should have power to inspect and weigh, but with Congressional direction to use wherever feasible, state, local, or private agencies which meet reasonable qualifications, especially where a satisfactory job has been and is now being done. Such a measure is now before the House Agriculture Committee for final approval. It makes good administrative sense and leaves the way open to whatever changes U.S.D.A. may find needed in the future.

The proposed G.A.O. bill would eliminate the successful state inspection services of Minnesota, Wisconsin, Washington, and Oregon, among others, which we find completely satisfactory services. It would do so because with all export and important inland terminals removed from state inspection, there would be too little other inspection left to maintain competent services.

One other feature of the G.A.O. bill deserves comment: the power to monitor U.S. grain outturns at foreign ports. Present trading is based on "certificate final" as to the quality of grain when loaded. While extensive private sampling of deliveries has been done by U.S. wheat, feed grain and soybean growers' groups, any problem of quality of a given shipment must be settled between buyer and seller starting from the evidence of the "certificate final". To change this system would require an entire new system of grain contracts with official enforcement agencies at each port of entry taking the place of present "certificates final". We submit our present system is working adequately and no such move is needed.

We are aware of all the good work of the Senate Committee and of the G.A.O. staff in investigating abuses, with many already brought to successful prosecution and others awaiting trial. We believe this has opened the way to a better inspection system.

However, for the reasons stated above, we favor the features of the House Committee bill making possible the use of state, local, or private agencies, and oppose complete federalization at this time. We believe this is in the best interests of grain farmers, who will have to pay the costs of the services, as well as of the buyers and users of our grain. We therefore support the position of the National Council of Farmer Cooperatives, of which we are a member, and hope that the Senate Committee will amend its bill accordingly. Cooperatively yours,

ROBERT HANDSCHIN,

Research and Legislative Relations.

STATEMENT OF GEORGE VOTH, EXECUTIVE VICE PRESIDENT,
FAR-MAR-CO., INC., HUTCHINSON, KANS.

Mr. Chairman and members of the Committee, I am George Voth, Executive Pice President of FAR-MAR-CO., a regional grain cooperative headquartered in Hutchinson, Kansas, owned and controlled by 600 local cooperatives in Kansas, Colorado, Nebraska, Oklahoma, Missouri, and Iowa. These 600 locals are owned by some 200,000 farmers in this same six-state area.

I also serve as Chairman of the Kansas State Grain Advisory Commission, established to provide liaison between all segments of the grain movement industry in our state with the Kansas State Grain Inspection Department. I serve as a cooperative terminal representative. Local cooperatives who are members of FAR-MAR-CO are also represented on this commission.

My purpose in presenting this statement is to share our long experience with grain inspection in Kansas with members of this Committee. I would also like to commend members of the Committee for their efforts to take positive action to clean up the reported scandals that have hurt the reputation of U.S. grain in world markets. Agriculture exports earned over $20 billion in balance of payments for this nation and its citizens this year. Grain was a major portion of that. Therefore, anything that adversely affects the reputation of these exports has a great impact on our entire nation. FAR-MAR-CO supports legislative actions that provide tight federal standards and inspection of export points.

At inland points, and based specifically on our experience in Kansas, the existing system of state public inspection has worked well and should be continued. In my 20 years plus years in the cooperative grain business, I have found no other system better than the Kansas state grain inspection system. It is well run, it provides excellent service, it's fair to all parties, and to my knowledge, has never experienced any significant breakdowns in the integrity

of its service. When questions have come up, the Kansas state system, under various different leaders over the years, has acted promptly and decisively to correct any problem areas. Therefore, on behalf of the farmers and local cooperatives and the board of directors of FAR-MAR-CO, I would urge members of the Committee and of the entire Congress to proceed to act to restore the integrity of U.S. grain in export markets but, in so doing, preserve the kind of quality state inspection that we have experienced in Kansas. I would urge that in your actions you give consideration to the farmers' concerns in terms of cost of inspection, quality and fairness of inspection, and the necessity of timeliness of inspection, particularly during the post harvest season rush. We in FAR-MAR-CO stand ready to assist the Committee in any way in carrying out their responsibilities in this very important matter.

Senator HUMPHREY. Now, we have a panel representing the National Association of Chief Grain Inspectors.

Might I ask is Mr. Virgil A. McNamee here?
Mr. MCNAMEE. Yes, all four of us are here.

Senator HUMPHREY. Would you just come on up here, please.

