[Senate Hearing 116-228]
[From the U.S. Government Publishing Office]
S. Hrg. 116-228
PERSPECTIVES ON REAUTHORIZATION OF
THE U.S. GRAIN STANDARDS ACT
=======================================================================
HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
JULY 31, 2019
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov/
______
U.S. GOVERNMENT PUBLISHING OFFICE
39-844 PDF WASHINGTON : 2020
COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
PAT ROBERTS, Kansas, Chairman
MITCH McCONNELL, Kentucky DEBBIE STABENOW, Michigan
JOHN BOOZMAN, Arkansas PATRICK J. LEAHY, Vermont
JOHN HOEVEN, North Dakota SHERROD BROWN, Ohio
JONI ERNST, Iowa AMY KLOBUCHAR, Minnesota
CINDY HYDE-SMITH, Mississippi MICHAEL BENNET, Colorado
MIKE BRAUN, Indiana KIRSTEN GILLIBRAND, New York
DAVID PERDUE, Georgia ROBERT P. CASEY, Jr., Pennsylvania
CHARLES GRASSLEY, Iowa TINA SMITH, Minnesota
JOHN THUNE, South Dakota RICHARD DURBIN, Illinois
DEB FISCHER, Nebraska
James A. Glueck, Jr., Majority Staff Director
DaNita M. Murray, Majority Chief Counsel
Jessica L. Williams, Chief Clerk
Joseph A. Shultz, Minority Staff Director
Mary Beth Schultz, Minority Chief Counsel
C O N T E N T S
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Wednesday, July 31, 2019
Page
Hearing:
Perspectives on Reauthorization of the U.S. Grain Standards Act.. 1
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STATEMENTS PRESENTED BY SENATORS
Roberts, Hon. Pat, U.S. Senator from the State of Kansas,
Chairman, Committee on Agriculture, Nutrition, and Forestry.... 1
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan... 2
WITNESSES
Linin, Brian, Farmer and Member, National Association of Wheat
Growers, Goodland, KS.......................................... 5
Ayers, David, Former President, On Behalf of Tom Dahl, President,
American Association of Grain Inspection and Weighing Agencies,
Sioux City, IA................................................. 6
Sutherland, Bruce, Member, Board of Directors, National Grain and
Feed Association, Lansing, MI.................................. 8
Friant, Nick, Chairman, Grades and Inspections Committee, North
American Export Grain Association, Wayzata, MN................. 10
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APPENDIX
Prepared Statements:
Linin, Brian................................................. 26
Ayers, David................................................. 29
Sutherland, Bruce............................................ 32
Friant, Nick................................................. 45
Document(s) Submitted for the Record:
Friant, Nick:
National Grain and Feed Association, prepared statement for
the Record................................................. 56
North American Export Grain Association, prepared statement
for the Record............................................. 58
U.S. Grain Standards Act, prepared statement for the Record.. 90
Question and Answer:
Linin, Brian:
Written response to questions from Hon. John Hoeven.......... 114
Sutherland, Bruce:
Written response to questions from Hon. John Hoeven.......... 115
Friant, Nick:
Written response to questions from Hon. John Hoeven.......... 116
Written response to questions from Hon. Amy Klobuchar........ 117
PERSPECTIVES ON REAUTHORIZATION OF
THE U.S. GRAIN STANDARDS ACT
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WEDNESDAY, JULY 31, 2019
U.S. Senate,
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC.
The Committee met, pursuant to notice, at 9:30 a.m., in SR-
328A, Russell Senate Office Building, Hon. Pat Roberts,
Chairman of the Committee, presiding.
Present: Roberts, Boozman, Ernst, Hyde-Smith, Braun,
Perdue, Grassley, Thune, Fischer, Stabenow, Brown, Casey, and
Smith.
STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND
FORESTRY
Chairman Roberts. Good morning. Well, thank you.
Actually, that is pretty pathetic. Good morning.
Thank you. Appreciate it.
I call this meeting of the Senate Committee on Agriculture,
Nutrition, and Forestry to order. This hearing on
reauthorization of the U.S. Grain Standards Act is a very
important step in continuing the Committee's work to
reauthorize programs in our jurisdiction.
Already this year, we have held hearings to advance our
work on reauthorizing child nutrition programs as well as the
Commodity Futures Trading Commission.
Today, we will examine the importance, the most important
importance, of the U.S. grain inspection system and hear
directly from key stakeholders and discuss provisions in the
Grain Standards Act that will expire on September 30, 2020,
without congressional action.
The members of this Committee know that the farm economy
and global trade face unique challenges. That is probably the
understatement of my whole comments. Maintaining the certainty
and predictability of the grain inspection and weighing system
is the key for the successful flow of grain and oilseeds from
their origins at farms all across the country to their eventual
destinations, including critical export markets.
For over 100 years, the U.S. Grain Standards Act has
authorized the Department of Agriculture to establish marketing
standards for grains and oilseeds. These official standards,
set by regulations, define each grain, each class of grain, and
the numerical grades of specific physical characteristics.
In the 1970's, after irregularities in grain inspection and
weighing led to grand jury investigations and indictments, no
less, there were major reforms to the Grain Standards Act to
ensure the reliability and quality of U.S. grains and oilseeds.
After disruptions of export inspections in 2014, the Grain
Standards Act was further modified to require the Secretary of
Agriculture to take immediate action to maintain export
inspections and to provide daily updates to Congress.
Transparency is also an important step to continue
certainty and predictability in the grain inspection and
weighing system. Most of the 2015 reauthorization has been
implemented, as anticipated. However, Congress did not intend
for the Federal Grain Inspection Service to allow for the
unilateral cancellation of many of the existing exceptions to
the geographical boundaries for domestic inspections.
A provision in the 2018 Agriculture Improvement Act,
shepherded by my good friend from Michigan and myself and the
rest of this Committee----
Good morning, John.
Senator Thune. Chairman.
Chairman Roberts. Thank you.
--allowed for a restoration of the previous exceptions.
I did not call you ``Coop.'' That is one of the first
times.
This serves as a reminder of the careful consideration we
must take during the upcoming reauthorization to avoid
unintended consequences.
The witnesses we will hear from represent different
perspectives in the grain and oilseed value chain: a farmer, an
inspector, a grain handler, and an exporter.
So today's hearing gives us a chance to hear directly from
stakeholders on what is working well and where we might
consider making improvements to the U.S. Grain Standards Act.
I also look forward to hearing from our witnesses regarding
their experiences with the Federal Grain Inspection Service
since it has been realigned under the Agricultural Marketing
Service.
Thank you to our witnesses for traveling to Washington and
providing testimony before the Committee on such an important
issue. I look forward to hearing from each of you.
I am confident that the Committee will, once again, work in
a bipartisan fashion to ensure our U.S. grain system continues
to facilitate reliable U.S. grain exports for years to come.
This hearing is the first step in this process.
I now recognize my distinguished colleague, Senator
Stabenow, for any opening remarks she might have.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
OF MICHIGAN
Senator Stabenow. Well, thank you, Mr. Chairman, for
holding this hearing as we begin the process of reauthorizing
the Grain Standards Act. We thank all of the experts before us
today. We appreciate all of your perspectives.
I have to particularly say thank you to Bruce Sutherland,
who has traveled here from Michigan. We appreciate all of you
being here.
