Source: Bloomberg

A provision in a spending bill passed by the Senate would avoid furloughs of U.S. meat inspectors as part of budget cuts, lowering the risk of disrupting plants run by companies including Tyson Foods Co. (TSN)

The spending bill was approved 73-26 today and now goes to the House. Earlier, in a voice vote, senators amended the measure to let the U.S. Department of Agriculture shift funds among programs to avoid pulling inspectors from meatpacking plants that require federal oversight to operate.

The possibility that plants may shut for 11 days from July through September drew protests from the American Meat Institute and other industry groups. Agriculture Secretary Tom Vilsack, who earlier estimated the disruptions could cost the industry as much as $10 billion, said the amendment should avert furloughs.

Meatpackers welcomed the vote. “Meat inspection is an essential government service, and should not be interrupted,” Gary Mickelson, spokesman for Springdale, Arkansas-based Tyson, the biggest U.S. meat processor, said in an e-mail. Mike Martin, spokesman for Minneapolis-based Cargill Inc., said “it appears as though the best interest of the American public is being served in Washington today in a bipartisan way.”

House Action
The Senate spending bill would fund the federal government through Sept. 30. House Budget Committee Chairman Paul Ryan yesterday said his Republican colleagues may accept the Democrats’ spending measure as-is. House Appropriations Committee Chairman Hal Rogers said he expects the bill to pass tomorrow.

The USDA began notifying union representatives that furloughs are possible after the budget-cutting measure known as sequestration took effect March 1. The mechanism is part of a 2011 deficit-reducing agreement that requires $85 billion in across-the-board cuts to government agencies this fiscal year.

Meat, poultry and egg processing plants are prohibited from operating without the presence of federal inspectors. Having to furlough inspectors for 15 days would cost the industry more than $10 billion in production losses, and workers at meat plants could lose more than $400 million in wages, Vilsack said in a letter to Senate Appropriations Committee Chairwoman Barbara Mikulski in February.

Under the amendment, $55 million would be transferred from USDA school-equipment grants and maintenance budgets for buildings and facilities to the department’s Food Safety and Inspection Service, which pays inspectors.