Mr. Ted Hoelck, owner and chief grain inspector, Hastings Grain Inspection Service, Hastings, Nebr.; Mr. Joseph Slater, chief grain inspector, Davenport Grain Exchange, Davenport, Iowa; and Mr. John Williamson, chief grain inspector, South Louisiana Port Inspection and Weighing Board, Destrehan, La.

Please have a chair.

STATEMENT OF VIRGIL A. McNAMEE, CHIEF GRAIN INSPECTOR, TOLEDO BOARD OF TRADE, TOLEDO, OHIO; TED P. HOELCK, OWNER AND CHIEF GRAIN INSPECTOR, HASTINGS GRAIN INSPECTION SERVICE, HASTINGS, NEBR.; JOSEPH SLATER, CHIEF GRAIN INSPECTOR, DAVENPORT GRAIN EXCHANGE, DAVENPORT, IOWA, REPRESENTING NATIONAL ASSOCIATION OF CHIEF GRAIN INSPECTORS

Mr. MCNAMEE. Mr. Chairman, we do have two statements, one for the National Association of Chief Grain Inspectors Mr. Slater will read, and Mr. Williamson has one following.

Senator HUMPHREY. All right, we will start off with Mr. Slater. Mr. SLATER. Yes.

Senator HUMPHREY. Thank you, Mr. Slater.

You are the chief grain inspector, Davenport Grain Exchange, of Davenport, Iowa?

Mr. SLATER. Yes, sir.

This is a statement of the National Association of Chief Grain Inspectors, represented by director and past president, Virgil A. McNamee; director and past president, Ted P. Hoelck; director and past president, John A. Williamson, Jr.; and secretary-treasurer, Joseph L. Slater, myself.

The above-named representatives of our national association are vitally interested in the proposed legislation, S. 3055, and are from different areas of the country inspecting grain for domestic and export trade. Virgil A. McNamee is chief grain inspector for the Toledo Board of Trade. Ted P. Hoelck is chief grain inspector and owner of the Hastings Grain Inspection Services. John A. Williamson, Jr., is chief grain inspector for the South Louisiana Grain Inspection

Services, Inc. I am chief grain inspector for the Davenport Grain Exchange.

We do appreciate this opportunity to present our views and those of our association members concerning the pending proposals to revise the U.S. Grain Standards Act. Many of us have been citizens of this great country for over one-half a century, contributing, along with many other people, to development of a great grain inspection and marketing system, from the farmers to the exporters, for the overall benefit of citizens of the United States of America.

The loyalty of State and private inspection personnel to this country is above reproach by knowledgeable people. The honesty and integrity of licensed inspectors is at least equal to any other citizens employed by Federal, State or local public agencies. The news media has done a terrific job exposing law violations in many Federal, State, county, and city agencies as well as private industry.

All guilty parties should be prosecuted for violations of the law whether public or private, but the condemning of a grain inspection system that has served the United States so well ever since 1916 does not appear to be in the best interest of informed and concerned citizens of this country. The National Association of Grain Inspectors strongly supports action to restore credibility of the grain inspection system.

The National Association of Chief Grain Inspectors strongly supports action that is needed to restore credibility to grain inspection by promoting orderly grain marketing, protect buyers and sellers interests, and build confidence in the quality and consistency of U.S. grain at home and abroad.

We feel the inadequacies we find in the present system can be corrected through the efforts of the U.S. Department of Agriculture without reverting to initial Federal inspection except in the case of emergencies resulting from violations of the act or its regulations.

The present system of State and private grain inspection has served well over many years and we feel that the credibility established over these years by highly efficient, well-trained State, private, and trade organizations should not be destroyed because of the wrongdoings of a few.

Our present system with Federal supervision and Federal appeal inspection provides a good procedure of checks and balances which would be eliminated with an all-Federal inspection system. Increased supervision and improvements in the regulations similar to those proposed by the administrator of AMS would restore integrity and confidence in the inspection system and provide greater uniformity and consistency in inspection procedures.

We wish to offer the following recommendations regarding "Reports on Irregularities in the Marketing of Grain" as prepared by the U.S. General Accounting Office, February 17, 1976.

The statistics shown in the error rates of appeal and supervision comparisons are distorted and misleading. If this error rate were true, it would not have been possible for the grain industry to operate for the past 60 years under such "so-called inaccuracies."

Everyone with experience in inspection or handling grain knows that the quality of grain does change, that grain samples will vary

with methods of sampling and that the inspection equipment is not designed to operate within such a very close tolerance.

We have many reports from agencies in the United States regarding this latest error report from GAO. One agency in particular mentions that they checked 1,376 supervision reports

Senator HUMPHREY. What is that?