We all know that our nation's farmers grow the best
products in the world, period. Whether it is Michigan
soybeans--or Kansas wheat--buyers around the world know that
when American products have a U.S. Department of Agriculture
certificate, their quality is second to none.
This credential has made the U.S. the premier supplier of
high-quality grains and oilseeds and the number 1 exporter of
farm goods worldwide.
Agricultural exports are crucial to our economy, supporting
more than 1 million American jobs, including over 22,000 jobs
in Michigan.
The trust associated with official USDA certificates of
inspection and weighing is a big part of that success story.
That is why it is critical we maintain the Federal Grain
Inspection Service.
Before the creation of this important agency in the 1970s,
our private inspection system was rocked by a scandal that
threatened the credibility of U.S. agricultural exports. While
American farmers were producing high-quality grain, private
inspection entities were shortchanging our trading partners by
inaccurately weighing grain, shipping it in contaminated
vessels, and even accepting bribes. Several individuals and
companies were indicted by federal grand juries.
The scandal damaged our reputation as a reliable business
partner and harmed our competitive advantage in international
markets.
The good news is, in response, Congress created the Federal
Grain Inspection Service in 1976. As a result, the integrity of
American agricultural exports was restored. Since then, exports
have increased more than six times.
The Grain Standards Act created the official USDA
certificate of inspection. That certificate helps assure
American farmers they are getting a fair price and guarantees
international customers can trust the products they are buying.
Because farmers are facing uncertainty on many fronts, as
we know, Mr. Chairman, it is crucial that we maintain the
integrity of our inspection system.
American farmers have been struggling with low commodity
prices, in addition to extreme weather that has damaged farms
across the country and delayed planting for farmers in Michigan
and around the Midwest.
On top of that, this Administration's reckless approach to
trade has taken a toll on our ability to export agricultural
products-- and it is having a real impact on farmers across the
country.
At a time when many buyers in international markets are
questioning the reliability of the United States as a
consistent supplier, it is important that those buyers are not
also doubting the quality of the grains and oilseeds they
purchase.
Mr. Chairman, the first bipartisan bill that we worked on
under your leadership included the reauthorization of the U.S.
Grain Standards Act in 2015. It was a pleasure to work with you
then, and it is a pleasure to work with you now as we move
forward to maintain the integrity of the existing inspection
system. Thank you.
Chairman Roberts. Thank you. Let us get to the witnesses.
Number 1, Mr. Brian Linin, farmer and member of the
National Association of Wheat Growers from Goodland, Kansas,
which we refer to in Kansas as the ``top of the world.'' Mr.
Brian Linin is a farmer in northwest Kansas where he grows
wheat, corn, soybeans, and raises three children. He is the
mayor of Goodland, Kansas, a Kansas Wheat Commissioner, a
member of the National Association of Wheat Growers, and most
importantly a graduate from the home of the ever optimistic and
fighting Wildcats, Kansas State University. Welcome to Brian.
Mr. David Ayers on behalf of Tom Dahl, president, American
Association of Grain Inspection and Weighing Agencies, Sioux
City, Iowa. Mr. Tom Dahl, the President of the American
Association of Grain Inspection and Weighing Agencies and
General Manager of the Sioux City Inspection and Weighing
Service, was our invited witness for the hearing.
Unfortunately, he had to stay in Iowa for a family emergency.
Delivering his statement is David Ayers, former president of
the association. David, Welcome.
Mr. Bruce Sutherland, Member and Board of Directors,
National Grain and Feed Association from Lansing, Michigan, is
our third witness.
Senator Stabenow, I understand you would like to introduce
him.
Senator Stabenow. Thank you, Mr. Chairman. I definitely
would, and again, I want to welcome Bruce Sutherland to the
hearing today.
He is a member of the board of directors for the National
Grain and Feed Association, and serves as President of the
Michigan Agricultural Commodities-- or ``MAC''-- where he has
worked for 33 years. MAC, headquartered in Lansing, is the
largest grain handler in Michigan with seven elevators across
the state, offering many other important services for Michigan
commodity farmers and employing more than 100 workers.
I know that your wife Teresa is here today, and we say
welcome. Welcome, Teresa, and we are pleased to have you both
here.
Bruce resides in Okemos, Michigan, and we look forward to
your testimony.
Chairman Roberts. Our fourth witness is Mr. Nick Friant,
who is the Chairman, Grades and Inspections Committee for the
North American Export Grain Association from--I am going to try
this--``Wayzata''?
Mr. Friant. Wayzata.
Chairman Roberts. Wayzata, one word.
Nick is the Chairman of the North American Export Grain
Association Grades and Inspections Committee. He is also the
Raw Materials Quality Leader for Cargill Agriculture Supply
Chain North America. He is based out of Wayzata----
That is exactly why they had this--see, when you put these
things in parens, it is supposed to give to the Chairman a
little example, but of course, the Chairman did not recognize
that until right now.
[Laughter.]
Chairman Roberts [continuing]. in Minnesota. Welcome, Nick.
Brian, why don't you start this off.
STATEMENT OF BRIAN LININ, FARMER AND MEMBER, NATIONAL
ASSOCIATION OF WHEAT GROWERS, GOODLAND, KANSAS
Mr. Linin. Well, greetings, and thank you, Chairman Roberts
and Ranking Member Stabenow and fellow Committee members. I
really appreciate being here. It is really an honor to be here
today.
You announced my organizations and affiliations, so I will
skip over that, but I will note that my written testimony goes
into more detail. I am just here to give a verbal summary of
that.
I will focus on three main areas, and that is a brief
overview of the ag economy just for some context and then an
overview of why an effective grain system is so critically
important for agriculture and finally a recap of the benefits
and the improvements made in the last reauthorization bill,
which we greatly appreciate.
First of all, the overall overview of the ag economy and
our export situation. About 50 percent of the wheat in the U.S.
is exported. Our international markets are critically important
for driving economic activity down to the farm level. Farmers
are experiencing many challenges resulting from the weather and
uncertain trade environment, and these things are causing
significant decreases in net farm income today.
Having a functioning and respective grain inspection system
has enabled the U.S. to be a reliable exporter and facilitate
continued demand for our commodities. With these tough economic
conditions being faced by farmers, including several years of
low commodity prices and the headwinds to exporting wheat, it
is critically important that we at least maintain a smooth
grain inspection system.
Now I will move into an overview of why an effective grain
inspection system is so critically important for agriculture.
International buyers have acknowledged that sustained
service from U.S. wheat associates and our State commissions
and our foreign ag service programs counterbalance the
headwinds to expanded exports.
I will give you an example. In June, Kansas Wheat hosted a
trade team from Brazil consisting of wheat buyers for flour
mills using funds from the Market Access Program, MAP. The team
visited the Federal Grain Inspection Service facility in Kansas
City and were very interested in the role that FGIS plays as an
independent third-party entity conducting inspections. They
walked away with more confidence in buying U.S. grain because
of the unbiased third-party system.
A strong grain inspection enables us to keep the quality of
U.S. wheat at a premium and prevent international customers
from looking to other countries for their wheat.
Another example of how our system adds value to our grain,
the Federal Grain Inspection's International Affairs Office
provides educational training programs that help foreign buyers
to better understand inspection protocol and testing methods.
