Enhancing the Quality of U.S. Grain for International Trade

Enhancing the Quality of U.S. Grain forInternational Trade

February 1989

NTIS order #PB89-187199

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Recommended Citation:U.S. Congress, Office of Technology Assessment, Enhancing the Quality of U.S. Grainfor International Trade, OTA-F-399 (Washington, DC: U.S. Government PrintingOffice, February 1989).

Library of Congress Catalog Card Number 88-600592

For sale by the Superintendent of DocumentsU.S. Government Printing Office, Washington, DC 20402-9325

(order form can be found in the back of this report)

American agriculture, long the sector of the economy considered the mostproductive and competitive in the world, began to show signs of declining interna-tional competitiveness in the early 1980s. Many reasons have been given for this,including the problems of the quality of U.S. grain. The quality issue is receivingrenewed attention in the current world buyers’ market for grain, Some are con-cerned that as the influence of important economic variables such as the strengthof the dollar and the extent of agricultural price support cause U.S. exports to be-come more price-competitive, opportunities to increase exports may be hamperedby buyers’ qualms about U.S. grain quality.

Complaints of overseas buyers about low-quality U.S. grain receive widespreadattention. Buyers protest that they receive dirty, molded, or infested grain, or thatcharacteristics contracted for, such as a certain protein level, were not met. Ex-porters argue that foreign buyers are using quality complaints to bargain for lowerprices. Farmers and many Members of Congress point to loss of market share toprove the importance of quality. The problems—real or perceived—have persistedfor many years, and neither industry response nor congressional actions to dateprovide a satisfactory answer or reassure U.S. customers.

During debate on the Food Security Act of 1985, the issue of the quality of U.S.grain was again raised, It became apparent that insufficient information was avail-able to make wise decisions. Congress then amended the act and directed the Of-fice of Technology Assessment to conduct a comprehensive study of the technol-ogies, institutions, and policies that affect U.S. grain quality and to prepare acomparative analysis of the grain quality systems of major export competitors ofthe United States. The study was also requested by the House Committee on Agri-culture and the Joint Economic Committee.

This report is one of two in that assessment, It focuses on the U.S. grain systemand possible changes within that system to enhance grain quality. A second report,Grain Quality in International Trade: A Comparison of Major U.S. Competitors,provides OTA’s analysis of the grain quality systems of other major exporters.

OTA greatly appreciates the contribution of the advisory panel, authors of tech-nical background papers, the many industry associations, and other advisors andreviewers who assisted OTA from the public and private sector. Their guidanceand comments helped develop a comprehensive study. As with all OTA studies,however, the content of this report is the sole responsibility of OTA.

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Advisory PanelEnhancing the Quality of U.S. Grain for International

Donald E. AndersonGeneral PartnerThe AndersonsMaumee, OH

Roger AsendorfAmerican Soybean AssociationSt. James, MN

G. (Jerry) W. BeckerVice President and General ManagerCaldwell Manufacturing Co.Kearney, NE

James B. BuchananVice President and Manager of

Grain & FeedIllinois Cereal Mills, Inc.Paris, IL

William J. CotterDirector of OperationsPort of Corpus Christi AuthorityCorpus Christi, TX

James F. FrahmDirector of PlanningU.S. Wheat AssociatesWashington, DC

Maurice A. GordonU.S. Feed Grains CouncilRantoul, IL

William W. HayMillers National FederationMinneapolis, MN

Jerry P. KruegerNational Association of Wheat GrowersWarren, MN

Roald H. LundDean, College of AgricultureNorth Dakota State UniversityFargo, ND

Richard L. McConnellDirector of Corn ResearchPioneer I-Ii-Bred International,Johnston, IA

Paul B. MulhollemGroup PresidentWorld Oilseeds GroupContinental Grain Co.New York, NY

Seiichi NagaoGeneral Manager

Trade

Inc.

Cereal and Food Research LaboratoryNisshin Flour Milling Co., Ltd.Tokyo, Japan

Grayce “Susie” Pepperpurchasing and Office ManagerZip Feed Mills, Inc.Sioux Falls, SD

Harold E. ReeseVice President and Assistant

Division ManagerBunge Corp.Destrehan, LA

Thomas C. RobertsExecutive Vice PresidentWheat Quality CouncilManhattan, KS

Ronald E. SwansonNational Corn Growers AssociationGait, IA

D. Leslie TindalCommissionerSouth CarolinaColumbia, SC

Department of Agriculture

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisorypanel members. The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA.assumes full responsibility for the report and the accuracy of its contents.

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OTA Project StaffEnhancing the Quality of U.S. Grain for International Trade

Roger C. Herdman, Assistant Director, OTAHealth and Life Sciences Division

Walter E. Parham, Food and Renewable Resources Program Manager

Michael J. Phillips, Project Director

David M. Orr, Senior Analyst

Lowell D. Hill, Contractor

William W. Wilson, Contractor

Julie A. King,’ Analyst

Linda Starke, Editor

Administrative and Support Staff

Sally Shafroth 2 and Nathaniel Lewis,’ Administrative Assistants

Nellie Hammond, Secretary

Carolyn Swarm, Secretary

‘Through March 1987.

‘Through April 1987.

‘From May 1987.

Major ContractorsEnhancing the Quality of U.S. Grain for

Stephen P. Baenziger Hagen B. GillenwaterUniversity of Nebraska U.S. Department of Agriculture

Fred W. Bakker-ArkemaMichigan State University

C. Phillip BaumelIowa State University

Joe W. BurtonU.S. Department of AgricultureRaleigh, NC

Roy G. CantrellNorth Dakota State University

Jack F. CarterNorth Dakota State University

Harry H. ConverseU.S. Department of AgricultureManhattan, KS

Bert L. D’AppoloniaNorth Dakota State University

Robert DavisU.S. Department of AgricultureSavannah, GA

Joel W. DickNorth Dakota State University

Patrick L. FinneyU.S. Department of AgricultureWooster, OH

Richard C. FrohbergNorth Dakota State University

Savannah, GA

Charles R. HurburghIowa State University

Howard L. LafeverOhio State University

Karl A. LuckenNorth Dakota State University

Paul J. MatternUniversity of Nebraska

Marvin R. PaulsenUniversity of Illinois

Tilden W. PerryPurdue University

David B. SauerU.S. Department of AgricultureManhattan, KS

Mark D. SchrockKansas State University

Rollin G. SearsKansas State University

Thomas L. SporlederTexas A&M University

A. Forrest TroyerDeKalb-Pfizer Genetics

Paul GallagherKansas State University

Chapter 1.

Chapter 2.

Chapter 3.

Chapter 4.

Chapter 5.

Chapter 6.

Chapter 7.

Chapter 8.

Chapter 9.

Contents

PageSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... , . . . . . . . . . . . . . . 3

An Overview of the U.S. Grain System . . . . . . . . . . . . . . . . . . . . . . 29

Basic Grain Processing Industries. . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Quality Attributes Important to Domesticand Overseas Industries . . . . . . . . . . . . . . . . . . . . . . . . . . , , . . . , , . . 61

The Changing Role of Quality in Grain Markets . . . . . . . . . . 89

The Genetics of Grain Quality . . . . . . . . . . . ................,,.103

Technologies Affecting Quality . . . . . . . . . . . . . . . . . . . . . . . . .. ...137

A n a l y s i s o f U . S . G r a i n S t a n d a r d s . . . . . . . . . . . . . . . . , , . . . , . . , , . 1 8 9

Government Farm Policy and Economic IncentivesAffecting Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..219

Chapter 10. Comparison of Technologies and Policies AffectingGrain Quality in Major Grain-Exporting Countries . ..........237

Chapter 11. Policy Options for Enhancing Grain Quality . . . . . . . . . . . . . . . . .251

Appendix A

Appendix B

Appendix C

Appendix D

Index, . . . .

Glossary of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273

Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......274

Commissioned Papers and Authors, . . . . . . . . . . . . . . . . . . . . . . .280

Acknowledgments ., . . . . . . . . . . . . . . . . . . . . . . ..............282

,... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 285

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Chapter 1

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CONTENTS

PageMajor Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Fundamental Advantages of the U.S. Grain System. . . . . . . . . . . . . . . . . . . . 4Competitors’ Policies ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Problem Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Quality in the Marketplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

policy options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Variety Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Market Intervention.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Grain Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Interaction Between Standards, Variety Control, and

Market Intervention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

FiguresFigure Pagel-1. Moisture, Temperature, and Relative Humidity Interactions . . . . . . . . . . 8I-Z. Importance of Uniformity Between Shipments . . . . . . . . . . . . . . . . . . . . . . 15l-3. Components of the Interdependent Grain System . . . . . . . . . . . . . . . . . . . 17

TablesTable Pagel -1. Comparison of Inst i tut ions and Policies Affect ing Grain Quali ty

of Major Grain-Exporting Countries ..,...... . . . . . . . . . . . . . . . . . . . 6l-2. Fundamental Policy Alternative s... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Chapter 1

Summary

More competitors exist in the internationalgrain market now than ever before, and grainquality has become an extremely importantcompetitive factor. In a mere decade, growthin grain suppliers has been phenomenal. In the1970s, one-third of the world supplied grain totwo-thirds of the world’s people. Today, the re-verse is true: two-thirds of the world suppliesgrain to the other third. This competitive envi-ronment has made foreign buyers increasinglysensitive about the quality of grain they receive.

During the debate on the Food Security Actof 1985, many Members of Congress expressedconcern about the quality of U.S. grain exports,Grain elevator operators and export traderswere accused of adultering loads of grainshipped to foreign buyers; these allegationswere supported by a sharp increase in foreigncomplaints about quality. Grain traders andhandlers maintained that they have been ship-ping grain according to specifications, and thatmost complaints were motivated by buyers’desires to obtain a higher grade of grain at alower price.

The debate often focused on the adequacy oftoday’s grain standards, developed over 70years ago. Critics argue that the standards them-selves are to blame for customer complaints.They claim that standards have not kept pacewith the changing world marketplace and arefrequently misunderstood by foreign buyers.

By focusing on standards, those debatingabout U.S. grain quality are seeing only partof the picture. Improving quality—or even theperception of quality—will be much more com-plicated than tinkering with the criteria forstandards. Grain is vulnerable to quality dete-rioration at virtually every stage of productionand marketing. Before changes can be contem-plated, full understanding is needed of the com-plex, interrelated system of:

developing varieties of grain,producing grain,harvesting grain,storing grain,handling grain, andtesting grain,

Understanding these relationships is the maingoal of this assessment.

First, it is important to clarify what is meantby grain quality. Webster defines quality as anessential character, a degree of excellence, ora distinguishing attribute. In grain, such a def-inition has come to mean a variety of things—being free of foreign material, not cracked orspoiled, or having the proper characteristicsfor a particular end use, No one definition ofquality as it relates to grain has been accepted.

For the purpose of this assessment, qualityis defined in terms of physical, sanitary, andintrinsic characteristics.

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Physical quality characteristics are asso-ciated with outward visible appearance ofthe kernel or measurement of the kernel.Included are kernel size, shape and color,moisture, damage, and density.Sanitary quality characteristics refer to thecleanliness of the grain. They include thepresence of foreign material, dust, brokengrain, rodent excreta, insects, residues,fungal infection, and nonmillable materi-als. These are essentially characteristicsthat detract from overall grain value,Intrinsic quality characteristics are criti-cal to the end use of the grain. They arenonvisual and can only be determined byanalytical tests. In wheat, for example,such characteristics refer to protein, ash,and gluten content. The characteristics de-pend on the grain and the end use withina grade,

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MAJOR

The U.S. grain marketing system has a num-ber of important characteristics. Handling (in-cluding exporting) and transport industries arehighly competitive and there is relatively lim-ited government intervention in the system.One key principle throughout the U.S. systemis that of self-selection. producers plant vari-eties perceived to be in their best interest; users(domestic and importers) specify and purchasecertain qualities that are in their interest, givena range of alternatives and prices; handlers andexporters condition and move grain in theirown interest. Each decision is based on the sov-ereignty of the individual decisionmaker, andtakes into account incentives and disincentivesreflected in market premiums and discountsfor quality characteristics,

Fundamental Advantages of theU.S. Grain System

An important component of this study wasa comparison of the U.S. grain system with thesystems in other exporting countries. OTA col-lected information on production and distri-bution in Canada and sent study teams to Ar-gentina, Brazil, France, and Australia todocument their systems. Five fundamental ad-vantages of the U.S. marketing system areapparent: efficiency, productivity growth, widerange of qualities, the grading and inspectionsystem, and market-determined premiums anddiscounts.

efficiency

The U.S. marketing system performs a num-ber of complex functions—it assembles, han-dles, conditions, and allocates different quali-ties to domestic buyers in many locations andfor export from a multitude of ports. Indeed,given the quantity produced, the many differ-ences in qualities at different locations, and nu-merous locations of end-users and ports, theU.S. marketing system is more complex andperforms more challenging functions than themarketing system of any other exporter. Yet theefficiency of the U.S. grain handling and trans-

FINDINGS

port system exceeds that of nearly all othercountries, assuring lower marketing marginsand higher prices to producers.

Productivity Growth

Plant breeding in the United States is rela-tively unfettered, compared with other coun-tries, in terms of regulations over variety de-velopment and release. Ultimate success ofvarieties is determined by the market for seedstocks. Producers make choices in response tomarket incentives. Where comparisons are ap-propriate (i.e., in wheat), productivity growthas measured by yield exceeds that of most otherexporters, with the exception of France. Pro-ductivity differences are affected by a multi-tude of factors including environment, soils,other inputs, relative prices, institutions, andpolicies. Thus, it is impossible to attribute yielddifferences to the institutional environmentaffecting varieties, but growth rates are influ-enced by variety release procedures.

A Wide Range of Qualities

No other country can offer such a wide rangeof intrinsic differences in grains to customers.This is obvious given the class differences inwheat, which is facilitated by production re-gions of differing environments and soils. Also,a wider range of physical and sanitary quali-ties exists in the United States than elsewhere.This is an advantage in the sense that morealternatives are available to buyers, some atlower costs, but it may be viewed as an exter-nality in the sense that reputation is affected.The uniformity problem (discussed later) is adirect result of the multitude of qualities avail-able. In addition, given such an unfettered sys-tem, importers need a certain amount of ex-pertise to benefit fully from the wide range ofqualities.

Grading and Inspection System

The U.S. grading and inspection system pro-vides grade determination by an independentagency (i. e., one not having financial stakes in

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the transaction), Factors and limits in factorsin the grade standards are relatively stableacross crop years (i.e., the definition of No. 2corn does not change from year to year). Simi-larly, the definition of No. 2 Hard Red Winterwheat does not change, although intrinsic dif-ferences not measured in the standards maychange. This is not necessarily the case in othercountries. Major changes to the U.S. systemcannot be implemented in less than a year af-ter they are promulgated. Some other exportersadjust factor limits with each crop year.

Market-Determined Premiumsand Discounts

Premiums and discounts and/or regulationsin all countries are used to provide quality in-centives to market participants. Those estab-lished in the United States are via the interac-tion of supply and demand for measurable qualitycharacteristics, i.e., the market for quality char-acteristics. Consequently, U.S. values perhapsreflect true values better than do premiums anddiscounts administered in several other export-ing countries. A notable exception is France,Efficient determination of price differentialsis important because they essentially allocategrain across end-users and provide signalsthroughout the production and marketing sys-tem. Through these differentials the systemresponds to market needs.

Competitors’ Policies

The institutions, policies, and trading prac-tices in the marketing system of the major grainexporting countries differ considerably. The ex-tent of market intervention varies from highlyregulated throughout (e. g., Australia and Can-ada), to partial, or no regulation. Differencesexist in procedures for seed variety develop-ment and release, the use of variety identifica-tion in the marketing system, and the use ofgrain receival standards (table l-l). In addition,a number of other countries address grain qual-ity problems as part of an integrated agricul-tural policy. Major foreign wheat exportershave more extensive controls at first point ofsale than U.S. exporters. Wheat from other

countries is probably preferred over compar-ably priced U.S. wheats due to these mech-anisms.

The policy and institutional structure of theU.S. grain system provides the framework forvarious grain-handling practices. Technologiesfor producing and handling grain are quite sim-ilar among competing countries. The maindifference is that the United States is slightlymore efficient in using these technologies. Butpoints in the marketing channel at which theyare used differ.

A case in point is cleaning. Outside the UnitedStates, most exporters clean grain at the firstpoint of receipt. Canada and Australia are twoexceptions, although for different reasons. Can-ada, however, is studying the economic feasi-bility of cleaning grain in the country versusat export and will probably change. Australianfarmers deliver grain that does not need to becleaned, unlike the situation in the UnitedStates. Basically, no economic incentive existsto clean grain at the first point of receipt in theUnited States.

The other major handling practice in whichthe United States differs from other exportersis blending. Blending U.S. grain over wideranges of quality to create a uniform productfor sale is necessitated by the lack of any mini-mum receival standard. Blending exists outsidethe United States but not to the same extent.In other countries it is done over very narrowranges in quality. These exporters basicallyhave grain of uniform quality moving through-out the system. The U.S. system lacks uniform-ity in quality throughout the market channel.At export, grain is blended in an attempt to pro-duce a uniform quality that meets buyers’ speci-fications. The OTA survey of foreign and do-mestic buyers of U.S. grain clearly indicatedthat lack of uniformity between shipments isthe buyers’ biggest complaint.

Problem Areas

Genetics and Variety Release

Genetically, yield and important intrinsicquality characteristics are often inversely re-

Table 1-1.—Comparison of Institutions and Policies Affecting Grain Quality of Major Grain. Exporting Countries

Activity/Policv United States Argentina Brazil France Canada Australia, ,Seed variety control. . . No State or Federal

control. Release of vari-eties influenced tosome extent by land-grant universities.Largely the market de-termines adoption ofvarieties.

Grain receivalstandards . . . . . . . . . . . . None. All types of qual-

ity are accepted withappropriate discountsfor low-quality grain.

Committee of govern-ment and industry mustapprove agronomicproperties. Quality fac-tors of minor influence.

Grain not meeting aspecified minimumquality (Condition Ca-mara) is rejected at firstpoint of sale.

Committee with broad Formal mechanism ex- Formal mechanism Formal mechanism fol-representation directs ists that regulates re- used to license new lowed as a prerequisiteresearch and approves lease of varieties based varieties. Agronomic for release Of varieties.varieties. Quality is on agronomic and qual- and quality criteria Quality and agronomicpotential criterion but ity criteria. given equal weight in criteria are used.not currently effective. testing new varieties.

Soybeans not meeting Grain not meeting ex- Developed eight grades Wheat must meet mini-a minimum quality are port contract specifica- for CWRS to differenti- mum quality standards.rejected at first point of tions can be rejected by ate quality. Lowest If not it is allocated tosale. surveying company or grade goes to feed mar- feed market.

receiving elevator. ket.Marketing by variety . No mechanism exists Variety is not identified Variety is not identified Very common. Variety Licensed grain must Very common-use vari-

for variety identifica- in marketing channel. in marketing channel. often specified in be visually distin- ety control scheme totion. wheat contracts. guishable. facilitate segregation

by classes.Price . . . . . . . . . . . . . . . . . . Loan rate is principal Government establish- Government establish- Key policy is European Initial producer price is Guaranteed minimum

price policy. Includes es minimum prices for es a minimum price pri- Community interven - the principal price poli- price (GMP) is key pricepremiums and d is- farmers and exporters. or to planting. it is tion price, which in- cy. Separate prices es- policy. It is establishedcounts for major grains Government also estab- adjusted during the eludes premiums and tablished for each by class and providesbut has not been Iishes premiums for crop year to account for discounts for quality grade of grain. Lower differentials for quality.responsive to market high-quality grain. inflation and political factors. Lower qualities qualities of wheat Lower qualities ofconditions. pressure. of wheat equated to equated to feed values. wheat equated to feed

feed values. values.Farm Storage . . . . . . . . . . Farm policy in past de- Government policy No incentive for farm- Farm policy through Producer deliveries are Use of GMP provides

cade has encouraged through pricing does ers to store on farm. the Common Agricul- regulated to primary no incentive for deliveryextensive on-farm not encourage on-farm tural Policy (CAP) has elevators via quotas. in post-harvest period,storage and inter-year or inter-year storage. not encouraged de- On-farm storage is sub- leading to minimal usestorage. velopment of extensive stantial. of on-farm storage.

on-farm storage. Alsorelatively limited inter-year storage due toCAP.

SOURCE Office of Technology Assessment, 1989

0)

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lated in each of the major grains. In the caseof wheat, it is well recognized that yield andprotein quantity are inversely related. In corn,the trade-off is between protein, starch, andyield; in soybeans, it is between protein andyield. Breeding programs generally aim to im-prove yield and disease resistance and to satisfyapparently desirable intrinsic quality goals.

In the case of corn, most breeders have al-ways sought to increase yield and improve har-vestability, with intrinsic quality not being apriority. The potential for improving qualitythrough genetics is quite high. However, manyquality factors are traits known to be influencedby many genes, This makes enhancing qualitymore difficult than altering a trait influencedby a small number of genes, The task is furthercomplicated by the fact that genetic alterationof one trait frequently leads to undesirablechanges in other plant traits.

New crop varieties require approximately 9to 12 years for development and release. If therewere a change in plant breeding program ob-jectives in 1989, such as development of newvarieties with enhanced quality factors, it couldbe the end of the century before these new va-rieties were commercially available.

The emphasis on yield in many cases is dueto the fact that though intrinsic quality charac-teristics may be important, they are not meas-ured in the market. Incentives to improve in-trinsic quality characteristics therefore are nottransmitted through the market as readily asthose associated with agronomic characteris-tics, such as yield, disease resistance, and har-vestability.

Individual breeders or their institutions canexercise tremendous discretion regarding re-lease of varieties. This is tempered, however,by the market system, which determines thesuccess of any release. Market efficiency re-quires measurement of relevant intrinsic qual-ity characteristics, which is absent in manycases. For example, a variety with lower yieldbut an improved intrinsic characteristic (e.g.,bake test) not measurable in the marketing sys-tem would fail to survive in the seed market,Variety release procedures as currently prac-

ticed are not applied uniformly across States(or firms, in the case of private breeding) or overtime.

No effective national policy exists on varietyrelease that would assure uniformity in appli-cation of release criteria. In the case of wheat,in which public breeding is more important,the State Agricultural Experiment Stationsmaintain variety release procedures. These arein turn guided by the Experiment Station Com-mittee on Organization and Policy. However,since no legally binding procedures for control-ling the release of varieties exist, individualStates can and do vary from this policy. Thusthe criteria for variety release may not be uni-form across States or consistent over time, Ulti-mately a particular class of wheat, corn, or soy-beans produced in different States may differin intrinsic quality.

Technologies Affecting Quality

Grain is a living organism and as such is aperishable commodity with a finite shelf life.Drying, storing, handling, and transportingtechnologies cannot increase quality once thegrain is harvested. Each technology is a self-sustaining operation, but the way each is usedhas an impact on the ability of the others tomaintain quality, For example, if grain is har-vested wet, not only will this lead to increasedbreakage during harvesting, but it means thegrain must be dried. Improper drying can leadto more breakage and to nonuniform moisturecontent. Moisture content, moisture uniform-ity, and the amount of broken grain and finematerial affects storability and can have an im-pact on the technologies used to maintain qual-ity during storage. Therefore, decisions madeat harvest, as well as at each step thereafter,affect the system’s ability to maintain and de-liver a quality product.

Moisture.—Moisture at harvest directly af-fects the amount of kernel damage producedthrough combining. Since cereal grains and oil-seeds are harvested in the United States at mois-ture levels too high for long-term storage or evenshort-term storage and transportation, thesecommodities must be dried to acceptable mois-

8

ture levels. Corn, which is harvested at 20 to30 percent moisture, must be dried to 14 to 15percent for safe storage. Wheat and soybeanharvest moistures are substantially lower thancorn, with safe storage levels marginally lowerthan harvest moisture. In certain regions of theUnited States, wheat and in some cases cornand soybeans dry naturally in the field.

The process of drying has a greater influenceon grain quality than all other grain handlingoperations combined. If superior grain qualityis to be produced, it is imperative to optimizethe dryer type and its operation since half thecorn crop is dried in continuous-flow, porta-ble batch, and batch-in-bin dryers. Of particu-lar concern is the increase in breakage of cornand soybeans and the decrease in milling qual-ity of wheat from improper drying. Artificialdrying of wheat and soybeans, however, is notfrequently required.

The main dryer operating factors affectinggrain quality are air temperature, grain veloc-ity, and airflow rate. A dryer operator is ableto adjust the first two on every dryer and, onsome units, can adjust all three. Collectively,the three conditions determine the drying rateand maximum temperature of the grain beingdried, and thus establish the quality of the driedlot.

At least 80 percent of the U.S. corn crop isdried on-farm. On-farm dryers fall into threecategories—bin, non-bin, and combination dry-ers. Bin dryers generally are low-capacity, low-temperature systems, able to produce excellentquality grain. Non-bin dryers, the most popu-lar type in this country, are high-capacity, high-temperature systems that frequently overheatand overdry the grain, and thereby cause seri-ous grain-quality deterioration. Combinationdrying reaps the advantages of both systems(i.e., high capacity and high quality) but requiresadditional investment, and is logistically morecomplicated. A switch by farmers from non-bindrying to combination drying would signifi-cantly improve U.S. corn quality.

Three classes of off-farm dryers are used—crossflow, concurrent-flow, and mixed-flowdryers. Off-farm dryers are high-capacity, high-

I

SOURCE: Office of Technology Assessment, 1989

temperature units. Crossflow models are themost prevalent type used in the United States;they dry the grain nonuniformly and cause ex-cessive stress-cracking of the kernels. Mixed-flow dryers are common in other major grain-producing countries; the grain is dried moreuniformly in these dryers and is usually ofhigher quality than that dried in crossflowmodels. Concurrent-flow dryers produce thehighest quality grain; their main disadvantageis the relatively high initial cost. A change fromcrossflow to mixed-flow or concurrent-flowdryers would benefit U.S. grain quality.

Moisture content and uniformity within astorage facility is critical to maintaining grainquality. The interaction between moisture, tem-perature, and relative humidity may spur moldgrowth, increase insect activity, and cause otherquality losses (figure l-l). Basically, grain mois-ture in equilibrium with 65 percent relativehumidity will support mold activity, but differ-ent grains will create the equilibrium with rela-tive humidity at different moisture levels. That

9

is why wheat and soybeans cannot be storedat the same moisture content as corn. Whencontrolling insects, high moisture content in-creases absorption of fumigants such as methylbromide, requires an increase in dosage, andaccelerates the breakdown of pesticides suchas malathion.

The equipment and methods used to fill a stor-age bin affect the performance of aeration sys-tems used to control the effects of moisture/tem-perature/humidity. Dropping grain into thecenter of a bin causes a cone to develop, withthe lighter, less dense material concentratingin the center (in spoutlines) while the heavier,denser material flows to the sides. This impedesairflow during aeration, and fosters moldgrowth.

In large horizontal storage areas, loadingfrom the center or from a loader that is grad-ually moved backward through the center ofthe building as the pile is formed causes simi-lar problems. If grain is piled over aerationducts on the floor by moving the loading de-vice back and forth, airflow will be greatly in-creased. However, airflow distribution is notas uniform as in upright bins. Some methodsof filling piles also result in segregation of finematerials. These accumulations are more sub-ject to insect and mold growth, and they divertairflow. But piles are difficult to aerate and theshape of some restricts uniform airflow.

Nonuniform moisture levels can lead to spoil-age in localized areas within a storage facility.Moisture and temperature within a grain masswill not remain uniform over time. Moisturewill migrate in response to temperature differ-entials. If the outside air is warmer than thegrain, the circulation reverses, and the area ofcondensation shifts to several feet below thegrain surface, although still in the center.

The effect of moisture migration on storageis that grain assumed to be in a storable condi-tion is not. Cold weather migration primarilyaffects grain in land-based storage, causing de-terioration as temperatures rise in the spring.Warm weather migration is particularly vex-ing for grain in transit from cold to warm areasof the United States and from the United States

through warm waters to foreign buyers. A bargeor ocean vessel is basically a storage bin andwill experience the same migration phenomenaas land-based storage facilities.

