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Senate Testimony Focuses on Reauthorization of USGSA

NGFA recommended several policy improvements to U.S. Grain Standards Act

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Today, the Senate Committee on Agriculture held a hearing looking at perspectives around reauthorizing the Grain Standards Act.

The National Grain and Feed Association (NGFA) recommended several policy improvements that would “create a more reliable, competitive and cost-effective official grain inspection and weighing system” during a July 31 Senate Agriculture Committee hearing on the reauthorization of the U.S. Grain Standards Act (USGSA).

“The grain storage, handling and export industry specializes in the logistics of purchasing the commodities a farmer grows and finding a market for it here at home or in global markets,” says Bruce Sutherland, president of Michigan Agriculture Commodities in Lansing MI, who testified on NGFA’s behalf. “…[O]ur legislative recommendations to amend the USGSA will strengthen the Official inspection and weighing system, foster the competitive position of U.S. grains and oilseeds in world markets, and maintain the integrity of official inspection results.”

Sutherland is a member of the NGFA Board of Directors and serves as a recently appointed member of the Federal Grain Inspection Service’s (FGIS) Grain Inspection Advisory Committee. NGFA’s recommendations were developed in collaboration with the North American Export Grain Association (NAEGA), with which it is co-located and has a strategic alliance.

FGIS and its delegated and designated state and private agencies are relied upon to provide “competent, state-of-the-art and reliable” inspection services, which are paid for by the industry, to facilitate marketing of U.S. grains and oilseeds. Official grain inspection and weighing generally is mandatory for most U.S. export shipments, while the use of such services is voluntary in the domestic market.

Reforms enacted by Congress in 2015 “served as a springboard” for a series of improvements to FGIS and the Official inspection system, Sutherland said. He also credited Secretary of Agriculture Sonny Perdue’s decision as part of his 2017 reorganization of the U.S. Department of Agriculture (USDA) to return FGIS to the Agricultural Marketing Service, where it had resided prior to 1994, as well as the installation of fresh, capable new leadership at the agency for bringing about positive changes.

As lawmakers consider reauthorizing the USGSA, the NGFA offered several recommendations for improvement:

  • FGIS should expressly prohibit the inappropriate and misleading practice of using grain standard quality factors as an indicator of plant health risk on phytosanitary certificates issued by USDA’s Animal and Plant Health Inspection Service (APHIS). “APHIS inappropriately and unwisely in our view acquiesced in late December 2017 to Chinese officials’ requests that foreign material (FM) content – a grain quality factor – be used as a proxy for weed seed content in U.S. soybean export shipments,” Sutherland noted. The resulting market uncertainty led to a sharp reduction in U.S. soybean exports to China months before the advent of tariffs.
  • Delegated states should be required to notify users of Official inspection or weighing services at least 72 hours in advance of any intent to discontinue service. Such agencies already are required to provide such notification to USDA. “We strongly believe affected facilities need and deserve the same courtesy and consideration as currently provided to USDA so they can make appropriate logistical and other alternative arrangements to continue to serve customers whenever possible – including farmers and upstream and downstream customers,” he said.
  • FGIS should conduct a detailed review of the current geographic boundaries for each officially designated agency operating in the domestic market. FGIS designates a single agency to provide official inspection services in each geographic territory. The agency has not conducted a comprehensive review of these boundaries since it was established in 1976.
  • FGIS user fees paid by those obtaining inspection and weighing services should be directed solely for that purpose, not for developing the U.S. grain standards or for compliance and enforcement activities, which have broad societal benefits to producers and consumers. “Users of these Official services already pay for the direct costs incurred by FGIS in providing them, plus administrative overhead for those services, which typically comprises 70 percent of FGIS’s total annual budget,” Sutherland said.
  • Extending the reauthorization period for the USGSA to somewhere between five and 10 years, versus the current five-year schedule – at Congress’s discretion, “given the extremely positive changes brought about by Congress in revising the USGSA in 2015, combined with the highly successful reorganization and realignment of FGIS into AMS.”
  • FGIS should be required to report to Congress and the public the number of and specific type(s) of waivers from official inspection and weighing service being requested and granted, the number of non-use of service exceptions requested and granted, and the number of specific testing services requested, while preserving confidential business information.
  • The FGIS Grain Inspection Advisory Committee should be reauthorized. The advisory committee provides counsel to the FGIS administrator on the implementation of the USGSA and is comprised of members who represent the interests of grain producers, exporters and handlers.

NGFA concluded that “reauthorizing the Grain Standards Act on time – or even a bit early – would provide continued certainty to grain handlers, farmers and our global customers.”

View NGFA’s full written testimony here. NAEGA also testified at the hearing, and its testimony can be viewed here.

Brian Linin, a wheat farmer from Goodland, KS, testified on behalf of the National Association of Wheat Growers (NAWG) on the importance of reauthorizing the Grain Standards Act.

Linin also serves as a board member of the U.S. Wheat Associates and works for Frontier Ag, Inc.

Highlights from his testimony can be found below:

“The Grain Standards Act serves a critical role in exporting grains and oilseeds, including U.S. wheat, of which about 50% is exported each year. With such a large volume of wheat being exported, our export markets are critical to wheat farmers’ bottom lines…

“The grain inspection system is one that is valued by our overseas customers and adds value to our commodities. Foreign customers can be assured that an independent agency has certified shipments to meet the grade requirements specified in a contract. This certainty and reliability has helped wheat and other U.S. commodities to grow our export markets and serves as a significant advantage of purchasing U.S. wheat versus wheat from other origins…

“A properly functioning grain inspection system is critical, and we urge Congress to reauthorize the Grain Standards Act this year. Despite the significant impacts of tariffs on exports, U.S. wheat has maintained some competitiveness in the international market in part thanks to the advantage and premium international buyers place on the U.S. grain inspection system.

”Given the current uncertainty in trade agreements and many of the bearish factors working against U.S. wheat exports, it is critical we maintain one of our key advantages. Foreign and domestic customers value an independent agency certifying shipments to meet the grade requirements of contracts.”

To read Brian Linin’s testimony in its entirety, visit NAWG’s site here.

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