Earlier this year, they held a training program in Peru,
where I have actually visited a few years ago, and that is an
import market of about 73.5 million bushels for that country.
This training enabled our foreign customers to have
increased trust in our certification process and will
ultimately help to ensure satisfaction with U.S. wheat by our
international markets. They know that the quality they are
getting from us is good.
It is also important that FGIS continues to conduct regular
reviews of specifications for wheat classes. These reviews
serve as an important opportunity for stakeholders to engage
FGIS if issues arise.
Finally, an overview of the improvements made in the last
reauthorization bill that we would like to see continued. The
last bill required that delegated agencies that decided to
discontinue service provide 72 hours' notice. This helps to
give certainty to our international trading partners that
inspections will continue uninterrupted.
The last reauthorization also established a recertification
process for delegated State agencies. This provision provides
transparency by allowing opportunity for public comment and
feedback about the operations of the agencies. The bill
included various reporting requirements, and these reports are
useful to stakeholders, particularly if there are any
disruptions or problems.
The bill also required a report to Congress about the
policy barriers U.S. grain producers like me face in countries
that do not provide grain with official grades or the lowest
quality grade. What we are talking about here is Canada as one
of the big problems there.
This report laid the groundwork for our current
administration to successfully negotiate an important provision
in the USMCA to facilitate reciprocal grain grading with our
key trading partners. This is a very important step for wheat
in the United States.
In conclusion, I would say, ultimately, the effectiveness
of our grain inspection and grading system has very important
implications for both our international and domestic markets.
Farmers are facing low prices, high costs, and an uncertain
trade environment. Given this uncertainty, it is critical that
we maintain one of our key advantages, the Federal Grain
Inspection Service.
Foreign and domestic customers value an independent agency
certifying shipments to meet the grade requirements of their
contracts. The 2015 reauthorization bill included many
improvements, and we hope to continue to build on those
improvements through this reauthorization.
In order to avoid disruptions to this effective system, I
strongly urge you to move forward with a reauthorization bill
this year, and I look forward to working with you through this
process.
Thank you very much.
[The prepared statement of Mr. Linin can be found on page
26 in the appendix.]
Chairman Roberts. Brian, thank you for an excellent
statement. We will be sure to make every effort to do just
exactly what you suggested. Mr. Ayers, please.
STATEMENT OF DAVID AYERS, FORMER PRESIDENT, ON BEHALF OF TOM
DAHL, PRESIDENT, AMERICAN ASSOCIATION OF GRAIN INSPECTION AND
WEIGHING AGENCIES, SIOUX CITY, IOWA
Mr. Ayers. Mr. Chairman and members of the Committee, thank
you for this opportunity. I request that the entire written
testimony be entered into the record.
My name is David Ayers. I am the past president of the
American Association of Grain Inspection and Weighing Agencies,
commonly called AAGIWA, on whose behalf I am presenting the
testimony today.
AAGIWA is the national professional association
representing the public and private agencies that are
designated and delegated by the USDA's FGIS, Federal Grain
Inspection, to weigh, inspect, and grade the Nation's grain.
Our member agencies perform over 90 percent of all the
inspections under the Grain Standards Act, and our agencies
employ over 2,000 dedicated individuals.
There is an important role for a Federal regulatory and
supervisory agency in the grain inspection business. FGIS
serves to provide an objective third-party regulatory role,
which assures credibility and integrity for both domestic and
export grain handlers and buyers of U.S. grain. Its strict
Federal standards help maintain the accuracy and consistency
that the grain industry has come to expect from the Nation's
official grain inspection system.
Official agencies have evolved with the changing pace of
the grain industry by providing onsite inspection laboratories
for shuttle loaders and at container yards shipping grain. FGIS
has approved and standardized rapid testing methodologies that
allow official agencies to quickly provide accurate and
reliable mycotoxin, protein, and moisture results at remote
locations so shippers can make real-time decisions.
AAGIWA is proud of what the official agencies have
accomplished and owes much of these advancements to FGIS's
willingness to change and provide more rapid and accurate
testing capabilities.
What has not changed is the need for a third-party
inspection service that is both responsive and unbiased to
provide accurate and timely results so that grain can be traded
throughout the U.S. and around the world.
FGIS quality and weights certificates issued by official
agencies are regarded as prima facie evidence in all courts and
serve to resolve disputes that allow for collection of funds
when the grain is traded.
This third-party role was recently strengthened when FGIS
moved to the Agricultural Marketing Service, thereby placing
all inspection activities under one USDA agency. AAGIWA has
observed positive results from this part of the 2017 USDA
reorganization.
AAGIWA supports the reauthorization of the U.S. Grain
Standards Act. AAGIWA believes that the customers deserve
first-class service from official agencies, and that the
current exception and boundary provisions along with other
provisions ensure that first-class service is available to all
customers when the provisions are properly administered.
AAGIWA recommends reauthorization of the Advisory
Committee. The Advisory Committee provides the opportunity for
all stakeholders to present issues and develop resolutions that
benefit all parties.
The USGSA currently requires that persons producing,
processing, storing, merchandising, consuming, and exporting
industries, including grain inspection and weighing agencies,
and scientists with expertise in research related to grain
testing be on the Committee.
AAGIWA recommends that the provisions for assessing user
fees with an administrative cap be reauthorized. The cap
ensures that FGIS spends fees collected from its customers
judiciously on administrative expenses.
We also support the funding of standardization and
compliance activities from appropriated funds because these
activities serve all parties in the marketing chain and not
just users of the official system.
AAGIWA supports also maintaining the mandatory export
provisions and the limitations on who can perform export
inspections. AAGIWA members, their employees, and their
families know how important grain exports are to the health of
both rural and export communities.
In conclusion, AAGIWA commends FGIS and the grain industry
for their continued commitment to market America's grain. We
are proud to serve as part of this important effort. It is
important that the necessary sections of the U.S. Grain
Standards Act be reauthorized to ensure that the Act serves to
support all those involved in producing and marketing American
grains.
Thank you.
[The prepared statement of Mr. Ayers can be found on page
29 in the appendix.]
Chairman Roberts. Mr. Ayers, thank you. Mr. Sutherland.
STATEMENT OF BRUCE SUTHERLAND, MEMBER, BOARD OF DIRECTORS,
NATIONAL GRAIN AND FEED ASSOCIATION, LANSING, MICHIGAN
Mr. Sutherland. Chairman Roberts, Ranking Member Stabenow,
and members of the Committee, I am pleased to testify today on
reauthorizing the U.S. Grain Standards Act on behalf of the
National Grain and Feed Association on whose board of directors
I serve.
NGFA, established in 1896, comprises more than 1,050 member
companies with roughly an equal number of farmer-owned
cooperatives and privately held entities that operates more
than 7,000 facilities and handles more than 70 percent of the
U.S. grain and oilseed crop.
For 45 years, the NGFA has worked to maintain and improve
the U.S. official grain inspection system, and we strongly
support reauthorization of the Grain Standards Act.
NGFA aligns itself with testimony provided by the North
American Export Grain Association.
MAC, the company of which I am president, is a voluntary
user of FGIS officially designated grain and inspection and
weighing agencies, principally for more than 15 million bushels
of our grain and oilseed by ship and by rail.
