Senator CLARK. Fine. fine. Mr. GROOT. These recommendations, resolutions, primarily came from the Grain Standards and Quality Committee of the ASA of which I was a member, and in addition to what is listed on that, I would quote a recommendation which we made in that a high-level trade team be sent to work with overseas customers and possibly work out recommendations of things that foreign customers could do to upgrade the whole picture of buying grain, from the farmer to the utilizer overseas, so this is not included in those resolutions, but it was a recommendation. Senator CLARK. Good. Mr. GROOT. I understand the administration is to introduce legislation on this subject in the future, and we would like the opportunity to compare the two bills when that time comes. With respect to his particular resolution S. 2256, I would direct the following comments-and I do not want these to be interpreted as being critical. I think I would like to make some objective observations, and I hope they are. Senator CLARK. Good. Mr. GROOT [reading]: 1. Inclusion of authority and responsibility for grain inspection, grain standards, and grain weighing under one agency would be an advantage. 2. Reorganization of the grain inspection system should not be done under one year provisions but should be made permanent. 3. Some questions have been raised concerning grain inspection at foreign ports. We feel the objective is to assure the loading of a specified product and elimination of fraud. We feel a program of monitoring at foreign_destination would achieve this objective on a practical basis at much lower cost. Personnel stationed at the major ports would also be available to help cut red tape in cases of disputed grades. This has been brought out in one way that I think the objective of the personnel should be to aid in seeing that the system works. I think getting them caught up in litigation and in fact setting them as judges might not be an advantage. Senator CLARK. We had some testimony earlier about that. Mr. GROOT [continuing]. 4. The practice of periodic rotating grain inspection personnel would have an advantageous effect of reducing the possibility for fraud. 5. Provisions should be retained for allowing farmers and grain handlers to do the best job of merchandising the grain itself as opposed to the incentive that now exists to add foreign material. I think that here is where there may need to be clearer language stated so that we do not restrict the merchandising of the grain itself. Now, maybe if they can blend No. 1 grade and No. 3 grade to make a good No. 2 grade, maybe this would be an advantage and would be a good practical advantage to keep. I think my objective is to try to see a system that would give the best return to the farmer. Senator CLARK. Right, right. Mr. GROOT [continuing]. 6. In regard to the section to establish standards and procedures for loading export grain to control the activities of elevator employees, longshoremen, grain trimmers and others who participate in the loading of export grain, I will include the following resolution adopted at the ASA Convention two days ago: Believing in the free trade policy established by USDA and whereas there has been a threat by the ILA to refuse to load grain destined for export, therefore be it resolved that the ASA attorney contact the attorney generals of one or more of the prin cipal farming states and request them to file suit against the International Longshoreman's Union to enjoin their action if the ILA refuses to load grain shipments to overseas purchasers, because this illegal action by the longshoremen would seriously damage American agriculture. In closing, as a personal observation, it would appear to me that the Congress must assert itself as the governing body of this country if a democratic process is to be maintained. Thank you for the opportunity to testify. Senator CLARK. We thank you very much, and we appreciate your testimony. Just a couple of questions. Your first recommendation, you say, with respect to S. 2256, "I would direct the following comments:", and you say, "Inclusion of authority and responsibility for grain inspection, grain standards, and grain weighing under one agency would be an advantage." Does that mean that you would prefer a Federal system across the board? What do you mean by one agency? Mr. GROOT. I think whatever the authority is established, it should be. As I understand it now, that in the agency that has the responsibility for inspection and standards, they do not have authority in weighing or in weights, and they do not have authority in regard to the complaints of short weights. Senator CLARK. That is correct. Mr. GROOT. That is my understanding. Mr. GROOT. So, however the problem is addressed, the inclusion of these factors in one agency, however it is addressed, would be an advantage. Senator CLARK. Right. I think our bill does that too. Now, I understand what you mean. Let's bring weights and grades together in one agency. Mr. GROOT. The feeling is this would be an elimination of fraud if the authority is put under one place. Senator CLARK. Your second recommendation you say, "Reorganization of the grain inspection system should not be done under 1-year provisions but should be made permanent." In other words, you say let's go ahead and pass a permanent bill instead of having a 1-year temporary