[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
           
           
           
           
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           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

                              ----------                              

                        Wednesday, July 31, 2019

                                                                   Page

Hearing:

Perspectives on Reauthorization of the U.S. Grain Standards Act..     1

                              ----------                              

                    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
                              ----------                              

                                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
                              ----------                              


                        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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                         QUESTIONS AND ANSWERS

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