The U.S. grain handling and export system is recognized
globally for its ability to provide a competitively priced,
fungible, abundant, and safe commodity supply, responsive to
customer needs. The FGIS serves an essential role by
establishing official U.S. grain standards, critical to
determining value and providing for price discovery in the
marketplace.
Farmers benefit when FGIS provides official inspection and
weighing services in a reliable, uninterrupted, and cost-
effective manner.
NGFA appreciates this Committee for its bipartisan
leadership and enacting important reforms as part of the 2015
reauthorization.
As you will recall, in 2013 and 2014, the reputation of the
official system providing reliable and cost-effective service
was called into question after a delegated State agency
repeatedly and without notice withdrew official inspection
service at a major export elevator.
Through bipartisan reforms, including more transparent
notification and reporting, changes to the way FGIS calculates
fees and regular public review of FGIS delegation of its
official inspection authorities, our industry and our farmer
customers are in a much better position today than we were
then.
Reforms enacted by Congress serve as a springboard for a
series of improvements to FGIS and the official inspection
system. Another major contribution was Secretary of Agriculture
Perdue's decision as part of his 2017 reorganization of USDA to
return FGIS to the Agricultural Marketing Service, where it had
resided prior to 1994, as well as to install fresh, new
leadership at the agency.
NGFA strongly supported these changes and commends the
dedicated career public servants within AMS and FGIS for their
commitment in addressing important issues during this
transition.
Given improvements realized from both the 2015 Grain
Standards Act and the 2017 reorganization, NGFA recommends the
next reauthorization period be extended from the current five
years to a time period of up to 10 years, leaving it to
Congress to determine the appropriate interval.
NGFA wishes to briefly highlight the following policy
recommendations contained in our written testimony. First,
require FGIS to conduct a comprehensive review of current
geographic boundaries for domestic official agencies. A major
review has not happened in 43 years and would provide FGIS with
a much better basis for determining appropriate updates to
geographic boundaries for officially designated agencies than
it does now.
On a related matter, NGFA thanks this Committee and your
staff for including language in the 2018 farm law that gave
grain handlers who had exception agreements wrongly canceled
the opportunity to restore this service arrangement with their
prior officially designated domestic inspection agency.
Second, NGFA believes user fees FGIS collects from our
industry, which represents 70 percent of its budget, should be
used solely for official inspection and weighing services and
related overhead costs. The remaining 30 percent should
continue to be appropriated for such activities as maintaining
and updating the grain standards, which have broad societal
benefits for farmers and consumers and for compliance and
enforcement activities.
Third, the FGIS Grain Inspection Advisory Committee, upon
which I serve, should be reauthorized, as it provides valuable
counsel on the implementation of the Grain Standards Act,
inspection services that have value in the grain marketplace,
and keeping the agency focused on fulfilling its statutory
mission. NGFA also supports three other important changes to
the Grain Standards Act that will be focused on by my
colleagues from NAEGA.
In conclusion, reauthorizing the Grain Standards Act on
time or even a bit early would provide continued certainty to
grain handlers, farmers, and our global customers. NGFA is
committed to working constructively with you to enact these
policies and achieve these positive outcomes.
Thank you for the opportunity to testify, and I will be
pleased to respond to any questions later.
[The prepared statement of Mr. Sutherland can be found on
page 32 in the appendix.]
Chairman Roberts. Mr. Sutherland, thank you so much for an
excellent statement.
Next, we have the gentleman from Wayzata, Mr. Friant.
Please proceed.
STATEMENT OF NICK FRIANT, CHAIRMAN, GRADES AND INSPECTIONS
COMMITTEE, NORTH AMERICAN EXPORT GRAIN ASSOCIATION, WAYZATA,
MINNESOTA
Mr. Friant. Thank you, Mr. Chairman. Chairman Roberts,
Ranking Member Stabenow, members of the Committee and staff,
thank you for the opportunity to testify today on behalf of the
North American Export Grain Association, or NAEGA. It is my and
NAEGA's honor to be part of this panel to testify regarding the
reauthorization of the U.S. Grain Standards Act.
Your leadership and hard work enacting fundamental reforms
as part of the 2015 reauthorization of the Act and the
resulting implementation by the USDA within the service-
oriented culture of AMS, combined with strong and effective new
leadership at FGIS has had a very positive impact that is
serving American farmers in our industry well. We look forward
to building on that success.
NAEGA promotes and sustains the international trade of
grain and oilseeds from the United States. Established in 1912,
NAEGA's members include private and publicly owned companies
and farmer-owned cooperatives serving the bulk grain and
oilseed export industry.
NAEGA strongly supports the reauthorization of the U.S.
Grain Standards Act and the U.S. official grain inspection and
weighing system. Both domestic and international markets for
commodities covered under the U.S. Grain Standards Act are
complex and ever changing. We are committed to continued
improvements to the system as well as the broader regulatory
and commercial environment to improve the value, safety,
competitiveness, and sustainability of U.S. agriculture.
I serve as Chair of the relevant technical committees of
both NAEGA and the National Grain and Feed Association. We
stand ready to work with you and other stakeholders to maintain
and improve the Act.
NAEGA works in the best interest of the entire value chain
to provide for optimal commerce and official practices that
provide for safe and secure commerce, increased efficiency,
risk management and mitigation, promotion of trade and
investment, and a level and competitive global playing field.
We include seven recommendations in submitted written
testimony for this hearing. I would like to highlight three of
those recommendations that would enhance our ability to
accomplish this mission.
First, NAEGA urges Congress to strengthen USGSA by
expressly prohibiting the misuse of official determinations of
grain standard quality factors. The purpose of the USGSA is to
establish official marketing standards for the covered
commodities. The misuse of official determination of the grain
quality factors, foreign material, on phytosanitary
certificates issued by APHIS has recently and unfortunately
been deployed. Using USGSA quality factors as an indicator of
plant health risk is inappropriate and misleading, and we
believe this practice should be expressly prohibited by statute
so it ends, never reoccurs, and does not set dangerous
precedent.
Second, Congress in the 2015 reauthorization to section 79
of the USGSA mandated that FGIS-delegated agencies provide USDA
72-hour advanced notification if they intend to discontinue
providing official inspection service. While the statutory
language expressly requires such notification be made to USDA,
FGIS did not require its delegated agencies to grant the same
advanced notification to the actual facilities affected by such
disruptions in official service, nor did USDA commit to
providing such notification itself. These disruptions adversely
affect a facility's ability to fulfill existing grain contracts
with customers, alter their ability to handle inbound and
outbound grain movements, cause disarray in domestic and export
transportation logistics, complicate staffing requirements, and
create a host of other business consequences. We recommend
legislation language to require a comparable 72-hour
notification for affected facilities.
Third, we recommend requiring that FGIS report the number
of and specific type or types 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
with appropriate protection of confidential business
information. We believe making this information available would
benefit Congress and stakeholders alike by continually
improving sustainability and growth of the U.S. official system
made possible by the Grain Standards Act.
NAEGA believes that all the NGFA and NAEGA recommendations
for modification of the Act will strengthen the official system
and foster the competitive position of covered commodities.
Reauthorizing the U.S. Grain Standards Act on schedule or
early would provide continued certainty grain handlers,
farmers, and our global customers. We are committed to working
constructively with Congress and all the stakeholders to enact
policies that achieve these positive outcomes.