Broken Grain and Fine Materials.—Somegrain damage or breakage generally occurswhenever grain is harvested. Overall, damageis always much greater in extremely wet or ex-tremely dry grain. When grain is harvested athigh moisture levels, the kernel is soft and plia-ble. Moist kernels deform easily when a forceis applied and greater force is needed to threshwet kernels than dry ones. Thus, wet kernelssuffer more damage than drier ones. However,drier kernels can break when the same forceis applied. Different optimal conditions thusexist for each grain,

In addition to grain breakage, factors suchas weed control and kernel density, especiallyin wheat, also affect a combine’s ability to har-vest and deliver clean grain. Cutting below thelowest pod or wheat head inadvertently intro-duces some soil into the combine. Most soil isaspirated from the rear of the combine unlessthe soil particles are about the same size as thekernel, in which case they pass through thecleaning sieves with the grain.

Harvesting technologies normally separateand remove material larger than the grain (suchas plant parts) and material significantly smaller(like sand and dirt). Sloping terrain, however,can affect this process. Side slopes also createproblems since the tendency is for material tocongregate on the downhill side of the clean-ing shoe,

The main factor affecting the combine’s clean-ing performance is the amount and type ofweeds present in the field during harvest. Weedcontrol is one of the most serious problems fac-ing many U.S. wheat producers. This is alsotrue for Southeastern U.S. soybean-producingareas, where a warm, wet climate is conduciveto weed growth. The amount of weeds affectsnot only grain yield, but also the amount of for-eign material present in the harvested grain andthe combine’s ability to remove this material.

.—

10

Combines are being modified to improve theirperformance in weedy fields. In the case ofwheat, kernel size has been decreasing, whichcomplicates this modification. The trendtoward smaller kernel size is a concern becausethe seeds of most grassy weeds are smaller andlighter than wheat. Thus, smaller wheat ker-nel size reduces the margin between wheat andweed size and, therefore, increases the diffi-culty of cleaning within the combine.

Rapidly drying moist grain with heated aircauses stress cracking. The drying operationitself does not cause grain breakage, but canmake grain more susceptible to breakage dur-ing handling later. Cleaning grain before itreaches the dryer can improve dryer efficiency.Introducing clean grain to the dryer:

● results in a more uniform airflow in thedryer and thus a more uniform moisturecontent of the dried grain;

Ž decreases the static pressure (airflow re-sistance) of the grain, thus increasing theairflow rate and dryer capacity; and

● eliminates the drying of material thatdetracts from final grain quality.

Obviously, precleaning also has disadvan-tages. It requires additional investments incleaners; the handling of wet, broken grain andfine material; and the rapid sale of wet, easilymolding material; and it results in some dry-matter loss. Although the advantages of pre-cleaning wet grain are fairly well understoodby dryer operators, most avoid precleaning. Thequality of the U.S. grain crop would improvesubstantially if precleaning were adopted.

Mechanical damage during handling resultsin grain breakage, which produces broken grainand fine materials. This causes a decrease inquality, greater storage problems, and an in-crease in the rate at which mold and insectstend to invade stored grain.

Research shows that breakage in handling ismore significant for corn than for wheat andsoybeans. Higher moisture content and highertemperatures prove to be the best conditionsto minimize breakage but are opposite of theoptimal safe storage moisture and temperature.

The effect of repeated handlings on grain break-age is cumulative and remains constant eachtime grain is handled or dropped. This is truewhether or not the broken material is removedbefore subsequent handlings.

The impact of grain breakage and fine mate-rials on all aspects of the system has resultedin the need to clean grain. Cleaning wheat incommercial handling facilities is normallylimited to removing dockage, insects, and, toa limited degree, shrunken and broken kernels.For corn, cleaning regulates the amount of bro-ken kernels and foreign material; for soybeans,it affects the amount of foreign material andsplit soybeans,

Cleaning corn to remove broken kernels andforeign material is required at each handlingin order to meet contract specifications andavoid discounts. For wheat, however, mostdockage is generated during harvest, and nor-mal handling does not cause significant in-creases. Therefore, cleaning is not required ateach handling. Soybeans, on the other hand,fall somewhere in between regarding theirbreakage susceptibility and the amount of clean-ing required at each handling.

The amount of grain cleaning required priorto storage involves the factors of risk to graindeterioration as a result of mold and insect in-vasions and the costs associated with maintain-ing quality. Broken grains, grain dust, and otherfine materials have the greatest effect on theperformance of insect control interventions.When a protective treatment is applied, graindust may absorb much of the insecticide, whichreduces the effectiveness. Likewise when a fu-migant is applied, concentrations of dust andfine material may require increased dosages topenetrate the grain mass. Dust also inhibitspenetration of fumigant gases causing nonuni-form penetration.

Ability of System to Maintain Quality.—Technologies are in place to harvest, maintain,and deliver high-quality grain. Each technol-ogy must be used, however, in a manner thatis conducive to maintaining quality.

Although the data indicate that nearly anycombine can deliver acceptable grain quality,farmer-operated combines tend to record moredamage than the combine should deliver. Froma technology standpoint two areas need em-phasis:

1. increased education to help operators bet-ter understand the interactions of cylinder/rotor speed, concave openings, fan speed,and sieve openings with grain quality andlosses; and

2. more monitoring devices and possiblyautomatic controls on combines to helpoperators adjust or fine-tune the combine.

Weed control and its relationship to kernelsize and density are critical to optimum com-bine performance. Unless new technologies ad-dressing this area are developed or improvedweed control measures are forthcoming, thecombine’s ability to harvest and clean grain willcontinue to present problems.

A significant improvement in grain qualitycan be obtained by optimizing the dryer oper-ating conditions of existing crossflow dryers,by precleaning wet grain, by selecting the bestgrain genotypes, and by installing automaticdryer controllers.

Molds will grow on any kernel or group ofkernels that provide the right conditions. There-fore, moisture content and uniformity withinstorage facilities are critical to maintaininggrain quality. Maintaining low temperaturesand moisture levels in grain is the principal wayto preserve grain quality and prevent damagefrom molds and insects. Aeration is also a veryeffective tool. The rate of development of bothmolds and insects is greatly reduced as tem-perature is lowered.

Many storage bins, especially on the farm,are equipped with aeration systems but oftenare not used effectively. Farm storage bins,especially smaller and older ones, generally arenot aerated. Small bins will cool or warmquickly enough with the changing season thatmoisture condensation may not be a seriousproblem. A majority of farm aeration systemsare either not operated at all or not used enough.

The most common problem is not running thefans long enough to bring the entire grain massto a uniform temperature level. If a cooling frontis moved through only part of the grain, a mois-ture condensation problem is likely at the sur-face where the warm and cold grain meet.

In addition to aeration, the turning and trans-fer process mixes grain and contributes to amore uniform moisture and temperature. In fa-cilities not equipped with aeration, turning hasbeen the traditional means of grain cooling.This approach requires much more energy thanaeration does, however, and it can contributeto physical damage by breaking the kernel.

Grain in horizontal or pile storages cannotbe turned because of the difficulty in unload-ing and moving it. In order to turn grain, a han-dling system must have empty bins that are con-nected by a conveying system. This is not thecase on most farms.

Most grain storage facilities provide a natu-ral habitat for certain harmful insects evenwhen the facility is empty. Grain residuetrapped in floor cracks and crevices, in walland ceiling voids, and on ledges provides anample supply of food to sustain several insectspecies. Thorough cleaning is the first and mosteffective step toward preventing insect infesta-tion of freshly harvested grain. Because insectslive from season to season, cleaning and remov-ing trash and litter is important, Also, a thor-ough cleaning should precede any insecticidaltreatment of storage facilities if the full valueof the treatment is to be gained.

For several reasons, such as remoteness of fa-cilities, small amounts of grain to be treated,and lack of information, farm storage facilitiesare often the inappropriate site for insect con-trol treatment. Grain that has not received aproperly applied treatment can become mixedwith noninfested grain when marketed, mag-nifying the problem and creating greater lossand the need for more expensive and time-consuming remedies later.

The high-speed, low-cost U.S. grain systemdoes not readily accommodate special qualityneeds. While these needs can be met by slow-

12

ing belt speed, installing and using cleaningequipment, eliminating unneeded handlings,and preserving the identity of grain, most ofthese actions increase costs.

All factors affecting quality just discussed—nonuniform moisture, moisture migration, tem-perature and humidity, insect invasion, andmold development—have an impact on grainquality during shipment. No mode of transpor-tation is equipped with aeration, nor can graintemperatures and corrective actions be takenduring shipment. Moisture migration can bemore dramatic since grain may undergo sev-eral outside air temperature and humiditychanges. This is especially true when grain isloaded in a cold climate and transportedthrough warm waters rather quickly to a warm,humid climate. Therefore, moisture uniform-ity is critical to maintaining quality duringshipments.

The interactions between technologies re-garding moisture content and breakage on grainquality are evident. Each technology is capa-ble of preserving grain quality. Once inert ma-terial such as weed seeds, dirt, stems, cobs, andso on are removed from the grain, no furthercleaning is required. But grain, especially corn,must be cleaned to overcome breakage that isinevitable due to handling in the system. Oncegrain quality deteriorates at any step in the proc-ess, it cannot be recovered.

Grain Standards

Standards should reward positive actions,such as genetic improvement and sound har-vesting, drying, and marketing practices. Theyshould also incorporate descriptive terminol-ogy that provides the best information avail-able on the value of each shipment. All changesmust be evaluated against the criterion of pro-viding information that is worth the cost of ob-taining it. Optimum information, not maximuminformation, is the goal. Proposals for changemust be tempered by current capabilities of theindustry, the cost of adjustments versus poten-tial benefits, the realities of international trad-ing rules, and history of the grain industry.Measurement and description of quality is only

one part of the problem. Quality must be evalu-ated in the context of technology, competition,foreign demand, and processing requirements.

Current grain standards are limited in fourimportant ways:

1. They create incentives for practices in-consistent with good management and effi-ciency.

2. They fail to identify many of the charac-teristics related to value in use.

3. They fail to reward producers and handlersfor improved drying, harvesting, handling,and variety selection.

4. Grade limitations on many factors are arbi-trary, sometimes not reflecting real differ-ences in value, and in some cases are notconsistent with statistical principles.

No ideal standard will be found, and any re-visions would have to consider trade-offs. Tomove toward an ideal system, grain standardsshould be changed to include:

● grade-determining factors;● non-grade-determining factors; and● definition and measurement technology for

official criteria.

Grade-determining factors should relate tosanitary quality, purity, and soundness (absenceof imperfections). Grade would be based on fac-tors such as impurities, foreign material, totaldamage, and heat damage. The lower the valuesof any of those defects, the greater the valueof the product.

Non-grade-determining factors would addressproperties such as broken kernels, moisture, oiland protein content, and other intrinsic char-acteristics or physical properties that influencevalues for major processing uses. Higher orlower percentages for those do not necessarilymean higher end-use value. Many chemical andphysical properties that influence the quantityand quality of products derived from grainprobably are yet to be identified. More researchmay add to the list of properties. The criteriafor inclusion should be that the cost of obtain-ing the information is less than the value of thatinformation to users who need it. By startingwith the major products generated from each

13

grain, a list of physical and chemical proper-ties can be developed that are correlated withthe value in use. New rapid testing technologyis also a requirement prior to inclusion.

Official criteria factors would be those re-quested by buyers and sellers. These would bedeveloped only after evidence of sufficient de-mand to cover the cost.

Grain can be inspected many times as itmoves from the farm to its ultimate destination.Normally it is tested for one or more impor-tant characteristics each time it is loaded intoand out of a grain elevator. The number andtype of tests varies, from those provided for inthe grain standards to measures of intrinsiccharacteristics not covered by the regulations.

The U.S. Grain Standards Act (USGSA) re-quires that standards be developed and usedwhen marketing grain, Even though the testsprovided for in the grain standards must beused, no requirement exists on who will per-form the tests and what tests will be performedon grain moving domestically in the UnitedStates. In fact, two U.S. Department of Agri-culture agencies are authorized to perform test-ing services using the grain standards on do-mestic grain movements. The only mandatorytesting is performed by the Federal Grain In-spection Service (FGIS) on export grain.

Since no single policy on inspecting grain ex-ists, no one group is responsible for developingand overseeing the tests and equipment beingused. Regardless of which tests are performedand who performs them, several factors are im-portant to testing. These include instrumentprecision, instrument standardization, thechoice of reference methods and traceabilityto standard reference methods when develop-ing rapid objective tests, calibration, and natu-ral error resulting from sampling.

As the relevance of additional tests performedon an ongoing basis becomes clearer, the needfor standardizing equipment and procedures be-comes more critical. Also, criteria must beestablished to govern the design of rapid testequipment. However, development of rapidtests must meet the basic criteria associated

with standardization, traceability to standardreference methods, and calibration. In addition,rapid tests must be evaluated in terms of speed,cost, accuracy, durability, and capability of han-dling wide ranges in quality.

Buyers’ Attitudes

An extensive survey of domestic and over-seas grain buyers was conducted for this studyto determine their attitudes toward quality,grain standards, and merchandising practices.Several general points of importance wereclear.

First, to determine what is considered qual-ity for any given grain, the ultimate use mustfirst be known. Each domestic and overseas in-dustry has defined quality in terms of the areasimportant to its markets.

Regarding key attributes not currently cov-ered by grain standards, no one set of qualityattributes for wheat meets the demands for allwheat products. Differences in what are con-sidered important attributes exist between do-mestic and overseas wheat millers and by re-gion of the world. Protein, hidden/dead insects,falling number, pesticide residue, mycotoxins,and dough handling tests were considered themost important. Falling number and pesticideresidue were identified by both groups as teststhat should be included in the wheat standard.Hidden or dead insects were also identified bydomestic millers for inclusion.

For corn, the determination of important at-tributes is industry-dependent except in areasregarding wholesomeness, health, and safety.Items such as stress cracking, breakage suscep-tibility, and hardness are more important to wetand dry millers than to the feed industry. How-ever, attributes such as pesticide residue, mold,mycotoxin, and hidden/dead insects are impor-tant to all those surveyed.

Commonality of important attributes is moreevident in soybeans than in wheat or corn be-tween domestic and overseas processors. Themost important attributes are protein, oil, andfree fatty acid content.

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Second, the grain system’s ability to deliverimportant quality attributes consistently is asimportant as the attributes themselves. Prob-lems with uniformity are especially acute inwheat and corn. As processing technologies be-come more sophisticated, the demand for uni-formity will become more critical.

U.S. Farm Policy

Two important features of U.S. farm policieshave an impact on several aspects of quality.The inverse relationship between yield and in-trinsic quality (e.g., protein in wheat) means thetarget price program) has a negative long-termimpact on intrinsic quality. This is because thetarget price typically exceeds the market price,creating an incentive to expand yields. Impactsvary by grain and region, depending on the ex-tent of the inverse relationship. When targetprices, which are based on yield, exceed mar-ket prices and if the premiums associated withthe measure of intrinsic quality are unchanged,there are incentives to increase yield at the ex-pense of intrinsic quality. This effect has beenexacerbated in previous farm bills, which useddifferent methods of determining yield. The to-tal impact in the case of wheat has been to forcemarket premiums for wheat protein to relativelyhigh levels in order to neutralize producers’ de-cisions.

Administration of the loan rate program alsohas an impact on intrinsic quality, as well ason physical and sanitary quality. In particular,the market for measurable quality characteris-tics is distorted due to the fact that premiumsand discounts on forfeited grains, especiallywheat, are less than those determined in themarket. Poorer quality grain is put under stor-age, and market differentials are depressed.

Changing Role of Demand

Wheat, by its very nature, is the most com-plex of the three grains for defining quality be-cause of the vast array of products and proc-essing technologies used to produce theproducts. Corn is somewhat less complex inthat fewer products are produced and qualityconcerns can be traced to the individual indus-

tries. On the other hand, the quality requiredby one corn industry is not necessarily impor-tant to others. This creates a situation wherebydecisions regarding corn quality must be as-sessed in terms of major usage. Quality con-cerns of different industries using wheat aresomewhat overcome by the fact that differenttypes of wheat exhibit different properties. Soy-bean quality is the least complex issue becausethe vast majority of soybeans are used to pro-duce oil and meal.

The varying quality requirements exhibitedby these industries highlight the need for theUnited States to become more aware of individ-ual industry requirements if the goal is to pro-duce and deliver high-quality grain. The UnitedStates has developed the reputation as a con-sistent supplier for any type and quality of graindesired. To become a supplier of high-qualitygrains, it must become more quality-consciousand develop a reputation as a high-quality sup-plier. The Nation must understand the specificquality requirements of its customers in orderto match them with the quality delivered, andmust become more aware of the dynamic issuessurrounding the qualities required by the mar-ketplace. Areas such as technological advance-ments in processing technologies, governmentpolicies, customer preference, development ofnew finished products, and consumption pat-terns all affect customers’ purchasing decisionsand their definition of quality at any one pointin time,

Quality in the Marketplace

Quality attributes required by individual in-dustries directly relate to the processing tech-nology used and the needs of the various fin-ished products. In the case of corn, what maybe considered high quality to feed manufac-turers is not necessarily high quality for the wetand dry milling industries. Wheat, used in amultitude of products, has quality requirementsthat differ not only by type and individual prod-uct, but between mills using the same type ofwheat to produce flour for the same type ofproduct. Baking technologies for wheat flourvary not only in the United States, but also

15

within and between countries using wheat pur-chased from the United States; so defining oneset of wheat quality characteristics for even onetype of wheat or flour is not useful,

High quality, as defined by the specific attri-butes required by each industry, is constantlychanging. However, the ability to produce anddeliver high-quality grain can mean more thanjust providing grain that meets specific test re-sults. What constitutes high quality from thecustomer’s point of view can range from spe-cial handling (low-temperature drying of corn)to the uniformity of specific attributes withinand between shipments.

The OTA survey specifically asked respond-ents to rank the importance of uniform qualitybetween shipments (figure I-2). Domestic andoverseas respondents considered uniformity be-tween shipments as being important eventhough they differed on which attributes weremore critical. The results from the question re-garding overseas millers’ preference for U.S.wheat compared to that of other exporters fur-ther demonstrates the importance of uniform-ity. Canada and Australia stress uniformity be-tween shipments and this fact general lyaccounts for wheats from these countries be-ing ranked as first choice.

To further complicate the task of identifyingimportant quality attributes for specific indus-tries, some traditional measuring technologiesare not accepted by certain industries produc-ing the same product. This fact stood out inOTA survey results for domestic and overseaswheat millers. Tests for theological properties(extensograph, alveograph, and mixograph)were considered more important by overseaswheat millers than by domestic millers, Andeven though overseas millers considered thesetests important, their importance varies by re-gion of the world.

As processing technologies become more so-phisticated through automation or as moredemanding qualities are required for finishedproducts, the need for specific attributes withinwell-defined ranges becomes more critical.Technologies for baking bread, rolls, and sim-ilar products in large bakeries have advanced

Figure 1-2. - Importance of UniformityBetween Shipments

WET SOY WHT-D WHT-OIndustries

ABBREVIATIONS:FEED = Feed manufacturers WHT-D = Wheat millersDRY = Dry millers (domestic)WET = Wet millers WHT-O = Wheat millersSOY = Soybean processors (overseas)

a4 O Neutral 60 Moderately important50 Slightly Important 70 Extremely important

SOURCE. Office of Technology Assessment, 1989

significantly. While bread can be made by handusing low-protein wheat, large dough-mixersand other equipment found in large automatedbakeries place too much stress on low-proteinflour, resulting in unacceptable finished prod-ucts. The differences in how flour will be bakedplays a very important role in determining thespecific values for the various attributes re-quired of the flour.

In addition to advances in processing tech-nologies, technological advances in other areascan have an impact on the quality required bydifferent industries. For many years, high-protein wheats have been blended with low-protein wheats to strengthen flour, More re-cently, vital wheat gluten, a product contain-

16

ing 75 to 80 percent protein, has been used asa flour fortifier. The recent expansion of vitalwheat gluten production is the result of tech-nological improvements in breadmaking, rapidpopulat ion growth, and increasing trendtoward urbanization in some countries.

Many countries striving to become self-suf-ficient in wheat Production are producing vi-tal wheat gluten to fortify locally produced low-protein wheat. Some European processors arealso producing isoglucose, a sweetener andsugar substitute, from wheat starch (that por-tion of the wheat kernel remaining after the glu-ten is extracted) to produce something similarto corn sweetener in the United States.

Corn, which has always been consideredmainly as an animal feed, is beginning to ex-perience pressures in areas similar to thoseaffecting wheat. As feed manufacturing be-comes more sophisticated and automated, andas customers (especially in the poultry indus-try) need strictly controlled and balanced diets,the demand for quality attributes and consist-

ency in delivering these attributes is taking onincreased importance. In other cases, individ-ual corn dry and wet milling companies areplacing more stringent demands on the qual-ity of corn they purchase. Companies are con-tracting with farmers to grow certain varietiesand perform special handling, such as low-temperature drying.

Traditional quality attributes, even thoughvaried, may be influenced by technological ad-vances, economic concerns, and governmentpolicies here and abroad. For the United Statesto produce and deliver high-quality grain, itmust not only become increasingly aware ofconcerns over quality expressed by domesticand overseas industries and match quality totheir wishes, but it must understand the reasonswhy countries purchase grain in the first place.Knowledge of customer preference, consump-tion patterns, and the role of government pol-icies is critical when considering steps theUnited States should take to enhance the qual-ity of grain in international trade.

POLICY OPTIONS

The overall purpose of any policy change re-lated to this grain issue must be to create anenvironment that enhances grain quality. Ingeneral, the important features of the U.S. grainsystem are breeding, handling, grain standards,and the market for quality characteristics. Eachhas an effect on grain quality. Institutions, pol-icies, and trade practices have an impact onthese sectors, and therefore on quality. Policydiscussion in this country has traditionally fo-cused on only one component of the system—grain standards. Yet given that it is the opera-tion of the overall system that influences grainquality, a far greater number of policy optionsexist than are normally discussed.

The notion of interdependence in the produc-tion and marketing system with respect to qual-ity is illustrated in figure 1-3. This triad couldbe viewed as a three-legged stool; each leg hasan impact on quality as well as on the system.

Premiums and discounts for quality charac-teristics are determined in the market, where

buyers and sellers interact. producers makevarietal and agronomic decisions in responseto incentives. These, however, are also influ-enced by farm programs. The demand for char-acteristics is influenced by end-use needs andforeign competition. Merchants and handlersprocure, handle, condition, and blend grain tomeet contract specifications. In addition, theymake offers on what they can sell, and at whatprice differentials, based on the availability ofquality characteristics and their conditioningcapabilities. Each activity is influenced by theincentives established in the market, by trad-ing rules, and by grain standards, which pro-vide a description that is useful for transactionsand which therefore facilitate trade. Relevantend-use characteristics generally are not in-cluded in grain standards, however.

The objectives of public and private plantbreeders in variety development include yield,disease resistance, harvestability, and quality.In addition, participants have procedures and

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Figure 1-3.—Components of the InterdependentGrain System

Variety development I● Plant breeders’ objectives

● Release criteria andprocedures

I

Grain standards

. Grade-determining factors

● Non-grade-determiningfactors

● Official criteria

no effort to coordinate or integrate policiesaffecting these activities. Any policy on grainstandards will affect varietal development andthe efficiency of the market for quality charac-teristics. Similarly, any policy affecting the mar-ket (e.g., incentives) will have an impact on va-riety development and grain standards. Theinability to measure intrinsic characteristics ingrain standards has implications for policiesaffecting the market and variety development.

Policy changes could be focused on any sys-tem component, but the effectiveness must in-clude impacts elsewhere. A number of phenom-ena that influence quality (e.g., weather) cannotbe affected by policy and a number of policiesare short-run and only treat symptoms. Policiesdeveloped here aim to affect underlying causesof the problem, which over the long term wouldresult in improved quality. Thus the policy op-tions are limited to three general categories—variety controls, market intervention, and grainstandards (table 1-2). Within each are a multi-tude of alternatives, and only selected ones arepresented. Policies available are a continuumwithin each category rather than discretechoices, as implied by the table. The emphasishere is that policy should take the long view,and it should have the objective of coordinat-ing policies across the three sectors.

w-

Market for quality characteristics

● Producers– Variety selection— Cultural practices, harvesting, handling– Farm programs

● Handlers and merchants– Condition and handle– Contract/trade

● End-users– Foreign competition– Domestic production– Products produced

Variety ControlsSOURCE: Office of Technology Assessment, 1989

criteria for variety release, Ultimately, the mar-ket for seed determines the success of varieties.Some characteristics, e.g., yield, are more eas-ily measured than others by market partici-pants. Breeders also have some control overintrinsic quality characteristics that are not eas-ily measured in today’s marketing system.

The interdependence of the system’s compo-nents must be recognized in the evaluation ofpolicy options with the objective of establish-ing a more integrated relationship among them.In a number of other grain exporting countries,the policies are more integrated and better co-ordinated. In fact, the United States has made

Three important considerations lead to thepolicy options listed under variety controls.First, with few exceptions grain standards donot measure important intrinsic characteristics.Second, intrinsic quality characteristics differsignificantly across some grain varieties. Third,varieties are not visually distinguishable, thussegregation in the market system is precluded,resulting in increased uncertainty in end-usequality. These three points apply to some ex-tent to each of the grains. The classic case isthat of wheat, in which performance variesacross varieties, and increasingly it is becom-ing difficult to differentiate wheat in the mar-keting system. In some of these cases it maybe easier to identify variety, or groups of vari-eties, than intrinsic characteristics. Further,

——

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Table 1-2.—Fundamental Policy Alternatives

Variety controls Market intervention Grain standards

No change Marketing board Mandatory USGSA inspection

Variety identification/ Export bonus Single agency to approve testingcategorization No change in loan policy Mandatory USGSA inspection in conjunction

Variety licensing Increased differentials in government with NIST equipment approval

policies

Minimum quality specifications forfarmer loans

SOURCE: Office of Technology Assessment, 1989

identity of a variety provides more comprehen-sive quality information than any subset ofmeasured quality characteristics.

Domestic processors attempt to resolve prob-lems of varietal differences, to some extent, bypurchasing by location or region. Foreign buy-ers, however, or in general any buyers usingpurely grade specifications are precluded fromthis alternative.

No ChangeMaintaining the status quo has four main im-

plications. First, intrinsic quality characteris-tics will continue to lack uniformity amongStates/regions/shipments. In the current sys-tem, with only informal, uncoordinated vari-ety release criteria, many basic characteristicsdiffer among varieties. These characteristicslose their identity in a market incapable ofmeasuring end-use characteristics. Conse-quently, important intrinsic quality differencesexisting regionally are not detected in the mar-keting system.

Second, problems will be created elsewherein the system due to the inability to measureintrinsic quality. In particular, increased pres-sure would be placed on grain standards tomeasure intrinsic quality within the marketingsystem.

Third, the current lack of information on in-trinsic quality in some grains will continue, re-inforcing current inefficiencies in the market.

Fourth, productivity growth would be facili-tated to a greater extent given completedom on variety release and selection.

free-

If there is no change from the current systemof administering variety release, the pressureon grain standards to introduce measures of in-trinsic quality will increase. Other countriesuse variety identification and release proce-dures in part to reduce the pressure on grainstandards to measure intrinsic quality. Alter-natively, by incorporating intrinsic quality intofarm program policies (discussed later), at leastsome incentive could be built into the systemto improve intrinsic quality.

Variety Identification Categorization

Any sort of variety identification or controlscheme would pose administrative challenges.One alternative would be to provide a mecha-nism in which varieties can be identified in themarket system. Such mechanisms currently ex-ist and are used in other exporting countries.These consist of an affidavit system, randomtesting using electrophoresis, and categoriza-tion. Producers would declare the variety at thepoint of first sale or loan application. Thiswould provide information to handlers on seg-regation based on grain categories or groupsof varieties. Categories would be developedaccording to end-use similarity and could be-come part of the grain standards.

Alternatively, variety or groups of varietiescould become part of the contract governingthe transaction, as is the case in the French sys-tem. The number of categories establishedwould vary by grain, depending on the threeconsiderations just discussed and on end-usespecificity. Thus, for example, if only one enduse existed and the varieties did not differ suffi-

19

ciently with respect to intrinsic quality, onlyone category would be necessary. On the otherhand, for wheat, in which there are intrinsicdifferences across varieties and a multitude ofend uses, there would be a larger number ofcategories. The intent here would be to formal-ize a mechanism not dissimilar from the cur-rent system of classification for wheat. Thedifference, however, is that the current systemfor classification relies on visual distinguish-ability, and categorization is based on fairlyimprecise criteria.

