(April 17, 2:42 p.m.) WASHINGTON, D.C. — Planned budget cuts at the U.S. Department of Agriculture’s Agricultural Marketing Service Fresh Products Branch over the next year should have a minimal short term impact on industry, USDA officials say.

“In the next six months, I don’t see too much of an impact at all, and even after that we want to provide service where we can afford to do so,” said Leanne Skelton, chief of the fresh products branch, on April 16.

Skelton said the branch needs to permanently cut $5 million in the next year to balance revenue and expenses and keep the program with adequate financial reserves. The sum, Skelton said, accounts for the current annual shortfall between revenues and expenses.

“The object is to make the cuts we need to make, size the offices appropriately and where we may have to close an office, we will take all the steps necessary to find other means of serving that office,” said Robert Keeney, deputy administrator for the AMS fruit and vegetable programs. “That’s an important goal for us.”

In an April 4 internal memo, Skelton informed Fresh Products Branch staff there of staff reductions, early retirement, reduced overtime, reduced travel, decreased training and unpaid leave. Furloughs, or unpaid leave, could begin June 1, Skelton said in the memo.

However, a cost-cutting plan is under development but not approved, Keeney said April 16, and the USDA could not yet share any specifics of the coming cuts.

In any case, Keeney said the Fresh Products Branch wants to put the cost savings measures in place before again considering raising fees.

The Fresh Products Branch has had 15% destination inspection fee increases in 2004, 2006, 2007 and another in March. However, because of cost living raises given to federal workers and other factors, the 15% fee increases have each netted about a 7% increase in incomes, Skelton said.

Federal cost of living wage increase added $700,000 in costs for 2008, Keeney added.

Skelton said she is concerned about ensuring that staff levels can be sustained by revenue produced at existing federal offices, acknowledging staff cuts are coming within the year at headquarters and at field offices.

The Fresh Products Branch has 34 federal field offices, while the federal-state program — with staff provided by states — has about 100 offices, she said.

“We are going to take a look where we may find efficiencies and staff accordingly, across the program,” she said.

Skelton raised the possibility of contracted inspections at terminal markets or other industry entities.

Keeney and Skelton said they welcome input — both from the Fruit and Vegetable Industry Advisory Committee and others — about ideas such as contracted inspections.

At the most recent industry advisory committee meeting in mid-February, Keeney said he recommended development of a working group on the inspection program even though the agency’s budget office had not yet provided the urgency of the situation at the time.

“I would also think the industry would want us to manage the program so we are break-even, because at the end of the day, if we run the program in the red, it will result in the closing of the program,” Skelton said.