Thank you for the opportunity to testify. I am pleased to
respond to any questions that you may have.
[The prepared statement of Mr. Friant can be found on page
45 in the appendix.]
Chairman Roberts. Mr. Friant, thank you so much for your
pertinent testimony and the suggestions that you recommended,
and to all witnesses, thank you for being on time or under
time.
Mr. Boozman is now leaving to introduce somebody to the
Judiciary Committee. Be careful.
Senator Boozman. Thank you.
[Laughter.]
Chairman Roberts. Brian, thank you for taking time away
from your operation to share your perspectives as well as those
of other farm organizations.
In your testimony, you said--and I am quoting here--``The
grain inspection system is one that is valued by our overseas
customers and adds value to our commodities.'' Explain the
value of U.S. grain standards to foreign customers and what it
ultimately means for producers on the farm or especially with
the situation we face today, sort of a tariff retaliation death
valley.
Mr. Linin. Well, thank you, Chairman Roberts.
The value that the grain inspection service is to the farm,
I have visited with customers in international countries, grain
buyers, flour millers, and they rely on U.S. grain standards
and our inspection service to verify that the grain that they
have contracted is, in fact, the quality that they have
specified on their contracts.
The reason that is important to me as an ag producer is
because as ag producers, we are working as hard as we can to
grow the best grain that we can. We are trying to feed the
world, and it would be a disservice to our farmers if that
grain was not properly represented in the marketplace and our
customers in the world were not receiving the grain that they
have paid for and asked for, no different than if you or I go
buy a car and it has been specified what quality it is and what
factors it has, and then we get it in something different. That
is what the grain inspection is for us to the world.
It is critically important that we have that reliability
and quality that other countries in the world do not have with
the grain that they export. It is very important to our buyers.
We have educated them on the grain quality factors. We have
shown them what is important, what makes good dough out of
flour in the case of wheat or what makes good feed in the case
of corn, and those are the factors that they are looking for.
Our grain inspection service verifies that for them.
Chairman Roberts. Brian, I appreciate it. You could not put
it any better than that.
Mr. Ayers, I understand that you and others on the panel
have firsthand experience with the Grain Inspection Advisory
Committee. Can you explain the role that the Advisory Committee
plays in advising the Department on these type of issues?
I am going to ask you a followup, so you can just include
this in your comments on that question. Do you or anyone else
on the panel--I want you all to think about this--have any
recommendations to make the committee more effective in
representing industry views? For example, would you support
allowing Advisory Committee members to apply and serve for more
than one term, which I understand is three years and then it is
adios? Am I correct?
Mr. Ayers. Yes.
Chairman Roberts. I would say to the distinguished Ranking
Member, I have decided I would just--if we had three-year
terms, I would have had to run, with a primary, 26 times.
[Laughter.]
Chairman Roberts. I am not sure I could----
Senator Stabenow. Keep busy.
Chairman Roberts. I do not know where you are on that, but
any rate, it just struck me that that is a law for one term,
three years, and so just about the time you really get
experienced, why then you are wandering off into the sunset.
Please proceed.
Mr. Ayers. Mr. Chairman, the Advisory Committee produces
resolutions giving direction to FGIS on technology, processes,
and any other matters--finances--and gives them guidance from
our viewpoint versus the FGIS internal viewpoint, and I think
that is very important. The more and more input that we have
and can have with the FGIS on the spending of their money, the
new technology from all the viewpoints is very important.
The second part of your question is I would highly
recommend that the three-year limit be kept in place. It allows
for new ideas, new thoughts to be reintroduced every three
years--or every year and not the same old people doing the same
old thing time after time.
Thank you.
Chairman Roberts. Mr. Friant, your testimony addresses an
issue regarding foreign material as proxy for weed seed on an
APHIS-generated phytosanitary certificate. It is my
understanding that grade factor determinations such as foreign
material or test-weight are the purview of the Federal Grain
Inspection Service, as opposed to any other Federal agency.
Should grade factor determinations made by FGIS be
reflected only on an official certificate authorized under this
Act?
Mr. Friant. Thank you, Mr. Chairman.
Yes, based on the provisions in the Act, we as NAEGA
believe that the use of quality factor determinations on
certificates other than those authorized by this Act are,
indeed, misleading and should not be used as such.
Chairman Roberts. Your statement demonstrates a lot of work
with customers all over the world that value U.S. grain and oil
exports. How have their demands or specifications changed over
time? Are they seeking different requirements in other
countries? Do you see any new demands on the horizon from our
foreign customers? I think the answer to that is obviously yes.
Mr. Friant. Yes, Mr. Chairman. Thank you for that question.
I think it is a great question, and you hit the nail on the
head with the short answer.
We absolutely are seeing more requests from our
international buyers. What we see a lot more of is they want to
understand the safety of the products that they are receiving.
When we talk about safety in the grain world, it is things like
mycotoxins, chemical residues. They want to know that that food
they are receiving is safe.
Of course, they still want to know about the quality of the
product, but in addition to the quality, we see more requests
for what we would call end-use functionality. My colleague, I
think, from U.S. Wheat mentioned the dough quality. We see more
requests for the end-use functionality.
Then we also see more requests for how the grain or
products were produced, and so we do see that. It is ever
changing. That is a big part of my role is to review those
requirements and understand our ability to meet them, and so we
do see more and more of those all the time.
Chairman Roberts. I appreciate that.
Senator Stabenow?
Senator Stabenow. Well, thank you, Mr. Chairman, and thank
you again to each of you.
Let me start with Mr. Sutherland and certainly welcome
others' thoughts. I go back to the Chairman's questions
regarding the Advisory Committee, and this is one of the
provisions that we need to reauthorize. I do not think there is
any doubt in the value of the Advisory Committee.
Mr. Sutherland, you have now been on the Committee for
about one year of your three-year term, so you are not quite an
old guy with--I do not know, Mr. Ayers, whatever you were
saying in terms of the outdated person with old ideas, although
I would still question whether three years is long enough to be
one of the old guys.
I would like your thoughts on what you have learned so far,
and from your perspective, how would you improve the functions
of the Advisory Committee?
Mr. Sutherland. Thank you, Ranking Member Stabenow, for
that question.
Well, currently, I think the Advisory Committee serves dual
roles. Shippers like ourselves need a voice to recommend to
FGIS ways they can improve or enhance their services.
Second, it is a great opportunity for other members, from
producers to end users, exporters, to voice their opinions.
I would like to submit as a matter of record, on April
30th, 2018, NGFA and NAEGA wrote a letter to FGIS for the
Advisory Committee on how to staff and to improve the
committee's functions. Actually, alternating two- and three-
year terms are helpful so we don't lack a quorum.
NGFA does believe, however, that we should have an ability
to serve more than one term, up to two terms within an eight-
year period.
Now, we do believe that new members should be rotated
consistently to provide a fresh perspective and diversity
throughout the United States, but we do think that continuity,
though, is important as well.
Senator Stabenow. Thank you.
I think, Mr. Friant, you also previously served on the
Advisory Committee. Do you have any thoughts or suggestions you
would like to add?
Mr. Friant. Yes, Senator Stabenow. I appreciate the
question as well.