A variety control scheme would increase in-formation (by category of varieties), thus in-creasing the efficiency of the market in its al-locative role. For most grains, variety is a betterindicator of quality than are selected tests forquality. Thus, buyers’ information regardingquality would be improved. The increase in in-formation would raise the efficiency of the mar-ket, resulting in improved signals being trans-mitted to producers, breeders, and end-users.

Such a program would pose a challenge foradministration in the United States, especiallygiven the numerous varieties currently grown.It would be further complicated by the fact thatintrinsic quality depends not only on varietybut also on where it is grown and on local cli-matic factors.

Contract specifications would increase incomplexity. The informational requirementsfor contract specification would increase, par-ticularly of foreign buyers. Depending on theextent of categorization, however, this complex-ity could be reduced.

Introduction of a variety identificationscheme would result in incentives and disin-centives being readily associated with varietieswith desired/undesired intrinsic characteristics.In addition, using a variety identificationscheme would reduce pressure on the grainstandards to measure intrinsic performance inthe marketing system. Categorization of vari-eties would serve that function.

Variety Licensing

A more restrictive approach would be to in-stitute a variety licensing scheme. Varieties

would be subjected to criteria administered ata national level for release into the market sys-tem, Licensing of varieties takes various formsin different exporting countries—from quite re-strictive, such as in Canada and Australia, tofairly neutral, as in France. The intent of each,however, is to provide some mechanism thatassures certain intrinsic characteristics, giventhat they cannot be easily detected in the mar-ket system, and to apply uniform criteriathroughout the country, i.e., to reduce uncer-tainty of intrinsic characteristics through uni-form application of release criteria. Adminis-tration would require procedures similar tothose of the variety identification system justdescribed. In addition, some criteria wouldhave to be established for categorization (i.e.,to license varieties by end use), and for admin-istration.

Licensing varieties would increase uniform-ity and raise the ability to control intrinsic qual-ity, A formal mechanism could be provided forcategorization relative to a simple variety iden-tification scheme. Due to locational differencesin quality, varieties would have to be licensedby location and by end use.

Depending on administration, this schemecould be viewed as restrictive, i.e., of produc-tivity growth. However, this is not necessarilythe case, as the situation in France indicates,This approach would be difficult to implement,complex to enforce, and likely to create abureaucracy.

A stricter variety licensing system would havesimilar effects on other parts of the system asjust discussed under variety identification. Inparticular, licenses could act as surrogate grainstandards for intrinsic characteristics.

Market Intervention

Marketing Board

Central to the U.S. system is the market inwhich prices are established. Embedded in thismarket, and all prices, are premiums and dis-counts for measurable characteristics, whichallocate grain across different users. In addi-tion, these quality characteristics provide in-

20

centives and disincentives for participantsthroughout the marketing system. Several othercountries accomplish this by some form ofboard control. Thus, one option would be to in-troduce a marketing board system in the UnitedStates to resolve quality problems. The empha-sis of the discussion here is on the implicationsof a board for quality, in particular, and the co-ordination of policies on quality. Other aspectsof a board operation are more far-reaching (e.g.,bargaining power, resource allocation, impactson non-board grains, impacts on physical co-ordination) and are not discussed here.

A primary benefit of a marketing board wouldbe to coordinate the many aspects of the pro-duction and marketing system that have an im-pact on quality. Quality would be improved tothe extent that only two transactions—one be-tween producer and board, and another be-tween board and buyer—would take place. Thisis in contrast to the multitude of current trans-actions, all requiring measurement of quality.

Administration of price differentials wouldbe more subjective and judgmental in such asystem since transactions would take placewithout an active market. Indeed, market de-termination of price differentials is an impor-tant advantage and role of the U.S. marketingsystem.

Operating a grain marketing board in theUnited States would be costly, given the com-plexity and breadth of the system. Countrieswith boards operate in relatively simple logisti-cal systems, and with few grains. When eitherof these increases, as would be the case in theUnited States, the problems associated with bu-reaucratic allocation decisions intensifies, Thehighly efficient U.S. grain handling and distri-bution system, due in part to the competitiveenvironment, would be lost in a board-type sys-tem. Thus, it is likely the costs of imposing aboard system in the United States would out-weigh the benefits of quality improvements.

Imposition of a board system could reduce theemphasis on grain standards at the point of ex-port, and for that matter throughout the system.This is presuming that sufficient earlier con-trols were imposed to resolve grain quality

problems, thereby reducing the importance ofquality measurement at the point of export. Inaddition, variety release procedures could beeasily administered in a board system. Incen-tives could be administered rather than hav-ing to rely on market determination.

Export Bonus

An alternative policy would be to establisha bonus payable to exporters who deliver grainhaving quality superior to that specified in thecontract. Conceptually, this addresses the sys-tem’s merchant-handler component, This pol-icy is discussed in the context of being appliedat the point of export, but in general it couldbe applied elsewhere in the marketing system.

An export bonus program could have imme-diate results, especially if tied to a physical orsanitary quality characteristic. It would resultin an increase in quality perception, or in at-tention to the issue, Longevity should be a con-cern, however, in that if terminated, the effectslikely would not last.

Administration would be costly. Several im-portant administrative points would need to beconsidered, First, which quality characteris-tic(s) would be tied to the bonus—physical, sani-tary, or intrinsic? Quality would improve onwhatever characteristic received a bonus. De-pending on longevity, however, the bonuswould likely not influence intrinsic quality, Sec-ond, should the bonus be applied at the pointof export or origin? One risk is that importersmay manipulate the system by specifying alower grade in order to receive the same gradethey traditionally purchase, but at a lower price,

An export bonus program, by definition,would be oriented to the merchants and han-dlers in the system. It would provide incentivesfor them to improve the quality on particularattributes and for particular shipments to whichthe bonus was applied, Due to competitionwithin the industry, any benefits would be dis-tributed to appropriate decisionmakers so asto provide incentives. More information wouldnot be provided to the market, however, norwould there be a reduction in information un-certainty, so the efficiency of the market would

.—

21

not be improved. Breeders’ objectives and re-lease criteria would be affected only to the ex-tent that the bonuses were applied to intrinsiccharacteristics, and over very extended timeperiods.

No Change in Loan Policy

Another option is to leave unchanged the cur-rent administration of the policy on loan for-feitures and grain stored for the CommodityCredit Corporation (CCC). The fundamentalproblem is that price differentials for loan for-feitures and transactions on CCC-owned grainare substantially less than those in the market.The market for quality characteristics is there-fore distorted. The loan and CCC storage prac-tices would continue to support the price oflower quality grains. In addition, there wouldbe essentially no change in intrinsic, physical,or sanitary quality from that of the currentsystem.

Lower quality grain under extended storagecould deteriorate more than if it were of superior(physical and sanitary) quality. Growers wouldremain isolated from the market and thereforeincentives for improving quality would bemasked.

The market is distorted in general in the al-location between storage and commercial sales,with superior quality grain going to the latter.Since the program does not effectively distin-guish intrinsic quality, loan rate disincentivesare not effective at transmitting signals to pro-ducers. Thus, a major impact of not changingthe policy would be to increase the role and func-tion of grain standards in measuring quality.

Increased DifferentiaIs inGovernment Policies

The administration of premiums and dis-counts for loan forfeitures and transactions in-volving CCC-owned grain could be revised toprovide incentives to maintain or enhance qual-ity. These could be attached to intrinsic as wellas other physical and sanitary quality charac-teristics. In a number of other countries, qual-ity problems are addressed as a matter of agri-cultural policy, These take the form of incen-

tives by using regulations and substantialpremiums and discounts for quality deviations.Realigning the incentive system via farm pol-icy addresses one component of the system, i.e.,the market for quality characteristics, That mar-ket already exists and develops premiums anddiscounts. But it is distorted somewhat byadministration of the farm program. This pol-icy option would thus be eliminating a distor-tion, which would allow the market to func-tion more efficiently. Alternatively, farm policycould take the lead by providing price differen-tials at least equal to market differentials, to pro-vide incentives throughout the system.

CCC administers programs for handling andstoring CCC-owned grain. Different rules areapplied to country and terminal elevators. CCCrequires that terminal elevators deliver the qual-ity represented by the warehouse receipts andit discounts individual railcars. CCC does notpay terminal elevators for overdeliveries inquality. This is not the case for country eleva-tors, which are not subject to the same rejec-tion rules if the quality delivered is inferior tothe warehouse receipts and which receive pay-ment for overdeliveries.

One of the few ways to legislate incentivesinto the system, particularly for intrinsic qual-ity, is via the price differentials in the loan pro-gram. This alternative consists of differentialsassociated with loans to be greater than or, al-ternatively, equal to the market. They could beapplied as currently done, on grades, or on spe-cific physical and sanitary quality criteria. Avery simple example would be a 4-cents/bushelprice differential for clean wheat (i.e., less than0.5 percent dockage). In addition, measures ofintrinsic quality (e. g., falling number in wheat,oil content in soybeans, or protein content incorn) could be incorporated, as in othercountries.

Because the relationship between marketprices and loan values varies across grains, andbecause the participation rates vary, this pol-icy would have a greater impact on wheat thanon other grains. In addition, its impact wouldonly be periodic due to the loan not being ef-fective all the time.

22

If the loan supported prices of higher qualitygrain, lower value grain would be forced intothe market, as opposed to into the loan program,as currently happens. Thus, there would be anincrease in the amount of grain going into alter-native uses, with lower end value. The mostvivid example is the use of wheat as animal feed.Incentives for intrinsic quality could be rela-tively easily incorporated into the loan program(i.e., relative to measuring them in the market-ing system).

Some type of mechanism for quality meas-urement would have to be developed for graingoing under loan, e.g., through farmers submit-ting samples. Establishment of the optimumprice differentials would be difficult to admin-ister. This is especially true given the large num-ber of U.S. markets and given that—at least inthe past—loans have to be announced long be-fore crop quality is determined.

Country elevators would be forced to becomemore concerned with maintaining quality, andCCC would be guaranteed that the quality ofgrain received into the country elevator wouldbe delivered out of the elevator. This changein policy would also relieve the pressure ofmaintaining discount schedules that reflect themarket, in that CCC would not accept qualitybelow that specified in the warehouse receipts.

This particular alternative addresses the mar-ket for quality characteristics, and providesincentives in an important market for somegrains. Changing the current system would havea number of system benefits. First, to the ex-tent that intrinsic characteristics are used, va-riety development would be favorably affected.Signals from this important market would betransmitted directly to breeders and would af-fect their breeding objectives and release cri-teria. Thus, this provides somewhat of a sur-rogate for variety control. Second, there wouldbe somewhat reduced pressure to measure in-trinsic quality in grain standards. In the ex-treme of a proactive farm policy, together withvariety identification/licensing, the role andfunction of grain standards could be reducedto some extent toward measuring physical andsanitary quality characteristics.

Minimum Quality Specificationsfor Loans

An alternative used in many countries is thatof minimal receival standards on grain enter-ing the marketing system. Normally grain mar-keting is integrally related to prices and pol-icies (e.g., initial payments) and therefore it isdifficult to isolate physical marketing from pric-ing. As developed here, minimum quality speci-fications would be applied to grain entering theloan program as opposed to grain entering themarketing system. The global application ofminimum quality specifications to the U.S. mar-keting system would be next to impossible toimplement since a majority of grain under loanis stored on farms.

The concept of setting minimum quality spec-ifications for loans is similar to the option justdiscussed, except that a constraint, rather thana price incentive, is used for entry into the loan.Minimum quality specifications could be appliedto physical characteristics (e.g., minimal dock-age) or intrinsic characteristics (e.g., variety,protein, falling number, oil, or meal protein).If these were integrated into the loan program,the potential exists for grain not meeting thosespecifications to be diverted to the export mar-ket. One way to help minimize this would beto use whatever quality specification has beenestablished for government programs as a ba-sis for rejecting grain going into an export ele-vator. This would have the added benefit of re-ducing the spread of qualities available forblending within the export elevator.

This policy option would have many of thesame advantages as increased differentials ingovernment policies. But the minimums wouldbe difficult to establish and maintain in today’spolitical environment. The desirable qualitycharacteristics to be incorporated in the loanprogram could also be those not easily meas-ured in the marketing system. Depending onthe minimum quality specifications (physical,sanitary, intrinsic, or variety), farmers couldbe required to certify the variety planted or tosubmit samples of the grain being stored fortesting as directed by the U.S. Department ofAgriculture.

23

Use of minimum quality specifications couldalso solve, or contribute to, the resolution ofproblems elsewhere in the system. Desirablevarieties or intrinsic characteristics, if used,would transmit signals to breeders. Thesewould influence their objectives and release cri-teria. In addition, the role and function of grainstandards in the marketing system as they per-tain to measuring intrinsic quality could be re-duced to some extent.

Grain Standards

The U.S. Grain Standards Act states that itis Congress’ intent to promote the marketingof high-quality grain to both domestic and for-eign buyers, and that the primary objective forgrain standards is to certify grain quality as ac-curately as practicable.

Mandatory USGSA Inspection

The Federal Grain Inspection Service es-tablishes grain standards, which includes de-veloping technology to measure the factorscontained in the standard. The agency also de-velops and publishes sampling and inspectionprocedures, evaluates and approves inspectionequipment for use during inspection, monitorsthe inspection accuracy of its employees andlicensed inspectors, and periodically tests sam-pling and inspection equipment for accuracy.Mandatory export inspection is required anda system of delegated and designated agencies,along with FGIS oversight, is in place to per-form domestic inspections upon request. There-fore, a basic structure is in place for approvingand overseeing all equipment and proceduresused for measuring grain quality character-istics.

Having mandatory inspection on interstategrain shipments would ensure that the factorscovered by the standards are tested using ap-proved equipment and procedures. It would pro-vide consistency in test results in that the iden-tical procedures are used for each inspectionin the marketplace and are performed by inde-pendent, government-sponsored agencies.

Mandatory inspection would focus the pri-mary responsibility y for grain quality measure-

ment on one government agency. The basicframework is in place through the delegatedand designated agencies, which already ownapproved equipment and have trained employ-ees who use FGIS-published procedures. Eventhough these agencies are in place, their abil-ity to cover the wide areas required to meet theneeds of country elevators receiving trucks isseverely limited. This fact, coupled with pastproblems of regulating truck movement, makesthis policy option only applicable to railcar andbarge shipments.

Imposing this requirement on the market willincrease costs associated with obtaining inspec-tion of grain that would not normally have tobe inspected (i.e., grain moving from one facil-ity to another owned by the same company).

Approval of Testing bya Single Agency

The National Institute of Standards andTechnology* (NIST), through the National Con-ference of Weights and Measures, standardizesweights and measures by developing specifica-tions for instrument precision and accuracyalong with scale tolerances. Currently, NISTaddresses neither grain measures other thanweights nor sampling equipment. In some in-stances, individual States have developed cri-teria for approving inspection equipment andmonitored equipment accuracy. (Moisturemeters and mechanical truck probes are primeexamples.)

NIST, in consultation with FGIS, could takethe lead in developing and maintaining equip-ment specifications and maintenance toler-ances. These actions could be in conjunctionwith developing new tests that would be in-cluded in the standards by FGIS. All equipmentused to measure grain quality attributes wouldthen be standardized and traceable to nationalstandards. Variations in testing results intro-duced by a wide range of equipment accura-cies would be minimized. Only approved equip-

*The National Bureau of Standards was recently renamed theNational Institute of Standards and Technology (NIST) with thepassage of the Omnibus Trade and Competitiveness Act of 1988(Public Law 100-418) as of August 1988.

24

ment could be used to provide testing results,and NIST oversight would ensure accuratetesting.

The basic framework is in place for this pol-icy option in that NIST already has establishedapproval procedures, publishes user require-ments, and enforces its provisions through Stateorganizations. Having NIST be ultimately re-sponsible for approving grain testing equipmentthat serves as the basis for the grain standardshas the advantage of placing responsibility inan agency that does not have a vested interestin the equipment’s use. Yet, NIST does notcover tests that are subjective in nature, suchas odor, wheat classing, and the determinationof damaged kernels. Nor does the bureau haveany experience in basing a national standard-ization program on reference methods that aredefined rather than proven.

Other than equipment approved by FGIS orindividual States, no other equipment is ap-proved. Converting to approved equipmentwould result in increased costs for those hav-ing to dispose of unapproved equipment andpurchase other equipment. This policy optiondoes not address who will use the equipmentand when it will be used.

Mandatory USGSA Inspection inConjunction With NIST EquipmentA p p r o v a l

A policy that requires mandatory USGSAinspection on grain moving in interstatecommerce and a broadening of NIST involve-ment into grain sampling and testing equipmentcaptures the advantages of both these optionswhile minimizing many of the disadvantagesof either.

The advantages of mandatory inspectionon railcars and barges moving in interstatecommerce ensures that consistent samplingand testing are performed on both subjectiveas well as objective factors and that one agencyis responsible for grain testing as well as stand-ards development. The inability to performUSGSA testing on trucks and at country eleva-tors can be offset to some extent by involvingNIST and its related support systems in the

grain testing area. Even though USGSA inspec-tion would not be performed, those groups thatdo perform testing would be required to useapproved equipment and to follow user require-ments spelled out in the NIST approval. Thiswould be the same equipment and user require-ments that USGSA inspectors use.

This policy option would allow country ele-vators to continue to perform their own testingservices on grain received from the farmer, thusreducing the potential increase in costs associ-ated with mandatory USGSA inspection. How-ever, it would create more uniform testing sinceanyone performing grain quality testing willbe required to use NIST-approved equipmentand to follow published user requirements. Cou-pled with the NIST State support systems al-ready in place to oversee equipment accuracyand ensure that user requirements are followed,NIST involvement would provide oversight inpreviously uncovered areas.

Interaction Between Standards,Variety Control, and Market

Intervention

The interdependence between variety control,market intervention, and grain standards iscomplex. The debate over grain quality has fo-cused primarily on grain standards, but physi-cal, sanitary, and intrinsic grain qualities area function of the variety planted, farmer prac-tices, environment and geographic location,handling practices, end-user preferences, mar-keting, government policies, and the system’sability to measure these factors accurately.Therefore, policy options have an impact onmany areas, not just on grain standards.

Policy alternatives outlined in the variety con-trol section address intrinsic quality character-istics, since physical and sanitary quality can-not be addressed through such programs. Policychoices discussed in the market interventionsection can address the easily measurable fac-tors for physical and sanitary quality, and canbe expanded to deal with intrinsic quality at-tributes once technology is developed to meas-ure them in the marketplace.

25

In both the variety control and market inter-vention sections, an option for no change inpresent policies has been provided. Such an ap-proach places the responsibility for physical,sanitary, and intrinsic quality solely on grainstandards. For the physical and many sanitaryquality concerns, relying on the grain stand-ards is a relatively simple matter that does notinvolve adoption of new technology. It involvestaking existing factors and applying appropri-ate criteria. Several factors could be combined(as is the case of foreign material and dockagein wheat, as many have suggested, as eithergrade-determining or non-grade-determining)or factors could be separated (as is the case withbroken kernels and foreign material in corn)to describe quality more accurately. In addi-tion to rearranging existing factors into grade-determining, non-grade-determining, or officialcriteria, fixed percentages could be establishedfor certain factors that transcend all grades (e.g.,maximum level of dockage in wheat or maxi-mum moisture levels in corn and soybeans).Limits for current factors (e.g., stones or liveinsects) could also be tightened.

Making no change to variety control systemsor market intervention has a dramatic impacton grain standards, however, in that they mustbe able to address the buyer’s desire for infor-mation on important intrinsic characteristicsand take the lead in establishing signals regard-ing quality for the entire system. At the moment,technology to measure intrinsic attributes eas-ily in the marketplace is not available. If stand-ards are to be the vehicle for providing infor-mation on intrinsic and many new sanitaryquality characteristics (e.g., pesticide residue),resources must be provided to develop the tech-nologies needed to measure them accurately andeasily before the market can respond. It will takemany years to research and develop new teststhat could be put on-line before signals beginto be transmitted back through the system.

In addition to identifying what factors thestandards should measure and whether factorsare grade-determining, non-grade-determining,or official criteria, the way the standards areimplemented can also have a dramatic impacton grain quality. One of the major problems fac-

ing the United States in terms of grain quality—whether physical, sanitary, or intrinsic—is thatall grain, no matter the quality, is accepted intothe system and marketed. This places enormousstrain on the system’s handling and inspectioncapabilities and is the cause of most of theblending controversies.

Conclusions

The production and marketing of grain in theUnited States is a highly interdependent sys-tem of activities. Any policy designed to en-hance grain quality—physical, sanitary, orintrinsic—must address this interdependence.Traditional policy discussions, however, havefocused on only one component—grain stand-ards. But a properly functioning market cansolve many grain quality problems. Therefore,a fundamental policy alternative would be onethat creates an environment that would im-prove market efficiency. In addition, appropri-ate quality information must be provided so thatrelevant incentives and disincentives can beestablished to improve market efficiency.

Evaluating policy options in terms of theirstrengths and weaknesses as well as their in-terdependence is a complex task. One possiblepolicy path that maximizes the strengths of thevarious options as well as minimizes their weak-nesses is to adopt variety identification/categorization, increase the differentials in loanpolicy and specify minimum quality for farmloans, and introduce mandatory USGSA inspec-tion in conjunction with NIST equipment ap-proval.

Introducing a variety identification schemewould improve information on intrinsic qual-ity characteristics, thus reducing the pressureon grain standards to measure intrinsic per-formance in the market. For most grains, vari-ety indicates quality better than selected testsdo. The increased information resulting fromvariety identification would raise the efficiencyof the market, resulting in incentives/disincen-tives being transmitted to producers, breeders,handlers, and end users. Variety identificationalone, however, does not address physical orsanitary quality concerns, which must be tack-led in other areas.

88-378 - 89 - 2

Removing the distortion created by the cur-rent administration of premiums and discountsfor loan forfeitures and applying the same rulesto country and terminal elevators storing gov-ernment grain would allow the market—whichhas already established premiums and dis-counts—to function properly. Grain of lowervalue would be forced onto the market as op-posed to entering government programs. To theextent that intrinsic quality characteristics areincluded, variety development would be af-fected. Signals from government programswould be directly transmitted to farmers thatwould affect their decisions on varietiesplanted, thus influencing breeders’ objectivesand release criteria.

Setting minimum quality specifications forloans places an additional constraint on entryinto the loan program. These could easily beapplied to physical and sanitary quality char-acteristics as well as measurable intrinsic char-acteristics and, along with the variety identifi-cation scheme, would reinforce signals beingtransmitted throughout the system. Farmerswould be required to obtain testing of grain thatwas going into the loan program and beingstored on farm, rather that self-certifying qual-ity as is presently the case.

Implementing such policies on governmentprograms and minimum quality specificationscould force lower quality grain into the exportmarket. Therefore, minimum quality specifica-tions established for entry into government pro-grams could be applied to grain entering exportelevators. This would transmit signals for im-proved quality throughout the system andwould reduce the spread of qualities availablefor blending at export locations.

The need for accurate measurement of im-portant characteristics—whether physical, sani-tary, or intrinsic—is crucial to providing infor-mation for the market to function properly. Thevehicle by which quality information is trans-mitted throughout the system is grain stand-ards. Incentives and disincentives cannot beestablished unless accurate, consistent, andtimely information is provided in the market.This can be accomplished by continued effortsto incorporate the four objectives of grain stand-ards, by implementing mandatory inspection,and by increasing NIST involvement in approv-ing grain sampling and testing equipment.

Mandatory inspection of railcars and bargeswould ensure that consistent sampling and test-ing were performed. Used in conjunction withminimum quality specifications on grain en-tering export elevators, this would ensure thatone government agency was responsible fortesting quality. The increased presence of NISTin approving grain sampling and testing equip-ment would ensure that all parties testing grainquality used approved equipment and followedbasic user requirements.

Grain quality is a function of the varietyplanted, farmer practices, environment and geo-graphic location, handling practices, end-userpreferences, marketing, government policies,and the ability of grain standards to provideinformation on important quality characteris-tics. Present policy does not recognize the in-terrelatedness of these factors. Policy changes,therefore, must create an integrated policy forenhancing grain quality.

Chapter 2

An Overview ofthe U.S. Grain System

—

CONTENTS

Grain Production. . . . . . . . . . . . . . . . . . . . . . . .Wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Utilization . . . . . . Wheat. ....... . . . . . . . . . . . . . . . . . . . . . ..Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Export Markets. . . . . . . . . . . . . . . . . . . . . . . .

Grain Flow.... . . . . . . . . . . . . . . . . . . . . . . . . .Storage and Handling. . . . . . . . . . . . . . . . . . . .Marketing of Grain . . . . . . . . . . . . . . . . . . . . . .Government Farm Policy . . . . . . . . . . . . . . . . .

Loan Program. . . . . . . . . . . . . . . . . . . . . . . . .Deficiency Payment/Target Price Program

Quality Control. . . . . . . . ~...... .Quality as an Issue . . . . . . . . . . . . .Chapter preferences . . . . . . . . . . .

,...., . . .. ● ☛

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Figures

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FigureU.S. Share of World Wheat, Corn, and Soybean Production,2-1.

2-2.

2-3.2-4.2-5.2-6.

Page

U.S. Export Market Shares in Wheat, Corn, and Soybeans,1970-88, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wheat-Producing Areas of the United States . . . . . . . . . . . . . . . . . . . . . . . . Grain Flow From Farm to Final Destination.. . . . . . . . . . . . . . . . . . . . . . . 37Flow of Grain Through the Country Elevator . . . . . . . . . . . . . . . . . . . . . . . 39Flow of Grain Through the Export Elevator . . . . . . . . . . . . . . . . . . . . . . . . 40

Table Page

2-1. U.S. Wheat, Corn, and Soybean Production, 2-2. U.S. Utilization of Wheat by Type of Use, 1971.88 . . . . . . . . . . . . . . . . . .2-3. U.S. Utilization of Corn by Type of Use, 1971-88 . . . . . . . . . . . . . . . . . . . .2-4. U.S. Utilization of Soybeans by Type of Use, 1971-88 . . . . . . . . . . . . . . . .2-5. Distribution of U.S. Wheat Exports by Destination,

1970-86, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-6. Distribution of U.S. Corn Exports by Destination,

1970-86 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-7. Distribution of U.S. Soybean Exports by Destination,

1970-86 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-8. Quantity of Grain Hauled by Rail and Barges, 1974-85 . . . . . . . . . . . . . . .

Chapter 2

An Overview of the U.S. Grain System

The United States grain industry has manycharacteristics that make it a formidable com-petitor in world markets. First, it has the capa-bility to meet almost any demand. During the1970s, when conditions caused a dramatic in-crease in demand, the Nation showed it hadthe productive and distributional capability tomeet that demand. Second, the United Statescan produce almost any type of grain. Of the

ducer of wheat (figure 2-I). Third, a buyer canpurchase nearly any type of grain at any timeof the year from the United States. For manyother countries this is not possible. Fourth, theNation has the capability to move grain fromfarm to terminal to overseas buyer very effi-ciently. This is because of the extensive inter-state highway system, rail system, and water-ways. In addition, its high-volume, high-speed

major grains, it is the world’s largest producer elevator facilities—both inland and export—of corn and soybeans and the fourth largest pro- are as efficient as any in the world.

Figure 2-1. -U.S. Share of World Wheat, Corn, and Soybean Production, 1970-88 (percentage)

90

80

70

40

30

20

10

0

.

