International Produce Training

Federal-State (USDA) Inspection Programs

With the economic crisis placing a huge burden on state budgets, will the USDA Federal State inspection programs be able to withstand these tough times?  During my many years as a state employee, a Federal Supervisor, and later as a Federal Program Manager, I would never have predicted that state budgets would reach into the state inspection reserve funds.  I was always led to believe these inspection funds were safe, were set aside as revenue generated from the growers using the inspection program, and could not be tapped by the state’s general funds.

It appears this economic crisis is changing the rules.  A blogger sent me a newspaper article from the Denver Post, dated 1/14/09, which states,

“So while the Department of Agriculture raised the $79,430 to hire five seasonal potato inspectors itself, that money is also at the legislature’s disposal as it tries to deal with budget cuts eleswhere, according to Tom Lipetzky, director of agriculture’s division of markets.”  It goes on to say, “In budget crises of yesteryear, lawmakers have raided those fund to help balance the budget.  (Gov. Bill) Ritter has said he has similar designs this year on part of those funds.”

As the states prepare for the possibility of losing some of their reserve funds, funds they use to hire their inspectors, train their inspectors and manage their inspection programs, they will have to make some adjustments and changes to compensate.  They could ask the USDA to lower their overhead charges imposed on their shipping point inspection programs, they could raise their own inspection fees, or they could institute workforce reductions or other cuts in expenses.

27 Comments on “Federal-State (USDA) Inspection Programs”

tyawman Says:

I received an e-mail from a state supervisor commenting on the fact state legislatures could indeed tap into the inspection revenue funds, wrote,

“Really, they can. We could pull up the total hours worked on terminal market inspections for the last 5 years. Not everyone was paid out of the inspection fund, so they could go back and claim they are reimbursing themselves for all the salary and fringe that was paid out of the general fund to inspectors. The inspection money would be gone in the blink of an eye.”

olden timer Says:

It is just a matter of everybody raising their “administrative costs” and boom, it’s gone!!!!

tyawman Says:

Another e-mail came my way, this time a new twist was unveiled. The Director of this state’s program is now offering to train the applicants on how to set up their own-in-house inspection program, for product being received at processing companies:

“After a review of all the information and careful consideration we have arrived at a set of revised fee rates. These rates will take effect on February 15, 2009. A schedule of fee rates is attached. In most areas these rates represent substantial increases. Again, these increases are driven by the loss of general fund revenue support but also by increasing costs and need to cover program costs by users as instructed by the authorizing statute.

For processors, we have offered to provide training, at your cost, in order for you to develop an “in-house” inspection program if that would meet your needs. That offer still stands.”

This idea may not be so far fetched. Presently, the USDA offers an alternative inspection program at shipping points called, Partners in Quality (PIQ). The company’s personnel is trained by the USDA and the company creates an approved quality management program. The industry performs their own inspections, writes their own certificates, all under the auspices of the USDA, through regularly scheduled audits.

olden timer Says:

I hear that California has started a furlough program, giving inspectors two days off every week. The inspectors are on a “Leave Without Pay” status during this time to help the state budget. How does the work get done on those days??? Are there any other states that are going to take this action??? Will inspection fees go up with this action??? What happens if PACA kicks out the inspection due to delays??? Does anybody have any answers??? I sure don’t!!!

Does the industry have to call in for recieving inspections prior to the product arrives in the good old days of Hunts Point just to get their name on the list hoping to, at least, have an inspector show up.

Spartan Says:

The news we received in Michigan is very troubling. In 2008 the weekly contract rate for one USDA Federal State Inspector was $900. In 2009 the weekly contract rate is being doubled. Increased to a whopping $1800 per week, per inspector! And another increase is planned for 2010. We will definitely look to other options, as this is clearly “government out of control.”

Whether this was due to the USDA increasing their own inspection fees by over 50% during the past three years and increasing the overhead on the state’s programs by approximately 40% this past year, or this was due to mismanagement at the state level, staring down at an annual fee increase of 100% is inexcusable.

Howard Hughes Says:

The FPB needs me to oversee their fiscal nightmare. But even I would have a difficult time balancing their books. Not because I am dead, but because the financial wizards within the fresh products branch have the books so screwed-up.

Plus, they rely on the ever inaccurate FEIRS to do it’s billing. Often inspections are never billed and sometimes FEIRS double bills companies. Nice way to run a federal program …… straight into the grave beside me.

olden timer Says:

Hey, Howard maybe you can donate some big bucks to bail ’em out.

Gator Says:

Great news! With the USDA’s financial records being released, the reserve fund for the end of Dec. 2008, was a whopping $12 million. Compared to the same time last year, the reserve fund was a paltry $9 million. This has to mean the end to cutbacks and office closures. What a great team effort to rebound, to actually make a profit of $3 million from one year to the next!

Happy days are here again!

olden timer Says:

Where is the reserve coming from, Market or Shipping Point activities???

tyawman Says:

This article was sent to me from a reader in Nogales, AZ. It appears a sizable amount of their inspection fund money is getting taken by the state legislature. From the February 10, 2009 edition, of the Nogales International:

Produce companies pay user fees to fund the inspections, which the state of Arizona does for the U.S. Department of Agriculture, Moore said. “The state becomes the trustee of that money to put back into that program to hire inspectors.”

But state legislators, in their efforts to cut $1.6 billion from the state budget, stripped $516,100 from the Arizona state-federal inspection fund with SB 2001, said Laura Oxley, public information officer for the state Department of Agriculture. Another section of that bill will take $171,400 in anticipated fees for the fund through June 30, for a total loss of $687,500.

