about test weight. Well, is weight more important than protein? So, we need to look at that whole Grain Standards Act. That's one thing. Second, I think we have to look at the whole question of how we handle grain. We are handling so much of it now and so fast and shipping so much overseas and we need to; we have got to-that I think many times we are mishandling it. We are blowing it into barges; we are handling it poorly in many cases. I think we need more research and more information on how to handle grain more efficiently without cracking it, without hurting it so much. Then, third, there is the whole question of grain inspection. Is a private grain inspection agency the right way to go, or should we have Federal/State or should we have simply Federal? Those are the tions, it seems to me, that we have to address ourselves to in all of these matters. ques Mr. KUEHL. Well, I would say from my experience, the cooperative's operations have been practically 100 percent honest as far as inspections go, because there is nothing to be gained by cheating the farmer. They have to keep good public relations with the farmer. Another thing I don't think is right is that there is too much restriction on our grain sales now. We were promised that they would not restrict sales if we would produce all out, go all out for production. Now they want to restrict the grain sales. Why can't the dealers or buyers in this country pay just as much as the foreign buyers for our grain? Why not just bid against each other, and whoever pays the most, let them have the grain. What is wrong with that? Why do we have to restrict the sales in order to keep our prices low, as this is what we are doing? Senator CLARK. Does it bother you that seven grain companies handle 80 percent of all the export grain in the world? Mr. KUEHL. It sure does. Another thing that bothers me is that the farmers won't organize together and price their product like every other business does. We have got a farmer organization now, but but you can't get enough farmers to support it. Even the Government is trying to break it up, because they don't want the farmers to organize. They have got a lot of different farmer organizations, and I think this is all to keep the farmers disorganized, because they know if they ever get organized, they would have something to say about the crop. As it is today, the farmer has nothing to say about his product. If corn is $3 a bushel, and he says he should have $3.25, that doesn't mean a thing, because he can go to any elevator in the country, and they all go by the board of trade as a rule. If the farmers would organize and price their own products, I don't think they would even need a board of trade. It disturbs me every day to see the board of trade set our prices. You can't tell me a bushel of beans is worth 20 cents a bushel more today than it was yesterday. There is nothing that jumps around in prices like farmer prices. It is very unfair. Senator CLARK. We are very appreciative of having you come up. Thank you very much. Mr. KUEHL. Right. Thank you very much. Senator CLARK. Next we will hear from Warren Dahms from Dixon, Iowa. I have a note here that he wanted to testify. Is he present? Mr. LOEWI. No, he is not. Senator CLARK. All right. Then next we will hear from State Senator Roger J. Shaff. I might say that at this point we also have a statement from the Davenport Chamber of Commerce that will be included in the record. If there are other people that would like to have statements included in the record, please bring them forward. [The statement referred to follows:] Hon. RICHARD C. CLARK, U.S. Senate, DAVENPORT CHAMBER OF COMMERCE, Old Senate Office Building, Washington, D.C. DEAR SENATOR CLARK: A lot has been said and written about the bribery of grain inspectors in Houston, Texas and New Orleans, Louisiana. The prescription being considered by Congress to cure this problem is the federalization of the grain inspection and grading system. The Davenport Chamber of Commerce wishes to go on record with you, as well as Congressman Mezvinsky, as being unalterably opposed to a federal takeover of the present private grain inspection and grading system for the following reasons: 1. There has been no evidence to show that the privately owned, federally licensed grain inspection services in the State of Iowa and throughout the nation generally has been operating improperly. 2. Present laws are adequate, if enforced, to eliminate what appears to be a localized problem. 3. Efforts should be made to eliminate potential conflicts of interest in which major grain trading firms may control inspection services. 4. The U.S. Department of Agriculture should enforce the present laws to eliminate conflicts of interest where they exist. 5. The number of federal inspectors responsible for surveillance of the inspection service should be increased rather than decreased as has been done in recent years. 6. There is no assurance that the federal inspectors will do any better job than has been done by the private inspectors. 7. The federal government does not have a very good track record in providing prompt and efficient service. Examples of poor service are the Postal Department and the Interstate Commerce Commission. 8. It is very evident that the federal government has increasingly assumed take over or control over private businesses. 9. Everytime the federal government takes over a private business, something is lost. This great country of ours became great because of the free enterprise system and many of us are at a loss to know why Congress is systematically doing away with the free enterprise system. 