STATUS OF PROGRAM

The Federal Grain Inspection Service (FGIS) was established on November 20, 1976, to carry out and administer the provisions of the U.S. Grain Standards Act of 1976 (USGSA), as amended (7 U.S.C. 71 et. seq.). Prior to 1976, work under the USGSA was performed by the Agricultural Marketing Service. The USGSA was amended again in 1981 to require user fee funding for supervision and administration expenses in addition to the costs of direct inspection and weighing services.

The mission of FGIS is to provide for the establishment of official United States standards for grain, to promote the uniform application thereof of official inspection personnel, to provide for an official inspection, weighing and weight certification system for grain shipped in interstate or foreign commerce, as authorized by the USGSA, as amended, and the regulations thereof, and the Agricultural Marketing Act of 1946 (AMA).

During FY 1981, FGIS was reorganized. The reorganization represents a significant change in FGIS priorities. Organizational analysis found that management structure above the field services area had expanded to the point that it was no longer cost effective and could not be justified under a user fee program. The restructuring of FGIS will save money and still ensure that the Agency will retain the capability to administer the USGSA and the Agricultural Marketing Act (AMA).

1. Inspection Activities

Current Activities

The USGSA requires, with minor exceptions, that all grain exported by grade must be officially inspected. Federal and delegated State agency licensed employees perform original inspections at export port locations in the United States and Canada. Original inspections of grain at interior non-export locations are performed on an as requested basis by designated State and private agency licensed employees. Original inspection of rice and commodities are performed by Federal employees on a request basis. Appeal inspections are also performed on an as requested basis.

As manadated by the USGSA and AMA, all inspection activities are funded by user fees. Inspection activities consist of direct original and appeal inspection of grain, rice, and related commodities; supervision activities; and administration. Prior to the 1981 amendment to the USGSA, only direct services were financed through user fees.

FGIS employees supervise both Federal and non-federal licensed inspectors, performing original inspection and reinspection, and Federal employees carrying out appeals. Federal personnel supervise all FGIS employees as well as all delegated and designated official agencies.

Selected Examples of Recent Progress

Supervision Program. During FY 1981, FGIS initiated a review of the supervision program to determine if the program reflects the intent of the USGSA, as amended. This review is expected to be completed in 1982.

Exemption from Inspection Requirements. Effective July 1, 1981, FGIS exempted from official inspection requirements all grain exported from the United States to Canada or Mexico by rail or truck. This action reduced a burden on the trading

of grain between the United States and these countries without impairing the objectives of the USGSA.

International Monitoring. During FY 1981, international monitoring teams visited countries in Europe, Asia, South America, Central America, and Africa. These teams responded to specific complaints and met with government and private officials from these countries to explain U.S. grain standards and inspection and weighing policies and procedures. They also performed grain monitoring to determine what effect the transportation of U.S. grain abroad had on original quality and weight determinations.

Aflatoxin Testing. Recently, FGIS approved for field use an improved procedure for aflatoxin testing. This procedure is less complicated, more accurate, and safer. This procedure is also approved by the Association of Official Analytical Chemists and the American Association of Cereal Chemists.

Fumigation of Tankers. FGIS implemented a procedure for the intransit fumigation of grain loaded aboard tankers. This procedure is based on scientific experiments conducted in cooperation with the Agricultural Research Service of the U.S. Department of Agriculture. This procedure substantially reduces delays in the export of U.S. grain due to insect infestation and results in lower industry costs. Prior to the implementation of this procedure, fumigation of grain aboard tankers was performed at the export port location delaying the movement of grain and resulting in higher costs to the industry.

Board of Appeals and Review. During FY 1981, 66,230 samples were processed. These consisted of 1,779 Board Appeals and Opinions; 24,577 monitoring samplers; 1,874 foreign complaints; and 38,000 protein appeals. The Board of Appeals and Review (BAR) conducted 22 training seminars on grain and 7 on protein. Other activities included: Preparation of interpretive line slides for fertilizer and recommendation for other grain factors and edible beans; and preparation of interpretive milling degree samples for field office distribution.