I served two separate three-year terms on the committee,
and I would like to start with our appreciation for the work
that current leadership, both in AMS, particularly
Administrator Summers, and the new leadership at FGIS has put
into the committee and listening to the concerns, not just of
our industry, but the growers and other members of the value
chain.
My comment regarding the term limits or how long folks can
serve on the committee, the real key for me and for NAEGA is
that we have diversity and continuity on the committee to meet
the needs of the industry and producers.
One of the issues that we ran into with the committee was
we got caught in a situation where several members of the
committee rolled off at once, and we had several new members
come on that were not as familiar with the issues. Having some
form of continuity so folks can continue on with existing
concerns that the agency is working on as well as new members
that can raise new concerns that may affect the grain industry
in the U.S. would be good.
Senator Stabenow. Thank you very much.
Mr. Sutherland, I wanted to ask you specifically about
Michigan for a moment. You have been involved in Michigan's
grain industry your entire career, and beyond the suggestions
you outlined in your testimony, what concerns are you hearing
from Michigan producers right now?
Mr. Sutherland. Well, again, Senator, thank you.
From Michigan's perspective, I think it emphasizes why we
do believe a comprehensive review of the boundaries is
important.
Two issues that we have primarily in the State of Michigan,
we are one of the top producers of soft red wheat in the United
States. We ship quite a bit throughout the Midwest, and we have
two providers that are limited on their ability to provide
toxin testing for us in a timely manner. We think that that
issue needs to be addressed, and we think this review would
show some of the deficiencies maybe in staffing or equipment or
services they are providing.
Another thing is that in the last 30 years, we have grown
the ability to ship grain throughout the United States in grain
trains. We are shipping 90 car trains, 110 car trains, and
during harvest time, you can have multiple trains in the State
at once.
Again, our providers are not always able to provide a
service in a timely fashion. You are required to load those
trains within 24 hours or less, and if you do not have timely
service and meeting official weights and grades, you get
demurrage charges, and it is a cost factor on shippers like
ourselves.
So, again, we think that these issues need to be reviewed
and that our service providers maybe consider staffing or
territorial changes.
Senator Stabenow. All right. Thank you.
Thank you, Mr. Chairman.
Chairman Roberts. Senator Hyde-Smith?
Senator Hyde-Smith. Thank you, Mr. Chairman and Ranking
Member.
Mr. Sutherland, will you elaborate on some potential ways
to help prevent the misuse of U.S. Grain Standards Act, quality
factors for inappropriate and misleading purposes, as we have
discussed?
Mr. Sutherland. Senator, I appreciate the question, but if
I could, I would like to defer to Mr. Friant. He is more
technically inclined in those areas, and perhaps he can answer
that question.
Senator Hyde-Smith. Not a problem at all.
Mr. Friant. Thank you, Senator. Would you mind repeating
the question to make sure I understood it all?
Senator Hyde-Smith. Would you just elaborate on some of the
potential ways to prevent the misuse of the Act, quality
factors for inappropriate or misleading purposes?
Mr. Friant. Absolutely. Without getting too much into the
technical details of the Act itself, there is some language in
section 78 of the Act that talks about the inappropriate or
misleading use of grade factors, and I think what we would like
to see is some strengthening of that language and, again, to
make sure not only it does not happen, but it does not happen
again in the future.
Senator Hyde-Smith. Strengthening in ways of increased
fines or----
Mr. Friant. Well, I think it would be probably a best
discussion that we would have with others and some more
technical folks to be involved in the discussion, maybe not
necessarily in this setting, but yes, some strength in the
language to make sure that the way that the factors are being
used is appropriate and not misleading.
Senator Hyde-Smith. Somebody that deals with it every day
that might--would have some suggestions because that does make
a difference.
Mr. Friant. Yes, correct.
Senator Hyde-Smith. Mr. Friant, what are some of the
benefits of reauthorizing the USDA Grain Inspection Advisory
Committee that maybe we have not talked about already?
Mr. Friant. I think my colleagues have spoken very well
about it in terms of the information that not just industry,
but other key stakeholders can get to the agency to make sure
that the areas where they are focusing are, indeed, helpful to
the industry. It is situations that can help with the
efficiency of the service delivered, improvements on the cost,
because what we heard was we rely on the gold standard of the
Federal Grain Inspection Service. We want to maintain that, and
the Advisory Committee is a great way to get that feedback, not
only on public record, but to the folks at the agency who do
the work. We want to continue to see that happen.
Senator Hyde-Smith. Thank you, every one of you, for being
here and your part in this.
Mr. Friant. Thank you, Senator.
Chairman Roberts. Senator Smith?
Senator Smith. Thank you, Chair Roberts and Ranking Member
Stabenow, and thanks to all of you for being here. A special
greeting to my fellow Minnesotan, Mr. Friant. I am sorry I was
not able to be here in the beginning to introduce you, but I am
really glad that you are here and very much appreciate your
work.
I would like to ask a question about the impact of the U.S.
Grain Standards Act on our ability to export products. Really,
this is a question for the whole panel. This U.S. Grain
Standards Act has provided consistent and dependable grain
standards for decades, and my question to everyone on the panel
is, Are these standards still trusted by importers of U.S.
grain? Is there anything that we need to do to modernize our
grain standards to remain competitive in foreign markets?
I will start with Mr. Linin.
Mr. Linin. Well, thank you, Senator. Appreciate the
question.
I guess I would agree that the Grain Standards Act has been
in place a long time. It has been a key aspect of exporting
grains and protecting our quality and our name in the world.
I believe that the grain standards are trusted by other
countries. I do think--and in my comments, I urge the Committee
to consider a review of the grain standards on a regular basis.
I think that is important to ensure that those standards are
accurate and they are still important to our customers in the
world.
I think this ties in also to the question Senator Hyde-
Smith asked about the Advisory Committee. The wheat industry
also supports having an Advisory Committee, and that Advisory
Committee is your voice from people in the industry to
communicate what is important and what maybe needs to change if
there are changes that are needed.
I actually know personally two of the folks that currently
serve on the Advisory Committee, Sarah Bowser from Kansas
Sorghum and a K-State employee and Tom Tunnell who is the
former CEO of our Kansas Grain and Feed Association and a
former elevator operator. They are very qualified. They
understand the industry and the grain business, and that is
what I would say is the mechanism or the vehicle for keeping
the standards updated is through that Advisory Committee.
Senator Smith. Thank you.
Mr. Ayers?
Mr. Ayers. Thank you, Senator.
The grain standards are reviewed on a regular basis, at
least the functions performed under the Grain Standards Act,
and I would like to commend FGIS for keeping things up to date
and making the changes necessary to keep the Grain Standards
Act up to date and active. I think they have done a very good
job at that.
For a document that was written in the early 1900's and
still basically stands the same way it did says a lot for those
who wrote it, and I think that FGIS along with the
congressional oversight, that they will continue. The Grain
Standards Act needs to be reviewed, and I think that everybody
in place is doing a fine job with it.
Senator Smith. Thank you.
Mr. Sutherland?
Mr. Sutherland. Senator, I appreciate the question.
I may add a little bit different twist to this. I think the
Grain Standards Act provides a great foundation for our
exporting services throughout the world, and I think it perhaps
even emphasizes the importance in trade agreements for ag,
specifically the ratification of the USMCA, to build on our
Grain Standards Act and to provide continuity between trading
partners, to resolve any issues that may arise, and to use
resolution mechanisms through those agreements. I think the
Grain Standards Act provides a great foundation to build on
that and use those trade agreements to facilitate even further.