10 Recent polls show that people still have more confidence in the private enterprise system than they do in our elected officials. We, therefore, ask that no legislation be passed that will do away with the private inspection and grading of grain and that Congress take whatever appropriate steps which it has available to assume the reasonable enforcement of existing laws in this area. Sincerely, For the DAVENPORT CHAMBER OF COMMERCE, Chairman, National Legislative Committee. Senator CLARK. Mr. Shaff, we are very pleased to have you here, and you may proceed in any way you think appropriate. STATEMENT OF HON. ROGER J. SHAFF, IOWA STATE SENATOR, DAVENPORT, IOWA Mr. SHAFF. Thank you, Senator Clark. I am Roger Shaff, State senator representing parts of Clinton and Scott Counties. I am a member of the Iowa Senate Agricultural Committee. The Iowa Senate Ag ricultural Committee has not discussed grain inspecting and grading. It is my concern that farmers are not being paid for the good, clean grain that they produce, and that the grain dealers may legally dilute or lower the quality and be paid for doing it. This really follows what the last farmer said. Most grain sold by farmers is dryer than the 152 percent allowed under the present grading standards and also has less than the 5-percent foreign matter. This invites dealers to blend the grain for the No. 2 price. They may even add water or other foreign material and sell it for the price of corn. Often heavy corn receives no premium and is blended with lighter corn. The seller of premium products should be paid for that quality and not be forced to add screenings and water to receive his just compensation. My point is that the grading system invites the addition of foreign material that is objected to by the foreign buyers, and it is done on local markets as well as at the ports. It produces a situation favoring the dealer at the expense of the average farmer/producer. Senator CLARK. I am inclined to agree with you. I think the grading system itself is, as you have testified very clearly and as Mr. Kuehl testified, lends itself to what the grain elevators-and I am speaking now of the New Orleans elevators, at any rate-call the blending-up. In other words, if you are allowed, you blend up to the highest conceivable tolerance level within the grade. As long as we encourage that and call it legal, it seems to me that we are going to have problems. Mr. SHAFF. Well, that is what my feelings are exactly, and I would hope that I would be part of the Senate's move to change the law. Senator CLARK. Indeed it is one of the three areas that I have been concerned about, and I might say that Prof. Lowell Hill has done a long study, along with the National Corn Growers' Association, to try to come up with some very practical solutions and some very practical alternatives on how we might change that law to avoid encouraging further dilution, really, of high quality grain. We thank you very much for appearing. Mr. SHAFF. Thank you. Senator CLARK. That completes the list of witnesses that have asked us to testify. I repeat that if there are any of you here that now would like to go on record with regard to the Senate Agricultural Committee hearings on the inspection system or the grading system or on any of their aspects, we would be very pleased to have your testimony. With that, we complete the 2 days of hearings here in Iowa. The committee will continue to meet in Washington. I think our next meeting is September 11 when we are going to mark up the Humphrey/ Dole/Talmadge bill. We are going to be looking at other alternatives in terms of changing the inspection system. We, of course, are going to continue to take testimony before coming to any final conclusions. I think the fact that we have had the opportunity here to get a lot of input from Iowans, both here and in central Iowa, has been helpful to this committee in making any final decisions. We thank you for participating. The hearing is adjourned. [Whereupon the hearing was adjourned subject to call of the Chair.] 63-058-75-12 ADDITIONAL STATEMENTS FILED FOR THE RECORD STATEMENT OF KENNETH L. LUDLOW, EXECUTIVE DIRECTOR, IOWA GRAIN AND FEED ASSOCIATION, DES MOINES, IOWA The Iowa Grain and Feed Association is an agriculural business trade association composed of 1150 grain, feed, fertilizer and allied agricultural businesses within Iowa. Of this figure approximately 600 are licensed and bonded country grain elevators purchasing grain from farmers for sale and reshipment into the domestic and export market. We are vitally concerned with the structure, administration and professional integrity of all facets of grain inspection and weighing from the farm to the ultimate user of grain products. We have read your proposed legislation and respectfully submit the following points: 1. We in accord with federalization of export grain inspection and weighing, both in and outbound, to reestablish confidence in the quality of our products and to standardize certification and enforcement of grain grades, sampling and weighing at all export points. 2. We do not feel federalization of established interior domestic grain inspection is necessary based simply upon the element of association through similar grain inspection structure. We point out, among other things, that most export market organizations administering inspection, sampling and weighing services are associations of buyers who are joined in common interest as opposed to interior points administered primarily by both buyers and sellers whom it serves. We also point out the absence, at this time, of incriminating interior acts of malfeasance with the exception of that reiterated by Mr. Harlan Ryan in regard to Illinois Inspection and the absence of indictment in that isolated instance of "upgrading" the grain. 3. In the event our council does not prevail in point 2. above our second alternative would be to preserve present state-federal agencies and offer the option of state-federal cooperative agreements to the other states as a choice. 4. We do urge stepped up federal supervision under the present system with a higher number of supervision samples being taken and recorded in all domestic markets and closer personal surveillance of individual inspector performance. 