Government Shutdown Impacts EPA, USDA; MFP Tariff Aid Payments Delayed
A partial government shutdown began on Dec. 22 after Congress and the White House failed to negotiate an agreement on how much money to allocate to President Trump’s border wall. Funding for about 25 percent of the federal government lapsed late on Dec. 21.
The shutdown was expected to extend into the new year after a brief pro forma House and Senate session on Dec. 27 failed to schedule any votes. Many lawmakers were preparing for the shutdown to last beyond Jan. 3, when Democrats take control of the House. Approximately 800,000 federal employees were reportedly furloughed or working without pay as the shutdown entered its second week.
Standard & Poor’s, the credit rating firm, estimated that the shutdown will slash the country’s gross domestic product by $1.2 billion for every week it continues.
The U.S. EPA on Dec. 27 alerted employees that it was about to run out of carryover funds that allowed the agency to continue working for several days after the shutdown. “In the event an appropriation is not passed by midnight Friday, December 28th, EPA will initiate orderly shutdown procedures,” Acting Administrator Andrew Wheeler wrote in an email obtained by Bloomberg Environment.
The EPA’s shutdown plan said more than 700 employees who are considered essential would be forced to work without pay, while more than 13,000 non-essential personnel would be furloughed.
The USDA on Dec. 21 issued a statement detailing which functions of the department would continue uninterrupted because they are related to law enforcement, the protection of life and property, or are financed through available funding such as mandatory appropriations, multi-year discretionary funding, or user fees.
USDA said 61 percent of its employees would either be exempted or excepted from shutdown activities during the first week, but that percentage would fall if the shutdown continues.
Some of USDA’s activities that will continue in the short-term include meat, poultry, and processed egg inspection services; grain and other commodity inspection, weighing, and grading services; inspections for import and export activities; maintenance of some research programs and research-related infrastructure, including the care of animals and plants; monthly Supplemental Nutrition Assistance Program (SNAP) benefits for January; Child Nutrition (CN) programs; conservation technical and financial assistance programs, including the Conservation Reserve Program, Environmental Quality Incentives Program, and easement program; trade mitigation purchases made by USDA’s Agricultural Marketing Service; agricultural export credit and other agricultural trade development and monitoring activities; and USDA’s Market News Service, which provides market information to the agricultural industry.
Most other domestic nutrition assistance programs, such as the Commodity Supplemental Food Program, WIC, and the Food Distribution Program on Indian Reservations, will continue to operate at the state and local level with any funding and commodity resources that are available, USDA said.
USDA also released a long list of activities that would not continue during the shutdown, including the provision of new rural development loans and grants for housing, community facilities, utilities, and businesses; all recreation sites across the U.S. National Forest System, unless they are operated by external parties under a recreational special use permit; new timber sales; most forest fuels reduction activities in and around communities; NASS statistics, World Agricultural Supply and Demand Estimates reports, and other agricultural economic and statistical reports and projections; Economic Research Service (ERS) Commodity Outlook Reports, Data Products, research reports, staff analysis, and projections; new research, education, and extension grants; and most departmental management, administrative, and oversight functions.
USDA said some farm payments would also be discontinued after the first week of the shutdown, including direct payments, market assistance loans, Market Facilitation Program (MFP) payments, and disaster assistance programs. Fertilizer industry sources noted that the delays would further impact year-end cash flow for growers already struggling with low crop prices.
Included in this list is the second round of some $12 billion in tariff aid payments under the MFP to farmers hurt by the trade war with China, with the majority of that aid package going to soybean growers. Farmers were able to apply for the first round of aid earlier this fall, and the second round was supposed to come in December. There are currently no plans to extend tariff aid to farmers in 2019.
“Payments will be made, but timing could be disrupted,” said USDA Under Secretary Bill Northey.
The administration had signaled earlier in December that the second round of tariff aid payments under the MFP could be delayed anyway, as trade negotiations continue between the U.S. and China. At the G-20 conference in Buenos Aries on Dec. 1, the U.S. and China agreed to halt any additional tariffs, as the two countries committed to a 90-day negotiation period. This announcement was followed by news of several large purchases of U.S. soybeans by China in mid-December.
Bloomberg reported in late December that there has been no recent news of fresh Chinese purchases of U.S. soybeans, however. Soybean futures in Chicago dropped over multiple trading sessions in late December, with corn futures also falling.
The government shutdown has hit other federal agencies hard as well, including Homeland Security and the Interior. According to Bloomberg Law, The Bureau of Land Management’s contingency plan calls for 6,930 of the agency’s 9,260 employees to be sent home in a shutdown, while the Fish and Wildlife Service’s shutdown plan furloughs about 7,000 of its 8,359 employees. The U.S. Geological Survey said that a shutdown would affect more than 99 percent of its 8,000-member workforce.