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Meat plant shutdowns inevitable in budget cuts: USDA

Butcher Brett Marley holds the freshly ground beef at Casey's Market in Western Springs, Illinois, April 25, 2012. REUTERS/Jeff Haynes
Butcher Brett Marley holds the freshly ground beef at Casey's Market in Western Springs, Illinois, April 25, 2012. REUTERS/Jeff Haynes

By Charles Abbott

WASHINGTON (Reuters) - U.S. meat packers and processors face short-term shutdowns because of impending federal budget cuts but the administration will try to minimize the impact on the industry and consumers, the Agriculture Department said on Tuesday.

The automatic cuts, also called sequestration, are due to take effect on Friday because Congress and the White House are unable to agree on other ways to reduce the federal deficit. USDA says the cuts would force it to lay off its 8,400 meat inspectors for 15 days to produce the savings ordered for its food safety agency.

Early this month, the White House raised the prospect of a mass layoff, which would shutter the meat industry for two weeks. Plants cannot operate without USDA inspectors.

A House subcommittee chairman, Texas Republican Michael Conaway, said on Tuesday that USDA might order furloughs on non-consecutive days to mitigate their effect and keep plants running.

"Specific furlough dates for (inspectors) have yet to be determined but there is no question sequestration will have an adverse effect on food inspection services," said USDA spokeswoman Courtney Rowe. "USDA is taking steps to minimize the impact of the furloughs on consumers, our employees and the meat industry."

Even so, there would be some shutdowns, USDA said, because there is no way to stretch the workforce to cover all plants while reducing outlays enough.

The administration estimates some $10 billion in production would be lost if inspectors were laid off en masse for two weeks, or their agency's share of cuts. Stores and restaurants could run short of meat temporarily.

The USDA did not respond to questions about how it would approach possible furloughs at its Agricultural Marketing Service (AMS), which among other things generates prices used as benchmarks for livestock futures at CME Group Inc. The USDA has not mentioned AMS in its comments about the sequester.

Conaway said the administration has not replied in writing to his request for information about meat inspections and the White House budget office "owes us an explanation." The budget office was the first to raise the prospect of a furlough of all 8,400 inspectors and a resultant meat industry shutdown.

Although the spending cuts are due to take effect on Friday, it could be weeks or months before the meat industry is directly affected. Meat inspectors are guaranteed at least 30 days' notice of a furlough.

"This is a direct prescription from Congress to reduce every line item," Agriculture Secretary Tom Vilsack said last week.

Up to one-third of the USDA's 100,000 employees may be affected by furloughs. The USDA says the cuts would deny food aid to 600,000 pregnant women, new mothers and infants and also force closure of hundreds of Forest Service campgrounds, picnic areas and visitors' centers during the spring and summer.

(Reporting by Charles Abbott; Editing by Ros Krasny, Andre Grenon and Eric Walsh)

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