U.S. Ag secretary says sequester will bite deep

2013-03-06T16:00:00Z 2013-03-07T15:39:03Z U.S. Ag secretary says sequester will bite deepBy Keith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

The continuing federal budget sequester could crimp Indiana's $3.4 billion agricultural export industry as well as cripple other programs important to Hoosier farmers, according to U.S. Secretary of Agriculture Tom Vilsack.

"Indiana producers, particularly soy and corn, rely a great deal on exports, and our export dollars will be cut," Vilsack said.

Vilsack is calling 10 newspapers around the nation this week to explain the impact the almost $2 billion in sequester spending cuts mandated for his agency will have on farmers and consumers.

In a Wednesday morning telephone call to The Times, Vilsack outlined a broad range of impacts, including the one that so far has garnered the most attention: the furlough of federal meat inspectors.

Those furloughs will mean the closing of meat packing plants across the United States, for one or two days per week for five or six weeks in July and August. The Agriculture Department estimates that could cause more than $10 billion in production losses and $400 million in lost wages for workers in the industry.

Vilsack, a former two-term governor of Iowa, also talked about 5 to 6 percent cuts in price support payments to farmers, which will result in direct cuts to farm income. Also on the chopping block are conservation programs that encourage wise land use and loans farmers use to build their business.

It all adds up to more uncertainty for farmers when piled on top of the fact Congress has been unable to agree on a new five-year farm bill, Vilsack said.

The federal sequester grew out of Congress' and the President's inability to agree on a longer-term deficit reduction plan. It calls for $85 billion in across-the-board cuts about equally split between defense and domestic programs.

The agriculture secretary said the key is for Congress and the President to get together and agree on cuts that can be made more wisely as well as reforming entitlement programs and closing tax loopholes.

"The president is saying you can't have one without the other; you need both," Vilsack said.

Locally in Northwest Indiana, farmers are following the national debate on deficit reduction but not exactly staying up nights worrying about the specific effects of the budget sequestration on their industry, said Tim Stoner, a Valparaiso farmer and business owner.

"Right now, it's just not something where I can look out my window and see it," Stoner said.

With all the political jockeying over the farm bill in the past decade, farmers have been preparing for big changes in government programs, Stoner said. Many thought crop price supports would be long gone by now.

"Most people just have an over-inflated view of what the federal government can and can't do," said Stoner, who is a member of the Times Board of Economists.

A government-subsidized crop insurance program instituted in recent years that cut premiums has been a good one for farmers, taking some of the uncertainty out of farming, Stoner said. But even there, farmers would adjust if it were cut or went away.

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