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Sequester Cuts Could Cause Spike in Protein Prices

By: Kyle Leyenberger
Updated: February 27, 2013
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Congress must act by Friday to avoid across-the-board budget cuts, but if they fail to compromise, the sequester could drive up prices at the grocery store.

The US Department of Agriculture says sequestration would force up to 15 furlough days for all Food Safety Inspection Service employees, slowing down meat and poultry production and driving up prices.

The USDA estimates the move will cause close to $10 billion in production losses and industry workers would lose more than $400 million in wages. 

"They have to have inspection to run, it would be a crisis if they actually shut down a plant," says John Marcy, an extension food scientist at the University of Arkansas. "Those people would be unemployed and those animals still have to be fed. The farmer gets hurt because that's another day, or two or three that they're feeding them."

Marcy does not expect plants to shut down completely.

"If the plant has four inspectors and they furlough one, then they slow down by one fourth," he says. "It's called dropping a shackle or missing a spot."

He says safety wont be an issue, but if inspectors are pulled from the line it will slow production, and that means you'll be paying more for your meat.

"Anytime you slow anything down in that type of situation it costs more to produce it," he says. "It's already being impacted by corn, it's already being impacted by many things. This isn't going to help."

Richard McGinnis says prices are already up at his meat market, and people have less money to spend.

"Thank goodness we've still got our customers coming in, but instead of buying steaks they're buying hamburger meat," he says.  "If they pull inspectors it's going to affect every person in the United States. Everybody, not just people coming to the grocery store, because that means McDonald's isn't going to be able to get all their hamburger meat either, or their prices are going to go up."

He hopes Congress can find a better way before the furloughs ever happen.

"I would be out of business if I run my business the way they have been running the government," he says. "They need to get their act together."

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