SOURCES:1 197&s3: s Evans, “wheat: Background for 1965 Farm Legislation,” Agriculture Information Bulletin No 467, U S Department of Agriculture (USDA), Economic Research

service (ERS), Washington, DC, 1964,1984-88: USDA, Foreign Agricultural service (FAS), “World Gram Sltuatlon and Outlook,” Circular series FG 10-88, Washington, DC, October 1966

2 197H1: USDA, ERS, ‘mm, Background for 1965 Farm Le?yslatlon,” Information Bulletln No 471, Washington, DC 1964,1982-88: USDA, FAS, ‘World Grain Situation and Outlook,” Circular Series FG 10 66, Washington, DC, October 1966

3 lg70_81: USDA, ERS, ‘Soytxans, Background for 1965 Farm Lewlahon,’” Agriculture Information Bulletin No 472, Washington, DC, 1964,1982-88: USDA, FAS, “World OIlseed Sltuatlon and Market Hlghltghts,” Circular Series FOP 10-66, Washington, DC, October 1966

4 As of October 1966

29

30

Notwithstanding all these strengths, the abil-ity of the United States to compete in worldmarkets has been called into question recently.Such a question would have seemed absurd 10years ago when the value and volume of U.S.grain and oilseed exports increased enor-mously. The U.S. share of world marketsseemed secure (figure 2-2); the value of agri-cultural exports more than doubled in realterms between 1970 and 1980, with the realvalue of U.S. grain exports more than tripling.Agricultural exports were considered the brightspot in the generally poor U.S. trade perform-ance across all economic sectors. In 1981, how-ever, wheat, corn, and soybean exports fellsharply while slow but consistent growth in im-ports of a large variety of agricultural products

continued unabated. By 1986, the Nation’s ex-port and net trade position had almost returnedto 1970 levels. The U.S. agriculture industryconfronted the possibility that it might face thekind of trade problems that had plagued thesteel, automobile, and semiconductor indus-tries. One congressional attempt to respond tothis situation was the Grain Quality Improve-ment Act of 1986.

A number of factors have been listed by tradeexperts as causing the decline in agriculturalexports, including global recession, the strongU.S. dollar, high price-support levels, EuropeanEconomic Community restrictions, and in-creased world productive capacity. However,another factor emerging is grain quality and

Figure 2-2. -U.S. Export Market Shares In Wheat, Corn, and Soybeans, 1970-88 (percentage)

SOURCES:1 t97~: s Evans, wheat: ~ckgmund for lg&j Farm Lagislati~n,” A9rI~u~um Information Bulletin No 467, IJ S @pafiment of Agriculture (USDA), Economic Research

ServIca (ERS), Washington, DC, 1964;1984-U: USDA, Foretgn Agricultural Service (FAS), “World Gram Situation and Outlook,” Cwcular series FG 10-66, Washington, DC, October 1966

2 197H1: USDA, ERS, “corn, ~ckgmund for 1= Farm Legislation,” information 8ulletin NO 471, Washington, ~ 19S4;

1942-U: USDA, FAS, “World Grain Situation and Outlook,” Circular Series FG 10-66, Washington, DC, October 19663 197~1: USDA, ERS, ,-~y~an~, ~ckgfound for l= F a r m Legi$Jat~n,” Agricu~ure Information Bulletin NO 472, W a s h i n g t o n , m, 1 9 6 4 ;

1SS248: USDA, FAS, “World Oilsead Situation and Market Highlights,” Cwcular Series FOP 10-66, Washington, DC, October 19664 As of October 1966

31

its use as a competitive tool in internationalmarkets. The factors listed above are consid-ered the major contributors to the decline inworld market share. But as the dollar weakensand lower price-support levels take effect, al-lowing U.S. exports to become more price-com-petitive, opportunities to increase exports maybe hampered by foreign buyers’ concerns aboutU.S. grain quality.

Importers of U.S. grain have become morevocal in their concern about quality. Formalcomplaints made by buyers to the U.S. Depart-ment of Agriculture (USDA) have increasedyearly. In 1987 over 60 complaints concerningquality were received at USDA. This numberis a conservative estimate of the true concernsince the amount of paperwork involved dis-courages the filing of complaints. Examples of

specific complaints include: excessive amountsof material other than grain in the shipment;quality attributes, such as wheat protein, notmeeting contract specifications; grain (mainlycorn and soybeans) arriving out of condition,e.g., moldy or infested; and grain arriving ina broken or cracked condition.

This report focuses on the enhancement ofgrain quality, To put that issue in perspective,it is important to understand how the U.S. grainsystem operates. The following sections pro-vide an overview of grain production, end uses,export markets, grain flow, Government pro-grams, and quality control, which are describedin the rest of this assessment. The chapter endswith a discussion of the quality issue and a def-inition of quality.

GRAIN PRODUCTION

Production trends in the United States from1971 to 1986 are shown in table 2-1. Annualwheat production averaged 1.7 billion bushelsduring the first 4 years of this period. By 1979,yearly production had increased to 2.1 billionbushels, and it peaked at 2.8 billion bushels by1981. Overall, wheat production has increased29 percent since 1971.

From 1971 to 1975, corn production averaged5.5 billion bushels per year. Production in-creased to 7.9 billion bushels by 1979. In 1983,corn production was drastically reduced as aresult of the payment-in-kind program. But in1985, it peaked at 8.9 billion bushels. However,in 1988 corn production dropped to only 4.5billion bushels because of the severe drought.Corn production overall has increased 46 per-cent since 1971.

Yearly soybean production averaged 1.3 bil-lion bushels per year during the years 1971 to1976; output peaked at 2.3 billion bushels in1979, and stayed around 2.0 billion bushels by1986. But it was reduced to 1.5 billion bushelsin 1988 because of the drought. Overall, soy-bean production has increased 71 percent since1971.

Table 2-1.—U.S. Wheat, Corn, and SoybeanProduction, 1971-88 (millions of bushels)

Year Wheat Soybeans Corn

1971 . . . . . . . . . . . . . . . . . .1 ,618.6 1,176.1 5,641.01972 . . . . . . . . . . . . . . . . . .1 ,546.2 1,270.6 5,573.01973 . . . . . . . . . . . . . . . . . .1 ,170.8 1,547.5 5,647.01974 . . . . . . . . . . . . ......1,781.9 1,216.3 4,701.41975 . . . . . . . . . . . . . . . . . .2 ,126.9 1,547.4 5,829.01976 . . . . . . . ...........2,148.8 1,287.6 6,266.41977 . . . . . . . . . . . . . . . . . .2 ,045.0 1,767.0 6,425.51978 . . . . . . . . . . . . ......1,775.5 1,869.0 7,081.81979 . . . . . . . ...........2,134.1 2,268,0 7,938.81980 . . . . . . . . . . . . . . . . . .2 ,380.9 1,798.0 6,644.81981 . . . . . . . . . . . . . . . . . .2 ,785.4 1,989.0 8,201.61982 . . . . . . . . . . . . . . . . . .2 ,765.0 2,190.0 8,235.11983 . . . . . . . . . . . . . . . . . .2 ,419.8 1,636.0 4,174.71984 . . . . . . . . . . . . . . . . . .2 ,594.8 1,861.0 7,674.01985 . . . . . . . . . . . . . . . . . .2 ,425.1 2,099.0 8,876.71986 . . . . . . . . . . . . . . . . . .2 ,086.8 1,940.0 8,252.81987 . . . . . . . . . . . . . . . . . .2 ,105.0 1,905.0 7,064.01988* . ................1,821 .0 1,472.0 4,462.0‘PreliminarySOURCE U S. Department of Agriculture, “Crop Producflon, ” Agricultural

SIatlstlcs Board, National Agricultural Statistics Serv!ce CrPr 2-2,Washington, DC, various issues.

Figure 2-3 shows the general areas wherevarious wheat types are grown. Forty-two Statesproduce various wheat types. However, almost42 percent is produced in just five States:

—

32

Figure 2-3. --Wheat-Producing Areas of the United States

Soft Red Winter

White

Hard Red Winter

Where different kindsof wheat are grown in the

United States

The map indicates the general areas inwhich the various kinds of wheat are grown.The classes of wheat grown in an area aredetermined by climate, soil, rainfall, andirrigation.

Durum

SOURCE: Wheat Flour Institute, “From Wheat to Flour,” revised cd., WaShln@On, DC, 19S1.

Kansas, Oklahoma, Texas, Nebraska, and Col- is grown mainly in North Dakota and Montana,orado. These five produce Hard Red Winter White wheat is grown mainly in the Pacificwheat—the major type grown in the United Northwest, and Soft Red Winter wheat is grownStates. from Missouri to Ohio and in the Atlantic

States.About one-fourth of the wheat produced in

the United States is grown in North and SouthDakota, Minnesota, and Montana. These Statesproduce Hard Red Spring wheat. Of the sev- Corn is produced in 47 States. The six Corneral other wheat types produced, Durum wheat Belt States—Iowa, Illinois, Indiana, Nebraska,

—

33

Minnesota, and Ohio—produced about 70 per-cent of the 1985 corn crop. Historically thesesix have been the dominant corn-producingStates. Corn production in recent years, how-ever, has increased in other parts of the coun-try. This has been the result of new, short-season hybrid seed corn that has increasedyields in Northern States like North Dakota andNew York, and of Government programs thathave made corn production profitable in Stateswith relatively high production costs.

Soybeans

Soybeans are produced in 29 States. Six ac-count for almost two-thirds of the output: Il-linois, Iowa, Indiana, Missouri, Ohio, and Min-nesota. In fact, Illinois and Iowa accounted for33 percent of the total 1985 crop and were thedominant producers.

UTILIZATION

Each grain has multiple uses and is impor-tant in world markets. In this section the vari-ous uses of each will be discussed as well asthe magnitude of the dependence on exportmarkets.

Wheat is used for domestic food consump-tion, export, animal feed, and seed (table 2-2).The proportion used for domestic purposes hasfluctuated between 32 and 53 percent over thepast 15 years. Wheat is very dependent on theexport market. The export market has grownsince 1971, and by the early 1980s as much as

68 percent of U.S. wheat was exported. The ex-port market share has declined since then toless than 50 percent of total wheat use.

Almost all wheat, other than that fed directlyto livestock, is milled into flour for producinga variety of bakery products for human con-sumption. Wheat is unique in that it is the onlycereal grain with sufficient gluten content tomake a loaf of bread without being mixed withanother grain.

Corn

The major use for corn is domestic animalfeed, accounting for well over half the corn con-

Table 2-2.— U.S. Utilization of Wheat by Type of Use, 1971-88 (million bushels and percentage)a

DomesticAnimal Total share

Year Food Seed feed domestic (percent) Exports

1971-72 . . . . . . . . . . . . . . . . . . . . 523.7 63.2 262.4 849.3 58.2 609.81972 -73 . . . . . . . . . . . . . . ......531.8 67.4 199.8 799.0 41.3 1,135.01973 -74 . . . . . . . . . . . . . . ......544.3 84.1 125.1 753.5 56.1 1,217.01974 -75 . . . . . . . . . . . . . . ......545.0 92.0 34.9 671.9 39.7 1,018,51975 -76...., . ..............588.6 99.0 38.3 725.9 38.2 1,172.91976 -77 . . . . . . . . . . . . . . ......588.0 92.0 74.4 754.4 44.2 949.51977 -78 . . . . . . . . . . . . . . ......586.5 80.0 192.5 859.0 43.3 1,123,91978-79 . . . . . . . . . . . . . . ......592.4 87.0 157.6 837.0 41.2 1,194,11979-80 . . . . . . . . . . . . . . ......596.1 101.0 86.0 783.1 36.2 1,375,21980 -81 . . . . . . . . . . . . . . ......610.5 113.0 59.0 782.5 34.1 1,513,81981 -82 . . . . . . . . . . . . . . ......602.4 110.0 134.8 847.2 32.4 1,770.71982 -83 . . . . . . . . . . . . . . ......616.4 97.0 194.8 908.2 37.6 1,508,71983-84 . . . . . . . . . . . . . . ......642.6 100.0 369.1 1,111.7 43.8 1,428.61984 -85 . . . . . . . . . . . . . . ......651.0 98.0 404.5 1,153.5 44.7 1,424.11985-86 . . . . . . . . . . . . . . ......678.1 93.0 273.5 1,044,6 53.3 915.41986 -87...., . ..............696.0 84.0 413.3 1,193,3 54.3 1,003,51 9 8 7 - 8 8 b . . . . . . . . . . . . . . . . . . .719.0 85.0 280.1 1,084.2 40.5 1,592.1~Differences between utilization and production are attributable to imports

Preliminary

SOURCE U S Department of Agriculture, “Wheat Sltuatlon and Outlook Report, ” Economic Research Service, Washington, DC various Issues

Exportshare

(percent)

41.858.743.960.361.855.856.758.863.865.967.662.456.255.346.745.759.5

—. ———

34

sumed in the United States (table 2-3). Feed usehas fluctuated with prices and livestock inven-tory. Other domestic uses include food/indus-trial use and seed. Industrial use has shownsteady growth since 1971. Total domestic cornusage has accounted for 70 to 85 percent ofusage over the past 15 years. Corn is not as de-pendent as wheat on world markets, but asmuch as 30 percent of total usage is exportedin some years.

Feed grains, which include corn, are char-acterized as high-energy grains due to their rela-tively high levels of nitrogen-free extract (prin-cipally starch) and low levels of crude fiber (4).Nearly all feed grains are highly palatable tolivestock. Corn is the leader in the amount ofenergy contained. However, several byproductsfrom corn used by food manufacturers are alsoavailable for animal feed. These include suchproducts as corn gluten feed and meal, Brewer’sdried grains, and distiller’s dried grains.

Corn is prepared for human consumption andindustrial use by dry and wet mill processing.Dry milling is the process by which corn is sep-arated into components of hulls, germs, andendosperm. Two processes are used: temper-ing-degerming and alkaline dry milling. Theseproduce flaking grits for breakfast cereals, bak-ing, and the snack food industries.

More than half the corn starch manufacturedfrom the wet milling process is converted intocorn syrups and corn sugar. Corn starches andsugars are used for human foods, beverages,industrial products, and livestock feeds. Cornsyrup is used in human foods, beverages, andindustrial products. Crude corn oil, which isextracted during starch recovery, is used forhuman food, industrial products, and animalfeed. The water used to soak the corn, com-monly referred to as steepwater, is used in phar-maceuticals and liquid animal feed.

Soybeans

Soybeans are processed for domestic foodand feed consumption, used for seed, and ex-ported. Domestic processing is the most impor-tant use of soybeans and has increased stead-ily over the past 15 years (table 2-4). Domesticsoybean utilization has accounted for approx-imately 60 percent of total usage, while the ex-port market has accounted for about percent.

Soybeans are primarily used for oil extrac-tion. The residuals from this process are toastedand ground into a high-protein meal for use asa supplement in animal feed. Other soybeanuses include lecithin, soy flour, and soy grits.Soybean meal usage, like corn, has increased

Table 2-3.—U.S. Utilization of Corn by Type of Use, 1971-88 (million bushels and percentage)a

Food,alcohol, and

Year industrial SeedAnimal

feedTotal

domestic

1971 -72 . . . . . . . . . . . . . . . .1972-73 . . . . . . . . . . . . . . . .1973-74 . . . . . . . . . . . . . . . .1974 -75 . . . . . . . . . . . . . . . .1975-76 . . . . . . . . . . . . . . . .1976-77 . . . . . . . . . . . . . . . .1977 -78. . . . . . . . . . . . . . . .1978-79 . . . . . . . . . . . . . . . .1979-80 . . . . . . . . . . . . . . . .1980-81 . . . . . . . . . . . . . . . .1981 -82 . . . . . . . . . . . . . . . .1982-83 . . . . . . . . . . . . . . . .1983-84 . . . . . . . . . . . . . . . .1984 -85. . . . . . . . . . . . . . . .1985-86 . . . . . . . . . . . . . . . .1986-87 . . . . . . . . . . . . . . . .1987 -88 . . . . . . . . . . . . . . . .

394.0407.0417.0432.6469.9493.3532.9557.0655.1715.1792.1880.3956.0

1,070.01,140.01,175.01,207.0

15.016.018.018.820.219.818.018.020.020.219.414.519,121.219.516.717.0

3,978.04,310.04,265.03,225.63,591.63,586.63,709.54,198.14,518.64,139.04,276.04,520.73,817.64,079.04,095.34,713.74,649.7

4,3874,7334,7003,6774,081.74,099.74,260.44,773.15,193.74,874.35,087.55,415.54,792.75,170.25,254.85,905.45,873.7

Domesticshare

(percent)

84.879.279.876.270.570.968.669.168.167.472.174.771.673.580.979.777.3

Exports

Exportshare

(percent)

786.01,243.01,188.01,148.51,711.41,684.21,947.82,133.12,432.62,355.21,966.91,833.81,901.51,865.41,241.21,504.41,725.0

15.220.820,223.829.529.131.430.931.932.627.925.328.426.519.120.322.7

aDifferences between utilization and production are attributable to imports.

SOURCE: U.S. Department of Agriculture, “Feed Situation and Outlook, ” Economic Research Service, Washington, DC, various issues

35

Table 2-4.—U.S. Utilization of Soybeans by Type of Use, 1971-88 (million bushels and percentage)a

Seed, Domestic ExportDomestic feed, and Total share share

Year processing residual domestic (percent) Exports (percent)

1971 . . . . . . . . . . . . . . . . . . . . . . 720 65 785 65.3 417 34.71972 . . . . . . . . . . . . . . . . . . . . . . 722 82 804 62.7 479 37,31973 . . . . . . . . . . . . . . . . . . . . . . 821 75 896 62.4 539 37.61974 . . . . . . . . . . . . . . . . . . . . . . 701 79 780 64.9 421 35.11975 . . . . . . . . . . . . . . . . . . . . . . 865 71 936 62.8 555 37.21976 . . . . . . . . . . . . . . . . . . . . . . 790 76 866 60.6 564 39.41977 . . . . . . . . . . . . . . . . . . . . . . 927 82 1,009 59.0 700 41.01978 . . . . . . . . . . . . . . . . . . . . . . 1,018 99 1,117 60.2 739 39.81979 . . . . . . . . . . . . . . . . . . . . . . 1,123 85 1,208 58.0 875 42.01980 . . . . . . . . . . . . . . . . . . . . . . 1,020 99 1,119 60.7 724 39.31981 . . . . . . . . . . . . . . . . . . . . . . 1,030 89 1,119 54.6 929 45.41982 . . . . . . . . . . . . . . . . . . . . . . 1,108 86 1,194 56.9 905 43.11983 . . . . . . . . . . . . . . . . . . . . . . 983 79 1,062 58.8 743 41.21984 . . . . . . . . . . . . . . . . . . . . . . 1,030 93 1,123 65.3 598 34.71985 . . . . . . . . . . . . . . . . . . . . . . 1,053 86 1,139 60.6 740 39.41986 . . . . . . . . . . . . . . . . . . . . . . 1,179 104 1,283 62.9 757 37.11987 . . . . . . . . . . . . . . . . . . . . . . 1,170 96 1,266 61.7 785 38.31988b . . . . . . . . . . . . . . . . . . . . . . 1,075 95 1,170 65.2 625 34.8aDifferences between uttllzation and production are attributable to imports‘Prellmlnary

SOURCE US Department of Agriculture, “Ofl Crops Situation and Outlook Report,” Economic Research Service, Washington, DC, various Issues

relative to livestock inventory. Overall, soybeanmeal usage has increased 49 percent since 1970.

Export Markets

The United States is quite dependent onworld markets, which are constantly changingin response to new relationships betweenbuyers and sellers.

Wheat exports increased dramatically in 1972and from 1976 to 1982. Overall, wheat exportsincreased about 190 percent during the decadefrom 1971 to 1981 and have declined by almost50 percent since then,

The markets for U.S. wheat have shifted overtime. The major importers in 1970 were India,Western Hemisphere countries, Japan, theEuropean Community (EC), and South Korea(table 2-5) By 1985, exports to India and theEC had declined sharply. The major importerswere Western Hemisphere countries and Japan(same markets) and the African countries (newmarkets). During this time the Soviet Union(U.S.S.R) was a sporadic buyer–but a largeone.

Corn exports increased dramatically from1971 to 1981, During that time exports in-

creased by 200 percent, but since then they havedeclined by 47 percent. In 1970, the largest im-porters of U.S. corn were the EC and Japan (ta-ble 2-6). By 1985, the EC share had dropped to10 percent and the largest importers were Ja-pan and the U.S.S.R. Other areas that hadsteady growth during this time were theWest-ern Hemisphere, the Middle East countries, andSouth Korea.

The growth of soybean export markets fol-lowed the same path as wheat and corn. Dur-ing the 1971-81 period, U.S. soybean exportsincreased 123 percent. Since then exports havedeclined by 25 percent. Compared with wheatand corn, the decline in soybeans was thesmallest.

The major soybean markets have not changedsince 1970 (table 2-7). The largest importershave been the EC and Japan, accounting forapproximately 65 percent of the U.S. soybeanexport market. Taiwan, Eastern Europe, Israel,and Western Hemisphere countries have beensteady importers, but imports by other WestEuropean countr ies have been decliningthroughout the period.

. .

36

Table 2-5.—Distribution of U.S. Wheat Exports by Destination, 1970.86 (in percent)

MiddleWestern East oil-

Hemi- exporting SouthYears sphere Europe countries USSR Japan Korea Pak is tan Ind ia Af r ica China Other Tota l

1970 -71 . . . . . . . . . 17.41971 -72 . . . . . . . . . 13.71972-73 . . . . . . . . . 19.11973-74 . . . . . . . . . 14.51974 -75 ..,...... 19.31975-76 . . . . . . . . . 14.91976-77 . . . . . . . . . 17.41977 -78 . . . . . . . . . 13.21978-79 . . . . . . . . . 19.61979-80 . . . . . . . . . 17.31980 -81 . . . . . . . . . 20.01981 -82 . . . . . . . . . 20.21982-83 . . . . . . . . . 18.11983-84 . . . . . . . . . 17.61984-85 . . . . . . . , . 17.51985-86 . . . . . . . . . 23.7

11.323.712.713.110.910,416.012.815.014.419.310.2

9.14.45.65.9

0.1 0 14.02.0 0 15.64.6 0 13.42.1 30.6 10.94.4 9.2 10.37.6 3.6 12.01.7 12.3 10.28.4 10.8 11.46.7 10.7 11.65.2 9.0 10.21.8 6.2 9.53.3 5.0 8.51.6 13.2 7.42.7 8.7 9.52.7 18.1 8.22.0 9.6 11.2—

10.09.09.25.25.55.94.57.45.75.05.04.94,25.44.86.4

6.1 15.6 7.03.5 7.4 8.05.9 5.8 11.73.6 1.2 5.61.8 5.5 11.53.3 14.3 10.72.1 15.5 10.70.7 9.1 16.42.0 1.0 17.43.8 0.1 14.90.6 0.8 13.00.4 1.2 13.10.5 2.7 13.50.5 9.6 14.80.3 2.7 16.21.4 0.1 18.9

000.57.99.00.5003.07.7

11.218.418.310.210.64.6

18.517.117.15.3

12,616,89.69.87.3

12.412.614.811.416.613.316.2

100100100100100100100100100100100100100100100100

SOURCE: U.S. Department of Agriculture, “Grain and Feed Market News,” Agricultural Marketing Service, Washington, DC, various issues

Table 2-6.—Distribution of U.S. Corn Exports by Destination, 1970.86 (in percent)

MiddleWestern Other East oil

Hemi- European Western Eastern exporting SouthYear sphere Community Europe Europe count r ies USSR Japan Korea Ch ina

1970-71 . . . . . . . . 4.7 58.6 - 0 7.4 0 10 26.0 2.0 01971-72 . . . . . . . . 2.9 42.3 3.4 6.9 0.1 11.8 13.8 2.7 01972-73 . . . . . . . . 6.5 33.8 7.0 6.3 0.1 12.9 18.0 1.4 4.01973-74 . . . . . . . . 9.9 31.8 7.5 5.4 0.1 13.2 20.0 1.2 4.21974-75 . . . . . . . . 10.1 40.7 10.3 10.9 0.5 4.1 17.5 1.4 01975-76 . . . . . . . . 5.8 30.0 7.6 11.1 0.2 24.8 13.6 1.4 01976-77 . . . . . . . . 5.0 43.3 5.9 11.5 0.5 10.0 16,5 2.2 01977-78 . . . . . . . . 6.9 27.3 8.1 10.1 0.6 20.5 17.2 3.6 01978-79 . . . . . . . . 7.9 24.7 6.3 11.0 0.6 16.1 16.8 5.9 5.41979-80 . . . . . . . . 13.3 21.3 8.8 12.0 0.4 9.5 18.3 3.5 2.91980-81 . . . . . . . . 16.9 18.0 9.6 11.8 0.2 8.0 22.2 3.9 1.21981-82 . . . . . . . . 10.3 15.7 13.0 6.5 0.1 14.5 21.5 5.1 2.61982-83 . . . . . . . . 13.6 20.1 0.2 2.9 0.3 7.0 28.5 8.9 4.61983-84 . . . . . . . . 11.0 17.5 0.1 1.3 0.9 13.8 30.1 6.2 01984-85 . . . . . . . . 6.3 13.1 0.1 1.6 1.2 32.7 23.1 2.8 01985-86 . . . . . . . . 11.2 10.1 0 3.1 1.8 21.4 29.9 4.4 0SOURCE’ US. Department of Agriculture, “Grain and Feed Market News:’ Agricultural Marketing Service, Washington, DC, various issues

Other

1.216.110.06.74.75.55.15.75.3

10.08.2

10.713.919.119.218.1

Total

100100100100100100100100100100100100100100100100

GRAIN

The major tasks of the United States grainindustry are to assemble grain from farmers,combine it in their facilities according to qual-ity differentiations, store it until it is sold, andtransport it by the most cost-effective meansto the final market destination.

Farmers transport grain from the farm infarm-tractor wagons or trucks to country ele-

FLOW

vators, subterminal or terminal elevators, ex-port elevators, or domestic processors (figure2-4). From some locations, farmers can delivergrain directly to Canada from the farm by truck,

Domestic processors and export elevators canreceive grain straight from farmers who are lo-cated within the general vicinity. When suffi-cient quantities cannot be supplied by local

37

Table 2.7.–Distribution of U.S. Soybean Exports by Destination, 1970.86 (in percent)

OtherWestern European Western Eastern

Years Hemisphere Community Europe Europe Japan Israel Taiwan Other Tota l

1970-71 . . . . . . . . . . . . . . . . . . . . 10.31971-72 . . . . . . . . . . . . . . . . . . . . 8.01972-73 . . . . . . . . . . . . . . . . . . . . 5.81973-74 . . . . . . . . . . . . . . . . . . . . 10.11974-75 . . . . . . . . . . . . . . . . . . . . 7.51975-76 . . . . . . . . . . . . . . . . . . . . 5.51976-77 . . . . . . . . . . . . . . . . . . . . 7.81977-78 . . . . . . . . . . . . . . . . . . . . 7.31978-79 . . . . . . . . . . . . . . . . . . . . 5.81979-80 . . . . . . . . . . . . . . . . . . . . 5.51980-81 . . . . . . . . . . . . . . . . . . . . 9.31981-82 . . . . . . . . . . . . . . . . . . . . 6.21982-83 . . . . . . . . . . . . . . . . . . . . 8.21983-84 . . . . . . . . . . . . . . . . . . . . 9.01984-85 . . . . . . . . . . . . . . . . . . . . 10.51985-86 . . . . . . . . . . . . . . . . . . . . 6.7

43.442.144.846.944.147.846.147.142.246.043.646.856.046.544.144.1

11.811.98.6

10.413.2

7.96.13.96.6

10.39.1

14.11.21.10.90.6

1.40.61.30.91.20.30.44.00.45.74.11.72.43.32.32.5

24.2 2.823.8 2.925.3 2.520,9 2.622.7 3.521.5 2.520.2 2.620.1 2.119.2 1.917.0 1.819.7 1.816.2 1.720.5 1.822.8 2.824.8 2.521.8 1.9

4.7 1.4 1005.4 5.3 1004.1 7.6 1003.8 4.4 1006.6 1.2 1005.2 9.3 1004.8 12.0 1004.9 10.6 1005.8 18.1 1003.1 10.6 1005.2 7,2 1004,6 8.7 1004.9 5.0 1006.5 8.0 1007.8 7.1 1007.5 14.9 100

SOURCE: US Department of Agriculture, “Grain and Feed Market News,” Agricultural Marketing Service, Washington, DC, various issues

Figure 2-4. –Grain Flow From Farm to Final Destination

Processor

Farm

1

elevator

River Portelevator elevator

Overseasprocessor

SOURCE: US Department of Agriculture, “The Phywcal Dcstnbutlon System for Gram,” Office of Transportation, Agriculture Information Bulletin No 457, Washington, DC,October 1983

38

farmers, domestic processors and export ele-vators obtain grain from other sources. Thisis accomplished by a system of country, sub-terminal, and terminal elevators used to col-lect, store, and move grain through the systemto its ultimate destination.

