Deficit Gives Meatpackers a Big Beef : Food: The federal budget stalemate could furlough U.S. meat and poultry inspectors, forcing a shutdown of the packing industry.

California meat and poultry packers are hatching contingency plans to get them through a proposed four-day industry shutdown that would occur in October if the federal budget stalemate continues.

The U.S. Department of Agriculture will close its Food Safety and Inspection Service for four days between Oct. 1 and Oct. 15, furloughing all meat and poultry inspectors, if budget negotiators cannot reach agreement on a deficit-reduction package before the new fiscal year begins Oct. 1.

The proposed furlough will save about $5 million at the inspection service.

The agency has adopted this strategy to comply with budget-cutting mandates of the Gramm-Rudman-Hollings Act. Other federal agencies face similar cuts.

Federal law will not allow livestock slaughter and meat processing if inspectors are not present.

As a result, the nation’s 6,900 meat and poultry slaughter and processing plants--780 of which are in California--will be forced to shut down during the four-day furlough.

Although many doubt that the furlough will occur, such a shutdown would “devastate” the nation’s meat and poultry industry, said John Gould, manager of meat inspection services for the American Meat Institute.

“We anticipate, just in sales, about $1 billion lost a day. And about 356,000 workers in the packing industry will be out of work,” he said.

California would be among the hardest hit states, because it has more packing plants and uses more federal inspectors than any other state in the nation.

Livestock and poultry production is a $5 billion industry here, according to the California Department of Food and Agriculture.

The furlough would have “much more business impact in California than any other state in the nation,” said James Nichols, director of regulatory and technical services for the Western States Meat Assn. “There are many, many, many small processors in the state. The impact on small business would be insurmountable. Many operate on a day-to-day type basis.”

Joe Clougherty, president of Clougherty Packing Co. in Vernon, said he hopes to adapt his firm’s work week to help mitigate the impact of the proposed shutdown. The company slaughters between 5,500 and 5,700 hogs each day and markets its products under the brand name Farmer John.

“It will probably be a burden on us,” Clougherty said.

“Where it would put the pressure is on our buying in the Midwest,” where hog prices might rise.

Four days after President Bush signed the Emergency Deficit Control Measures of 1991, the act that orders budget cuts and would idle the meat and poultry inspectors, Coast Packing Co. in Vernon went into overdrive.

Coast is the largest lard-packing business on the West Coast and markets a line of beef-fat and vegetable shortenings.

Because so many of Coast’s products are meat-based, a federal inspector must be present during manufacturing.

The rendering plant usually runs four days a week, 10 hours a day. But once the furlough was announced, it immediately switched to five 12-hour operating days.

The overtime will continue until the company can stockpile a week’s worth of products.

“It’s time-and-a-half we pay for that,” said Dieter Rehnberg, sales and marketing manager. “We don’t have a choice. We owe this to our customers. A guy who owns a little restaurant, he shouldn’t suffer under it.”

But most of the slaughtering and processing plants affected by the proposed furlough are not so lucky.

Those who deal in fresh meat cannot stockpile their products as protection in the event of a shutdown.

Marty Schwartz is president of J.M.P. Foods, a Los Angeles company that processes cattle carcasses into hamburger and other cuts of beef.

Although Schwartz doubts that the furlough will occur--”I can’t see them shutting down an industry that feeds the nation”--he is cognizant of the potential for disaster.

“If I can’t sell a pound of meat a day will I lose money? Yes,” Schwartz said.

“That’s my business, selling meat. All of my fresh meat that I would have, I could not do anything with it. In this business, it’s sell it or smell it.”