Friday, November 01, 2013

Government Shutdown: The Impact on Food and Agriculture

AliciaFailed negotiations over the 2014 federal budget forced the federal government to shut down operations on October 1, 2013, with thousands of government employees furloughed and critical programs across the country put on hold. While national news covered the vitriolic, partisan battle in Congress, the near-complete shutdown of USDA programs crippled farmers and ranchers across the country, with profound ripple effects on consumers, food systems and local economies.

While the shutdown ended on October 16, farmers and ranchers are still without a Farm Bill, which expired on September 30. That means the status of nearly every program governing the country's food and farm policy hangs in limbo, presenting one of the most dire threats to family farmers and our food system ever witnessed. While it is expected that Congress will proceed with Farm Bill negotiations, the path forward is completely unclear in the shadow of looming budget challenges, and substantial cuts to farm programs are anticipated.

Impact on Farmers

USDA Lending Programs

Though it has tried to re-brand itself as the "Lender of First Opportunity," USDA's Farm Service Agency is, for all intents and purposes, still the "Lender of Last Resort." When a farmer turns to the FSA for a farm operating or farm ownership loan, they have been turned down by other lenders. For many, a USDA loan is their only chance to continue farming or to start their career on the land. In all, more than 6,300 US farmers waited on Congress before they could move forward with their farm operations, pay their bills or prepare for harvest and planting:

  • 1,423 farmers waited to receive their approved USDA direct farm operating loans while FSA offices were closed. Since a "loan delayed is a loan denied," as they say, this delay places more than 1,400 farms in serious jeopardy.
  • An additional 2,161 families waited for disbursement of approved USDA direct farm ownership loans, and an additional 1,005 waited on guaranteed ownership loans. Many of these farm families had already waited months.
  • 1,800 of the approximately 29,000 farmers expected to receive USDA loans this year had to wait even longer for their applications to be processed.

Disaster Programs

Government resources are critical in preparing for, responding to and recovering from natural disasters, such as the severe flooding in Colorado and the devastating snowstorm in South Dakota that left hundreds of farmers reeling. Weather-related losses can affect a farm business for years to come, particularly from income losses that are critical for next year's planting. Recovery from losses to livestock herds, and damage to land and infrastructure, can often take years. With the USDA's Risk Management Agency closed, farmers will see delays or inaction on their claims for 2013 crop losses. In addition, the Farm Bill's expiration leaves key disaster programs unfunded, like the Livestock Indemnity Program, meaning several producers have no safety net when disasters strike.

Federal Program Payments

Payments from commodity programs and technical and financial assistance from federal conservation programs like the Conservation Reserve Program, Environmental Quality Incentives Program, Conservation Stewardship Program and Conservation Security Program were also delayed, and are not taking new enrollments in some cases. Program payments are as critical as other income sources for farm families, and many are feeling the pain of not receiving October checks they had been banking on.

Critical Market and Business-Planning Information

Farmers take their cues from USDA market reports and other government databases to make critical decisions about what to plant each year or what price to lock in futures contracts. Planting for winter crops was impacted as farmers were forced to guess on how much to plant. Meanwhile, livestock growers could not track cattle auction prices and had no reference point for sales negotiations with meatpackers who already hold too much power in an opaque and heavily manipulated marketplace.

Dairy

With funding for the Milk Income Lost Contract (MILC) program on hold due to the Farm Bill's expiration, the federal safety net for dairy producers has been taken away, leaving them with no cushion against price volatility.

Grain Inspection, Packers and Stockyards Administration (GIPSA)

With the typical appropriations process in upheaval, major industry lobbyists have seen an opening to try to unravel proposed GIPSA rules that were required by the 2008 Farm Bill to protect contract poultry growers. These rules were temporarily suspended in the stop-gap spending bill that passed in March of this year and poultry processors are working hard to ensure the delay continues through whatever stop-gap spending bills get passed moving forward.

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Impact on Eaters & Food Systems

Food Safety

Among government personnel that were furloughed are the many food safety inspectors charged with keeping our food safe through coordination with the USDA's Food Safety and Inspection Service (FSIS), the FDA and the CDC. Almost immediately, the dangers of a centralized, industrial food system have surfaced as it has gone unchecked. On October 7, FSIS announced a Salmonella outbreak from contaminated chicken had caused 338 illnesses across 20 states.

  • Information and monitoring programs through the CDC were greatly reduced, further restricting the public's access to food-borne illness information.
  • The FDA stopped routine establishment inspections, some compliance and enforcement activities, monitoring of imports, notification programs, and the majority of the laboratory research necessary to inform public health decision-making.

Food Security

The country's largest food security programs, the Supplemental Nutrition Assistance Program (SNAP), and the Women, Infants and Children (WIC) program feed 48 million Americans and 9 million low-income women and children, respectively. On October 8, the WIC program stopped issuing benefits to women and children across the country. Both SNAP and WIC have for long been scheduled to see reductions in benefits on November 1 (after the temporary increase in benefits from federal stimulus money expires). Further cuts are possible given the $4 billion in proposed cuts in the House and $400 million in cuts in the Senate version of the Farm Bill.

The drop in federal food assistance benefits placed a strain on emergency food assistance programs, like food banks, across the country. Food bank managers saw increases in the number of people looking for food and several food banks saw reductions or delays in deliveries of food items.

The ripple effect of these programs also had an impact on farmers who sell their goods at farmers markets. Since both SNAP and WIC benefits are accepted at a growing number of markets around the country, the drop in customers able to purchase their goods had a direct impact on the farm's bottom line.

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