UPDATE 2-U.S. Senate acts to avoid meat inspector furloughs

Wed Mar 20, 2013 7:00pm EDT

WASHINGTON, March 20 (Reuters) - U.S. Senators agreed to shift $55 million in funds within the Agriculture Department on Wednesday to avert the layoff of all U.S. meat inspectors this summer due to federal budget cuts.

On a voice vote, the Senate adopted the amendment as part of a government-wide funding bill and later sent the bill to the House on a 73-26 roll call. The House was expected to vote on the bill on Thursday.

"If it gets passed, we will apply it," Agriculture Secretary Tom Vilsack told reporters on Tuesday. Otherwise, he said, there was no way to avoid furloughs of all 8,400 inspectors for a total of 11 days.

Senator Mark Pryor, Arkansas Democrat, said by shifting the money, "we've been able to protect private sector jobs, keep food prices affordable, and help nearly 40,000 employees in my state alone."

In Chicago, Joe Ocrant, president of Oak Investment Group, said "Whether it passes or not it shows that the government will find the money to not disrupt meat production in the United States,"

Meat packers and processors would have to close plants during a furlough because they cannot operate without USDA inspectors on the scene. Billions of dollars in production could be lost in a lengthy furlough.

The bipartisan amendment was cosponsored by Missouri Republican Roy Blunt. Pryor and Blunt are the leaders of the Senate subcommittee that oversees the USDA's budget.

Chicago Mercantile Exchange live cattle futures closed higher after being lower early, but investors said the rebound had more to do with the oversold condition of the market and less about Senate's decision on Wednesday.

"Over the last week the industry has worked extremely hard to get Congress to understand this issue and it appears to have made some progress," Jim Robb, director of the Colorado-based Livestock Marketing Information Center, said of the meat inspectors.

"The lack of understanding by USDA of the implications are apparent," he said.

The Obama administration says the automatic spending cuts that took effect on March 1 cut so deeply into the meat safety agency that all of its workers would be furloughed.

To ease the impact of furloughs, USDA officials said inspectors would be idled on non-consecutive days nationwide from mid-July to the end of September. The time span would mean roughly one day off work each week.

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