In September, several provisions of the Grain Standards Act expire, leading House legislators to hold a hearing to highlight what currently works as well as needed changes as it finalizes legislation to reauthorize the act and do so “well in advance” of the expiration to achieve bipartisan consensus.
During a hearing Wednesday, House Agriculture subcommittee on general farm commodities and risk management chairman Rick Crawford (R., Ark.) said legislative drafts are “nearly concluded” and proposals have been reviewed from grain industry organizations and majority and minority offices have worked very closely in an effort to develop a bipartisan consensus in advance of a markup in the “near future.”
The U.S. Grain Standards Act, which was first passed in 1916, authorizes the Grain Inspection, Packers and Stockyards Administration to establish official marketing standards for grains and oilseeds, and requires that exported grains and oilseeds be officially weighed and inspected. It also establishes rules for the voluntary inspection of domestic grain.
USDA’s Federal Grain Inspection Service (FGIS) performs the essential role of maintaining the official U.S. grain standards, which are critical to establishing value and price-discovery in the U.S. grain and oilseed marketplace.
Expiring provisions include the authority of the Federal Grain Inspection Service to collect user fees that fund their operations and the authority for a U.S. Department of Agriculture Grain Advisory Committee.
Members of the panel as well as legislators noted the importance of addressing shortcomings which have led to intermittent disruptions in official inspection and weighing service such as what happened at the Port of Vancouver, Washington in 2013 and 2014.
Nick Friant, business unit food safety leader for Cargill and on behalf of the National Grain and Feed Assn. and North American Export Grain Assn., urged that existing language be strengthened to reinforce the Secretary of Agriculture to restore official inspection in a prompt manner, which was not followed through on last year. He testified, “Make no mistake, U.S. foreign buyers took note of this very visible and extreme disruption, which damaged the reputation of FGIS and undermined confidence of international buyers in the reliability of the U.S. official grain inspection system at export locations.”
David Winkles, South Carolina Farm Bureau president, testified that these types of disruptions bring chaos into the marketplace and threaten customer relationships that have taken years to build and farmers, local businesses and consumers pay the price.
Farm Bureau testified it believes it is essential to have a contingency plan in place to ensure that official grain inspection activities still occur regardless of service disruptions. “We need to have a reliable third party inspection and grading program for emergency situations to assure both seller and buyer that every contract can be expected to be fulfilled in a timely manner,” Winkles said.
Friant added in his testimony the use of the independent third-party inspections in the cases when disruptions in official service occur should be utilized. He said some have attempted to denigrate, undermine or obfuscate this concept by labeling it as “privatization.”
“That emphatically is not what NGFA and NAEGA are proposing. Instead, what we propose is a process to further strengthen the federal system we seek to improve and preserve by enabling qualified individuals working under federal oversight and employed by independent, private third parties to be licensed under Section 84 of the USGSA utilizing the same process USDA already does to license personnel from designated official State and private entities in the domestic market,” he shared.
David Cox, who testified on behalf of the American Federation of Government Employees for the AFL-CIO, said that FGIS has a successful record over four decades of inspecting and weighing nearly 90% of the grain shipped to customers around the world. Approximately 200 inspectors are currently employed by FGIS. Cox said privatization would “undermine America’s guarantee of impartial and honest, government-backed trading which is relied upon by world buyers.”
NGFA and NAEGA also urged that FGIS be required to base the tonnage component of export inspection user fees on a fluctuating and more market-responsive basis that takes into account shifts in actual shipment volumes that are officially inspected, rather than the current static formula that is based on what were erroneously low projections in export volumes. Specifically, they recommended that FGIS use a rolling five-year average as the basis for the tonnage user fee calculation.
The Grains Standards Act is typically reauthorized every 10 years, however, NGFA and NAEGA recommended the time period be changed to ever five years given the “dynamic, changing and highly competitive nature of the global grain export marketplace,” Friant said.