Beef industry predicts disruptions due to upcoming furloughs

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Posted: Sunday, March 17, 2013 12:00 am

Each of the cattle slaughtered at Larry Swerczek's locker in Albion, Neb. — between 50 and 90 a month — must be examined by a federal inspector as it comes into the locker and then as it's killed, butchered and packed for three small grocery stores in Boone and Antelope Counties.

So Swerczek worries about how he'll get enough meat to his customers and keep his nine employees working if that inspector, one of about 8,600 around the country, is temporarily taken off the job this summer as part of the across-the-board federal budget cuts known as sequestration.

Consumer safety is not at risk, the U.S. Department of Agriculture says, but people in Nebraska's beef industry worry about other problems if plants and meat import stations are shut down because inspectors can't come to work and supervise operations as required by law.

Effects could include meat shortages and higher prices for consumers and the loss of hours for thousands of slaughterhouse workers. Ranchers and feedlot operators could see reduced sales, and the furloughs would disrupt the finely tuned supply system that delivers live animals at the right weight to the right place at the right time.

Agriculture Secretary Tom Vilsack says furloughing meat inspectors is the “least desirable option,” yet unavoidable.

The plan is to furlough all Food Safety and Inspection Service workers nationwide for the same 11 non-consecutive days this summer from mid-July into September. USDA Undersecretary Elisabeth Hagen told a House subcommittee Wednesday that the plan is the best way to minimize the impact on the marketplace while treating all industries and regions of the country fairly.

She said the USDA has made other cuts to its inspection budget, but furloughs are the only way to cut the “sequestered” $52.8 million by the Sept. 30 end of the fiscal year.

The furloughs would cost more than $10 billion in production losses and a loss of more than $400 million in wages to industry workers, the USDA estimates.

“The whole thing, to me, is a pretty bad joke,” Swerczek said.

Nebraska's beef industry isn't laughing.

It costs feedlot operator Troy Stowater up to $5 a day to feed and house an animal, and that adds up for the 26,000 cattle on his yards in Stuart and West Point. He's worried about the extra costs he'll incur if he can't move cattle to slaughter on time.

Stowater said his livelihood is caught up in politics. Like others in the industry and in Congress, Stowater believes Vilsack has other options but won't consider them because he needs to back up President Barack Obama's dire warnings as part of budget negotiations.

“It's unfortunate the secretary of agriculture is using agriculture as a pawn,” Stowater said.

Consumers may see less meat in stores and higher prices on what's there, Stowater said.

“If you look up and down the food chain, it would affect a lot of people's income,” he said. “The ultimate loser is the consumer.”

Deb Bailey, office manager at the J.F. O'Neill packing plant in Omaha, thinks about the plant's 110 workers, who slaughter cattle and break down carcasses into large, “primal” cuts.

“The less work, the less they're paid,” Bailey said.

The less they're paid, the less they'll spend at local businesses.

Some are hopeful Congress will forge a budget solution before furloughs take effect.

“Hopefully by then there will be some resolution to this situation by the federal government,” said Mike Martin, spokesman for Cargill. The Minnesota packer has 5,000 to 6,000 employees among its Nebraska and western Iowa operations, which include a pork processing facility in Ottumwa, Iowa; a beef processing facility in Schuyler, Neb.; a beef patty plant in Columbus, Neb.; and a turkey and deli meat processing facility in Nebraska City.

“We cannot operate our meat processing plants in the absence of inspectors,” Martin said. “We also believe nonessential USDA personnel should be furloughed before meat plant inspectors, as we believe there is a statutory obligation for USDA to provide inspection.”

Tyson Foods said it will start developing a contingency plan when the company finds out more about when the furloughs would start. Vilsack notified inspector unions March 8 about the furloughs, but there is a negotiation period and then a 30-day wait period before furloughs can begin.

Arkansas-based Tyson has more than 8,500 employees in Nebraska at its plants in Dakota City, Lexington, Madison and Omaha, and 2,800 in western Iowa, in Storm Lake and Council Bluffs.

A spokesman said he expects a solution before furloughs would take place.

“Because meat inspection has historically been considered 'essential' by the federal government, we're optimistic there will be no interruption in this public health and safety function. We do not expect any immediate impact on our business,” said Gary Mickelson.

Even some small-town lockers would have to curtail operations.

