Furloughs may affect meat, poultry prices

Furloughs may affect meat, poultry prices

March 14th, 2013 by Chris Carroll and Shelly Bradbury in Business Around the Region

Secretary of Agriculture Tom Vilsack says sequestration will raise food prices later this year.

Photo by Associated Press/Times Free Press.

WASHINGTON - Meat lovers should expect shortages and price hikes this summer if federal food safety inspectors are forced to take lengthy furloughs, America's top agriculture official said Wednesday.

In a 20-minute phone interview with the Chattanooga Times Free Press, U.S. Agriculture Secretary Tom Vilsack criticized the blunt budget cuts known as sequestration, warning of logjams for farmers, processors and consumers.

"We're not an unlimited ATM machine here," the former Iowa governor said.

Sequestration requires a 5 percent federal slash to all line items; salaries and other "frontline" inspection costs make up all but 3 percent of USDA's $1 billion food safety budget. So even if Vilsack eliminated non-personnel expenses altogether, he said, the savings wouldn't shed the need for 11-day furloughs.

Federal law requires the USDA seal of approval on beef, poultry and pork. Furloughs to nation's 6,200 meat inspectors and 3,000 support staffers would almost certainly lead to plant shutdowns and supermarket shortages.

"It creates a disruption for everybody," Vilsack said. "We have to have inspectors on site in order to produce the product that's sold to consumers."

Furloughs could begin as early as July.

According to the Georgia Poultry Federation, the average poultry plant processes about 250,000 birds every day. Do the math, and that's about 2.75 million unprocessed chickens per plant during an 11-day furlough.

Tennessee Poultry Association Executive Director Dale Barnett said inspection delays allow chickens to gain more weight, presenting additional hardships for packaging and processing.

"The ramifications are so large," he said. "We really hope it doesn't happen and that they'll look at all possible options for continuing the inspections."

The cutbacks could affect three poultry processing plants in Chattanooga -- two operated by Pilgrim Pride and one by Koch Foods. The local plants employ about 2,000 employees and process birds from hundreds of area chicken farms.

The Vilsack interview came in the middle of a publicity blitz from a White House eager to blame congressional Republicans for the automatic budget squeeze. Vilsack said he routinely reaches out to "newspapers that aren't the New York Times or Wall Street Journal" to localize the cuts, but couldn't pinpoint how furloughs would specifically affect Tennessee and Georgia.

"It's hard to do that," he said.

Sen. Saxby Chambliss, R-Ga., and others have questioned Vilsack's alarm and lack of detail. They say agriculture officials could consolidate rental space, eliminate travel dollars and reduce operating costs instead of furloughing safety middlemen between farm and table.

"We are confident you have the ability to implement sequestration at USDA without jeopardizing the ability of Americans to feed their families and seriously hurting U.S. farmers, meat and poultry production facilities," says a Feb. 26 letter signed by Chambliss and eight other senators.

But Vilsack said his hands are tied because of sequestration's structure. Congress allowed no flexibility in terms of moving money from less essential programs to food safety.

One fix seems rather obvious. Political appointees in the Vilsack's immediate office are facing three days of furloughs versus 11 for inspectors, according to a letter Vilsack wrote in response to Chambliss and others.

A Vilsack aide defended the discrepancy Wednesday, reiterating that money cannot be transferred between agencies "to offset employee furlough days." The aide also said 5 percent cuts "impact each USDA agency differently."

U.S. Sen. Charles Grassley, R-Iowa., said that's "hard to believe."

Despite the discord, some industry executives say there's time to cut a deal.

"We are hopeful that USDA will implement any furloughs or reductions required in a way that will enable poultry production to continue without interruption," said Mike Giles of the Georgia Poultry Federation.