Senator Smith. Thank you.
Mr. Friant. Thanks, Senator.
If I might paraphrase your question, is the Grain Standards
Act still the gold standard in the world? It absolutely is.
Working in the export industry, we trade grain, and the key
is the FGIS certification. It absolutely is important to our
industry, and maintaining the Grain Standards Act and
reauthorizing it with some of the improvements that NAEGA and
NGFA have proposed only make that that much stronger and
continues to give weight and credence to the U.S. certificate
that producers and manufacturers in other countries are getting
what they expect to get.
Senator Smith. Thank you.
Well, that is good to know, and at a time when Minnesota
producers and I know producers all over the country are really
struggling with a really challenging time, uncertainties, to
put it nicely, with our trade deals around the world, bad
weather, low prices, to have something that can be, as Mr.
Friant says, the gold standard and for us to be able to do all
of our work to make sure that it continues to work well for
Minnesota producers is certainly important. I appreciate it.
Thanks very much.
Thank you, Mr. Chair.
Chairman Roberts. I have a question for the entire panel,
and could I ask you to go from my right to your left. That is
not a very good idea.
[Laughter.]
Chairman Roberts. Do you like that? Somewhat progressive.
All right. I quit. Just in time for additional questions.
Each of you have a long history of working in the various
sectors of the grain and oilseeds industry. As you know,
Secretary Perdue has sought to improve customer service
throughout the Department of Agriculture. Can you quickly
outline any of your experiences and reactions with the
realignment of the Federal Grade Inspection Service within the
USDA, please?
Mr. Friant. Thank you, Mr. Chairman, and an excellent
question because we have noticed a marked improvement in the
agency with the realignment into AMS.
Just a couple areas that I would like to call out are the
accountability and the responsiveness in the agency. What we
have seen--we have heard it said by many employees at FGIS that
they want to put the service back in the Federal Grain
Inspection Service, and we have particularly seen that in their
responsiveness when we raise concerns, whether that is issues
with timeliness of service or concerns we have on accuracy of
grades.
The agency has been much more responsive when we have
raised these concerns, and a particular example I would like to
share with everyone today is there is an oversight process of
the graders at export port facilities, where a certain number
of samples are re-inspected by the Central Office in Kansas
City.
It is called ``monitoring,'' to ensure that the graders are
accurately performing their service. When the monitoring
program went through some revisions a couple years ago, what
industry found was when monitoring samples were being
collected, the timeliness to get those samples graded and then
collected and sent was impacting the ability of the facilities
to load. In fact, it was slowing down to where inspections on
the officially exported sub-lots or lots of grain could not
occur in a timely manner.
About two years ago at an industry FGIS workshop down in
New Orleans, that issue was raised with the then Acting Deputy
Administrator for FGIS about this timeliness. It was raised
with her in the meeting. She took that back to her staff, had
that discussion, and the result was some changes did not reduce
the amount of monitoring that was happening. The integrity of
the system was still maintained, but it ensured that the
timeliness and the speed with which the monitoring samples were
being graded and collected was much quicker and not impacting
the facilities that were loading the grain.
We have seen great improvements in the responsiveness and
the culture of the agency, and we definitely appreciate that
and look forward to continue working with FGIS and leadership
to continue to increase the efficiency of the agency.
Chairman Roberts. Mr. Sutherland?
Mr. Sutherland. Well, I will just second what Mr. Friant
said. I really cannot add more, but I will relate my experience
on the Advisory Committee when I went to the grain center last
year in August in Kansas City.
I was impressed with the energy and focus on the FGIS
directors and regional staff and managers with their interest
in our issues. They gave us detailed explanations of their
procedures, their ideas and thoughts, and were generally
interested in what we had to say. I was impressed by that, and
I look forward here in August to my next meeting and
interacting more with those folks.
Chairman Roberts. Mr. Ayers?
Mr. Ayers. Thank you, Mr. Chairman.
Under AMS, we have seen a tremendous increase in
communication, openness, and responsiveness from the AMS
management team that is in place. They are very responsive to
anything. Whether they tell us yes or no is irregardless, but
they are responsive. We did not see that under the old group
prior to FGIS being under AMS.
It is very good. The communication is much better. The
responsiveness and the openness is a big relief for all of us.
Chairman Roberts. I think the Secretary will be pleased to
hear that.
Brian?
Mr. Linin. Thank you, Mr. Chairman.
I would agree that from an end-user standpoint, the move
has worked well under AMS.
I would just point out that the GIPSA, the Grain Inspection
Packers and Stockers Administration, is more of an enforcement
agency, and it operates under a different statute than the
Federal Grain Inspection Service. I think FGIS fits better
under AMS.
Thank you.
Chairman Roberts. I appreciate that.
Senator Braun?
Senator Braun. Thank you, Mr. Chair. I got here late. I was
at a different forum today on health care and education, two
other issues that we discuss a lot here.
I would like to direct this question to Mr. Linin in the
sense that I am involved in farming. I understand everything
that this hearing is about. Whenever I have a farmer here, I
would like your opinion on how you see the future in terms of
your occupation.
I am constantly getting questions from farmers that I rent
ground to that they are worried about farming as it currently
exists, regardless of tariffs, trying to find markets which
seemed to be in what many of us consider to be worse than what
it was like when we had LDPs and direct payments because prices
are not a whole lot better now than what they were then. Most
farmers like the fact that they are not as dependent on
government.
I look at the industry itself and the high altitude of
putting a crop out, whether it is soybeans, corn, or wheat, and
I remember 15 years ago, it was probably one-third, at least
one-half of what it is now.
How do you see the industry as it has evolved, regardless
of finding new markets, which we all want to do that? How do
you see finding your way to make your enterprise thrive and
hopefully go into the next generation when you see what has
happened to agriculture and how it has evolved into fewer and
fewer companies that sell you supplies, chemicals and so forth?
Where does that fit into your view of the future?
Mr. Linin. Well, thank you, Senator. Appreciate the
question.
I do think that there is some concern about consolidation
in the suppliers to farmers, consolidation of equipment
dealers, consolidation of grain handlers, consolidation of
input providers, fertilizer and chemical companies and such,
that we depend on to operate our business.
It is a different landscape than it was 20 years ago, and I
am in a unique situation because I have just kind of gotten
into farming full-time. I have always been involved with the
farm but kind of had a job off the farm here up until recently,
and so I am taking the plunge, if you will.
Farming is more than just a business. Farming is a
lifestyle, and we have chosen that lifestyle of living in a
rural community and raising our family there and enjoying some
of the amenities that that offers and also giving up some of
the amenities that you have when you live in the city. I have
also lived in the city. I lived in Kansas City for eight years,
right out of college. That is where I met my wife. It is a
lifestyle, and it is a life decision, I think.
I think farming is getting more to be just like any other
business. It is a little bit less of a lifestyle for us, and it
is more of a business. We have to be better at managing our
costs and producing more with less and becoming more efficient.
While I am concerned about that, I also know that people
have to eat. We have seen the population projection numbers. We
know that the earth is going to nine billion people by 2050,
and we know all those people are going to need to eat
something. We are going to have to provide that food.
