts, NCBA's executive director of legislative affairs.
Meat plants can't operate without inspectors present. NCBA is encouraging USDA to evaluate other areas where it could meet the needs of sequestration but isn't hearing any other suggestions from USDA, she said.
USDA has indicated some type of delay implementing the plan because it has to give inspectors notice of an intended furlough, but no definitive timeframe has been forthcoming. In addition, there's no talk on the Hill of avoiding or delaying sequestration, she said.
Vilsack has said the furloughs would result in more than $10 billion in production losses and more than $400,000 in lost wages to processing employees, and NCBA has taken the matter seriously, she said.
Steve Meyer, livestock economist and co-publisher of the CME Daily Livestock Report, said furloughs would affect markets if they happened. But he thinks the threat is being used by the Obama administration as a scare tactic to get people behind the administration's position in budget negotiations with Congress.
If furloughs do happen, USDA will have to negotiate union agreements, which could take months, he said.
Stan Painter is chairman of the Joint Council of Food Inspection Locals for the American Federation of Government Employees, AFL-CIO, the union that represents all 6,400 meat, poultry and egg inspectors. He said USDA will have to negotiate those furloughs.
USDA has indicated a June-July timeframe for implementation. If a deal hasn't been reached by then, he said, the likelihood of furloughs will be 50-50.
Painter said two things bother him about the furloughs.
Inspectors, who are on a lower grade pay scale, would be furloughed for the same amount of time as USDA employees in much higher paying positions, he said.
And while the Obama administration is using the furloughs to blame Republicans for failed negotiations on the budget, he said, it has an initiative ready to roll that would permanently cut 1,500 inspectors' jobs.
That proposed Poultry Slaughter Rule has already cleared the public comment period and is just waiting to be sent to the Office of Management and Budget. But the administration is holding it up to take advantage of the sequestration situation to criticize Republicans, he said.
National Pork Producers Council won't speculate on whether furloughs will take place, but contends the action would have a huge negative impact on hog farmers, meat packers and processors, food retailers and restaurants, and consumers.
The prospect of furloughs of meat inspectors is a great concern to pork producers, who are looking for ways to ensure the continued good care of their animals, said Dave Warner, NPPC's director of communications
The US Meat Export Federation is also concerned, said Jim Hurlihy, vice president of communications.
The federation hopes Congress and the Obama administration realize the impact processing shutdowns would have on meat supplies and the food industry. In addition to the domestic upset, it would affect exports, 27 percent of domestic pork production and 12 percent to 14 percent of domestic beef production, he said.