In many cases, grain destined for export isdelivered by the farmer to the country eleva-tor, unloaded and stored, loaded, and deliveredto a subterminal elevator. Here again the grainis unloaded and stored. At subterminal eleva-tors, it can be loaded and shipped to export ele-vators or terminal elevators. If subterminal ele-vators do not deliver the grain to its finaldestination, then it is delivered to a terminalelevator, unloaded, stored, and reloaded forshipment to a port. Once grain is received atan export elevator, it is unloaded and loadedonto the vessel for shipment to the importingcountry within a very short period of time. Atexport elevators the emphasis is on through-put capacity with minimal storage. At interiorelevators the reverse is true, with the empha-sis being on increased storage capacity and re-duced handling capacity.

Grain moves by truck, railroad, barge, or shipor any combination of these modes as it makesits way from the farm to its final destination.The reported quantities of grain moved by rail-

roads and barges is shown in table 2-8. Theshare by rail ranged from a high of 80.3 per-cent in 1974 to a low of 66 percent in 1982.Barge shares tend to rise and fall as exports in-crease or decrease, primarily because almostall grain moving by barge is destined for ex-port ports in the New Orleans area. The railshare of grain moving to export ports declinedfrom 62 percent in 1974 to 38 percent in 1983(l). Except for the relatively small amount ofgrain moving into Canada by truck and intoMexico by rail, ocean vessels carry almost allexported grain.

Table 2.8.–Quantity of Grain Hauled byRail and Barges, 1974.85

Quantity moved Share moved(billion bushels) (percent)

Year Rail Barges Rail Barges1 9 7 4 . . . . . . . . . . . . . . 4 . 2 11 9 7 5 . . . . . . . . . . . . . . 4 . 0 61 9 7 6 . . . . . . . . . . . . . . 4 . 1 01 9 7 7 . . . . . . . . . . . . . . 3 . 9 11 9 7 8 . . . . . . . . . . . . . . 4 . 1 21 9 7 9 . . . . . . . . . . . . . . 4 . 4 11 9 8 0 . . . . . . . . . . . . . . 5 . 0 01 9 8 1 . . . . . . . . . . . . . . 4 . 3 81 9 8 2 . . . . . . . . . . . . . . 4 . 2 21 9 8 3 . . . . . . . . . . . . . . 4 . 7 21 9 8 4 . . . . . . . . . . . . . . 4 . 8 11 9 8 5 . . . . . . . . . . . . . . 3 . 9 9

1.031.201.611.521.631.621.911.992.182.111.971.67

80.377.371.872.071.773.172.468.866.069.170.970.5

19.722.728.228.028.326.927.631.234.030.929.129.5

SOURCE Association of American Railroads, The Grain Book 1986 (Washington,DC: 1987)

STORAGE AND HANDLING

Grain handling and storage systems have types of equipment, size, capacity, and config-developed over the years to provide an eco- uration.nomical means of moving grain into storage,preserving its quality while in storage, and un-loading it from storage. The total U.S. grain stor- The basic storage types can be categorized

age capacity in 1987 was 23 billion bushels (5), as upright metal bins or concrete silos, flat

of which 14 billion bushels was on-farm stor- warehouses (buildings), and on-ground (piles),Upright bins and concrete silos are the mostage and 9 billion was considered off farm,easily managed type and can be found on farms

Regardless of whether storage and handling as well as in commercial facilities. They rangesystems are constructed on farm or off, basic in size from farm bins as small as 3,000 bushelstypes of equipment are being used. The only to over 500,000 bushels in commercial facilities.differences are in the choice of the number and These storage types are loaded from the top and

39

easily unloaded from the bottom. In most in-stances, they can be equipped with aeration tomaintain cool grain temperatures, easily sealedfor fumigation when required, and, dependingon the number of bins available, unloaded andturned if needed,

The recent demand for additional storagespace has increased the use of flat warehouses,of on-ground piles placed on hard surfaces con-fined by movable sloping walls or circular rings,and of several other forms of on-ground piling.These storage types are more difficult to load,unload, fumigate, and aerate than upright bins.In the fall of 1986, approximately 300 millionbushels of grain were stored in piles, By thesummer of 1987 this volume had doubled, toover 600 million. Most was corn and, to a lesserextent, wheat (5).

Considerable interactions occur betweenhandling and storage technologies based on thesize and type of storage structures in use. Cer-tain kinds of handling equipment are well suitedto high-speed, high-volume upright elevators;others, to flat storage or to on-farm storage.Various types of handling equipment are usedto move grain horizontally or vertically withinfarm or commercial facilities. Figures 2-5 and2-6 show basic flow diagrams of terminal andexport elevators. Country elevators could haveless equipment than shown in figure 2-5, andexport elevators may have cleaners on the out-bound side. Therefore, these figures only pro-vide basic configurations and should not betaken as being representative of all grain ele-vators,

Figure 2-5.— Flow of Grain Through the Country Elevator

conveyor

Probesampler

SOURCE. U.S. Department of Agriculture,“The Physical Distribution System for Grain, ”Office of Transportation, Agriculture Information Bulletin No 457, WashingtonDC, October 1983

40

I 9

\

SOURCE: U S Department of Agriculture, “The Physical Distribution System for Grain, ” Office of Transportation, Agriculture Information Bulletin No. 457, Washington,DC, October 1983.

MARKETING OF GRAIN

A fundamental principle of the U.S. grainmarketing system is that of self-selection. Pro-ducers, handlers, and users all act in their ownbest interests. Producers select varieties andmake other agronomic decisions with the ob-jective of maximizing profit. Handlers assem-ble, condition, and deliver grain subject to ne-gotiated contract terms with the objective ofmaximizing profit. And users select among dif-ferent qualities available, each with a differentend-use characteristic, also with the objectiveof maximizing profit.

The market for quality characteristics is cen-tral to these decisions. Through this market,price differentials develop that provide incen-tives and disincentives for participants through-

out the system. An important aspect of thisprocess is that premiums and discounts, andtherefore incentives and disincentives, developfor quality characteristics. Bargaining and con-tracting for quality specifications occursthroughout the system, explicitly and implicitly,between buyers and sellers. The premiums anddiscounts built into contracts reflect value tothe participants.

From an operational perspective, farmerstypically sell and deliver grain to local countryelevators for a cash price. Farmers’ decisionson whereto sell their grain are sometimes basedsimply on selling to the closest elevator or theone they have always sold to before. Since themiddle 1960s, however, farmers have increas-

ingly searched for bids at competing elevatorslocated as far as 40 or more miles away. Theysubtract the cost of delivery from the bid priceat each elevator and then deliver to the one fromwhich they receive the highest net bid,

After buying from farmers, the country ele-vator manager, like many farmers, also decideswhen and where to sell the grain to processorsor exporters based almost entirely on the high-est available net bid. Typically, elevators willswitch shipments from one destination to anotherfor a fraction of a cent per bushel. In this highlycompetitive setting, participants are almost cer-tain to adopt innovations in technology, serv-ices, and transportation quickly. Gains that ac-crue to an innovator through cost-reducingprocedures soon become apparent to compet-ing firms through changing prices and a shiftof grain away from their firm. This, in turn,forces neighboring firms to adopt the innova-tion or accept a declining volume of business,

Country elevators typically hedge their grainpurchases from farmers by selling a futures con-tract for a similar quantity on the Chicago Boardof Trade. When country elevators sell theirgrain directly or through a broker to grain proc-essors, exporters, or cash merchandisers, thecountry elevator “lifts” the hedge by buyingback a futures contract for a similar quantityfrom the Chicago Board of Trade, The hedgeprotects the elevator from the large price risksassociated with changes in international grainsupplies and demands. In exchange, the eleva-tor receives the smaller price risk from the“basis’ ’-that is, the difference between theappropriate Board of Trade futures contractprice and the local price of grain. Almost allparticipants in the grain trade—except specu-lators at the Chicago Board—hedge their pur-chases and sales in a similar manner.

The sales contract between the country ele-vator and the processor, exporter, or cash mer-

chandiser typically specifies the terms of thesale. Unless otherwise specified in the contract,title and risk of loss or damage on domesticsales pass to the buyer as follows:

●

●

on f.o.b. (free on board) contracts, at themoment of acceptance of the appropriateshipping document by the courier, andon delivered contracts, when the shipmentis constructively placed or otherwise madeavailable at the buyer’s original destination(2).

Thus, the buyer is responsible for loss or dam-age during transit on f.o.b. sales and the selleris responsible for loss and damage during tran-sit on delivered contracts.

Export sales are typically made directly be-tween exporting firms and importing countrybuyers. In centrally planned countries, thebuyer is a government agency; in most othercountries, the buyer is typically a merchandiseror buying agency who buys grain and resellsit to end users in the importing country.

Most U.S. export sales are made under termsspecified in North American Export GrainAssociation, Inc. (NAEGA) contract forms. In-dustry sources indicate that at least half of U.S.grain export sales are made under terms speci-fied in the NAEGA f.o.b. contract, This con-tract specifies that:

2.

the quality and condition to be final at portof loading in accordance with official in-spection certificates,seller shall retain title to the commodityuntil seller has been paid in full, it beingunderstood that risk of loss shall pass tobuyer at discharge end of loading spout (3).

Therefore, the seller retains title of the grainuntil paid, but the buyer assumes all risk oncethe grain leaves the discharge end of the load-ing spout at the export elevator.

.- -- .

42

G0VERNMENT FARM POLICY

The main purpose of government farm pol-icy is to support farm incomes. Several differ-ent policies and program mechanisms havebeen used over time to achieve this. The twomain programs are the loan rate and deficiencypayment/target price.

Loan Program

The Commodity Credit Corporation (CCC)makes nonrecourse loans to farmers at estab-lished loan rates for a variety of crops, includ-ing corn, wheat, and soybeans. The loan, plusinterest and storage, can be repaid within 9 to12 months and the commodity sold on the cashmarket. If it is not profitable for the farmer torepay the loan, CCC has no recourse but to ac-cept the commodity in full payment of the loan.Commodity loans are frequently referred to asa price support, since national season-averageprices generally do not fall below set loan levels.

ing CCC stocks when prices are high and with-drawing them when prices are low. A secondobjective is to encourage orderly marketing ofcommodities throughout the year by prevent-ing a glut at harvest.

Deficiency Payment/Target Price

In the United States, deficiency payments arepaid to farmers to make up the difference be-tween a price determined to be a politicallyacceptable income level (target price) and thehigher of the average market price or the loanrate. Deficiency payments are made on eachfarm’s actual planted acres and farm programyield. The farm program yield is based on eachfarm’s yield history. Deficiency payments wereinitiated to raise and stabilize farmer incomes,while allowing farm prices to be competitivein the export market.

The major objective of the loan program isto add price stability to the market by releas-

QUALITY CONTROL

The United States Grain Standards Act(USGSA), administered by the Federal GrainInspection Service (FGIS), is the statutory au-thority for developing grain standards. TheDeclaration of Policy contained in Section 2of the USGSA states that it is Congress’ intentthat uniform standards for promoting and pro-tecting grain moving in interstate and foreigncommerce be developed so that grain can bemarketed in an orderly and timely manner andthat trading in grain may be facilitated.

Standards for wheat, corn, barley, oats, rye,sorghum, flaxseed, soybeans, triticale, sun-flower seed, and mixed grain have been promul-gated under the USGSA by FGIS. Each stand-ard consists of numerical grades, i.e., 1, 2, 3,and Sample Grade. Factors are included in eachstandard and maximum limits for each factorhave been set for each grade. The grade for anygiven parcel of grain is based on the factor re-

Program

suits determined during the course of an in-spection.

Section 6 of the USGSA states:

Whenever standards relating to kind, class,quality, or condition are effective . . . no per-son shall in any sale, offer for sale, or consign-ment for sale, which involves the shipment ofsuch grain in interstate of foreign commerce. . . describe such grain as being of any grade. . . other than by an official grade desig-nation.

In other words, the grain standards must beused to describe grain being marketed and sub-sequently used as the basis for all inspections.

Grain is usually inspected each time it is han-dled, i.e., into and out of grain elevators. Asdemonstrated in figure 2-4, this could result inmany inspections if grain moves through eachstep in the marketing chain. Two separate

43

USDA agencies provide and/or license individ-uals to perform inspection services. Privatecompanies not affiliated with either of theseGovernment agencies also provide inspectionservices.

Several authorities regulate inspection re-quirements by specifying who will performthese services and where. In other instances,sales contracts and individual market policiesdictate inspection requirements. In all cases,settlement is based on inspection requirementsas required by individual sales contracts oragreements.

No single national policy exists on inspec-tion requirements on domestic grain. Inspec-tion can be performed by FGIS or an FGIS-licensed inspector, by a private individuallicensed by USDA’s Agricultural Stabilization

and Conservation Service (ASCS) under theUnited States Warehouse Act, by private com-panies, or by grain elevator employees. Threemain forces determine when inspection is re-quired: warehouse licensing requirements un-der the Warehouse Act or individual State ware-house authorities, the Grain Trade Rulespublished by the National Grain and Feed Asso-ciation, and the Uniform Grain Storage Agree-ment administered by ASCS.

Inspection of export grain is mandatory andmust be provided by FGIS or an FGIS-licensedinspector. Even though inspection by FGIS ismandatory, private companies are retained insome cases by the importing country to inspectgrain and represent their interests duringloading.

QUALITY AS AN ISSUE

Today more competitors exist in the inter-national grain market than just 10 years ago.In the 1970s one-third of the world suppliedgrain to two-thirds of the world’s people.Growth in farm trade was dynamic. Today, two-thirds of the world supplies grain to the otherthird. Trade growth is relatively stagnant. Insuch a competitive atmosphere, foreign buyershave become increasingly sensitive about thequality of grain they receive.

During the debate of the Food Security Actof 1985, several Members of Congress ex-pressed growing concern over the quality ofU.S. grain exports. Accusations were made thatgrain elevator operators and export traderswere adultering loads of grain shipped to for-eign buyers; these allegations were supportedby a sharp increase in foreign complaints overquality. On the other hand, traders and han-dlers indicated that they have been shippinggrain according to specifications, and that mostof the buyers’ complaints were motivated bytheir desire to obtain a higher grade of grainat a lower price. Much of the focus of the de-bate concerned the adequacy of present grainstandards, which were developed over 70 years

ago. Critics argue that the grain standards them-selves are partly to blame for customer com-plaints. They claim that the grain standardshave not kept pace with the changing worldmarketplace and are frequently misunderstoodby foreign buyers.

Improving U.S. grain quality—or even theperception of quality—will be much more com-plicated than tinkering with the criteria for de-termining grain grades. Grain is vulnerable toquality deterioration at virtually every stage ofthe production and marketing process. Manyaspects of the interrelatedness of producing,harvesting, storing, handling, and testing grainneed to be understood before any changes inthe system can be contemplated. Understand-ing these relationships is the main goal of thisreport,

First, it is important to clarify what is meantby grain quality. Webster defines quality as anessential character; a degree of excellence; ora distinguishing attribute. In grain, such a def-inition has come to mean a variety of things.Quality grain could be grain free of materialother than grain, or grain not cracked or

44

spoiled, or grain with the proper characteris-tics for its ultimate use. Therefore no one defi-nition of quality applies as it relates to grain.

For the purpose of this assessment, grainquality will be defined in terms of sanitary,physical, and intrinsic characteristics.

● Sanitary quality characteristics refer to thecleanliness of the grain. They include thepresence of material other than grain, dust,broken kernels, rodent excreta, insects,residues, fungal infection, and other non-millable materials. They are essentiallycharacteristics that detract from the over-all value and appearance of the grain.

● Physical quality characteristics are asso-ciated with the outward visible appearanceof the kernal or measurement of the ker-nel. These characteristics could includekernel size, shape, and color; kernel mois-ture; kernel damage; and kernel density,

CHAPTER 2

1. Association of American Railroads, The GrahBook 1986 (Washington, DC: 1987).

2. National Grain and Feed Association, “TradeRules and Arbitration Rules,” Washington, DC,1985.

3. North American Export Grain Association, Inc.,“Free on Board Export Contract—USA/Can-ada,” Washington, DC, 1985.

4. Perry, T. W., “Grain Attributes for the Feed In-dustry,” background paper prepared for the Of-

Intrinsic quality characteristics are criti-cal to the specific use of the grain and canonly be determined by analytical tests. Inwheat, for example, such characteristicsrefer to protein, ash, and gluten content.For corn they could include starch, pro-tein, and oil content, and for soybeans, pro-tein and oil content. These characteristics,along with the specific values, will differ,depending on the grain and its final use.

Using these grain quality definitions, the fol-lowing chapters will consider various aspectsof the quality issue. Chapters 3 through 5 lookat which quality attributes are considered im-portant by buyers of U.S. grain and how viewson what is important change. Chapters 6through 10 analyze the U.S. grain system’s abil-ity to produce and deliver quality grain, andcompares the system with that of other majorgrain exporters. Chapter 11 identifies policy op-tions to enhance the quality of U.S. grain.

REFERENCES

fice of Technology Assessment, U.S. Congress,Washington, DC, 1988.

5. Sauer, D. B., and Converse, H., “Handling and

6

Storage of Wheat: An Assessment of CurrentTechnologies,” background paper prepared forthe Office of Technology Assessment, U.S. Con-gress, Washington, DC, 1988.Wheat Flour Institute, “From Wheat to Flour,”revised cd., Washington, DC, 1981. ●

Chapter 3

Bask Grain ProcessingIndustries

— . . . ---- -

CONTENTS

Page

Grain Processing Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Milling Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Feed Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Soybean Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Basic Processes Used To Produce Grain Products . . . . . . . . . . . . . . . . . . . . . . 50Dry Milling Wheat and Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Wet Milling Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Soybean Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Chapter 3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

FiguresFigure Page

3-1. Flour Grades Obtained in the processor Milling . . . . . . . . . . . . . . . . . . . . 483-2. How Flour is Milled . . . . . . . . . . ....... . . . + . . . . . . . . . . . . . . . . . . . . . 523-3. Production Flow Chart for a Typical Corn Tempering-Degerming

System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533-4. Block Flow Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543-5. Wet-Milling Process Flow Diagram. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553-6. Typical Soybean Extraction Process Flow . . . . . . . . . . . . . . . . . . . . . . . . . . 56

TablesTable ‘ Page

3-1. Active Wheat Flour Capacity by Size Group . . . . . . . . . . . . . . . . . . . . . . . . 483-2. Amount of Corn Used Annually for Dry Milled and Alkaline Cooked

Products in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493-3. Estimated Dry Milling Product Quantities Classified According

to End Use, 1977 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493-4. Typical Proportion of Corn Products From a Degerming Dry Mill . . . . . 493-5. Shipment of Products of the Corn Refining Industry in the

United States, 1983-85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Chapter 3

Basic Grain Processing Industries

Wheat, corn, and soybeans can be used ina variety of ways. They can be used directlyin food for human consumption, as in the caseof wheat flour and soybean oil. Products fromthese grains can also be mixed with other in-gredients, as is the case with corn starch andcorn sugars, to produce a multitude of prod-ucts for human consumption. Wheat and cornare fed directly to animals or mixed with otheringredients to produce balanced diets. Mealproduced during soybean oil extraction is usedas a feed supplement to increase the proteincontent of mixed feed. Byproducts from thevarious processes, such as millfeed producedfrom wheat milling and steep-water concen-trates from corn wet milling, are used by thefeed industry or for industrial use. In addition,new uses for these grains are constantly beingdeveloped–for example, ethanol and biode-gradable plastics produced from corn. There-fore, the physical and intrinsic characteristicsrequired of each grain vary; more important,they must be assessed in terms of their variouscommercial uses.

The basic uses for wheat, corn, and soybeansin the United States are very similar to thosein countries that import these grains. The basicprocesses used to produce wheat flour, cornstarch, soybean oil, and so on are similar every-where. Yet, differences in processing technol-ogies exist, as do cultural preferences for cer-tain types of products. The specific physicaland intrinsic attributes required of finishedproducts for U.S. consumption may thereforediffer from those required for a specific prod-uct in an importing country, even though thebasic processing technology is similar.

When identifying the basic sanitary, physi-cal, and intrinsic requirements for wheat, corn,and soybeans, it is important that the technol-ogy involved with producing the intermediateproduct and the quality required of the finishedproduct be understood. This chapter thus pro-vides basic information on grain processing in-dustries and technologies.

GRAIN PROCESSING INDUSTRIES

Three basic industries–milling (wheat andcorn), feed manufacturing, and soybean proc-essing—process wheat, corn, and soybeans.

Milling Industries

Milling is a process by which kernel compo-nents are separated physically or chemically.Each milling process yields products indica-tive of the grain being milled. Wheat is milledto produce various types of flour. In the caseof corn, dry or wet processes are used, and eachresults in different products and byproducts.

The many products of milling can be useddirectly as food or as ingredients in another typeof food product. Specialty uses of milling prod-ucts have also been developed, along with uses

for the various byproducts. Thus each millingprocess entails almost complete utilization ofall the grain.

Wheat Milling

Wheat is milled to remove the bran and germand reduce the wheat kernel to flour to be usedin various baked and nonbaked goods. Otherproducts of the process, e.g., vital gluten, cansupplement other edible products. Millfeed, thematerial remaining after all the usable flour isextracted, is used by the feed industry eitherdirectly or as a feed supplement.

In general, 100 pounds of wheat will produce72 pounds of flour. The remaining 28 poundsis classified as millfeed (figure 3-1). In large flourmills, 30 or more flour streams of varying com-

47

48

Figure 3-1. - Flour Grades Obtained In the Processof Milling

Short patent flourso%

14%bran

14%shorts

SOURCE: Wheat Flour Institute, “From Wheat to Flour,” revised ed., Washington,DC* 1981

position and purity may be collected, grouped,and merchandised. Combining all the streamsresults in a straight grade flour. The more highlyrefined flour streams are taken off separatelyand sold as patent grade flours. The remain-ing streams contain more bran and germ andare considered clear flour. Raising the propor-tion of this that is included in the patent flourlowers the quality of the remaining clear flour(8).

Flour is used in a variety of U.S. products.Fancy patent flour from soft wheats is used incake products. In the case of hard wheats, shortpatent is used in premium breads, standard pat-ent in featured breads, medium and long pat-ent and straight in bread and rolls, and highgluten flour in hearth breads and Kaiser rolls.Flour types and grades produced in non-U.S.mills vary by mill and by the type of flourproduct.

The Association of American Feed ControlOfficials has defined eight different types ofmillfeeds: wheat bran, wheat feed flour, wheatgerm meal, wheat mill run, wheat middlings,wheat shorts, wheat red dog, and defattedwheat germ meal (9). These products are usedto feed cattle, poultry, and other small animalsas part of a formulated ration.

In 1988, a total of 211 flour mills and 18 Du-rum mills were operating in the United States(5). The basic flour types produced and the dailyproduction capacities from these mills are hardwheat flour (843,606 cwt), soft wheat flour(247,931 cwt), whole wheat flour (40,205 cwt),and Durum flour (96,540 cwt). Table 3-1 pro-vides a breakdown of the 211 hard, soft, andwhole wheat flour mills by size and capacity.Twenty-four percent of mills in the UnitedStates produce 84 percent of all flour.

Dry Milling Corn

The dry milling process requires the millerto remove the corn hull and germ without re-ducing the endosperm. The dry milling andalkaline cooking industries processed about 161million bushels of corn in 1986. Total cornusage has ranged from a low of 154 millionbushels in 1975 to a high of 170 million bushelsin 1982 (table 3-2).

This process produces flaking grits, meals,flours, oil, and other products. Low-fat flakinggrits are the highest valued grit product andare used primarily in breakfast foods. Generalfood use accounted for 1,125 million poundsof dry milling product in 1977, with breakfastcereals using the most (table 3-3).

Table 3-4 shows the yield of primary and alter-nate products produced by dry milling. Break-fast cereal is produced from large flaking grits.Coarse and regular grits are used by the brew-ing industry, while corn meal is made from ma-terial too small to make grits. Corn meal andflour are made from finely ground starchy en-dosperm and used in various baked goods,snack foods, and mixes, but they also have in-Table 3-1.-Active Wheat Flour Capacity by Size Group

(wheat, soft wheat and whole wheat flour)

Hundredweights Number of Active Inactiveper day mills capacity capacity

Under 200 . . . . . . . . . 21 2,371 —200-399 . . . . . . . . . . . 22 6,415 —400-999 . . . . . . . . . . . 17 10,330 —1,000-4,999 . . . . . . . . 61 168,670 —5,000-9,999 . . . . . . . . 48 317,200 –10,000 & over . . . . . . 42 615,750 –

Total 211 1,120,736 —SOURCE: &fi//irrg and Baking News, Milling Directory/Buyers Guide” (Mer-

riam, KS: Sosland Publishing Co., 19SS).

49

Table 3-2.—Amount of Corn Used Annually forDry Milled and Alkaline Cooked Products

in the United States

Dry-milledand alkaline Total U.S.

cooked products corn production Dry-mill shareYeara (million bushels) (million bushels) (in percent)

1975 . . . 154 5,841 2.61976 . . . 155 6,289 2.51977 . . . 158 6,505 2.41978 . . . 155 7,268 2.11979 . . . 158 7,928 2.01980 . . . 160 6,639 2.41981 . . . 162 8,119 2.01982 . . . 170 8,235 2.11983 . . . 164 4,175 3.91984 . . . 160 7,674 2.11985 . . . 161 8,865 1.81986 . . . 161 8,253 2.0‘Year begins Sept. 1,

SOURCE: U.S Department of Agriculture (USDA), Economic Research Service,“Feed Situation and Outlook Report,” FdS-302, Washington, DC, May1987; USDA, Agricu/tura/ Statistics, 1986 (Washington, DC: U S Govern-ment Printtng Office, 1986).

Table 3-3.—Estimated Dry Milling Product QuantitiesClassified According to End Use, 1977

QuantityUse (million Ibs)

Brewing ... , , . . . . . . . . . . . . . . . . . . . . . . . . . . 1,850Food, general . . . . . . . . . . . . . . . . . . . . . . . . . . 1,125

Breakfast cereals . . . . . . . . . . . . . . . . . . . . . 800Mixes (pancake, cookie, muffins, etc.) . . . 100Baking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Snack foods. . . . . . . . . . . . . . . . . . . . . . . . . . 100Breadings, batters, baby foods, etc. . . . . . 75

Fortified Public Law 480 foods . . . . . . . . . . . 485Nonfood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530

Gypsum board . . . . . . . . . . . . . . . . . . . . . . . . 100Particle, fiber board, plywood. . . . . . . . . . . 40Pharmaceuticals, fermentation. . . . . . . . . . 200Foundry binders . . . . . . . . . . . . . . . . . . . . . . 90Charcoal binders. . . . . . . . . . . . . . . . . . . . . . 75Other (paper, corrugating, oil well

drilling fluids . . . . . . . . . . . . . . . . . . . . . . . 25Animal feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,190SOURCE: R.J. Alexander, “Corn Dry Milling” Processes, Products and Applica-

tions,” Corn Chernfstry and Technology, S.A. Watson and P.E. Ram.stad (eds ) (St. Paul, MN American Association of Cereal Chemists,1987),

dustrial uses. Corn oil obtained from dry mill-ing is used in food products and in industrialuses. Hominy feed consists of all the byproductssuch as hull fractions, inseparable mixtures ofhull, endosperm, germ, germ meal, and corncleanings. It is the single largest product soldby dry millers (6).

The number of corn dry mills in the UnitedStates has dropped from 152 in 1965 to only

Table 3-4.—Typical Proportion of Corn ProductsFrom a Degerming Dry Mill (percent)

Product Yield

Flaking grits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Coarse grits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Regular grits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Coarse meal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Dusted meal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Flour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Hominy feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Shrinkage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4SOURCE: O.L. Brekke, “Corn Dry Milling Industry,” Corn” Culture, Processing,

Products, G.E. Inglett (cd.) (West port, CT: AVI Publishing Co , Inc , 1970).

68 in 1986. Of these, 55 had daily capacitiesof under 12,000 bushels, 8 could handle be-tween 12,000 and 36,000 bushels, and 5 couldprocess 36,000 bushels a day (4). The majorityof corn dry mills are located in the midwest-ern and southeastern part of the United States.The 13 largest mills have a combined estimateddaily capacity of 445,000” bushels, about 69 per-cent of the total corn usage for dry milling,

Wet Milling Corn

The amount of corn processed by the wetmilling industry has increased from 155 mil-lion bushels in 1960 to 645 million bushels in1985, accounting for some 12 percent of domes-tic corn use (3).