The U.S. is the most reliable source of food in the world,
and it is going to be on our shoulders to do that. I really
believe that.
I think other countries have better growing conditions
maybe than we have, but I think we are more resilient and more
adaptive than other countries are.
I guess I see it as a challenge, but I love what I do. We
get better at it every day.
Senator Braun. A question. Because competition is the
variable on any business, like mine, and growing it over 37
years, you do everything well if you are oversupplied. You
still do not bring much home from the bottom line. Do you think
American farmers can still operate as the low-cost producer?
Because you are selling the same product, and of course, there
is a quality difference that may be out there. Do you think you
have the tools with the current supply chain to be the low-cost
producer? Because when you go through tough times, that is your
only protection of living for another day. Do you feel
confident that that is there?
Mr. Linin. I think it is and it is not. The market moves
and changes. If there was something that we could do to help on
that cost side, I think that would be positive.
Things that concern me, farmland going out of business
years ago, almost 20 years ago. That hurt the industry. I mean,
they were a consistent supplier of anhydrous ammonia, different
chemicals and products that we need on the farm, and we do not
have that today. A lot of the suppliers today are just in it
for the dollar and the business aspect of it. They may or may
not be there, depending on if their profit margins are there.
Senator Braun. That statement right there, I would like
everybody to remember and listen to because that is a simple
deduction. The folks that are in that position of being the
lifeblood for farmers when it comes to inputs and supplies,
they seem to be doing okay. I think that is maybe a place
farmers need to look to, to get some relief, rather than
looking to government, because I think we know what that
involves.
Mr. Linin. Sure.
Senator Braun. Thank you so much.
Mr. Linin. You are welcome. Thank you.
Chairman Roberts. Senator Perdue? You are up. The
distinguished Senator----
Senator Perdue. I apologize, Mr. Chairman. No, I was
looking at the other side. Republican, Democrat, I guess we
really are nonpartisan today. That is great. I love it.
[Laughter.]
Senator Perdue. Well, I want to thank you guys here. This
is obviously a strategic industry for us, and this standard is
one that is very important.
I know the Ranking Member here has talked long and hard
about managed regulation. We want to make sure we have a level
playing field and protect this industry. At the same time, we
do not want to be onerous or intrusive.
Mr. Ayers, Georgia is a designated State for FGIS
inspections on domestic trade. How do official inspections
differ from a delegated State? If the Act is not authorized,
how would domestic trade suffer within the State and across the
Country?
Mr. Ayers. Thank you, Senator.
There are two types of official agencies in the Country.
There are designated and delegated. Delegated are reserved for
State entities, departments of agriculture, et cetera, that
actually run the inspection, and it is at export locations,
where there is actually ship loading going in. I believe there
are seven States that are delegated, maybe six now, but there
are seven States. All the rest of them are domestic market.
We as a designated agency cannot provide official
inspection service in an export area along the coast where they
load ships, and that is the biggest differences. Otherwise, we
all follow the same rules, the same guidelines, the same
procedures and processes.
Senator Perdue. On competing for our grain producers to
compete around the world, one of the things I am concerned
about is the cost structure. You guys were talking about cost
structure just a second ago.
Labor, raw material, ancillary overhead is different in the
ag business than most other businesses that I am aware of. It
just is, and all those things fluctuate, but they run up
against a fixed ceiling called ``commodity prices.'' The
commodity prices are not cost of goods driven. They are market
driven, as really most industries are.
In this one, though, they do not move with market forces
from what I have seen. We have outside speculators,
particularly in the grain industry, that are affecting this. I
would love to hear any of you talk about the conundrum here
about--a grain standard and the inspections and all that, I
get, but the bigger issue is how do we continue to provide
grain for the world? Because there are only a few bread baskets
in the world: Ukraine, Brazil, North America. Going from 6.5-to
9 billion in the next few decades, this was a real issue in
terms of trying to solve this economic problem that we have.
Government subsidies will not supply that long term. We can
provide ups-and-down protection, but we cannot provide a
structural protection long term because you lose the
competitive position.
Does anybody have an offering on that?
Mr. Sutherland. Well, Senator, I appreciate the question.
Obviously very complicated, but we are in a global
environment. Competition in that global environment is key, and
allowing American producers to do what they do best, produce,
in an unencumbered environment is critical, and our current
trade disruptions are problematic at best.
I think for producers--and I have many customers.
Senator Perdue. Sorry to interrupt. I want to come back to
that, but would you agree that the long-term implications of
getting a more level playing field around the world and equal
access is also something that we would like to try to achieve?
Mr. Sutherland. When you say equal access, Senator, can you
elaborate a little bit?
Senator Perdue. Sure. There are plenty of ag products that
we cannot ship to other countries that they can ship here. All
we want is equal access.
Mr. Sutherland. Right.
Senator Perdue. There are a number of ways to get there.
This is one, but I believe this is the best thing we can do for
ag.
I mean, China today imports $15 billion worth of U.S. ag
products. That is ridiculous. Australia does many, many times
that, and they are a fifth of our population or less--or less
than 10 percent really.
I am concerned about it too, but it seems to me that that
is something that one of the solutions here is to get the
demand cycle moving more naturally around the world to help on
that commodity price issue.
Mr. Sutherland. That is true, and getting these trade
agreements cemented are important.
Again, I refer to the USMCA. Getting that one ratified
would be important as that next step.
Senator Perdue. Agreed, agreed.
Mr. Sutherland. That is my opinion on that.
Senator Perdue. That is very good.
Anybody else, real quick?
Mr. Friant. Senator, I would just like to talk more about
your question on costs. That was one of the key achievements
that we had in the 2015 reauthorization was a change in how the
FGIS user fees were calculated to a five-year rolling average,
and it allowed the agency to be more responsive to these
changes in export flows and be able to more easily adjust their
user fees for the industry.
I think continuing to look at ways that the agency can take
costs out helps us continue to be the low-cost service
provider, and that is an important mission both of the agency
and then one of the key roles of the FGIS Advisory Committee
that we are advocating to be reauthorized because that is
another venue for the agency to hear about ways that the users
of the system think they can reduce costs and continue to be an
efficient service provider.
Senator Perdue. Okay. I am out of time. Thank you very
much.
Thank you, Chair.
Chairman Roberts. With that excellent question and that
excellent response from the panel, that will conclude our
hearing today. Thank you to our witnesses for sharing your
views on these important topics and for giving the Committee
much to think about as we work to reauthorize the U.S. Grain
Standards Act.
For those in the audience and all of our stakeholders, if
you want to provide additional views on reauthorization, we
have set up an address on the Senate Agriculture Committee's
website to collect your input. Do not worry. It is safe. Please
go to ag.senate.gov and click on the Grain Standards
Reauthorization box on the left-hand side of the screen. Please
note that link will be open for 5 business days following
today's hearing.
To my fellow members, we would ask that any additional
questions you may have for the record be submitted to the
Committee 5 business days from today or by 5 p.m., next
Wednesday August 7th.
The Committee stands adjourned. Thank you.
[Whereupon, at 10:39 a.m., the Committee was adjourned.]
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A P P E N D I X
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DOCUMENTS SUBMITTED FOR THE RECORD
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QUESTIONS AND ANSWERS
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