Markets and the industry responded negatively to the Agriculture Secretary's comments last week that federal meat inspectors might be furloughed in order to make the necessary funding cuts that would be required of sequestration.
Whether it turns out to be seriously considered or merely political grandstanding, USDA Secretary Tom Vilsack helped add pressure to cattle markets last week when he suggested USDA may furlough federal meat inspectors for two weeks in order to meet the mandatory federal spending cuts (sequestration) that take place March 1 if lawmakers fail to agree to a spending package by then. This suggestion implies that meat inspectors would be regarded as “non-essential” federal employees.
“Under the Federal Meat Inspection Act and other related legislation, Congress has charged the USDA with providing federal inspection of meat, poultry and egg products at government expense,” said Scott George, National Cattlemen's Beef Association (NCBA) president, on Wednesday. “This places a legal duty on the USDA and the administration to carry out this service, a duty which the USDA has recognized as ‘essential’ in the past. And while we understand the hardships placed on the agencies through the possibility of sequestration, we are severely disappointed Secretary Vilsack has chosen to take this path of threatening to halt FSIS inspections.”
It’s unclear whether such a meat inspection furlough would be for consecutive days or intermittently.
Either way, market flow would be interrupted. In the meantime, markets are responding to the added uncertainty.
“Secretary Vilsack is using America’s cattlemen and women as pawns in the agency’s political wrangling with Congress,” George said. “While we are certain the USDA contains other ‘non-essential’ employees, the Secretary has chosen to announce the consequences of sequestration in terms of a furlough of FSIS inspectors, essentially threatening to close down all production, processing and interstate distribution of meat. This action has already cost cattle producers significant amounts of money with the downward slide in the futures markets caused by rampant speculation, with untold effect on producers through further regulatory uncertainty.
“Under the Federal Meat Inspection Act, the Poultry Products Inspection Act, and the Egg Products Inspection Act, the production, processing or interstate distribution of meat, poultry and egg products is prohibited absent federal inspection,” George emphasized. “Such a move would impact approximately 6,290 establishments nationwide and the agency estimates the move would cost over $10 billion in production losses. Industry workers they estimate would experience over $400 million in lost wages, consumers would experience limited meat and poultry supplies and potentially higher prices and food safety could be compromised.”
By Friday, a number of organizations, along with NCBA, were encouraging members to contact their Congressional representatives immediately to call for continued, uninterrupted federal meat inspection.
“NCBA will not stand by while the administration threatens this kind of action against the industry,” George said. "We are calling on producers to contact their senators and congressional representatives to send a clear signal to the USDA that this is not an acceptable exercise of executive authority.”