bill? Mr. GROOT. This is our feeling, that we do feel there are problems that we are facing and there are things that need to be done, corrections. that need to be made, and this should be addressed permanently. We do not need to go back and have the possibility of a problem arising again. Senator CLARK. Thank you very much, Mr. Groot. We appreciate having your testimony. [The following resolution was submitted for the record:] RESOLUTION OF THE AMERICAN SOYBEAN ASSOCIATION SOYBEAN GRADING AND STANDARDS Customer and producer complaints have focused attention on inequities in United States grading standards for soybeans. United States growers have builtup a foreign market for over 50 percent of their annual soybean production. To maintain and expand overseas sales, we must regain a reputation for providing products of uniform quality. Therefore, the American Soybean Association recommends that the following items be incorporated into the revision and updating of present standards: 1. That soybean grading standards be changed to eliminate the incentive to add foreign material; 2. That soybean grades be maintained from farmer to export purchaser without degradation due to addition of foreign material; 3. That a self-supporting (fee basis) federal or quasi-public inspection, grading and weighing service be established by United States Department of Agriculture for soybeans and all grains shipped in International trade. We further recommend suspension or revocation of license for any company or individual who knowingly violates USDA grain standards; 4. That a system be established for the random monitoring of United States shipments by USDA personnel at the foreign destination. We further recommend that USDA grade monitoring personnel be located in Western Europe and Japan. In addition to the revision of standards, we recommend that USDA establish a program whereby growers and the industry are allowed to participate in a periodic review of the standards. We also suggest that USDA establish appropriate programs to restore the confidence of our overseas customers in our ability to provide high-quality soybeans. We encourage development of machines and techniques, to be tested throughout the soybean-producing area, which will more accurately indicate the value of soybeans at first point of sale. We encourage a policy of: (1) educating soybean farmers and the grain-buying trade on the value of these machines, and (2) cooperating with USDA in the study of a new grading system using these machines for the benefit of the farmer. SOY OIL GRADE STANDARDS The American Soybean Association recommends that the feasibility of setting United States grade standards applicable to retail sales of soy oil be studied by United States Department of Agriculture in cooperation with ASA and National Soybean Processors Association. SOYBEAN MEAL GRADE STANDARDS The American Soybean Association recommends that the feasibility of setting United States grade standards for the domestic and export market of soybean meal be studied immediately by United States Department of Agriculture in cooperation with ASA and National Soybean Processors Association and that recommendations of the study be implemented as soon as practical. Senator CLARK. We are going to hear next from Mr. Dale Lund, vice president of the Polk County Farmers Union, Polk City, Iowa, and then just so others can be ready, we are going to hear from Mr. Glen Taylor of the Iowa Farm Bureau and Mr. Argie Hall of the Farmers Grain Dealers Association of Iowa. You go right ahead and proceed any way you want, Mr. Lund. STATEMENT OF DALE J. LUND, VICE PRESIDENT, POLK COUNTY FARMERS UNION, POLK CITY, IOWA Mr. LUND. Mr. Chairman, I am Dale Lund, a farmer in north Polk County and a member of Iowa Farmers Union. I am representing the organization today since our State president, Lowell E. Gose of Jefferson, was unable to attend. An effective solution of the grain inspection problem is of great importance to U.S. farmers and I can assure you our membership appreciates the evident determination by the Congress to enact appropriate authorizing legislation. Some of the mischief which recently came to light in the export grain trade was not completely surprising, even out here at the production end. It had been common talk for some time that the big shippers, figuratively speaking, had a little spout running inside the big spout while loading ships, so as to obtain a blend barely above the bottom of the contract grade. But we did not know until recently what trash was being added to export cargos in the blending process. We were not aware of the scandalous falsification of grades on inspection certificates furnished foreign buyers. In short, most farmers had no idea of the extent of damage being done to the reputation of American grain in receiving countries. Now, there can no longer be any dispute about the need to restore honesty and constant vigilance to the grain inspection system in this country. It is unthinkable that anybody in the grain business, or any high public official for that matter, would object to such a reform effort. It seems clear that the No. 1 essential is an expansion in both personnel and scope of the Federal inspection apparatus. Grain at export points should be done henceforth only by highly qualified licensed Federal inspectors. Grain grades need to be reviewed