* Meatpackers say move is "good news" for consumers
* USDA food agency would get $55 mln to keep inspectors at work
* Critics say biotech "rider" weakens control of GMO crops
WASHINGTON, March 21 (Reuters) - Congress approved $55 million on Thursday to prevent the furlough of all U.S. meat inspectors this summer, a step that could have driven up meat prices and created spot shortages in grocery stores and restaurants.
The money for meat inspectors was part of a bill to pay for federal operations through the end of this fiscal year. The bill did not restore budget cuts that took effect on March 1, however.
In a special step, lawmakers shifted $55 million in Agriculture Department funding so that its food safety agency would have enough money to keep its 8,400 inspectors on the job. Senators wrote the shift into the bill on Wednesday, the House approved it and sent it to President Barack Obama on Thursday.
Livestock futures prices in Chicago rose following the House vote. The threat of one-day-a-week furloughs beginning in mid-July has weighed on cattle and hog prices for weeks. Meat packers and processors are barred from operating their 6,300 plants without USDA inspectors.
USDA Secretary Tom Vilsack said in a statement the $55 million "provides us with funding to help address those furloughs."
In a statement Tyson Foods, the No 1 U.S. meat provider, said, "This is good news for consumers, farmers, grocery stores, restaurants and meat companies."
Cargill, the No 3 U.S. meat company, hailed the prospect of uninterrupted meat inspection through the Sept. 30 end of the fiscal year.
But Rep Robert Aderholt of Alabama, who oversees the USDA budget, said "it has taken an act of Congress to get this administration to do the right thing."
Republican lawmakers and some meat industry officials say USDA designed its response to the budget cuts to be as hurtful as possible, a suggestion the agency has rejected.
For his part, Vilsack insisted there was no alternative to 11-day furloughs of all 8,400 inspectors because of the March 1 spending cuts, which were equal to 9 percent of the money remaining for meat inspection for the rest of the year. USDA said it had intended to minimize the impact by scheduling the furloughs on non-consecutive days.
"We are gratified that lawmakers recognized the essential nature of meat and poultry inspection by taking this step to prevent inspector furloughs," said the American Meat Institute, a trade group.
The government funding bill carried a "biotech rider" authorizing commercial cultivation and sale of a genetically engineered crop while USDA carries out court-ordered research. The rider applies in instances where a court vacated USDA approval of a biotech variety but there is no final ruling.
The Center for Food Safety, an opponent of genetically modified foods, said the provision undermines the power of federal courts to block potentially hazardous crops from entering the food chain. The consumer group Food and Water Watch said the provision weakens biotech regulation.
USDA approval is needed for commercial sale of biotech crops. At present, USDA approval of a biotech variety of alfalfa is being challenged in court.
USDA lost $1.9 billion in the automatic cuts that took effect on March 1. It has said up to one-third of its 100,000 employees will be affected by furloughs and it would have to close Forest Service visitor centers and campgrounds as well as deny enrollment of 600,000 poor pregnant women, new mothers and their children into the so-called WIC program that provides additional food aid.