Failure to pass a five-year farm bill last year has left agriculture vulnerable to budget cutbacks resulting from sequestration - $85 billion in across-the-board federal spending cuts.
"This is why we pushed so hard for a five-year farm bill," says Travis Jones, executive director for the Idaho Grain Producers Association. "The sequester is a big threat to Idaho wheat and barley growers."
Under the sequester, the U.S. Department of Agriculture must trim its budget by 5.3 percent for the rest of this fiscal year, which ends Sept. 30. The agency has already seen its operating budget cut by 12 percent, or $3 billion, since fiscal 2010.
Where the additional cuts will come from is still uncertain. Eliminating direct payments and reducing crop insurance subsidies are in the sights of many lawmakers. Cuts to either program would hit Idaho grain producers in the pocketbook. Idaho farmers received about $45 million in direct payments in fiscal year 2012.
Agriculture Secretary Tom Vilsak has also warned that federal meat inspectors may be furloughed as part of the budget cuts. By law, meatpacking plants cannot operate without a federal inspector on site, so the furloughs could disrupt the meat supply and cause higher meat prices.
Some in the meat industry have argued that meat inspectors have historically been deemed "essential personnel" and should be exempt from any furloughs. They argue that the inspectors are being used for political leverage. But Vilsak has countered that the sequestration legislation does not include exceptions that apply to inspection activities.
If inspectors are idled, the impacts will reach beyond the packing plant to the trading floor.
Future contracts for both live and feeder cattle have dropped in late February in response to the prospect of packing plants closing for two weeks if federal inspectors are furloughed.
"This will impact domestic consumers of all meat products and could do some significant damage to our meat exports if we are out of the game for two weeks as well," says Wilson Gray, University of Idaho extension livestock economist.
Bob Naerebout, executive director of the Idaho Dairy Association, and Jones see the greatest threat to agricultural programs coming from an overall reduction in federal spending and how that will influence discussions of the 2013 farm bill.
"There is already going to be a reduction in spending in the next farm bill," Naerebout says.