and probably revised in a number of respects. The definition of foreign material should be narrowed so that much of the trash adulteration of the past would be strictly prohibited. Farmers who take pride in producing clean, high quality grain also would like to see greater price reward for their efforts. Admittedly, though, it is difficult to see how grade changes alone would bring this about unless ultimate buyers become more inclined to pay the difference. Nevertheless, it does aggravate a farmer to haul in a load of corn or soybeans below the tolerable maximum on moisture and grade factors and usually be accorded no premium. In this connection, I might add that farmers tend to be a bit apprehensive of what goes on at the local elevator on load sampling, moisture testing, and grading. At the same time, it is recognized that at harvest time, particularly, most local elevators have to work very rapidly to handle the traffic. It has to be taken on faith that the testing equipment stays in good working order and that the sampling procedure is uniform and reasonable. At any rate, that is the point at which our grain inspection system begins. Maybe one problem is that few elevators have bins enough to keep grades and qualities more nearly separated and identity preserved. So greater precision in judging each delivery may tend to be less critical when the grain will mostly be commingled anyway. After what has happened, the sooner the export grain inspection system can be cleaned up the better. For that reason, Senate Joint Resolution 88 has some attraction but it provides only a 1-year emergency authority and does not seem quite tough enough to require the present Secretary of Agriculture to do what needs to be done. Farmers Union members prefer to believe it is possible to enact more permanent and extensive legislation yet this fall. As for S. 2256, the Federal Grain Inspection Act, I may say it pretty well covers essentials already mentioned. It contains criminal provisions that should be quite effective in putting an end to deceptive weighing of grain, adulteration, attempts to influence Federal grain inspectors with bribes. Other commendable features include registration of grain firms in interstate and foreign commerce with details on ownership and all operational locations; authority for periodic rotation of inspection personnel and prohibition against hiring as an inspector anyone financially interested, directly or indirectly, in storage or merchandising of grain. I note that S. 2256 would set up an agency separate from the U.S. Department of Agriculture to administer the new inspection system, analogous to the creation of the separate commission to take over the regulation of commodity futures trading from USDA's Commodity Exchange Authority. I am unable to offer official comment on the separate agency idea, since the question of preference has not been before our board of directors. I suspect their main concern might have to do with the adequacy of the authorizations. I thank you for your attention. Your may be sure Farmers Union members will watch further developments with great interest and can be counted on for support of your legislative purpose. Senator CLARK. We appreciate that very much. The views that you present here today, Mr. Lund, represent the State Farmers Union Association? Mr. LUND. Right, right. Senator CLARK. I gather from your testimony, the latter part of your testimony, that generally speaking you support the principles of S. 2256. Mr. LUND. That is what we would have to say. Senator CLARK. You would prefer to go in that direction, rather than a 1-year temporary bill? Mr. LUND. Yes. Senator CLARK. Thank you very much. We appreciate it. We are going to hear now from Mr. Glen Taylor of the Iowa Farm Bureau. Mr. Taylor is the director of the public policy division of the Iowa Farm Bureau Federation here in Des Moines. Proceed in any way you think appropriate. STATEMENT OF GLEN TAYLOR, DIRECTOR, PUBLIC POLICY DIVISION, IOWA FARM BUREAU FEDERATION, DES MOINES, IOWA Mr. TAYLOR. Thank you very much, Senator. We wish to commend the committee on its inquiry into grain inspection systems and methods. There is definite need for this attention on the part of Congress. There is ample evidence of sufficient corruption and abuses within the system to make both the inquiry and some revisions of the system necessary. A thorough study and improvements must be forthcoming to restore producer and public confidence and, possibly more importantly, to reassure foreign buyers that they will receive the quality of grain provided for in the purchase contract. It is not necessary at this time to detail the importance of exports to Iowa corn and soybean producers and consequently to Iowa's economy. It is a well-recognized fact that farmers have the ability to produce considerably more than the domestic market will absorb at a price which will assure a healthy agricultural economy and continued production. Acreage restrictions, either voluntary or mandatory, will have to be very severe if we do not maintain a high level of exports. Furthermore, there seems little possibility that the United States can achieve a balance of payments and continue to import needed quantities of oil and other products unless an even higher level of agricultural exports is achieved and sustained. We must take whatever steps |