The 16-day shutdown of the US federal government, which had not occurred since 1996, initiated at 12:00 am on Tuesday, 1 October 2013, due to the expiration of FY 2013 appropriations, brought on a wave of uncertainty for citizens and businesses across the nation.
The food and agriculture industry was no exception, and, to a degree, it is still feeling the effects. The industry was doubly affected, however, with the simultaneous expiration of the Farm Bill on the same day. In the near-term, the bottom does not necessarily fall out, so to speak, but there are immediate threats that both producers and processors are dealing with, on top of a list of minor and major inconveniences.
USDA oversees roughly 15% of the US food supply, including meat, poultry and processed eggs. The government shutdown and Farm Bill expiration both affected USDA. While some staff was furloughed, 87% remained on the job, including most of the Food Safety and Inspection Service (FSIS). Considered essential, FSIS inspectors continued on-site inspections and the food facilities they oversee continued to operate.
The Farm Bill’s expiration will affect USDA most acutely. Although the legislation expired on 30 September, many Farm Bill programmes are funded through the end of the calendar year. The first major effects will not be felt until 1 January 2014, when the law automatically reverts to 1940s-era agriculture policies. Major programmes, including direct payments and crop insurance, will continue to operate because they are authorised under permanent law and not subject to annual appropriations.
However, due to the Farm Bill’s expiration, funding expired for a host of conservation programmes, including the Chesapeake Bay Watershed Programme, Conservation Reserve Programme (CRP), Grassland Reserve Programme (GRP), Healthy Forest Reserve Programme and Wetlands Reserve Programme (WRP). In addition, the Farm Bill’s expiration also meant that some export promotion and specialty crop programmes expired. These include the Market Access Programme (MAP), Foreign Market Development Programme (FMDP), export credit guarantees, facilities credit guarantees, dairy export subsidies and technical assistance for specialty crops.
Due to the shutdown, USDA Farm Service Agency (FSA) offices were closed, which made it more difficult for farmers to process loans and payments. Farmers in parts of the western US – including South Dakota and Montana – who saw crops and livestock wiped out in recent weather-related disasters, could not get official damage assessments performed due to the FSA office closures. These producers were duly harmed by the Farm Bill’s expiration, as livestock disaster programme that provides assistance for producers in dire straits expired.
Perhaps the most disruptive part of the shutdown for the agricultural sector, particularly producers, was the delay and cancellation of key reports from the USDA National Agricultural Statistics Service (NASS). Perhaps the most critical of these reports is the World Agricultural Supply and Demand Estimates, or WASDE, published monthly, which provides critical economic intelligence and commodity outlook for US and world agriculture. Farmers of corn, soybean, wheat, sorghum and other crops, in addition to other agricultural professionals, pay close attention to price shifts as a result of the monthly forecast in order to get a better handle on what crops will be worth.
The WASDE report scheduled for 11 October was cancelled due to the shutdown. The NASS Crop Production and Cotton Ginnings reports scheduled for release on the same date were also cancelled. The next scheduled release for those reports is not until 8 November, leaving producers without key market information in the meantime. NASS’s Crop Progress reports scheduled for 7 and 15 October and their Cattle on Feed and Peanut Prices reports scheduled for 18 October were also postponed. NASS says on its website that “while the lapse in federal funding has ended, NASS has not been able to engage in the necessary data collection and analysis over the past few weeks. NASS is assessing its data collection plans and evaluating the timing of upcoming reports.”
At FDA, which oversees roughly 85% of the US food supply, 45% of the workforce (roughly 6,600 personnel), including food inspectors, was furloughed due to the government shutdown (the Farm Bill expiration did not contribute to these furloughs). Nearly all the furloughs came to employees on the food side of the agency, which meant, among other things, that the agency could not conduct routine establishment inspections. Unlike USDA, FDA doesn’t require onsite inspectors for food facilities to operate, so companies regulated by FDA, were not forced to close their doors. The backlog of inspection work to be done now that the shutdown is over, however, could prove burdensome for industry as inspectors are forced to catch up. FDA was also forced to cease some compliance and enforcement activities as well, monitoring of imports and the majority of its laboratory research necessary to inform public-health decision making.
Another key effect on FDA was the delay in writing and publishing key regulations and guidance documents, including the implementation of the Food Safety Modernization Act (FSMA). A pending Proposed Rule on preventive controls for animal feed was expected to be released imminently, until the shutdown. Stakeholders have been waiting a very long time for this, the last of five key rules to be promulgated as part of FSMA implementation, and now they must wait longer. In addition, FDA was forced to cancel one of the three public meetings being held to receive public comment on two of the other key FSMA rules on foreign supplier verification and third party accreditation. The meeting, previously scheduled for 10-11 October in Miami, Florida, will not be rescheduled.
Less publicised, but just as consequential, were the effects of the shutdown on the EPA and CDC. The key effect for industry vis-à-vis the EPA was the delay in pesticide approvals and inspections of pesticide imports. The Office of Pesticide Programme at EPA operated with a skeleton staff for the duration of the shutdown, which ultimately means that e-mails backed up and deadlines for product approvals, which pesticide manufacturers must obtain before marketing their product, were perhaps delayed.
At CDC, an agency that has responsibilities for tracing foodborne illness outbreaks, capacity was significantly reduced. The agency was unable to process laboratory samples or maintain its 24/7 emergency operations centre. The agency was also unable to conduct multi-state outbreak investigations or support state investigations.
The government shutdown and Farm Bill expiration were notable, to be sure. The effects were and will be different for producers and processors, and will vary depending on industry sector. We observed that most food facilities remained in operation and that payments for most farm programs continued. However, key marketing decisions by producers had to be made ’blind’.
The US House of Representatives and Senate will begin conference negotiations on a Farm Bill next Wednesday, 30 October. Most are optimistic about the bill’s chances, having observed a long and difficult road to reach this point. However, the appointment by House Speaker John Boehner (R-OH) of Rep Steve Southerland (R-FL), a non-Agriculture Committee member who introduced an amendment widely viewed as the measure that killed the Farm Bill on the House floor earlier in the year, has, including House Agriculture Committee Ranking Member Collin Peterson (D-MN), worried that ideological interests could trump policy interests and ultimately thwart a compromise.
Industry stakeholders are hopeful for a prompt, strong resolution to the Farm Bill debate, as well as an agreement from the newly-appointed budget conference committee, whose mandate is to reach a compromise on long-term fiscal issues by mid-December. The certainty that an agreement in each of these cases will be warmly welcomed by the food and agriculture industry, following a very disruptive time in which the government was shut down and the Farm Bill expired.
© FoodBev Media Ltd 2024