How Will A Looming Government Shutdown Impact Agriculture?

When the House and Senate returns on Tuesday, lawmakers will have just five days left to avoid a shutdown, which would impact several USDA services, including key reports. 

In a surprising turn of events, renegade House Republicans once again rejected Speaker Kevin McCarthy's (R-Calif.) efforts to pass a Pentagon funding bill. This marks the second time in a week the GOP members have disrupted federal spending plans, highlighting deep divisions within the party. It now looks like the Senate will take the lead to try to get a continuing resolution going, even though the House would likely balk at its contents.

Even after McCarthy conceded to demands from the band of renegades for more extensive spending cuts to avoid a government shutdown, this latest development underscores the challenges he faces in uniting the Republican caucus on critical budgetary matters.

Voting against it were Rep. Andy Biggs of Arizona, Dan Bishop of North Carolina, Eli Crane of Arizona, Marjorie Taylor Greene of Georgia and Matt Rosendale of Montana. Rep. Tom Cole of Oklahoma, the chairman of the Rules Committee and an ally of McCarthy, also voted “no” so he would have the ability to request the vote be reconsidered, a step he took immediately after it was defeated. Two GOP dissidents — Marjorie Taylor Greene, once a reliable McCarthy ally, and Eli Crane — surprised McCarthy by voting against bringing up the defense spending bill. Greene said she opposed the inclusion of $300 million in Ukraine aid — a move that caught the speaker by surprise.

Negotiations on both short-term funding solutions and long-term appropriations have deteriorated to the point where lawmakers from both chambers are returning home, with no scheduled votes for the remainder of the week.

Next House step: McCarthy and his leadership team now intend to focus on passing the remaining 11 individual funding bills. The House Rules Committee has scheduled a markup this afternoon on four spending bills — Homeland Security, State-Foreign Operations, Defense and Agriculture.

An unlikely alternative approach: Rep. Don Bacon (R-Neb.), who helped craft a bipartisan stopgap proposal with the Problem Solvers Caucus, said McCarthy needs to start working with Democrats.

The Senate is preparing to act first on a short-term funding plan if the House fails, but there are constitutional considerations since spending bills must originate in the House. Senate Majority Leader Chuck Schumer (D-N.Y.) teed up a bill that could become the vehicle for a bipartisan stopgap funding package designed to keep the government open past Sept. 30. But that measure, if approved, as is now likely, would likely face major hurdles in the House. The Senate will take an initial procedural vote Tuesday evening on the House’s FAA reauthorization bill, which will eventually be substituted for the continuing resolution. Sen. Rand Paul (R-Ky.) has already said he won’t give consent for speedy passage of a bill that includes Ukraine aid. And Rep. Mike Lawler (R-N.Y.) told reporters he’ll demand a vote on a continuing resolution next week. If there is no vote, Lawler said he will use a discharge petition, which could allow a bill to be brought to the floor over McCarthy’s objections. The petition process, which could take at least 10 days, would not allow enough time to avert a government shutdown.

Impact on Agriculture

According to government agencies, here's how a potential shutdown will impact key services and their plans for maintaining essential services:

USDA: USDA's Animal and Plant Health Inspection Service and Federal Grain Inspection Service, which provide official phytosanitary certificates and grain inspection services, will continue their operations as they are funded by user fees. However, regulatory enforcement and standards development activities could be disrupted as they rely on appropriated funds. The Office of Management and Budget likely will issue a revised “Agency Contingency Plans” document in the event of a lapse in funding. If a shutdown does occur, there could be a disruption in services such as regulatory enforcement and standards development since the primary staffers that handle those activities are paid via appropriated funds. The work hours for headquarters staff in Washington, D.C., might also be staggered between “essential/exempted” staff since they are funded by both user fees and appropriated funds. The most recent partial gov’t shutdown affected USDA loans and grants for rural communities, paused funding for food banks, and closed thousands of Farm Service Agency county offices. Link to USDA contingency plans for each agency.

Key government reports will be impacted: A government shutdown on Oct. 1 could temporarily halt the release of the September jobs report, September CPI data and third-quarter GDP estimates, all scheduled for release in October. USDA’s NASS told us that phone surveys for the Oct. 12 Crop Production Report are scheduled to run Sept. 29 to Oct. 4. Unless a deal is reached by then, NASS will ask enumerators to make as many contacts as possible on Sept. 29-30. If a shutdown occurs, all data collection will halt at midnight on Sept. 30. Whether NASS could release the report as scheduled all depends on how long a shutdown lasts, and more importantly how much data NASS can collect prior to Oct. 1. They must have enough data to set accurate estimates. 

The Risk Management Agency (RMA) is responsible for publishing the October harvest price that is typically announced Oct. 31 or Nov. 1. Even if any government shutdown would last through that time, typically there are more than a few outlets and university folks that will publish the price as it is based on daily settlement prices for futures. RMA would also have some essential personnel who could likely release the information. If not, it would not take long for an RMA announcement once the government reopens.

Army Corps of Engineers: Lock operations, considered exempted activities vital for human life and property protection, will remain operational during a government shutdown. Link for more

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