Similar to the requirements for inspection, the USGSA requires, with some exceptions, that all grain exported by grade be officially weighed. All weighing activities are funded by user fees. Weighing activities consist of direct services by Federal personnel, supervision of Federal and non-federal personnel, and technical and administrative support. Direct services are required for impartial and accurate weighing information on grain and grain carriers.

These include Class X weighing which requires 100 percent official supervision; Class Y weighing which requires a minimum of 25 percent supervision; and a checkweighing service for sacked grain.

Federal supervision and administrative programs provide the technical direction, planning and control to insure the accuracy of the weighing certification system for exported grain. Accuracy is assured through the supervision of Federal personnel as well as licensed employees of delegated State agencies.

Selected Examples of Recent Progress

Exemption From Weighing Requirements. Effective July 1, 1981, FGIS exempted from Class X weighing requirements all grain exported from the United States to Canada or Mexico by rail or truck. This action reduced a burden on the trading of grain between the United States and these countries without impairing the objectives of the USGSA.

Revised Supervision of Weighing (Class Y). During FY 1981, FGIS revised the requirement for supervision of the Class Y weighing service to meet the needs of both interior elevators and export elevators at export port locations. Class Y weighing services were not previously available at export port locations because official weighing services (Class X) were required. Public Law 96-437 amended the U.S. Grain Standards Act to exempt from mandatory official weighing the transfers of grain into or out of export elevators at export port locations for certain types of shipments. This resulted in requests from the grain industry for a cost effective supervision of weighing services (Class Y). In addition to offering Class Y weighing services at export port locations, FGIS revised this service to provide for signing and issuance of the Class Y certificates by approved weighers employed by the elevators. This revised Class Y weighing service is more flexible and more cost effective.

Obligations by State: The following is a distribution of obligations for

the Inspection and Weighing Services.

THURSDAY, MARCH 18, 1982.

OFFICE OF RURAL DEVELOPMENT POLICY

WITNESSES

FRANK W. NAYLOR, JR., UNDER SECRETARY, SMALL COMMUNITY AND RURAL DEVELOPMENT

WILLARD (BILL) PHILLIPS, JR., ACTING DIRECTOR, OFFICE OF RURAL DEVELOPMENT POLICY

JAMES C. ANDERSON, ACTING DIRECTOR, BUDGET DIVISION, FARMERS HOME ADMINISTRATION

STEPHEN DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

OPENING REMARKS

Mr. WHITTEN. The Committee will come to order.

This is a continuation of the hearings on the Department of Agriculture budget for 1983. We have with us today the Office of Rural Development Policy and also the Rural Electrification Administration. We have Mr. Naylor back with us from the Secretary's Office.

We will be glad to take up Rural Development Policy first. You may proceed. If you care to present your associates, Mr. Naylor, we will add the biographical sketches in the record.

Mr. NAYLOR. Thank you, Mr. Chairman. It is a pleasure to be with you again today. I have with me at this time the Acting Director of the Office of Rural Development Policy, an office that was formed out of the section devoted to rural development and rural development policy activities in the Farmers Home Administration this past year by Secretary Block. He did this in an effort to provide more direction and more strength to our policy development, both within the Department and for the Cabinet Council on Food and Agriculture, which Secretary Block chairs and which is responsible for rural development within the Administration.

The Acting Director is Mr. Bill Phillips, who I think is uniquely qualified for the position in which he now serves. He has had extensive experience on Capitol Hill, being in the Office of former Congressman Wilmer "Vinegar Bend" Mizell. He has had extensive experience in rural areas and is very familiar with rural government operations and the unique problems and the unique needs of rural parts of our country.

With that, Mr. Chairman, if I may, I would like to introduce Mr. Phillips and let him make a short statement to you.

Mr. WHITTEN. We will be glad to hear from you, Mr. Phillips. [The biographical sketch of Mr. Phillips follows:]