Market Matters Blog

The Senate Agriculture Committee on June 24 advanced a bill, via a voice vote, reauthorizing the U.S. Grain Standards Reauthorization Act (USGSRA) for another five years. The bill was widely supported by agricultural groups and exporters who depend on the reauthorization to provide structure for the entire grain inspection system. The existing authorization law, which passed in 2015 and included provisions to ensure uninterrupted export inspections, is set to expire on Sept. 30.

The Federal Grain Inspection Service (FGIS) was created by Congress in 1976 to manage the national grain inspection system, which was initially established in 1916, and to institute a national grain weighing program. Today FGIS facilitates the marketing of U.S. grain and related products by establishing standards for quality assessments, regulating handling practice for quality assessments, regulating handling practices, and managing a network of Federal, State and private laboratories that provide impartial official inspection and weighing services. FGIS and the official agencies that comprise the official system provide services under both the U.S. Grain Standards Act (USGSA) and the Agricultural Marketing Act (AMA) on a fee basis for both export and domestic grain shipments.

"The entire federal grain inspection system needs the certainty, predictability and transparency that the bipartisan U.S. Grain Standards Reauthorization Act of 2020 provides," said U.S. Senate Committee on Agriculture, Nutrition, and Forestry, Chairman Pat Roberts, R-Kansas. "The Senate Agriculture Committee has never let this reauthorization lapse, and as is customary in our Committee, we have listened before putting pen to paper. I appreciate our stakeholders' input while crafting this bill. It will serve them well and help maintain our country's reputation as a reliable exporter of quality grain."

Ranking Member Debbie Stabenow, D-Michigan added, "As our farmers face unprecedented uncertainty and trade instability, it is vital that we maintain the integrity of our grain inspection system. This bipartisan bill protects the interests of American farmers and ensures our credibility as a reliable producer of high-quality crops."

Currently, under the United States Grain Standards Act (USGSA) and the Agricultural Marketing Act of 1946 (AMA), FGIS:

-- Establishes and maintains official U.S. grain standards for barley, canola, corn, flaxseed, oats, rye, sorghum, soybeans, sunflower seed, triticale, wheat, mixed grain, rice and pulses.

-- Inspects and weighs grain and related products for domestic and export trade.

-- Establishes methods and procedures, and approves equipment for the official inspection and weighing of grain.

-- Supervises the official grain inspection and weighing system. The official system is a network of FGIS field offices, and State and private grain inspection and weighing agencies across the nation that are authorized by FGIS to provide official inspection and weighing services.

-- Provides international services and outreach programs and protects the integrity of the official inspection system and the market at large to ensure markets for grain and related products are fair and transparent.

FGIS and the official agencies that comprise the official system provide services under both the USGSA and the AMA on a fee basis for both export and domestic grain shipments.

The National Grain and Feed Association (NGFA) and North American Export Grain Association (NAEGA) in a press release said they strongly support legislation that would reauthorize and improve the current U.S. Grain Standards Act. Both groups noted that they support reauthorizing all expiring provisions of the current law for another five years, including: the ability for Congress to appropriate funding for standardization and compliance activities that have broad societal benefits, including to farmers and consumers; authorization for the USDA Grain Inspection Advisory Committee to operate, and the current statutory limitation on the amount of money FGIS can spend on administrative costs not associated with direct inspection and weighing activities.

NGFA noted that USGSRA 2020 also includes a number of improvements advocated by them and NAEGA, saying they will promote increased data and information sharing to benefit the system and its users, including:

-- Requiring delegated state agencies to notify users of official inspection or weighing services at least 72 hours in advance of any intent to discontinue such services.

-- Ensuring FGIS user fees are directed solely to inspection and weighing services.

-- Reporting requests for waivers, exceptions and other specific services received and granted by FGIS.

-- Directing FGIS to complete a comprehensive review of the current boundaries for the officially designated grain inspection agencies in the domestic marketplace.

NGFA and NAEGA also highlighted their concerns about ongoing non-tariff trade barriers that have restricted exports of U.S. grains and oilseeds, noting that the reauthorization bill retains the provision that prohibits the "use of false or misleading grade designations" for U.S. grain exports.

U.S. Wheat Associates (USW) chairman and Paulding, Ohio, wheat farmer Doug Goyings said, "Our exports markets are critical to U.S. wheat farmers' bottom lines as they see 50% of U.S. wheat exported each year. The grain inspection system is one of our key advantages over our competitors that has helped wheat and other U.S. commodities grow export markets. Our overseas customers value the independent system in place through the Grain Standards Act."

National Association of Wheat Growers (NAWG) President and Cass City, Michigan, farmer Dave Milligan added, "To avoid any disruption in inspection services and keep the flow of grain moving, NAWG encourages Congress to act quickly to reauthorize the Grain Standards Act before expiration in September."

Various exporters I spoke to in the Pacific Northwest said that the industry fully supports reauthorizing this bill. I was reminded of the International Longshore and Warehouse Union (ILWU)lockout that began early in 2013 and lasted 18 months. During that time, when Washington's governor stopped providing police escorts for state grain inspectors to cross ILWU picket lines in Vancouver, state FGIS Inspectors refused to cross the picket lines. That refusal left those terminals without any official grain grading and weighing, thus stalling outgoing shipments. One exporter told me that because of that, the industry was unable to negotiate because they couldn't even operate.

"Requiring service is fully justified and necessary," noted another exporter. "The lack of this type of language in the USGSA crippled the grain industry during the 18-month strike."

Here is a link to the USGSRA legislation, summary, and section-by-section: https://www.agriculture.senate.gov/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

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