Shutdown having ripple effect

Shutdown having ripple effect

Government shutdown limiting USDA activities and affecting market price identification.

THE stalemate in Congress over passing a spending bill will cause a ripple effect as government agencies slow down their activities, and there is much speculation as to what the final impact will be on farm country.

If, as many political insiders anticipate, the negotiations over funding the government drag on for more than a week, incremental impacts will be seen on each sector, including agriculture and agribusinesses, explained Dave Ladd, president of RDL & Associates.

"The longer the shutdown goes, those ripples will continue to go out," Ladd said, adding that a lot of the time, those ripples start small and get bigger as time goes on.

Most U.S. Department of Agriculture employees were sent home Oct. 1 and will not return to work until a fiscal 2014 appropriations bill that includes USDA funding clears Congress and is signed by the President.

USDA officials said personnel, administrative and programmatic problems are being compounded by the Sept. 30 expiration of the 2008 farm bill and by the fiscal 2014 federal budget sequestration — an automatic percentage reduction in federal spending mandated by the 2011 budget act that took effect Oct. 1.

One top-of-mind marketing issue will be whether USDA will be able to release its reports that are scheduled for publication Oct. 11.

One of the major ones is an update of crop production figures, and at least some of the surveying of producers would have occurred during the first week of October after staff had been furloughed, explained Pat Westhoff, director at the University of Missouri's Food & Agricultural Policy Research Institute.

He said USDA could potentially update its "World Agricultural Supply & Demand Estimates" report, assuming that staff are back.

CME Group was also forced to suspend the calculation of its Lean Hog Index and Feeder Cattle Index since the data needed to compute the indexes came directly from USDA's "Livestock Market News," which is closed as part of the shutdown.

Collin Woodall, vice president of government affairs at the National Cattlemen's Beef Assn., said since the mandatory price reporting won't be maintained during the shutdown, it raises the question of what will happen with cattle pricing mechanisms and what that could mean in the marketplace.

"We will have to see how long this shutdown stays in place and really try to get some feedback from the countryside," he said.

USDA's Foreign Agricultural Service, Farm Service Agency, Natural Resources Conservation Service (NRSC) and Risk Management Agency (RMA) are among the many federal agencies that are no longer operating or are operating only to meet special, limited functions, such as providing food safety and other services deemed essential to public safety.

As time rolls on, the regular government staff workload gets put off. This includes everything ranging from program signups to publishing new rules and regulations.

"Farmers depend on these agencies," American Soybean Assn. president Danny Murphy said.

Undersecretary for farm and foreign agricultural services Michael Scuse said RMA's update of the 2014 insurance handbook, underwriting of certain policies and claims and case arbitration are delayed because RMA staff cannot be in the office.

NRCS chief Jason Weller said 56,000 Conservation Security Program and Conservation Stewardship Program contracts on 70 million program acres and $1 billion in program payments have been delayed, and 100,000 Environmental Quality Incentives Program contracts on 28 million acres, valued at $750 million, will not go out.

In addition, 2,200 NRCS field offices are closed, and 11,000 NRCS employees are furloughed. Also, Weller said 8,000 local conservation personnel who share office space and equipment with NRCS officials cannot get to their offices or files because of the NRCS closures.

Due to the government closure, USDA's main website is not available, but the department does direct readers to the White House Office of Management & Budget Office for a list of federal contingency plans and the site.

Agencies funded through user fees, such as the Grain Inspection, Packers & Stockyards Administration and the Food Safety & Inspection Service, currently continue to maintain their websites.

Volume:85 Issue:41

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