“We'd have to slow down, or stockpile up,” said Dennis Schaardt, owner of Den's Country Meats in Table Rock.

He's concerned because he's made an effort lately to expand sales to area grocery stores. “We wouldn't be able to do that if (the inspector) were not there.”

He could sell meat only at his own locker, which he said does not require USDA inspection. Then, Schaardt worries, he may have to cut hours or lay off an employee.

The beef industry is “fluid” and an interruption in processing causes problems all the way up the chain, said Nebraska Cattlemen President Dale Spencer, of the Spencer Herefords seed stock production business in Brewster.

“When they're ready for harvest, and I mean cattle, poultry, swine, it's time,” he said.

Spencer said the furlough plan is “extremely insensitive and demeaning” to cattlemen whose businesses are already affected by a severe drought that has forced cattle to slaughter in recent years — leaving herds at what the USDA says is the lowest level since 1952.

With reduced herds, the number of cattle slaughtered under federal inspection fell a total of 3.7 percent in the last two years, to 32.4 million, according to USDA reports.

Yet Vilsack said the reduction in slaughter doesn't mean there are extra inspectors sitting around who could keep plants running amid a furlough. He said the USDA has reduced its workforce and enacted a hiring freeze among other cost-saving measures meant to blunt the impact of the sequester.

Despite Vilsack's insistence otherwise, Spencer is frustrated at the talk of furloughs and believes there are other areas of USDA's work that could sustain cuts.

A meat processors trade group also says the USDA has the flexibility within its operations to avoid plant shutdowns.

The largest plants, which may have more than 20 inspectors on the job at a time, can adjust how those inspectors' time is allocated, says the American Meat Institute. AMI Senior Vice President Mark Dopp said some of those inspectors are working on paperwork and could be tapped for inspection duty.

At least one inspector agrees.

In a big plant, there may be seven inspectors working the line per shift, but also others on a general patrol or working on paperwork, said Trent Berhow, a former Iowa hog slaughterhouse inspector who is vice chairman of the National Joint Council of Food Inspection Locals. It would be “painful” to put off that paperwork, but it could be done legally, he said.

Dopp and Berhow also question the USDA's assertion that support staff who work within the inspection branch cannot bear a greater portion of the furlough days without interrupting the inspection process.

During a snowstorm or federal holiday, “Washington is closed up tighter than a drum, yet all the plants are operating,” Dopp said. “The idea that everybody has to be there for the inspection system to work is simply not the case.”

For two weeks, Republican lawmakers including Nebraska Sens. Mike Johanns and Deb Fischer, Iowa Sen. Chuck Grassley and Iowa Rep. Tom Latham have attacked the USDA's unfolding plans in letters, in media interviews and in tough questioning during congressional subcommittee hearings.

Johanns is one of the toughest critics, speaking from experience as agriculture secretary for three years starting in 2005.

“I ran that department. I dealt with this budget. I served during very lean budget times, and we would have never, never furloughed meat inspectors,” he said.

He pointed out that the amount Vilsack needs to cut is only about 3 percent of the agency's total budget. “It doesn't pass the laugh test,” Johanns said.

Vilsack, a Democrat and a former Iowa governor, countered that the timing of the sequester forces him to squeeze the cuts into the last quarter of the fiscal year, magnifying the impact. He said nearly 85 percent of his budget is tied up in mandatory programs such as food stamps.

The $879 million Food Safety and Inspection Service is part of the 15 percent of budget considered “discretionary,” a budget that has shrunk over the last three years as mandatory programs have grown.

“Sen. Johanns knows better, because he was in this office,” Vilsack said. “The way this sequester is structured, Congress gave us no flexibility.”

Johanns said the secretary should submit a request to allow him to move money from other programs to cover meat inspections.

Vilsack said Congress could fix the sequester struggle “with a stroke of a pen.”

“Hopefully, Sen. Johanns, who is concerned about this, will be able to impress on his colleagues to provide the resources to avoid these concerns,” he said.

Meanwhile, local meat inspectors are worried about their paychecks and the paychecks of thousands of Nebraska and Iowa meatpacking workers.

“The employees in these plants, they won't be able to work if we're not on duty,” said Al Stusse, an Omaha meat inspector and union member. “If we can't be there, it could have a major economic effect.”

Contact the writer: 402-444-1336, barbara.soderlin@owh.com

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