5. We cannot overemphasize our concern about destination so-called "official weights" and the need for uniform standards of minimum scale design, inspection and maintenance. Every grain destination above the country elevator level (elevators are under Iowa Department of Agriculture Inspection) should be under continual supervision of the appropriate USDA, AMS, federal field supervisory agency. The possibility of "official" weight certificates on carload lots of grain to also note the waybill lading weights on the face of the unload certificate should be investigated. Such manifesting would immediately show outboundinbound discrepancies and would also be a basis to detect and alleviate longterm patterns that may gradually develop. A similar procedure was originally proposed by Mr. Fred Tomlinson of the Alleman Co-op Elevator, Alleman, Iowa. 6. We support overseas destination sampling of American grain arrivals as an "internal" check by the Agricultural Marketing Service to be used as follow-up information on a particular American export point. An attempt to publicly compare embarkation-arrival grades would be cause for a jungle of arbitration claims and counterclaims. We also pose a problem pointed out at a recent meeting of farm and grain groups-Many European arrivals are off-loaded into barges and lighters with quality depending upon where a particular barge draws its cargo. If foreign destinations were equipped with receiving terminals to receive and reload and at the same time re-blend (particularly foreign material) a much more uniform delivery grade would be achieved. 7. We are concerned with the working of Section 11. (b) (13) regarding addition of foreign material. The blending process, legitimately used only with mate rial or characteristics inherent with a lot or shipment of grain is a valuable tool both for the farmer and the grain industry. A very close evaluation of legislative restraints in this area should be undertaken. 8. We urge a careful evaluation of Mr. Clark's suggestion that the Commodity Futures Trading Commission be charged with administering the U.S. Grain Standards Act. We are not in a position to fully support this but feel it is deserving of serious study. If a Director can be legislatively assured of autonomy within USDA, then this could remain the answer as written in S. 2256. 9. We urge the most careful reevaluation of certain provisions of Section 19 wherein the Director "shall": (a) Change and establish grading standards: This seems an arbitrary charge to the Director to change for the sake of change rather than as an approach to possible and studied change by elevator, farmer, industry representation on review committees and without hearing. (b) Establishing foreign material as "dockage" per your section (b) of Section 19, seems to address itself to new Section 3 (v) established under your Section 2, sub (e), which in turn would nullify any foreign material value as "broken corn" or for any other use. This should be clarified, particularly in regard to inherent foreign material compounded at every point in handling. This again points to careful, studied approach to grade changes and their ramifications which should definitely not place one individual in the position of irrational decision making dictated by a set time limit. 10. We are concerned about extension of registration to include "farm level" buying. Even with the exceptions listed under your Section 18(a) the magnitude of such local registration would be overwhelming and we can only suppose that subsequent regulations would differentiate specifically between "incidentally or occasionally" selling grain. The "average" diversified country elevator agribusiness is now subject to some 16 licensing, inspection and regulatory agencies including the relatively new Iowa Licensed Grain Dealer law which many other states now have. In short, the local agricultural business is already laden with licenses, and bonds and we question the intent and need on the local level. In closing, we applaud your efforts which have uncovered a condition that is as abhorrent and shocking to the interior domestic trade as it is to you, farmers and the general public. We will not belabor any economic importance of American agricultural exports which these conditions have placed in jeopardy. We share with you an urgency to correct these inadequacies at the earliest opportune time. STATEMENT OF HOWARD KREBS, EXECUTIVE VICE PRESIDENT, IOWA CORN Senator CLARK: The Senate Agriculture Committee hearings in Bondurant last week were a good opportunity for Iowa producer groups and related parties to offer their opinions and positions to you, I am sorry the Iowa Corn Growers Association was unable to testify. Two days before your hearings, we elected a new president due to Karl Nolin's ill health. Our new president, Thurman Gaskill, Corwith, Iowa, was unable to attend. We feel that the grain grading standards of the U.S.D.A. should offer an incentive for the production of a high quality and abundant crop. These standards have not materially changed in the past 60 years, while the technology and production of the grain producer has changed dramatically. Grain inspection and grading are necessarily related. Poor grading and identification of Iowa's grain results in greater adulteration and inequities in the inspection system. We recognize that these two functions are seperate administrative problems. However, these is a strong cause and effect relationship between grain grading and improper inspection procedure respectively. Our organization was formed on the principles of producing the highest quality product for use by the ultimate consumer. Inadequate grading standards are a disincentive for the production of an abundant and high-quality crop. In order to offer incentives for quality and to accommodate the variety of users the corn crop has, our board has cited five areas that we believe will better accomplish the grading and, thus, the inspection of grain. 1. That cracked corn and foreign materials be split into two new factors. These would properly reflect the grade in relation to the use of the grain. Suggested titles for these new factors are (a) Eine and Foreign Materials and (b) Mechanically Broken Kernels. |