USDA entwined in U.S. farm output, markets

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The U.S. government has a hand in every stage of American agriculture, from planting the crop to harvesting and price discovery. Among other things the automatic budget cuts that began on Friday will affect the Agriculture Department's role in measuring farm output and tracking market prices.

Most prominently, USDA says budget cuts may force it to furlough all 8,400 meat inspectors for 15 days. By law, meat plants cannot operate without USDA inspectors, so a furlough en masse would shut down the meat industry.

Some $10 billion in production would be lost if that happens, USDA estimates. It says it will try to minimize the impact, perhaps through non-consecutive days off for inspectors.

Up to one-third of USDA's 100,000 employees may be affected by furloughs, USDA says. They will get at least 30 days' notice, which means layoffs are still weeks away.

At least ten of USDA's agencies and offices have a direct impact on production, marketing and price-setting. The following is a list of what they do and, in cases where USDA has provided details, how the sequester may affect them.

  • Food Safety and Inspection Service: inspects meat packing and processing plants to ensure meat is wholesome and safe to eat. Also inspects meat imports and exports. Furloughs of all 8,400 inspectors are possible.
  • National Agricultural Statistics Service: produces most USDA reports on crop and livestock production, marketings and stocks, including the monthly crop report that is one of the most widely followed agricultural reports in the world. USDA says NASS would stop analysis of its 2012 Census of Agriculture, the foundation for USDA forecasts, under a sequester. The crop report and other major NASS reports, such as Prospective Plantings due at the end of March, would continue.
  • Office of the Chief Economist: produces the monthly World Agricultural Supply and Demand Estimates (WASDE) report, a companion to the crop report and equally influential in affecting agricultural commodity prices.
  • Agricultural Marketing Service: provides hundreds of reports daily on local prices for livestock and crops. Its "market news" data are used as benchmarks for livestock futures at exchange operator CME Group Inc. AMS provides a weekly report on the volume of grain and soybeans inspected for export, watched by traders as an indicator of demand.
  • Foreign Agriculture Service: produces the weekly Export Sales report for U.S. grains, soybeans, beef and hides, and cotton, which influences commodity prices worldwide. FAS also provides data and analysis for WASDE, makes quarterly forecasts of U.S. farm exports, publishes reports on crops worldwide and has a network of foreign attaches who report on developments in major food exporting and importing nations.
  • Grain Inspection and Packers and Stockyards Administration: weighs U.S. grains, pulses, oilseeds, and processed and graded commodities. Also enforces fair-trading rules in livestock, meat and poultry markets, including timely payment.
  • Farm Service Agency: operates crop subsidy programs, including loan programs that set a minimum price for major crops, tracks plantings of major crops, assists in WASDE estimates.
  • Economic Research Service: makes periodic estimates of crop and livestock production and prices as well as farm income and indicators of financial health of the farm sector. Its analysts also have a hand in WASDE estimates.
  • Animal and Plant Health Inspection Service: duties include preventing introduction of crop and livestock pests and diseases as well as approval of biotech crops for farm use. APHIS was a lead agency in combating mad cow disease and has surveillance programs against deadly or debilitating livestock ailments such as hoof and mouth disease.
  • Risk Management Agency: oversees the federally subsidized crop insurance system. Duties include approval of new types of coverage, setting the premium rate for policies and sharing part of the losses when claims are high. So far, growers have collected a record $14.7 billion on losses due to the 2012 drought, which is $4 billion more than insurers collected.

(Reporting By Charles Abbott;editing by Sofina Mirza-Reid)



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