“This is now law,” Oxley said. Gov. Jan Brewer signed the bill on Jan. 31.

U.S. retailers want produce to meet certain quality standards and those inspections are separate from safety or security inspections, Moore said. By taking some of the inspection funds, the state will limit its ability to provide inspections on produce entering the United States on weekends, she said. It might mean there won’t be enough inspectors to check the grape crop coming from southern Sonora beginning in May.

“The money in that fund is money we pay for inspections,” said Jaime Chamberlain, owner of Chamberlain Distributing in Nogales. He described the legislature’s action as a “blatant violation.”

Wiley Vet Says:

Oooops, she did it again. The good times with the inspection service were short lived. A round of office closures and layoffs has been announced for mid May. Well, it was good while it lasted! Anyone know which offices are slated for closure?

hendrik Says:

I am guessing it will obviously be some of the markets that are losing big money.
The ones losing the most money are Buffalo, El Paso, Salt Lake City, Pittsburgh, Bronx, San Francisco, Seattle, Kansas City.

Dog Bonz Says:

Not Pittsburgh. I heard the bigger applicants were forced to sign a contract to keep the USDA inspectors in the area. There goes the integrity in that office, as the inspectors will now be “working” directly for the wholesalers that signed the contract. Is the USDA going to rotate inspectors in and out of that office, at least to give the impression of being unbiased?

hendrik Says:

Did they sign an agreement? And will it be year to year?
If so, wait till the year is almost up and they have pen in hand to sign on for another year?
Shippers will know what’s up.
Unbiased? Yes!

Capt'n Crunch Says:

Mr. Dog — Would you care to elaborate on
what you mean by the bigger applicants in
Pittsburgh were “forced” to sign a contract?

Dog Bonz Says:

Mr. Crunch; in order to keep the USDA inspectors in Pittsburgh, the USDA made the applicants sign a contract, guaranteeing a fixed price, to prevent that office from closing. That is all well and good, but if the applicants don’t get the service they expect, they may cancel their contract, meaning the inspectors will be out of their jobs.

I don’t know why Pittsburgh was singled out as they will surely be paying higher inspection fees than their competitors in other markets.

Anonymous Says:

preferred customers?
no, just a way to keep the office open to provide continued service in Pittsburgh. That office would have closed and the inspectors would have been out of a job since it was not self sufficient and being more of a financial drain on the organization than the training center is.
Alternative to this was that the Pittsburgh applicants would not be able to get inspections. Shippers would quickly realize this and send the garbage that route.

Moles are pesky critters Says:

A question to the one that answered
in response the Pittsburgh office staying
open vs closing or to anyone else in the
know —

If the Pittsburgh office is such a big financial
looser and was on the verge of closing, what
is the bottom line for keeping offices open
within the FPB? For example, it is a well known
fact that several offices in the FPB operate
despite the fact they are in the red. So my
question is, what is the justification behind the
FPB keeping them open, while closing down
other offices? I mean if the reason for closing
down an office is because they are losing
money year to year, shouldn’t more offices
that are still operating be closed because they
are in the red? I just find it disturbing that
certain offices, those in Pittsburgh, Salt Lake
City to name just two, are either closing down
or almost closed down because of negative
financial numbers, when several other offices
that I will not name, continue to operate
in the red. Just appears to be a management
team that is inconsistant, inexperienced
and confused when making important life
changing decisions that not only affect the
inspection program, but the careers of many
dedicated employees and their families.

Anonymous Says:

Mr. Mole, you nailed it! Last I looked about 25 offices were in the red, while only 10 made a profit. Will the USDA close down all 25 offices? How much of a loss is too much?

It is true Pittsburgh is losing money, but 6 other office are even losing more money. If the USDA can close down Pittsburgh are they going to shut down Hunts Point, San Francisco and Baltimore?

You are exactly right in asking, What is the justification for closing an office, or placing the receivers on some markets on an expensive contract basis?

Anonymous Says:

hunts point?

tyawman Says:

The previous blogger is pointing out; if the USDA is closing down offices on the basis of losing money for the USDA Fresh Products Branch (El Paso, Buffalo, Salt Lake City), then shut down the offices that lose the most money. Offices like Hunts Point (Bronx, NY), San Francisco, and Baltimore all lose more money than the offices that have been shut down, or are slated for closure.

Anonymous Says:

Yes, hunts point has been losing money now for years. why do they keep that open then?
buffalo, el paso?
I thought that the main goal was to provide service, especially to the more remote areas where shippers don’t have an immediate contact to oversee the results. HP should be enough in the black so as the smaller markets can do just that and provide service.
LA, Chicago were also in the red in a big way, but have since showed much improvements. Why can’t HP?

Anonymous Says:

HP loses money because the three supervisors in the office do practically zero inspections. Having to pay the big salaries, with one earning 6 figures, is just too much for the office to handle. If the supervisors got their hands dirty once in a while it may make a difference. But if HQ lets them continue to do nothing, who is to blame?

Anonymous Says:

What do you mean by 3 supervisors? Do any of the supervisors (not sure why you would need 3) do inspections? And what exactly do they supervise?

Anonymous Says:

The Bronx office has about 8 inspectors. The three supervisors include a training officer, an assistant officer in charge and the officer in charge. The three do not do any inspections. I guess it takes 3 to supervise the 8.

CEO Says:

Let me get this straight. You are saying that there are 8 inspectors and 3 supervisors? That cannot be right. No business in the world would be able to be in the black with that kind of oversight. Clearly you are mistaken?
In the “real” world, if a business is not in the black, then you start with the removal of management.

olden timer Says:

Where does the money come from with all the red ink???

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