Mr. SLATER [continuing]. GR-189-that is a form that the Depart

ment uses.

Senator HUMPHREY. Fine; thank you.

Mr. SLATER. And of these 1,169 grades were upheld, 158 were changes by mechanical factors; that is to say, foreign material by a dockage machine or a moisture test by a moisture machine or a test weight on a test weight scale. These changes could amount to onetenth of 1 percent or less. There were 49 changes on judgment and 22 of these were actually upgraded. Of all these changes, some were only changed by one-tenth of 1 percent or less.

That is factual information and does prove that the error factor that we are hearing about is of a statistical type which we doubt could ever be corrected unless we have more sensitive, sophisticated types of equipment. Furthermore, the quoted error rate does not reflect findings by the board of appeals and review which in many cases would sustain the original grade assigned by the licensed inspector.

The GAO report states that supervision of licensee's work is on "time permits" basis. The present Grain Standards Act has always authorized the Secretary to administer the act and regulations and effectively supervise all licensee's work on a full-time basis.

Our association is appalled at the absolutely slanderous statement quoted by GAO concerning the loyalty of licensed inspectors to the United States.

The GAO reports inadequacies in sampling. We recommend the U.S. Department of Agriculture vigorously pursue new methods of sampling and utilize extensive research for improved modern sampling equipment.

The GAO report states they are not able to make a cost estimate of a federally operated inspection system. It is a fallacy to believe that a Federal system could be developed that could afford all the timely, efficient, around-the-clock services at the nominal costs that private and State agencies now provide, without a tremendous increase in cost. Based on appeal inspection fees as compared to average licensed inspection fees, costs would be considerably greater. These costs would eventually have to be borne by either consumer, farmer producer, or taxpayer.

The inefficiency and cost of an all-Federal inspection system are exemplified in many other Government operated businesses, such as post office, Federal meat inspection, medicare, food stamps, social security, to name a few.

GAO conclusions on foreign grain buying and complaints are not factual as compared to statements in the report of Congressman Edward R. Madigan in his report to the House Interstate and Foreign Commerce Committee, in which he stated in part:

Officials of the European Common Market who will import another 12 million tons of U.S. grain this year told me that complaints about the quality of U.S. 70-654-768

grain are overstated and come mostly from speculators who have paid too much for the grain.

Furthermore, as we see this problem, because of the way we physically handle grain from the farm to the overseas buyer, a Federal inspector's grade under a Federal system will be no better than the licensed inspector's grade under our present system.

The National Association of Chief Grain Inspectors of the United States wish to state that our own inspection system has been unduly criticized by a biased report made by Federal employees who were previously briefed on the necessity of a Federal system of grain inspection and who in making this report lost all point of objectivity as to the problem and its solution.

In 1967 the National Association of Chief Grain Inspectors presented testimony at hearings held at the House Agricultural subcommittee concerning proposed amendments to the then existing act. The statement we presented at that time made it clear that we are duly concerned with the changes proposed which give the appearance, to those people using the services offered under the act, of a lessening of control and enforcement of supervision by the U.S. Department of Agriculture.

We feel many of the problems we see today resulted from this legislation. In the last several years we have noticed a decline in the amount and degree of supervision our inspection system has received. Over the same period of time, we have had a substantial increase in initial inspections and a decrease in a number in the Federal personnel performing this supervision. To point out this fact, in 1916 at the beginning of the Grain Standards Act, Congress appropriated approximately $23 million to administer supervision of the act. Now, some 50 years later, fiscal year 1973, Congress still only appropriated $213 million.

We strongly concur with strict supervision by knowledgeable Federal supervisors, but it is not reasonable to kill a workable system to correct what may have developed through unwise budgetary, restraint of the Federal supervisory system in the past.

Prior testimony has intimated that U.S. Department of Agriculture employees are superior in grading to licensed inspectors. The fact is that USDA employees are not trained in grading grain on an initial basis. The licensed inspectors in a majority of cases are grading the samples without prior knowledge of quality or grade, whereas in most cases the Federal supervisors have previous knowledge of the initial grade.

Under this proposed Federal initial inspection arrangement, it might be possible that deficiencies in grading by Federal employees, contested by overseas buyers, could be a direct reflection on the U.S. Government.

Also this can cause considerable delay in handling grain, both domestically and for export, which could cause serious repercussions to our entire marketing system. There are USDA and trade records which show the accuracy, honesty and integrity of private employed licensed inspectors grading grain according to the rules of the U.S. Grain Standards Act. One ship lot of grain was checked as thoroughly as is possible as it was being loaded with corn and soybeans