Wet milling corn produces starch, oil, andsweeteners (table 3-5). Corn starch is used infood and nonfood products by the brewing andbaking industries; in the production of chemi-cals, drugs, and pharmaceuticals; by the paperindustries; and in the production of ethanol.Sweeteners are used by the baking, beverage,canning, and feed industries. Byproducts fromthe wet milling process, including the waterused to steep the corn prior to milling, are usedby the feed industry.

Feed Manufacturing

Livestock and poultry consumed 85 percentof domestic corn during the 1980s. Over thepast 5 years, swine consumed 34 percent of thecorn; beef, 22.3 percent; dairy, 18.2 percent;poultry, 21.3 percent; and other classes of ani-mals, 5.1 percent. Wheat use in feed, on theother hand, is significantly lower. In 1985 wheat

50

Table 3-5.—Shipment of Products of the Corn Refining Industry in the United States, 1983-85 (thousand pounds)

Product 1983 1984 1985

Starch products(includes corn starch, modified starch, and dextrin). . . . . . . . . . . . . . . . 4,018,905 4,182,866 4,225,171

Refinery products(includes glucose syrup, high-fructose corn syrup dextrose,

corn syrup solids, and maltodextrins) . . . . . . . . . . . . . . . . ..........16,005,529 17,921,126 20,341,535High-fructose corn syrup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,707,041 11,502,324 13,920,406

Other products:Corn oil crude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,612 116,142 164,382Corn oil refined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399,919 407,456 382,234Corn gluten feed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,391,069 8,739,730 8,811,476Corn gluten meal

4 1 % p r o t e i n 19,115 20,272 18,50360% protein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383,129 1,635,228 1,609,112

Corn oil meal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,728 29,465 48,585Steepwater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211,937 300,770 282,333Hydrol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208,807 216,558 228,742Ethanol (thousand gallons, 100%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325,000 375,000 425,000

SOURCE: Stanley A. Watson and Paul E. Ramstad (eds), Corn Chemistry and Teclrno/ogy (St Paul, MN: American Association of Cereal Chemists, 1987)

and rye combined accounted for 16.9 percentof total feed grain consumption by livestock.

Wheat and corn can be ground and fed to ani-mals or ground and mixed with other ingre-dients to produce a balanced diet for a particu-lar species. Each animal species has specificdietary requirements; when corn and wheat areused, ingredients must be added to overcomecertain deficiencies in these grains (7). Feedconcentrates, byproducts from wheat and cornmilling processes, soybean meal, animal pro-tein, and other byproducts are mixed with otherfeeds or fed directly to livestock.

The modern feed manufacturer blends ingre-dients using a computer program designed toselect the lowest priced ingredient that is a sig-nificant source of the desired nutrients. Formost nutrients, published average values areused and any deviation from these values willrender the feed deficient and affect animal per-formance.

Soybean Processing

Soybean processing separates oil by solvent-extraction from the nonoil portion of the bean.The soybeans are cleaned prior to beingcracked, hulls are removed, and the crackeddehulled pieces are heated and rolled intoflakes. Crude oil is then extracted from theflakes. After extracting the oil, the flakes canbe toasted and ground into meal products.

The two major products from soybean proc-essing are high-protein meal and oil. Food usesof oil include shortening, margarine, and cook-ing and salad oils; nonfood uses include paint,varnish, resins, and plastics. Soybean meal,which is the largest product produced from thisprocess, is used by the feed industry as a pro-tein supplement unmanufactured feeds.

BASIC PROCESSES USED TO PRODUCE GRAIN PRODUCTS

To fully understand the quality requirements company within the United States and amongof each industry, a general knowledge of the countries around the world.basic technologies used to process the variousgrains is important. Since such technologies Dry Milling Wheat and Cornare similar worldwide, general descriptions areprovided in this section. Modifications of and The basic process used to mill wheat and cornimprovements to these will vary by individual involves cleaning, conditioning, grinding, and

51

sifting. In the case of dry milling corn, degerm-ing also takes place.

Samples are taken from each incoming ship-ment of wheat and corn and tested. The char-acteristics of the wheat determine how it willbe handled, since different types are usuallyblended before milling to meet various flour re-quirements. Figure 3-2 provides a simplifiedwheat milling flowchart, and figure 3-3 is a drycorn milling flowchart. The sequence, number,and complexity of different operations will varysomewhat between mills.

The first step in milling involves cleaning thegrain to remove weed seeds, other grains, andmaterial such as sticks, stones, dirt, and otherdebris. This involves the use of scalpers to re-move large material, aspiration to remove finematerial, and screens. Magnetic separators canalso be used to remove any metal from the grain.

Disc separators are used to catch individualkernels and reject larger or smaller ones, thuscreating a uniform kernel size for milling. Inthe case of wheat, the grain passes through ascourer that throws the kernels against a sur-face, buffing each one and breaking off thebeard. Air currents remove the dust and 1oo-sened particles of the bran coat.

Wheat and corn are conditioned prior to mill-ing. This process, called tempering, involvesadding moisture. Tempering is done to aid inremoving the bran from the endosperm dur-ing grinding, since the outer bran layers arebrittle and must be toughened. Wheat is heldin tempering bins for usually 8 to 24 hours, de-pending on the type of wheat. The percent ofmoisture added, the amount of soaking time,and the temperature differ for soft, medium,and hard wheats. Corn is injected with steamor sprayed with warm water in a temperingchamber. This may occur in one to three stagesbefore the corn finally reaches 18- to 24-percentmoisture. The moist corn is then held in thetempering bin for up to 6 hours, Corn moisture,holding time, and the temperature during con-ditioning are critical for obtaining correct mois-ture gradients in the kernel.

Wheat Milling Process

After tempering, wheat is moved to an ento-leter, which consists of discs revolving at highspeed that crack unsound wheat kernels andseparate them from the grain stream. Wheatflows from the entoleter to the grinding bin,where it is held and metered into the mill itself.

Corrugated rolls are used to break the wheatinto coarse particles. The initial set of these (re-ferred to as the “first break” rolls) break thekernel into very coarse pieces. These rolls canbe adjusted for spacing as well as speed toachieve the exact milling surface desired, de-pending on the type of wheat and its condition.As many as four to six break rolls, with succes-sively smoother surfaces, can be used to fur-ther reduce the kernel into flour.

The coarse pieces of wheat and bran pro-duced from the first break are sifted over a ser-ies of bolting cloths or screens to separate largerfrom smaller particles. Sifters consist of asmany as 27 frames of bolting cloth with meshesthat grow progressively smaller from top to bot-tom. Larger material is shaken off at each stepand the finer flour sifts to the bottom. Thecoarse pieces are sized and carried to the sec-ond set of break rolls. The second break rollsare spaced closer together, producing a finermaterial, This material is then sent to a sifterand the process repeats itself.

Flour is obtained from each break roll andsifting operation. However, fragments of en-dosperm, bran, and germs called middlings re-main after each sifting. These are sent to puri-fiers, where air removes bran particles andbolting cloth is again used to separate coarserfractions by size and quality. The coarse mate-rial is then sent to reduction rolls and againsifted (8).

The process of grinding, sifting, purifying,and reducing is repeated many times until themaximum amount of flour is obtained. Eachprocess results in a separate flour stream. Forexample, flour is produced from each break andmiddlings reduction (first, second, third, etc.).

. -. . . - - -

52

I

[

\

Figure 3·2.-How Flour is Milled (a simplified diagram)

It Starts Here

Elevator-storage and care of wheat.

8"ge \ r11ll klbllllllJl Jillillw.u

~ Product control­chemists inspect and classify wheat, blending is oftE!n done at this point.

Separator­reciprocating scmens remove stones, sticks, and other coarse and fine materials.

Aspirator­air !Currents remove lighter impurities.

Disc separator­barley, oats, cockle, and othl~r foreign materials are removed.

Scourer­bea,ters in scn~en cylinder scour off impurities and rou,ghage.

I (g ~

Magnetic separator­

~ ~ iron or steel articles stay here.

Washer­stoner- high speed rotors circulate wheat and water­stones are removed.

~ Tempering-:; water toughens

• outer bran

Tempering bins

coats for easier separation -softens or mellows endosperm.

Blending-) zs'A b.~nMs tIn types of wheat

- are blended to

Grinding bin

make specific flours.

Entoleter­impact machine breaks and removes unsound wheat.

First break­corrugated rolls break wheat into coarse particles.

SOURCE Wheat Flour Institute, "From Wheat to Flour," revised ed., Washington, DC, 1981.

. ~

( r---Sifter- Broken wheat is sifted through successive

. screens of increasing fineness.

Air currents and sieves

Is a series of purifiers, ~reducing rolls and

sifters.

Purifier

\ x x ) ~eiiii!~~~;~~~I~~d f===~~==~-- ~flli!w~i~

Reducing rolls· smooth rolls:!.-_____ ...... reduce ' 4io. middlings into flour.

Shorts Purifier

A series of purifiers, reducing rolls, and sifters repeat the ,

Flour

Clear flour

i!liilt~trf~j Germ

BleaChing-(p '" flour is Enriching-:::': ___ L-__ -.. matured thiamine,' and color

L.. __ ....,r--_.....;,~,neutral ized

Bulk storage

Sacked­for home ,and bakery use.

Patent flour

kill By m rail

53

I

SOURCE: Richard J Alexander, “Corn Dry Mdling: Processes, Products, and Applcatlons” m Corn ChemLsiYY and Technology (St Paul, MN: American Asaoaatlon of CerealChemists, 1987)

Figure 3-4 shows an example of a milling proc-ess with four breaks. In this case, 12 differentflours are produced–four from each break andeight from each reduction (2).

Flour from each point in the process has dif-ferent characteristics and baking properties andcan be combined in many different ways. Flourfrom the first few middlings separations is themost highly refined. After each additional proc-ess the flour contains more bran and germ. In

large mills, there can be 30 or more separatestreams.

Some mills, in addition to producing flour,produce vital wheat gluten, essentially a pow-dery product containing 75 to 80 percent pro-tein with a bland flavor that is able to absorbwater 2.5 times its dry weight. This product isrelatively simple to produce in that flour iswashed with water and then dried. Vital wheatgluten is used as a supplemental ingredient in

54

1BKrolls

2 B Krolls

3 B Krolls

4 B Krolls

Breaking Purified

SOURCE: Canadian International Grams institute, “Gram& Oil seeds, Handling, Mar-keting, Processing,- 3rd ad, rewed, Winnipeg, MB, Canada, 1982

breadmaking especially by commercial bakers.It is added to a dough that requires additionalprotein to develop properly.

Corn Dry Milling Process

Determination is the process by which thecorn kernel is broken apart into endosperm,germ, and pericarps (6). Although a few com-panies use impact mills or granulators, about90 percent of the dry mills producing flakinggrits use the Bean degermer almost exclusively.This is a cone-shaped mill with rows of smallconical protrusions that rotate within an outerconical surface that also has protrusions. Thisprocess causes corn-on-corn rubbing to removegerms, pericarps, fines, and a few small gritscalled through-stock. Tail-stock consists primar-ily of grits that are free of attached germs andpericarps.

After degerming, through-stock is normallywetter than the tail-stock and must be dried.This is accomplished by rotary steam-tubedryers that quickly heat the products to 140 to160 ‘F. After drying, the stock is cooled to 90to 100 ‘F.

Tail-stocks consisting of large pieces of en-dosperm are aspirated to remove loose peri-carps. The material is then sieved. Materialpassing through a 3.5 mesh/inch sieve but not

a 5 mesh/inch sieve is considered large flakinggrits. Material that will not pass through the3,5 mesh/inch sieve is recycled for retemper-ing and degermination. Whatever passedthrough the 5 mesh/inch sieve is then sievedusing 6 and 10 mesh/inch sieves. Anything pass-ing through the 6 but not the 10 mesh/inch sieveis considered brewers and coarse grits. If thereare any attached germs or pericarps, the mate-rial will be roller-milled.

Several sets of corrugated rollers are used ina manner similar to that described in the wheatmilling section. Smaller numbers of corruga-tions are used for the first break to producecoarse grits. Second and third break rolls usemore corrugations, resulting in more finelyground products. After grinding, the materialis sifted and then aspirated to remove freepericarps.

Through-stock containing germs is aspiratedto remove loose pericarps and then sent to grav-ity tables for separation. The germ fractions canthen be dried and sent to an oil expeller or sol-vent oil extraction process to recover the crudeoil. The germ meal remaining after the crudeoil has been extracted is used in hominy feed.The material other than the germ separatedwith the gravity table is recycled back to thefirst break rolls to be processed with thetail-stock.

Wet Milling Corn

Corn is first cleaned by screening and aspi-ration to remove dust, chaff, cobs, stones, andso on, similar to the processes described fordry milling (figure 3-5). After cleaning, the cornis moved on to the refining process (3).

As in dry milling, corn must be tempered.This is accomplished by placing the grain insteeping tanks and adding water containing sul-furous acid that has been heated to 125 ‘F. Cornis held in steeping tanks for 22 to 50 hours. Dur-ing this time the water is recirculated and re-heated.

Water is used to transport the corn from thesteeping tanks to holding bins. It is screenedoff prior to the wet corn being placed in the

55

Figure 3-5. - Wet-Milling Process Flow Diagram (showing equipment arrangement for the separation of the majorcomponents --steepwater, germ, fiber, gluten, and cornstarch)

Multiple-stage fiber wash system

I I I

Multiple-stage starch washing system

SOURCE: James B Mag, “Wet MWng: Process and Products” In Corn Chamisby and Technology (St

bin, From the holding bin the corn moves into The material remaining in the flotation tanksgrinders that break up the kernel. Water is again is screened to separate fiber from starch andadded and the material is transported to flota- gluten. About 30 to 40 percent of all the starchtion tanks, where the germ floats to the top. The is separated at this stage. The remaining mate-germs are recovered, washed, and screened. rial is further processed, washed, and screenedThe recovered germs are then dried and fur- to separate more starch and gluten. Starch isther processed to remove the oil, purified by washing and can be dried, treated

56

Figure 3-6.—Typical Soybean Extraction Process Flown

Seed Preparation

I

Meal grinder

Meal to-storage

*Alternative - A crown desolventizer toaster dryer cooler may be furnished in Ileu of desolventizer toaster and dryer cooler

SOURCE’ Crown Iron Works, 1987.

57

with chemicals to modify the starch to meetvarious requirements, and then processed forits various uses. The gluten is also washed andthen dried, forming corn gluten meal.

Corn steepwater is processed to remove thecorn solubles by evaporation. The corn solu-bles removed during this process are useddirectly by the feed industry or in the produc-tion of corn gluten feed. The corn germ mealremaining after the oil is extracted is also usedin the feed industry,

Soybean Processing

Soybeans are first cleaned to remove dust,weed seeds, stones, and so on. Then they arecracked by means of corrugated rolls andmoved to the dehuller (l). The hulls are drawnoff between the first and second cracking rollsby dehulling equipment, using air suction (fig-ure 3-6). Screens remove any portions of theseeds that have been removed with the hulls.Seed hulls are transported to a grinder, wherethey can be kept separate or recombined withthe extracted meal.

The moisture content of the soybeans beingprocessed must be between 9.5 and 10 percent.The cracked soybeans are first heated to about140 ‘F and then proceed through a series ofrollers, where they are flaked, Following a cool-ing period, the flakes are exposed to continu-ous extraction with hexane to reduce the oilremaining in the soybean flakes to 0.5 percentor less. The extracted flakes are then trans-ported to dryers and held at 208 ‘F for approx-imately 10 minutes to drive off any residual hex-ane. From the dryer, the flakes are moved toa toaster for a 90-minute toasting at 220 ‘F.Then the flakes are cooled and moved to thegrinder for reduction into the ultimate soybean-meal-sized product.

Crude soybean oil extracted from the mealcontains impurities that can affect its qualityand must be removed. The various processesused to remove objectionable impurities are de-signed to minimize the effect on the finishedoil and the loss of oil.

CHAPTER 3 REFERENCES

1.

2,

3.

4.

Brekke, O. L., “Edible Oil Processing-Introduc-tion,” Handbook of Soy Oil Processing and Uti-lization, D.R. Erickson, et al. (eds.) (St. Louis,MO, and Champaign, IL: American Soybean As-sociation and the American Oil Chemists’ Soci-ety, 1980).Canadian International Grains Institute,“Grains & Oilseeds Handling, Marketing, Proc-essing,” Zrd cd., revised, Winnipeg, MB, Can-ada, 1982.May, J. B., “Wet Milling: Process and Products,”Corn Chemistry and Technology, S.A. Watsonand P.E. Ramstad (eds.) (St. Paul, MN: Amer-ican Association of Cereal Chemists, 1986).h4iZling and Baking News, “1987 Milling Direc-tory/Buyers Guide” (Merriam, KS: Sosland Pub-lishing Co., 1987).

5. Milling and Baking News, “1988 Milling Direc-tory/Buyers Guide” (Merriam, KS: Sosland Pub-lishing Co., 1988).

6. Paulsen, M. R., “Grain Quality Attributes forCorn Dry Milling,” background paper preparedfor the Office of Technology Assessment, U.S.Congress, Washington, DC, 1988.

7. Perry, T. W., “Grain Attributes for the Feed In-dustry,” background paper prepared for the Of-fice of Technology Assessment, U.S. Congress,Washington, DC, 1988,

8. Pomeranz, Y., and Schellenberger, J. A., BreadScience and Technology (Westport, CT: AVIPublishing Co., Inc., 1971).

9, wheat Flour Institute, “From Wheat to Flour, ”revised cd., Washington, DC, 1981.

88-378 - 89 - 3

Chapter 4

Quality Attributes Important toDomestic and Overseas

Industries

-- .—— —— ——. . . . — -—.

CONTENTS

Page

Survey Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Quality Measurement as Evidenced by Official Standards. . . . . . . . . . . . . . . . 62

Wheat Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63Corn Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Soybean Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Important Attributes for Wheat, Corn, and Soybeans . . . . . . . . . . . . . . . . . . . . 67Wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72Soybean Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Uniformity Between Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79Decrease In Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Important Attributes Not in Standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Uniformity Between Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Chapter preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

FiguresFigure Page

4-1. Adequacy of Grain Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634-2. Importance of Wheat Standard Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 654-3. Use of Wheat Standard Factors in Contracts . . . . . . . . . . . . . . . . . . . . . . 66

Importance of Corn Standard Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67Use of Corn Standard Factors in Contracts . . . . . . . . . . . . . . . . . . . . . . . 68Importance of Soybean Standard Factors . . . . . . . . . . . . . . . . . . . . . . . . . 69Use of Soybean Standard Factors in Contracts,.. . . . . . . . . . . . . . . . . . . 69Protein Range and Flour Uses of Major Wheat Classes . . . . . . . . . . . . . 70Importance of Wheat Attributes and/or Tests—Domestic Millers . . . . . 73Importance of Wheat Attributes and/or Tests—Overseas Millers . . . . . . 74Additional Tests for Inclusion in the Wheat Standards. . . . . . . . . . . . . . 75Importance of Corn Attributes and/or Tests . . . . . . . . . . . . . . . . . . . . . . . 77Importance of Soybean Attributes and/or Tests . . . . . . . . . . . . . . . . . . . . 78Importance of Uniformity Between Shipments . . . . . . . . . . . . . . . . . . . . . 79Importance of Uniformity on Wheat Standard Factors . . . . . . . . . . . . . . 80Importance of Uniformity on Corn Standard Factors . . . . . . . . . . . . . . . 81Importance of Uniformity on Soybean Standard Factors . . . . . . . . . . . . 82

Tab lesTable Page4-1. Countries Included in OTA Wheat Survey, by Region . . . . . . . . . . . . . . . 624-2. Regional Tastes and Preferences for Wheat-Based End Products

and Their Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704-3. Importers Preference for Wheat by Type and Source . . . . . . . . . . . . . . . . 714-4. Quality Characteristics of U.S. No. 2 or Better DNS, 15 Percent

Protein, 1975-86 Shipments to Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834-5. Quality Characteristics of U.S. No. 2 or Better HRW, 11 Percent

Protein, 1981-86 Shipments to Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Chapter 4

Quality Attributes Important toDomestic and Overseas Industries

Grain quality, or more importantly the attri-butes that constitute it, is as varied as the num-ber of grains and commercial processes usedto produce finished products. Quality attributescan vary from perfect kernels used for seed tohighly damaged corn kernels used in fuel pro-duction, and may entail cleanliness, health, andsafety concerns, Add to this cultural differencesand consumer preferences, and what may beconsidered high quality for one use may be con-sidered poor quality for the next.

Other than concerns for conditions affectingsanitary quality, no one set of physical or in-trinsic characteristics fully describes quality forany one particular grain. Physical and chemi-cal differences exist between varieties as a re-sult of heredity, soil, and climatic conditions.Further, in the case of wheat, intrinsic qualitycharacteristics vary from one type to the next.Even in the case of flour, however, the way theflour will ultimately be used has an impact onthe intrinsic wheat attributes required for highquality.

Quality attributes (sanitary, physical, and in-trinsic) are measured using a multitude of spe-cific tests designed to provide information onthe various characteristics of grain. The mostcommonly used tests for sanitary and physicalquality are those contained in the OfficialUnited States Standards for Grain, These in-clude measurements for conditions such as ker-nel density; moisture; damaged, broken, or splitkernels; impurities; and other visual defects,In addition to tests provided for in the grainstandards, each industry, along with individ-ual companies within each industry, has eitherdeveloped or uses internationally accepted test-ing procedures. These determine values for in-trinsic characteristics that ultimately influencedecisions on the grain’s suitability for a par-ticular process and product. Even the use ofany one of these tests varies by industry andis influenced by the type of product produced.Beyond tests for quality attributes, uniform or

consistent quality within and between ship-ments can also influence buyers’ perceptionsof quality, The ultimate test for quality is howwell the grain performs in actual use.

As processing technologies, increased num-bers of uses, and more sophisticated methodsof using grain become available, specializationin specific quality attributes becomes more crit-ical. This is especially true in the case of wheat.Flour quality is more narrowly defined for mill-ing than for baking because milling is morestandardized around the world, even thoughit varies by level of development within a coun-try. A multitude of baking technologies existsthat are becoming more sophisticated, thus re-quiring flour quality to be more closely regu-lated. This places increased importance on theattributes required of wheat, in addition to theirconsistency within and between shipments.

Since what constitutes physical and intrin-sic quality varies according to processor (wheatmiller, corn dry and wet miller, soybean proc-essor, and feed manufacturer), the importantattributes of each were examined for this assess-ment. OTA identified the quality attributes im-portant to each industry as they relate to eitherthe attribute itself or the test used to measurethe attribute. The important attributes are out-lined later in this chapter, The levels at whichthese attributes affect the quality of a finishedproduct are not discussed since the valuesplaced on the attribute by an individual indus-try have an impact on ideal quality, For exam-ple, protein quantity and gluten strength areimportant attributes in wheat. However, highprotein and strong gluten are required by mill-ers to produce a high-protein, strong flour forbread, whereas low-protein and weak glutenare required for low protein, weak flour usedto produce cakes and pastries, To aid furtherin this evaluation, surveys of domestic and over-seas processors were conducted to identify theimportant attributes and/or tests.

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OTA developed questionnaires for each do-mestic industry. The 1987 Milling Directorywas used to identify wheat milling and corndry and wet milling companies. Additional in-put was provided by their trade associations.Questionnaires then were sent to 119 wheatmillers, 64 corn dry millers, and 6 corn wetmillers—all the companies in each industry.Since there are thousands of feed manufac-turers in the United States, the American FeedManufacturers Association assisted in identify-ing 190 major companies to be surveyed. TheSoybean Processing Directory, along with helpfrom the National Soybean Processor Associa-tion, was used to identify 19 major soybeanprocessing companies.

Responses were received from 57 out of 117wheat milling companies (48 percent), 24 outof 64 corn dry milling companies (38 percent),4 out of 6 corn wet milling companies (75 per-cent), 83 out of 190 feed manufacturing com-panies (44 percent), and 10 out of 19 soybeanprocessing companies (53 percent).

An overseas wheat questionnaire was also de-veloped by OTA and administered in 18 import-ing countries (table 4-I) by the U.S. Wheat Asso-ciates. All but one country responded. Corn andsoybean overseas questionnaires were not de-veloped since work was already being done inthis area by other research groups, which pro-vided data to OTA for use in this analysis.

In order to gather information on the impor-tance of the specific attributes and/or tests iden-tified, five basic areas were examined:

1. the attribute’s and/or test’s importance,2. how the attribute and/or testis used when

purchasing grain,

Table 4-1.—Countries Included inOTA Wheat Survey, by Region

Far East EuropeChina Soviet UnionJapan NorwayIndonesia The NetherlandsTaiwan ItalyRepublic of Korea FrancePhilippines United Kingdom

Middle East SwitzerlandEgyptIndia

South AmericaVenezuelaBrazilChileSOURCE: Office of Technology Assessment, 1989,

3. whether quality has decreased as evi-denced by any of the tests,

4. whether grain standards adequately reflectconditions important to their operationsand if more tests are needed, and

5. the test’s importance as it pertains to uni-formity between shipments.

Respondents were asked in several questionsto rank each attribute and/or test using a scaleof 1 to 7. Four was defined as being neither im-portant nor unimportant, 5 as slightly impor-tant, 6 as moderately important, and 7 as ex-tremely important. Yes and no questions werealso used and respondents were asked to iden-tify the attributes and/or tests of particular con-cern when answering yes. The information col-lected in this survey only represents therespondents’ concerns at the time it was admin-istered, a point worth noting given the fluctua-tions in perceptions about important quality is-sues in these industries.

QUALITY MEASUREMENT AS EVIDENCEDOFFICIAL STANDARDS

Official grain standards developed for wheat, standards and the ways they are implementedcorn, and soybeans establish certain factors are discussed in ch. 8.) Each standard coversused to describe a level of quality and provide areas such as grain type; bulk density; degreea basis for marketing grain. (The need for grain of cleanliness; amounts of broken, shriveled,

63

or split grains; moisture content; amounts ofimpurities including damaged kernels; andother areas relating to the sanitary and physi-cal condition of grain. The levels for each fac-tor used to define a grade, as well as their im-pact on the finished product, have causedconsiderable debate regarding the usefulnessof the factors and the limits established by thegrades themselves. This assessment does notaddress the specific limits used to define grades,but merely focuses on the factor’s importance.

Much research has been done on determin-ing the impact that physical properties such astype, color, kernel hardness and size, and de-gree of kernel damage have on various prod-ucts. For example, kernel damage resultingfrom heating, storage and field fungi, frost, andimmaturity have been shown to affect flour andoil quality. Factors such as excessive moisturecontent, the presence of molds or mycotoxins,the amount of material other than grain, liveinsects, and rodent excreta are not desired inany product.

All industries desire grain with good bulkdensity and safe moisture levels that is cleanand free from impurities and otherwise fit forprocessing. These factors in various ways arecovered by the grain standards. Domestic in-dustries as well as overseas wheat millers wereasked if the factors contained in the standardsadequately reflect conditions important to theiroperation and whether additional tests areneeded (figure 4-I).

For the three corn industries (wet millers, drymillers, and feed manufacturers), the degree towhich the factors contained in the corn stand-ard reflects conditions important to their oper-ations varies; only the dry millers see a needfor additional tests. Only half the domestic soy-bean processors considered the soybean stand-ard adequate, but few respondents indicatedthe need for additional tests.

Domestic wheat millers generally felt thewheat standard does not adequately reflect con-ditions important to their operations. The needfor additional tests is evident from responsesfrom domestic and overseas respondents, butis slightly higher for overseas millers even

Figure 4-1. -Adequacy of Grain Standards

—FEED DRY WET SOY WHT-D WHT-O

Industries

Standards :,:,adequate

ABBREVIATIONS:FEED = Feed manufacturers WHT-D = Wheat millersDRY = Dry millers (domestic)WET = Wet millers WHT-O = Wheat millersSOY = Soybean processors (overseas)

SOURCE: Office of Technology Assessment, 19S9

though they consider the wheat standards moreadequate. This section discusses each grainstandard along with information gathered fromthe survey on the importance of the specificfactors covered by each standard.

Wheat Standard

Wheat is grouped according to growing habit,color, and kernel texture. The major distinc-tion, however, is its growing season. Winterwheats are planted in the fall and harvested inthe summer; spring wheats are planted in thespring and harvested in the fall. Both winterand spring wheats produce grain that is red,white, or yellowish amber in color. Wheat is

.

64

also grouped according to whether it is hardor soft. Spring and winter types tend to behigher in protein and are principally used inbread flour, Softer wheats, white and red types,contain lower protein and are milled into flourfor cakes, cookies, pastries, and crackers. Du-rum wheat, which is very hard, is milled intosemolina for pasta products (9). These generalgroupings have resulted in the establishmentof seven basic classes: Hard Red Spring, HardRed Winter, Soft Red Winter, White, Durum,Unclassed, and Mixed.

The wheat standard, in addition to establish-ing classes based on the above criteria usingvisual examination, provides information on:

• test weight,● moisture,● heat-damaged kernels,● damaged kernels total,● foreign material,● shrunken and broken kernels,● total defects,● contrasting classes, and. wheat of other classes.

Also measured are the number of live insects;the amount of dockage (material other thanwheat that can be removed by scalping, aspir-ation, and screens); special conditions such asthe presence of garlic and ergot; and the amountof stones, metal, glass, and toxic weed seeds.

Respondents were asked in the domestic sur-vey to rank the importance of each factor asit pertains to producing four major flour types:hard wheat flour, whole wheat flour, soft wheatflour, and semolina. In addition to evaluatingwhether flour type has a bearing on a factor’simportance, the company’s daily production ca-pacity was also factored in. The cutoff pointfor capacity was set at 5,600 daily hundredweight (cwt) capacity. The number of responsesin the 5,600-cwt-and-over range accounted forapproximately 83 percent of the total U.S. dailymilling capacity.

All factors currently contained in the wheatstandard were ranked as 5 (slightly important)or higher by domestic millers, Each factor’s im-portance was similar across flour types and

milling capacities, with the highest ranking be-ing for live insects. Overseas millers also rankedall factors as 5 or higher. They were slightlyless concerned than domestic millers about liveinsects, contrasting classes, and wheat of otherclasses. For the remaining factors, overseasmillers generally regarded the factors as beingslightly more important, especially in the caseof dockage (figure 4-2).

Information was collected on whether thewheat standard is used when purchasing wheatand if contracts are based on grade only, gradeand factor, or only factors (figure 4-3). Eventhough specific factors included in contractsvary, 79 percent of the domestic respondentsindicated they use the wheat standard and in-clude limits for one or more of the factors intheir contracts. This compares with 34 percentfor overseas respondents, Significant differ-ences were found between milling capacitiesfor domestic respondents regarding using thewheat standard for contracting, Those with5,600 cwt and over capacity indicated thatlimits for some or all factors are always in-cluded in contracts,

Corn Standard

Corn is classed based on color without regardto growing habit. With color serving as the ba-sis for classing, three classes have been estab-lished: Yellow, White, and Mixed. In additionto visually classing based on color, the cornstandard provides information on:

● test weight,● moisture,● heat-damaged kernels,● damaged kernels total, and● broken corn and foreign material,

The number of live insects, along with stonesand toxic weeds, are also included,

Unlike the wheat standard, the corn stand-ard is used by several different industries,Therefore, domestic questionnaires where sentto dry millers, wet millers, and feed manufac-turers,

All industries ranked the factors as 5 (slightlyimportant) or higher except for class in the wet

65

Figure 4-2.-importance of Wheat Standard Factors

M HT DKT FM SHBN DEF CCL WOCL DKG INS

Factors

Domestic Overseasmillers millers

ABBREVIATIONS:M = Moisture FM =TW = Test weight SHBN =HT = Heat damage DEF =DKT = Damaged kernels (total) CCL =

SOURCE. Office of Technology Assessment, 1989

Foreign material WOCL = Wheat of other classesShrunken and broken kernels DKG = DockageTotal defects INS = Live insectsContrasting classes

milling and feed manufacturer responses (fig-ure 4-4), Differences exist across all industriesregarding the importance of certain factors, butwet millers consistently ranked factors as moreimportant than the other two,

Industries differ on which factors have limitsincluded in contracts. All wet millers indicatedthey use the corn standard and include limitsin their contracts for one or more of the fac-tors. This compares with 75 percent for the drymilling and feed manufacturers. Except for bro-ken corn and foreign material, the frequencywith which individual factors are included incontracts varies (figure 4-5), Moisture was men-

tioned the most often by feed manufacturers,whereas heat-damaged kernels was contractedfor the most often by dry millers and damagedkernels total was included by wet millers.

The data on the importance to overseas in-dustries of factors contained in the corn stand-ard were obtained from surveys not conductedby OTA. This resulted in only one commonarea—contracting—between the OTA domes-tic questionnaire and overseas responses. Re-sponses by the three overseas industries indi-cated that limits for moisture, test weight,damaged kernels total, and broken corn andforeign material are included in contracts by

. . .

66

Figure 4-3. - Use of Wheat Standard Factors in Contracts.

—

—

M TW HT DKT FM SHBN DEF WOCL DKG

FactorsI

Domestic Overseasmillers millers

ABBREVIATIONS:M= Moisture FM = Foreign material WOCL = Wheat of other classes

TW = Test weight SHBN = Shrunken and broken kernels DKG = DockageHT = Heat damage DEF = Total defectsDKT = Damaged kernels (total) CCL = Contrasting classes

~ Percentages are based on number of responses that use standards for contracting

SOURCE. Office of Technology Assessment, 1989

wet millers and feed manufacturers. Moisture,damaged kernels total, and live insects are in-cluded in contracts by dry millers.

Soybean Standard

Soybeans are classed based on color, and twoclasses have been established: Yellow andMixed. In addition to visually classing basedon color, the soybean standard provides infor-mation on:

● test weight,● moisture,● heat-damaged kernels,

●

●

●

INS = Live insects

damaged kernels total,foreign material, andsplits.

JINS

The number of live insects, garlic, stones, andtoxic weeds are also included.

Several factors were ranked below 5 (slightlyimportant) by domestic soybean processorsclass, test weight, and splits (figure 4-6), Thetest for live insects did not rank as the mostimportant test, as it did for wheat and corn,since live insects are not normally a problemin soybeans. Heat-damaged kernels received thehighest ranking for soybeans.

67

Figure 4-4.--Importance of Corn Standard Factors

CL M TW HT DKT

Factors

ABBREVIATIONS:CL = Class DKT =M = Moisture BCFM =TW = Test weight INS =HT = Heat damage

SOURCE: Office of TechnologyAssessment, 1989

Damaged kernels (total)Broken corn and foreign materialLive insects

All soybean processors indicate that they usethe soybean standard and set limits in their con-tracts for one or more factors. Moisture andheat-damaged kernels were identified as beingcontracted for the most often (figure 4-7).

As with the corn standard, information onthe importance to importers of factors con-

IMPORTANT ATTRIBUTES FOR

Many factors influence grain value and whatis considered quality either by affecting whole-someness or by affecting the yield and qualityof the finished product. Factors such as pesti-cide residue, molds, mycotoxins, toxic weed

n

INS

tained in the soybean standard was obtainedfrom another survey. Moisture and foreign ma-terial were ranked as most important by over-seas soybean processors, while moisture, testweight, and damaged kernels total were iden-tified as having limits included in contracts.

WHEAT, CORN, AND SOYBEANS

seeds, insect fragments, and soon affect a prod-uct’s wholesomeness. Yield and quality can beaffected by variety; kernel size, shape, color,and hardness; foreign material, dust, and stems;and intrinsic properties such as protein, oil, and

I

68

Figure 4-5. -Use of Corn Standard Factors in Contracts ●

—

—

CL M TW HT DKT BCFM IN

Factors

ABBREVIATIONS:CL = Class HT = Heat damageM = Moisture DKT = Damaged kernels (total)TW = Test weight BCFM = Broken corn and foreign material

a percentage are based on number of responses that use standards for contracting

SOURCE: Office of Technology Assessment, 1989

starch. This section examines wheat, corn, andsoybeans for these type of factors.

Wheat

The ultimate test for wheat quality is whetherit will bake an acceptable product. Proteinquantity and quality, the amount of alpha amy-lase, and dough handling properties (water ab-sorption, mixing time, and extensibility) alongwith other tests are used as indicators of qual-ity and impact on baking quality. Except forDurum, the differences between the amount ofprotein required to produce certain productsand the range of protein between classes re-

INS = Live insects

veal the inability of any one wheat class to beperfectly suited-for any one finished product(figure 4-8). This is also true for wheats pro-duced in various regions of the world. Thisforces millers to blend different wheat typesin order to produce the flour quality desired.Not only can different types be blended, butimporters blend different U.S. wheat classeswith wheats imported from other countries (ta-ble 4-2).

Millers blend wheats in order to produceflour that can meet the variety of demands ofvarious finished products. In many instancesflour produced from the various flour streams

7.0

6.5

4.5

4.0

Figure 4-6. - Importance of SoybeanStandard Factors

CL M TW HT DKT FM SPL INSFactors

ABBREVIATIONS:CL = Class DKT = Damaged kernels (total)M = Moisture FM = Foreign materialTW = Test weight SPL = SplitsHT = Heat damage INS = Live insects

SOURCE: Office of Technology Assessment, 1989

(see ch. 3) is also blended to meet the specificquality demands placed on flour. Informationon protein quantity and quality along with otherimportant quality characteristics such as theamount of alpha amylase (as measured by thefalling number test), dough handling proper-ties (as measured by farinograph, mixograph,extensograph, and alveograph tests), and baketest results are all used to determine the quan-tities of each wheat type that will go into theblend.

To produce a hearth bread, spring and win-ter/spring mixes maybe required. Spring, win-ter/spring mixes, and winter wheats are usedfor buns and rolls. Pan bread uses winter, win-ter/spring mixes, and spring wheat. Cakes andpastries may use red and white soft wheat, low-

69

Figure 4-7.-Use of Soybean Standard Factorsin Contractsa

CL MFactors

ABBREVIATIONS:CL = Class DKT = Damaged kernels (total)M = Moisture FM = Foreign materialTW = Test weight SPL = SplitsHT = Heat damage INS = Live insects

a Percentages are M on number of respaw.esthat use standards forcontractmg

SOURCE: Office of Technology Assessment, 1989

protein winter, and blends of other wheat types.In addition, U.S. winter wheats with variousattributes from various regions may be blendedwith spring wheats. Blending wheats from vari-ous origins, types, and intrinsic characteristicsallows millers to produce flour to meet vari-ous flour specifications, maximize the millingoperation, and produce uniform, consistentflour quality.

To illustrate this point further, the OTA over-seas questionnaire collected information on theprimary reason for importing wheat. Five basicreasons were suggested:

1. to supplement the volume of domesticwheat,

70

Figure 4-8.-Protein Range and Flour Uses of Major Wheat Classes

——

Flour uses●

●

Used to blend With weakerwheats for bread flour

Whole wheat bread,hearth breads

Egg noodles (U.S.),macaroni, and otheralimentary pastes

White bakers’ bread,bakers’ rolls

Waffles, muffins, quickyeast breads, all-purposeflour

Noodles (Oriental), kitchencakes and crackers, piecrust, doughnuts andcookies, foam cakes, veryrich layer cakes

SOURCE: U S Oepariment of Agriculture, Economk Reaaarc h Service, Wheat Background for 19S5Farm LeglalatlM,. A@cu)tural lnfomuUion Bulletin No 4S7, September 19S4

Table 4-2.—Regional Tastes and Preferences for Wheat= Based End Productsand Their Requirements

Averaged requiredMajor products protein level Types of

Region consumed (in percent) wheat used

Fast East Asia Pan bread 12-14 Hard redSteamed products 10-11 Medium-hardNoodles 9-11.5 Medium-hard whiteChappatis 9-1o Soft to medium-

hard whiteMiddIe East and Bread Durum, medium-

North Africa hard white and redCouscous, pasta, 9-11 Durum

bulgur, fereekEurope White pan bread 10-12 Hard red, domestic soft

Rolls 9.5Pasta Durum

Latin America Breads 10-14 Hard red, domestic softPasta Durum

SOURCE: Canada Grains Council, Wheats of the World (Winnipeg, MB, 1979).

to supplement quality for blending with As more than one reason may apply to a par-domestic wheat, ticular country, respondents were asked to in-equalities are not available in domestic dicate all that applied, The results indicate thatwheat, 51 percent import wheat to supplement volume,as feed, and 32 percent to supplement quality, 47 percentlocal wheat is not available. because quality is not available in domestic

—

71

wheat, 6 percent for feed, and 13 percent be-cause local wheat is not available.

Importers’ preferences for bread, soft, andDurum wheats from all countries exportingthese types were also evaluated. Each respond-ent was asked to rank their preference assum-ing that price, transportation, and other relatedcosts were equal. Overall the United States didnot rank as first choice, even though some re-spondents did identify it as first choice, Theaverage for all responses is shown in table 4-3.

When identifying important wheat attributes,the demands placed on flour quality must beconsidered. Flour is used to produce a largenumber of products under various baking con-ditions. Advances in milling technology haveenabled millers to increase the water absorp-tion of flour so bread yield can be increased.Flour protein levels can also be modified by airclassification. This process separates low-protein flour for use in cakes and pastries fromhigh-protein flour that can be used to blend withother flours (2). In addition to traditional lea-vened bread, many countries produce a vari-ety of unleavened products using weaker flourand chemical leavening.

Flour is classified according to strength, rang-ing from strong to weak (7). Strong flours haverelatively high protein and elastic gluten andcan be baked into loaves that have good crumb,grain, and texture. They require considerablewater to make a dough that produces a high-yield bread. Doughs from strong flours haveexcellent handling properties. They are not crit-ical in their mixing and fermentation proper-ties, and yield good bread over a wide rangeof baking conditions.

Weak flour, on the other hand, has relativelylow protein, weak gluten, and low water ab-sorption; it yields dough of inferior handlingquality for bread baking, and mixing and fer-mentation requirements are critical. Weakflours, therefore, require less mixing and fer-mentation than strong flours and can be usedto bake biscuits, crackers, and pastry. Inter-mediate flour strengths can be considered all-purpose flours for use in traditional householdapplications.

Baking technologies also influence flourattributes, Chemical and mechanical dough de-velopment processes require lower flour pro-tein and weaker gluten than straight (tradi-tional) dough processes. Since flour can be usedfor home use, in small bakeries, and in highlymechanized plants, knowledge of intrinsicwheat attributes along with how the flour willbe baked are required in order to produce aquality flour.

Since no one set of values—high v. low pro-tein or strong v. weak flour-meets the needsof all products, the survey questionnaire wasused to determine which attributes and/or testsare important to wheat millers here and abroad,No effort was made to determine levels sincethey vary by product, country, and baking tech-nology.

Traditionally, wheat class has been used asa quality indicator. Spring wheats have tradi-tionally been high-protein, strong gluten wheatsused to make products requiring strong floursand for blending with other wheat types. Softwheats, which are lower in protein, are usedin products requiring weak flour. Domestic andoverseas millers were asked if “wheat class is

Table 4“3.—lmporters Preference for Wheat by Type and Source

Bread-type wheats Soft-type wheats Durum wheats

1. Canadian spring 1. Australian standard white 1. Canadian2. Australian prime hard 2. U.S. white 2. Us.3. U.S. spring 3. U.S. soft red 3. Argentinean4. U.S. hard red winter 4. Australian soft white 4. EC5. Australian hard 5. EC soft6. Argentinean hard7. EC soft8. U.S. soft redSOURCE OTA Overseas Wheat Survey, 1988

72

I

I

I

I

II

I

a good indicator of wheat quality”; both groupsindicated that wheat class alone is not a satis-factory indicator of quality.

In an effort to identify the importance of vari-ous attributes and/or tests to domestic millers,the survey listed 28 attributes and/or tests notcurrently found in the wheat standard. As inthe wheat standard analysis, the 28 items wereevaluated by flour type and an analysis wasmade between capacities for domestic millers.

Other than attributes and/or tests not nor-mally used for a particular flour type, no sig-nificant differences were found between flourtypes. Slightly more variability between flourtypes was evident in the under-5,600-cwt cate-gory, and overall rankings varied on some itemsbetween capacities (figure 4-9). Eight items (pro-tein, mycotoxins, alpha amylase, falling num-ber, pesticide residue, hidden/dead insects,flour protein, and bake test) were ranked as 6(moderately important) by the over-5,600-cwtcapacity companies. Only mycotoxins, pesti-cide residue, and hidden/dead insects wereranked as 6 or higher by the smaller companies.

In the overseas questionnaire, only 22 attrib-utes and/or tests were included. Most respond-ents did not rank the items using the 1 to 7 scalebut merely checked the important ones. Theimportance ranking is therefore based on thefrequency with which they responded.

Significant differences exist between items,but more importantly between regions of theworld (figure 4-10). For example, protein andalpha amylase were considered the most im-portant by Far East countries. This compareswith protein, the falling number test, starchdamage, and flour yield in the European Com-munity (EC). Overall, the Far Eastern countriesranked the majority of the items as more im-portant, followed by EC, South America, andthen the Middle East.

The frequency with which the 28 items wereincluded in domestic contracts was also exam-ined. Overall, 70 percent of those responding(but 88 percent of the 5,600-cwt-and over cate-gory) indicated that one or more items wereincluded in contracts. Five items (protein, hid-

den/dead insects, pesticide residue, falling num-ber, and farinograph) were identified as beingcontracted for most frequently.

Only 14 of the 22 attributes and/or tests listedin the overseas questionnaire are included incontracts. Sixty-two percent of those respond-ing indicated that protein is specified in eachcontract. Of the remaining 13 items, 23 percentindicated they specify limits for one or more.The falling number test and radiation rankedfirst (45 percent) followed by the farinographtest (36 percent), pesticide residue (18 percent),and mycotoxins (18 percent).

Both groups indicated additional tests areneeded, as demonstrated by their responses onwhether the wheat standard adequately ad-dresses their needs. The falling number test andpesticide residue were the main items identi-fied by both groups (figure 4-11). Domesticmillers also marked hidden/dead insects for in-clusion. Overseas millers identified tests fordough handling properties (farinograph, exten-sograph, alveograph, and amylograph) for in-clusion, while domestic millers did not indi-cate any preference for these tests even thoughthey often contract for the farinograph.

Corn

Three main industries account for the ma-jority of corn usage and each one has differentrequirements. The following is a brief discus-sion of the important attributes for each in-dustry.

Corn Dry Milling

Several factors affect dry milling perform-ance, yields, and the quality of products derivedfrom dry milling. These factors include:

●

●

●

●

●

●

corn hardness;drying temperature;stress cracks;broken corn and foreign material;kernel size and shape; andwholesomeness or freedom from molds,aflatoxin, insects, rodent excreta, toxic sub-stances, odors, and so on.

73

Figure 4-9. --lmportance of Wheat Attributes and/or Tests - Domestic Millers

PRO KWT HD SZ MYCO ASH P/s AMLY FN SED RES

I(H/D) SD GLT F/CL P/FL A/FL FAR ALV MIX BT

Attributes/tests

Particle size SD = Starch damage EXT = ExtensographAlpha amylase GLT = Wet/dry gluten ALV = AlveographFalling number F/CL = Flour color MIX = MixographSedimentation P/FL = Flour protein BT = Baking testPesticide residue A/FL = Flour ashInsects (hidden/dead) FAR = Farinograph

——

74

9 0

8o

70

3 0

2 0

1

1 10

0

Figure 4-10.—lmportance of Wheat Attributes and/or Tests — Overseas Millers

PRO KWT HD SZ MYCO ASH P/s AMLY FN SED RESI

I

I

I

SD GLT F/CL P/FL A/FL YD FAR

Attributes/testsALV MIX AMY

ABBREVIATIONS:PRO = Protein P/S = Particle size GLT = Wet/dry gluten EXT = ExtensographKWT = 1,000 kernel weight AMLY = Alpha amylase F/CL = Flour color ALV = AlveographHD = Hardness FN = Falling number P/FL = Flour protein MIX = MixographSZ = Kernel size SED = Sedimentation A/FL = Flour ash AMY = AmylographMYCO = Mycotoxins RES = Pesticide residue YD = Flour yieldASH = Wheat ash SD = Starch damage FAR = Farinograph

SOURCE: - of Technology _ment, 1989

-. . -

75

Figure 4-11 .–Additional Tests for Inclusion in Wheat Standards”

10

0

50

40

30

20

10

0

ABBREVIATIONS:PRO = ProteinHD = HardnessMYCO = MycotoxinsASH = Wheat ash

FN = Falling number ALV = AlveographSED = Sedimentation AMY = AmylographRES = Pesticide residue RAD = Radiationl(H/D) = Insects (hidden/death) BT = Baking test

GLT = Wet/dry gluten EXT = Extensograph ‘

a Percentages a re based on number of responses that indicated additional tests are neededSOURCE: Office of Technology Assessment, 1989

76

Corn hardness can be defined as the quan-tity of vitreous or horny endosperm containedin a corn kernel relative to the amount of flouryendosperm. Corn hardness is almost entirelya result of corn genotype, but to a limited ex-tent nitrogen, soil fertility, and drought cancause hardness to increase. Dry millers needa hard corn in order to produce high yields oflarge flaking grits and have even developed ap-proved lists of corn hybrids.

Excessive drying temperatures can lead tocorn kernel stress cracking, which has deleteri-ous effects on dry milling yields. The stresscrack formation in the horny endosperm iscaused by rapidly drying kernels with heatedair. Stress-cracked corn not only causes in-creased breakage during handling, but also re-duces flaking grit yields since stress-crackedflakes produce smaller grits when undergoingcooking and pressing through flaking rolls.

Broken corn and foreign material is detrimen-tal to dry milling and no attempt is made to usethis material in the milling process. It is re-moved prior to milling and diverted to hominyfeed. Broken kernels affect the tempering proc-ess because they absorb moisture faster thanwhole kernels. Kernel size, shape, and color alsoaffects the dry milling process. Round kernelsare more difficult to degerm than flat kernels,and the same is true of small kernels comparedwith large ones. Color is important to produc-ing corn chips because the alkali cooking proc-ess modifies the color. In some cases white andyellow kernels are blended to produce thedesired color (5).

Corn Wet Milling

Since the wet milling process involves steep-ing with elevated temperatures and sulfurdioxide, fungi and other micro-organisms aredestroyed (4). Many of the other wholesome-ness factors such as insects, mycotoxins, andother debris are not found in the food productafter processing but can be found in the feedbyproducts if they are present in the corn be-ing processed.

High levels of broken corn and foreign ma-terial, breakage susceptibility, and damaged

kernels are not desired by the wet milling in-dustry. Broken corn must be removed prior toprocessing because it affects steeping. Highlevels of mold-damaged kernels affects germrecovery and crude oil quality. Drying temper-ature, as discussed in the dry milling section,causes stress cracking and increases breakagesusceptibility, which affects starch recovery.

Feed Manufacturing

All feed grains are highly palatable to live-stock. Corn has the lowest protein content ofall feed grains. However, the protein in all feedgrains has a relatively low biological value formonogastric animals due to a deficiency of oneor more essential amino acids. When formulat-ing diets for poultry and swine, therefore, sup-plemental protein that adds sufficient aminoacids to balance this deficiency must be added.Also, feed grains are extremely low in calciumcontent and in phosphorus, and deficient in sev-eral essential vitamins (6). Therefore, these defi-ciencies must also be overcome with supple-ments in various degrees, depending on the typeof animal to be fed (3).

Properly balanced diets containing whole-some ingredients are necessary for efficientlivestock production. In addition, variations inimportant intrinsic properties (protein, crudefiber, total digestible nutrients) from publishedvalues are detrimental to efficient feed pro-duction.

Survey Results

The OTA questionnaire sent to dry millers,wet millers, and the feed manufacturers listed19 attributes and/or tests not currently foundin the corn standard (figure 4-12). With the ex-ception of starch and oil content in the wetmillers’ rankings, all three industries rankedhidden/dead insects, mold, mycotoxins, andpesticide residue as the most important items.Breakage susceptibility, stress cracks, and hard-ness, as expected, were ranked higher by wetand dry millers than by feed manufacturers.Protein is considered more important by wetmillers and feed manufacturers. Oil and starchcontent were considered very important by wet

77

n

6.5I

n

ABBREVIATIONS:VAR = Variety BSUB =l(H/D) = Insects (hidden/dead) RES =MD = Mold A D T =MYCO = Mycotoxins FFA =SZ = Kernel size PRO =

SOURCE: Office of Technology Assessment, 1989

Breakage susceptibility OIL = Oil FIB = FiberPesticide residue ST = Starch ASH = AshArtificial drying temperature ONUT = Other nutrients STC = Stress cracksFree fatty acid CL = Color HD = HardnessProtein AGE = Age

78

1

I4II

I

I1I

,

I

millers, but only marginally important by drymillers and feed manufacturers.

Seventy-one percent of the wet and dry mil-lers and 36 percent of feed manufacturers in-dicated that limits for one or more of the 19items were being included in contracts. Fiveitems (hidden/dead insects, mold, mycotoxins,pesticide residue, and stress cracks) were foundmost often in contracts by all industries.

Data from the survey of importers only in-volved the attributes and/or tests that are in-cluded in contracts. Stress cracking was theonly one identified by dry millers as havinglimits included in contracts, whereas five items(protein, fiber, starch, oil, and mycotoxins) weremarked by wet millers being included. Over-seas feed manufacturers specify limits on fouritems (protein, fiber, energy, and carbohydrates)in contracts.

Soybean Processing

The quantity and quality of soybean proteinand oil are important attributes to processorssince the main products are high-protein mealsand oil. Crude soybean oil contains oil-insolubleand oil-soluble impurities that must be removed(1). Oil-insoluble impurities include seed frag-ments, excess moisture, and waxy fractions thatmake oil cloudy. Oil-soluble impurities such asfree fatty acid, phosphatides, and protein frac-tions are detrimental to the oil’s flavor, odor,color, and stability.

Of 16 attributes and/or tests not currently con-tained in the soybean standard, soybean proc-essors ranked protein, oil, oil stability, and neu-tral oil loss as most important (figure 4-13). Nolimits for any of the 16 items listed, however,are included in contracts.

For overseas soybean processors the impor-tance of items and which items have limits in-cluded in contracts were evaluated. Protein, oiland free fatty acid were considered the mostimportant and the only items for which limitsare included in contracts.

Figure 4-13. - Importance of Soybean Attributes‘and/or Tests -

I-IN

Attributes/tests

ABBREVIATIONS:PRO = Protein FAC = Fatty acid contentOIL = Oil PL = Phosphorous levelFFA = Free fatty acid PV = Peroxide valueRES = Pesticide residue L = Lipoxygenasel(H/D) = Insects OS = Oil stability

(hidden/dead) HP = HydratableLN = Lovibond number phosphatidesIN = Iodine number NOL = Neutral oil lossIC = Iron content CC = Chlorophyll content

SOURCE. Office of Technology Assessment, 1989

. . . .

79

UNIFORMITY BETWEEN SHIPMENTS

Delivering uniform, consistent quality be-tween shipments has been identified by over-seas and domestic industries as important. U.S.industries have more flexibility in handling ashipment that is not up to specification, sincethe grain can be resold or blended. Many over-seas industries cannot do this since they havelittle or no inventory and each time a shipmentarrives they must deal with the quality received.

The need for uniform or consistent qualitywas documented at the International U.S.Wheat End Use Quality Conference in June1986 by Dr. Seiichi Nagao from the NisshinFlour Milling Co., Ltd., Japan, and by EmmaB. Laguio, United Flour Mill Co., Ltd., Bang-kok, Thailand. Dr. Nagao stated:

The low reliability of U.S. Hard Red Springwheat is caused by wide fluctuation both inmilling and in baking performance, and itseems to me that the quality fluctuation amongcargoes is getting larger and more serious,. . . Besides ash content, almost all quality itemsincluding test weight, moisture, protein, flour,yield, the analytical data of flour and bakingperformance vary very widely. As we are afraidof giving our large customers trouble in theirautomated baking process by blending a largeamount of U.S. Hard Red Spring wheat thatvaries widely in its baking absorption anddough handling property, it is thought to be asupplementary material usable only with No.1 Canada Western Red Spring wheat which ismore stable in quality (8).

Emma Laguio echoed Dr. Nagao but addedthat consistency in quality is foremost in theAsian miller’s mind.

Bakers in our region require consistency ofquality in flours they use. Flour millers also re-quire consistency of quality in the wheat theywill mill. I realize that the attainment of con-sistent or even near-consistent wheat qualityat any given time calls for more than just theacts of mortals. However, there are factorswithin the producer’s control which can anddo contribute to quality consistency in wheat.This, I believe is particularly important to Asianmillers who are a captive market, so to speak,in the sense that we are obligated to mill what-ever wheat we receive (8).

When identifying important grain quality at-tributes, the system’s ability to consistently de-liver these attributes can be as big a factor asthe attribute itself, as evidenced by these im-porters’ statements. The qualities desired aregenerally available, given the information col-lected from the OTA survey. But quality fluc-tuations between shipments can affect purchas-ing decisions and the ul t imate use of aparticular grain.

As part of the OTA survey, each industry wasasked to rank the importance of uniformity be-tween shipments (figure 4-14). Domestic andoverseas wheat millers ranked the importanceof uniformity between shipments as 6 (moder-ately important) or higher. The wet millers con-

Figure 4-14. - Importance of UniformityBetween Shipments

FEED DRY WET SOY WHT-DIndustries

ABBREVIATIONS:FEED = Feed manufacturers WHT-D = Wheat millersDRY = Dry millers (domestic)WET = Wet millers WHT-O = Wheat millersSOY = Soybean processors (overseas)

SOURCE: Office of Technology Assessment, 1989

80—

sidered uniformity more important than theother corn industries did, while the soybeanprocessors ranked it as 5 (slightly important).

When evaluating future attributes/and or testsfor grain, the ability to deliver uniform, con-sistent quality must be addressed, The impor-tance of delivering consistent quality is evidentwhen examining the factors currently con-tained in each standard. Significant concernexists for these factors regarding uniformity(figures 4-15, 4-16, and 4-17).

For wheat, moisture, test weight, dockage,and live insects stand out as being critical fac-tors regarding uniformity between shipmentsto overseas buyers. With the exception of dock-

age, these factors are also considered the mostimportant in terms of uniform it y between ship-ments to domestic millers.

Except for moisture, the importance of eachfactor varies by individual corn industry, Mois-ture was considered the most important factoroverall in terms of uniformity, followed bydamaged kernels total.

The importance of uniformity between ship-ments for attributes and/or tests not currentlyfound in the grain standards again reflects theindustries’ concerns, Protein content, in thecase of wheat, was considered the most impor-tant by domestic and overseas millers. Over-seas millers showed more concern for dough

Figure 4-15.-lmportance of Uniformity on Wheat Standard Factors

100 ‘

3o1-

—M TW HT FM INS

ABBREVIATIONS:M = Moisture FM = Foreign material DKG = DockageTW = Test weight SHBN = Shrunken and broken kernels INS = Live insectsHT = Heat damage DEF = Total defectsDKT = Damaged kernels (total) WOCL = Wheat of other classes

SOURCE: Office of Technology Assessment, 1989

81

Figure 4-16.-lmportance of Uniformity on Corn Standard Factors

—CL M TW HT DKT BCFM INS

FactorsWet ❑ Drymilling ❑m i l l i n g Feed

ABBREVIATIONS:CL = Class DKT =M = Moisture BCFM =TW = Test weight INS =HT = Heat damage

SOURCE: Office of Technology Assessment, 1989

Damaged kernels (total)Broken corn and foreign materialLive insects

handling tests than did domestic millers, butdomestic millers ranked the bake test secondin importance. Except for mycotoxins, the threecorn industries ranked the items differently,

DECREASE

Each industry was asked in the OTA surveyif quality has decreased as evidenced by anyof the factors contained in the grain standardsor for the attributes and/or tests listed. The do-mestic and overseas wheat millers indicatedthat they have perceived a decline in quality.

Sixty-six percent of the overseas respondentsindicated that they have experienced a decrease

with concerns being evident for the items ofparticular interest to each. Soybean processors,on the other hand, did not identify any itemas being overly important.

in wheat quality. Five factors (moisture, heatdamage, foreign material, wheat of otherclasses, and dockage) were identified as hav-ing gotten worse. Domestic millers also identi-fied these factors, but ranked four others (testweight, damaged kernels total, shrunken andbroken kernels, and live insects) as the areasshowing declines. Both groups indicated thatquality has decreased in terms of protein and

82

Figure 4-17. - Importance of Uniformity on Soybean‘Standard Factors

the falling number test. Overseas millers alsoidentified wet/dry gluten and the farinographtest, whereas domestic millers expressed con-cerns for the presence of hidden/dead insects.

The results from the survey regarding de-creases in wheat quality were also reported byEmma Laguio (tables 4-4 and 4-5), who pointedout at the International End Use Quality Con-ference that test weight, kernel size, and ker-nel hardness have been decreasing over time.Lower water absorption and shorter mixingtimes of spring wheat, as demonstrated by thefarinograph test, have been evident since 1983.Further, it was reported that 1985 and 1986 ar-rivals show significantly lower water absorp-tion and mixing time as compared with theshipments of the 1970s, and that flour doughsare softer and slightly more extensible. Theseconditions, in his opinion, indicate lower glu-ten strength.

Factors

ABBREVIATIONS:M = Moisture FM = Foreign materialTW = Total weight SPL = SplitsHT = Heat damage INS = Live insectsDKT = Damaged kernels (total)

SOURCE: Office of Technology Assessment, 1989

FINDINGS AND CONCLUSIONS

All processors desire grain that is free frompesticide residues, molds, mycotoxins, toxicweed seeds, and insects and insect fragments,and that otherwise is in a sanitary condition,The importance, however, of physical and in-trinsic quality characteristics can vary by grainand by processor and are influenced by thegrain’s ultimate use. Each industry, domesticand overseas, defines quality in terms of theareas important to its market, as the OTA sur-vey of buyers confirmed.

Standards

Domestic and overseas wheat millers con-sider the factors contained in the wheat stand-

ard important, but indicated a need for addi-tional tests. However, overseas millers generallyconsider the factors contained in the standardas slightly more important. Live insects wereconsidered the most important factor by both.Domestic millers include in their contractslimits for the factors contained in the standardmore often than overseas millers, who purchaseon grade only with limits.

Overall each corn industry considers the fac-tors contained in the standard as important.Differences exist between industries regardingthe importance of each factor, but wet millersconsistently ranked the factors higher than drymillers and feed manufacturers did, Differences

83

Table 4-4.—Quality Characteristics of U.S. No. 2 or Better DNS, 15 Percent Protein, 1975-86 Shipments to Thailand

1975 1978 1981 1983 1984 1985 1986

Wheat characteristics:1,000 kernel weight (g) . . . . . . . . . . . . . . . 29.2 31.4 32.4 32,1 31.9Grain hardness (o/o) . . . . . . . . . . . . . . . . . . — 13.2 12.4 11.5 12.3Moisture (o/o) . . . . . . . . . . . . . . . . . . . . . . . . 12.1 12.5 13.0 11.8 11.2Ash ( 0 /0) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50 1.52 1.53 1.64 1.63Protein (o/o, as is M. B.) . . . . . . . . . . . . . . . 15.2 15.1 14.7 15.0 15.0Protein (o/o, 12.0°/0 M. B.) . . . . . . . . . . . . . . 15.2 15.2 14.9 15.0 14.9

28.315.211.6

1.5915.014.9

27.415.212.3

1.6015.215.2

Flour characteristics (milled in Buhler Mill MLU-2020):Flour extraction (o/o) . . . . . . . . . . . . . . . . . — 73.0Ash ( 0 /0) . . . . . . . . . . . . . . . . . . . . ., . . . . . . 0.53 0.41Protein (o/o, 13.0°/0 M. B.) . . . . . . . . . . . . . . 14.5 14.5Wet gluten (%) . . . . . . . . . . . . . . . . . . . . . . 40.2 38.5Amylogram peak viscosity (BU) . . . . . . . . – 620

Farinogram:Absorption (o/o) . . . . . . . . . . . . . . . . . . 69.3 68.8Peak time (min.) . . . . . . . . . . . . . . . . . 14.5 11.5Mixing tolerance index (BE) . . . . . . . 25 15Stability (min. ). . . . . . . . . . . . . . . . . . . 20 26Calorimeter (BU) . . . . . . . . . . . . . . . . . 87 90

Extensogram:45 minutes

Extensibility (mm.).... . . . . . . . . . . . . . 232 240Resistance . . . . . . . . . . . . . . . . . . . 240 265Area (sw. cm.) . . . . . . . . . . . . . . . . . . . . . 127 150

135 minutesExtensibility (mm.)... . . . . . . . . . . . . . . 181 214Resistance . . . . . . . . . . . . . . . . . . . . . . . . 480 345Area (sq. cm.) . . . . . . . . . . . . . . . . . . . . . 176 171

73,50.42

13.837.5545

73.40.51

14.238.2728

74.10.48

14.038.0869

72.60.46

14.238.0805

70.60.46

14.239.5500

67.511.5152692

66.08.0

201677

65.49.5

202085

64.39.5

252589

64.98.5

252089

244275161

262256174

242324188

235299186

236320192

218320209

246283218

255382222

235386230

240400217

SOURCE U S Wheat Associates, “U S Wheat End Use Quality Conference,” published proceedings, Washington, DC, June 1986

Table 4-5.—Quality Characteristics of U.S. No. 2 or Better HRW, 11 Percent Protein, 1981-86 Shipments to Thailand

1981 1982 1983 1984 1985 1986Wheat characteristics:1,000 Kernel weight (g) . . . . . . . . . . . . . . . 30.5 31.7 31.6 31.7Grain hardness (o/o) . . . . . . . . . . . . . . . . . . 11.4 11.8 12.5 14.2Moisture (o/o) . . . . . . . . . . . . . . . . . . . . . . . . 10.0 10.6 11.2 11.1Ash (0/0) 1.50 . . . . . . . . . . . . . . . . . . . . . . . . 1.53 1.47 1.51 1.55Protein (o/o, as is M. B.) . . . . . . . . . . . . . . . 11.9 12.0 11.8 12.2Protein (o/o, 12,0°/0 M. B.) . . . . . . . . . . . . . . 11.6 11.8 11.7 12.1Flour characteristics (milled in Buhler Mill MLU-202):Flour extraction (o/o) . . . . . . . . . . . . . . . . . 72.0 71.0 72.3 75.6Ash (o/o) 0.53 . . . . . . . . . . . . . . . . . . . . . . . . 0.40 0.41 0.46 0.46Protein (o/o, 13.0°/0 M. B.) . . . . . . . . . . . . . . 10.8 10.7 10.8 11.1Wet gluten (o/o) . . . . . . . . . . . . . . . . . . . . . . 28.6 29.6 29.8 31.2Amylogram peak viscosity (BU) . .......655 790 760 800

Farinogram:Absorption (o/o) . . . . . . . . . . . . . . . . . . 63.3 63.2 62.0 63.5Peak time (min.) . . . . . . . . . . . . . . . . . 4.0 6.5 5.25 6.0Mixing tolerance index (BU) ... , . . . 20 30 30 25Stability (min. )........ . . . . . . . . . . . 15 13 12 16Calorimeter (BU) . . . . . . . . . . . . . . . . . 71 68 66 74

Extensogram:45 minutes

Extensibility (mm.)... . . . . . . . . . . . . . . 200 207 200 215Resistance . . . . . . . . . . . . . . . . . . . 265 350 290 320Area (sw. cm.) . . . . . . . . . . . . . . . . . . . . . 116 156 146 142

135 minutesExtensibility (mm.).... . . . . . . . . . . . . . 189 203 207 204Resistance . . . . . . . . . . . . . . . . . . . . . . . . 318 390 331 382Area (sq. cm.) . . . . . . . . . . . . . . . . . . . . . 130 178 158 175

SOURCE U S Wheat Associates, “U S Wheat End Use Quallty Con ference,” published proceedings, Washington, DC June 1986

31.216.111.4

1.4412.011.9

28.916.510.9

1.5511.811.6

71.90.43

10.930.0

600

73.40.44

10.520.4

700

62.16.5

251569

60.1

101751

219 185310 330144 122

84

also exist between industries concerning whichfactors are included in contracts. The factorshaving limits included in contracts by domes-tic processors are similar to those of their over-seas counterparts, however.

A number of factors currently in the soybeanstandards are not considered important byprocessors. These include class, test weight,and splits. Moisture and heat damage are con-sidered the most important factors by domes-tic processors, while overseas processors con-sider moisture and foreign material as im-portant.

Important Attributes Not inStandards

No one set of quality attributes—e.g. high v.low protein or strong v. weak flour-meets thedemands for all wheat products. Domestic mil-lers do agree, however, that at least eight fac-tors are important no matter what the end-pro-duct may be: protein, mycotoxins, alpha amylase,falling number, pesticide residue, hidden/deadinsects, flour protein, and bake test. Overseasmillers differed by region of the world in theirresponse to which attributes are important. Nev-ertheless, four factors were common across allregions: protein, pesticide residue, falling num-ber, and dough handling tests. The Far East-ern countries considered these factors to be ofgreater importance than other regions of theworld.

Domestic and overseas wheat millers indi-cate that additional tests are needed. Fallingnumber and pesticide residue were the itemsmost often identified by both groups. Overseasmillers also specified dough handling tests suchas farinograph and alveograph as important ad-ditional tests, while domestic millers indicatea strong preference for a test for hidden/deadinsects.

Determining which attributes are importantfor corn is industry-dependent except in areas

regarding wholesomeness, health, and safetyconcerns. Quality attributes vary by require-ments of each corn industry, Items such asstress cracking, breakage susceptibility, andhardness are more important to wet and drymillers than to feed manufacturers. Attributessuch as pesticide residue, mold, mycotoxin, andhidden/dead insects are important to all in-dustries.

Commonality of important quality attributesis more evident in soybeans than in wheat orcorn between domestic and overseas proces-sors. The most important attributes are protein,oil, and free fatty acid content.

Uniformity Between Shipments

The grain system’s ability to deliver the im-portant quality attributes consistently is as im-portant as the attributes themselves. Qualityfluctuations between shipments significantlyinfluence purchasing decisions. Problems withuniformity are especially acute in wheat andcorn. Uniformity between shipments will be-come more important as processing technol-ogies become more sophisticated and more end-uses are found for each grain.

In wheat, overseas millers indicate that thefactors contained in the wheat standard thatare most affected by lack of uniformity are mois-ture, test weight, dockage, and live insects. Withthe exception of dockage, uniformity in thesefactors was also considered the most impor-tant by domestic millers. Protein, dough han-dling tests, and the bake test were also identi-fied as items of concern.

In corn, moisture was the most important uni-formity concern, followed by damaged kernels,Mycotoxin was considered important by allthree corn industries, with other concerns be-ing expressed for items of particular interestto each industry.

85

1.

2.

3.

4.

5.

CHAPTER 4Brekke, O. L., “Edible Oil Processing-Introduction,” Handbook of Soy OiZ Processingand Utilization, D.R. Erickson et al. (eds,), ch.5 (St. Louis, MO and Champaign, IL: AmericanSoybean Association and the American OilChemists Society, 1980).Canada Grains Council, “Wheat Grades forCanada—Maintaining Excellence,” Winnipeg,MB, Canada, 1985.“Feed Marketing and Distribution,” 1987 Refer-ence Issue, Feedstuffs 69(31):6, 1987.May, J. B., “Wet Milling: Process and Products,”Corn Chemistry and Technology, S.A. Watsonand P.E, Ramstad (eds.) (St. Paul, MN: Amer-ican Association of Cereal Chemists, 1986).Paulsen, M. R,, “Grain Quality Attributes for

REFERENCESCorn Dry Milling,” background paper preparedfor the Office of Technology Assessment, U.S.Congress, Washington, DC, 1988.

6, Perry, T. W,, “Grain Attributes for the Feed In-dustry,” background paper prepared for the Of-fice of Technology Assessment, U.S. Congress,Washington, DC, 1988,

7. Pomeranz, Y., and Shellenberger, J. A., BreadScience and Technology (Westport, CT: Publish-ing Co., Inc., 1971).

8, U.S. Wheat Associates, “U.S. Wheat End UseQuality Conference,” published proceedings,Washington, DC, June 1986.

9. Wheat Flour Institute, “From Wheat to Flour, ”revised cd,, Washington, DC, 1981.

Chapter 5

The Changing Role of

. . . . .

C o n t e n t s

Page

Quality in the Market Place . 89Changing Nature of Markets–A Case Study in Wheat. . . . . . . . . . . . . . . . . . . 91

Background 91Product Consumption and Wheat Importation . . . . . . . . . . . . . . . . . . . . . . . . 91The Dynamics of the Wheat Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Analysis Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Case Study Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Chapter 5 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

TablesTable Page5-1.

5-2.

5-3,

5-4,5-5.5-6.

5-7.

5-8.

Export Classes of Wheat Categorized by Characteristics andCountry of Origin ● . . . . . . . . ● . . . , . . 0 . . 92Required Protein Levels for Wheat-Based End Products andProtein Content of U.S. Wheat Classes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Regional Tastes, Preferences, and the Requirementsfor Wheat-Based End Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Wheat Consumption in Selected Countries, 1984/85 . . . . . . . . . . . . . . . . . 94Market Shares of Imported Wheat Classes, 1984/85. . . . . . . . . . . . . . . . . . 95Correlation of Imported Wheat Class Market Shares, Income, andDomestic Wheat Production, 1984/85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96Average Growth Rates of Wheat Class imports by Country, Region,and World, 1961/62-84/85 ● ****.. .**.*.** ● **..*.. ● ******. ● *,.,..* * 97Simulated Changes in Wheat Class Market Shares, 1985/95 . . . . . . . . . . . 98

Chapter 5

The quality concerns of each industry usingwheat, corn, and soybeans are identified inchapter 4. Wheat, by its very nature, is the mostcomplex of the three grains in terms of defin-ing quality because of the vast array of prod-ucts and processing technologies involved.Quality requirements differ not only by typeand individual product, but between mills usingthe same type wheat to produce flour for thesame type of product. Corn is somewhat lesscomplex in that fewer products are producedand quality concerns can be traced to the indi-vidual industries, Nevertheless, the quality re-quired by one corn industry is not necessarilyimportant to others, so decisions regarding cornquality must be assessed in terms of majorusage. Quality concerns of different industriesusing wheat are somewhat offset by the factthat different types of wheat exhibit differentproperties. Soybean quality is the least complex,because the vast majority of soybeans are usedto produce oil and meal,

The varying quality requirements exhibitedby these industries, especially for wheat, high-light the need for the United States to becomemore aware of individual industry require-ments if the goal is to produce and deliver high-quality grain, The Nation has developed thereputation as a consistent supplier for any typeand quality of grain desired; to become a sup-plier of high-quality grains, it must becomemore quality-conscious and develop a reputa-tion as a supplier of high quality. The U.S. grainindustry must understand the specific require-ments of its customers in order to deliver thequality requested and must become more awareof the dynamic issues surrounding the quali-ties required by the marketplace. Areas suchas technological advancements in processingtechnologies, Government policies, customerpreference, development of new finished prod-ucts, and consumption patterns all affect cus-tomers’ purchasing decisions and their defini-tion of quality at any one point in time.

QUALITY IN THE MARKETPLACE

High quality, as defined by the specific at-tributes required by each industry, is constantlychanging. But the ability to produce and de-liver high-quality grain can mean more thanjust providing grain that meets specific test re-sults. What constitutes high quality from thecustomer’s point of view can range from spe-cial handling (low-temperature drying of corn)to the uniformity of specific attributes withinand between shipments. The importance of thelatter was evident in the OTA survey resultsand in the statements by overseas wheat millers(ch. 4).

The OTA survey specifically asked respond-ents to rank the importance of uniform qualitybetween shipments. Domestic and overseas re-

spondents considered uniformity as being im-portant even though they differed on which at-tributes were more critical. Overseas millersalso indicated the importance of uniformity:Canada and Australia stress uniformity be-tween shipments and this often accounts forwheats from these countries being consideredfirst choice.

Even identifying the important quality attri-butes for specific industries is not simple. Sometraditional measuring technologies are not ac-cepted by all industries producing the sameproduct. In the OTA survey, tests for rheologi-cal properties (extensograph, alveograph, andmixograph) were considered more importantby overseas wheat millers than by domestic

89

88-378 - 89 - 4

. . . .

90

ones. Though overseas millers considered thesetests key, their importance varies by region ofthe world. Paul Clark, for example, has indi-cated that in trying to identify and establish softwheat flour quality characteristics, ArchwayCookies, Inc., found not only that companieshad different quality requirements but thatdifferent companies keyed on different analyti-cal tests for performance parameters (3).

As processing technologies become more so-phisticated through automation or as moredemanding qualities are required for finishedproducts, the need for specific attributes withinwell-defined ranges becomes more critical.Technologies for baking bread, rolls, and sim-

1 ilar products in large bakeries have advancedsignificantly. While bread can be made by handusing low-protein wheat, large dough mixers

I and other equipment found in large automated! bakeries place too much stress on the low-1 protein flour, which results in unacceptable fin-, ished products and the need for different at-

tributes. The way the flour will be baked playsa very important role in determining the spe-cific values for the various attributes required.,

In addition to advances in processing tech-nologies, technological advances in other areascan have an impact on the quality required bydifferent industries. For many years, high-protein wheats have been blended with low-protein wheats to strengthen flour. More re-cently, vital wheat gluten, a product contain-ing 75 to 80 percent protein, has been used asa flour fortifier. The recent expansion of vitalwheat gluten production is the result of tech-nological improvements in breadmaking, pop-ulation growth, and increasing urbanization insome countries. Vital wheat gluten in these na-tions has become more attractive than higherpriced, imported wheat.

Many countries striving to become self-suf-ficient in wheat production are producing vi-tal wheat gluten to fortify their locally produced

low-protein wheat. Some European processorsare also producing isoglucose, a sweetener andsugar substitute, from wheat starch (that por-tion of the wheat kernel remaining after the glu-ten is extracted), similar to corn sweetener’suse in the United States.

Corn, which has always been consideredfrom a feed point of view, is beginning to ex-perience pressures in areas similar to those ex-perienced by wheat. As feed manufacturingbecomes more sophisticated and automated,along with the need for strictly controlled bal-anced diets especially in the poultry industry,the demand for quality attributes and con-sistency in delivery is of increased importance.In other cases, individual dry and wet corn mill-ing companies are placing more stringent de-mands on the quality of corn they purchase.Companies are contracting with farmers togrow certain varieties and provide special han-dling, such as low-temperature drying.

Traditional quality attributes, even thoughvaried, thus may be influenced by technologi-cal advances, economic concerns, and Govern-ment policies here and abroad. For the UnitedStates to produce and deliver high-quality grain,it must not only become increasingly aware ofconcerns over quality expressed by domesticand overseas industries and match quality totheir wishes, but it must understand why im-porters purchase grain in the first place.

The findings in chapter 4 could lead to theconclusion that the United States should stressdeveloping high-protein wheats. Yet the ex-panded use of vital wheat gluten in some coun-tries to obtain self-sufficiency provides acompletely different picture. Knowledge of cus-tomer preference, consumption patterns, andthe role of Government policies is critical whenconsidering what direction the United Statesshould take. The rest of this chapter examinesthese areas using wheat as an example.

91

CHANGING NATURE OF MARKETS-A CASE STUDY IN WHEAT

As the intensity of competition in grain mar-kets increases, so does the differentiation of im-portant quality characteristics. Because of thedynamic nature of wheat markets, OTA ana-lyzed the demand for wheat quality character-istics in international markets. The analysis hadtwo specific objectives—to identify the extentto which market shares are determined by fac-tors such as relative prices, income, prefer-ences, and other factors, and to analyze prefer-ences for wheat by quality factors and estimatechanges in these preferences. *

Background

Various types of wheat are produced aroundthe world based on conduciveness of the localclimate. For example, the semiarid climatefound around the Mediterranean Sea is particu-larly suitable for production of Durum wheat.Environmental factors including rainfall, tem-peratures, soils, available nutrients, and topog-raphy influence and cause wide variety in suchwheat characteristics as protein content, testweight, and kernel size. Genetics is also a ma-jor factor in wheat characteristics. Plant breed-ing programs differ greatly from one produc-ing area to the next, resulting in wide variationsin inherited attributes. Differences in environ-ment and genetics among wheat-producing areasof the world or within a country result in widevariations in the characteristics of wheats pro-duced, even among those of the same generaltype.

Numerous classes of wheat are available fromthe major wheat-exporting countries of Argen-tina, Australia, Canada, France, and the UnitedStates (see table 5-1). Although each exports oneor more wheat class, the United States is alonein exporting five classes in significant amounts.Hard Red Winter (HRW) has always been thedominant class in U.S. wheat exports, followedby Hard Red Spring (HRS); White and Soft Red

*The analysis is based on William W. Wilson, Paul Gallagher,and Jean Riepe, “Analysis of Demand for Wheat Quality Char-acterist ics, ” prepared for the Office of Technology Assessment,U.S. Congress, Washington, DC, 1988.

Winter (SRW), in varying arrangements—thesecond through fourth positions. Durum is con-sistently the class with the lowest export vol-ume. Each of the remaining exporter countriesis known for one dominant class or, in the caseof France, type. Argentina predominantly ex-ports Trigo Pan whereas Canada has estab-lished a reputation with high bread-makingquality Canadian Western Red Spring (CWRS).France, a member of the European Community(EC), exports soft wheats. Australian StandardWhite is by far the dominant class in Australianwheat exports.

The quantity and quality of protein is the mostimportant attribute of wheat in determiningend-use suitability. Table 5-2 shows the requiredprotein levels of typical American wheat prod-ucts and protein ranges for U.S. wheat classes.The overlapping of class protein ranges por-trays the possibilities of class substitutions.Differences between protein ranges and reali-zation of protein quality differences betweenclasses reveal the inability of wheat classes tobe perfectly substitutable or homogeneous froma technical perspective.

Product Consumption and Wheatimportation

Consumers generally prefer end products thatmake good use of the characteristics of wheatgrown in their local or regional area. Tastesand preferences thus tend to be regionalizedby climate and culture (l). In the Mediterraneanarea, for instance, where Durum wheat isgrown, products typically consumed includebread, couscous, bulgur, and fereek, all ofwhich are made from Durum alone or in a blendwith common wheat. The Far East providesanother example of this behavior. Vast amountsof soft wheat are grown in this region so thatnoodles, chappatis, and steamed breads joinrice as common consumer products.

Flour millers and other wheat productproviders in importing countries are well awareof the tastes and preferences in their markets.Millers are interested in buying wheats that em-

92

Table 5-1 .—Export Classes of Wheat Categorized by Characteristics and Country of Origin

Characteristics

Kernel hardness Bran color Habit

Country/wheat class Hard Medium-hard soft Red White Winter Spring

Argentina:Trigo Pan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X xFideos and Candaal

Taganrock (Durum)a

Australia:Prime hard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XHard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XAustralian Standard White . . . . . . . . . . . . . . . . . .Australian Standard

White—soft varieties.. . . . . . . . . . . . . . . . . .Australian Soft. . . . . . . . . . . . . . . . . . . . . . . . . . . .Durum a

x

xx

x

Canada:Canadian Western Red Spring . . . . . . . . . . . . . . . X xCanadian Prairie Spring . . . . . . . . . . . . . . . . . . . . xCanadian Utility . . . . . . . . . . . . . . . . . . . . . . . . . . . X xCanadian Western Red Winter . . . . . . . . . . . . . . X xEastern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xWestern Amber Duruma

France:By lot specifications . . . . . . . . . . . . . . . . . . . . . . . x x

United States:Hard Red Spring . . . . . . . . . . . . . . . . . . . . . . . . . . X xHard Red Winter . . . . . . . . . . . . . . . . . . . . . . . . . . X xWhite wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Western White . . . . . . . . . . . . . . . . . . . . . . . . xWestern Club . . . . . . . . . . . . . . . . . . . . . . . . . xSoft Red Winter . . . . . . . . . . . . . . . . . . . . . . . x x

Duruma

aDurum lsa highly specialized wheat type generally not classified with others.SOURCE: Canada Grains Council, ~heafs offbe Wor/d(Winnipeg, MB: 1979)

xxx

xx

x

x

xxxx

x

xxx

xx

xxx

xx

x x

x

xxxx

Table 5-2.—Required Protein Levels for Wheat-Based End Products and Protein Content of U.S. Wheat Classes

Uses Sources

Protein content Protein contentProduct (percent) Wheat class (percent)

Pasta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 and above Hard Red Spring . . . . . . . . . . . . . . . . . . . . . . 12-18Hearth bread . . . . . . . . . . . . . . . . . . . . . . . . . 13-14 Durum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-16Hard rolls . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-14 Hard Red Winter . . . . . . . . . . . . . . . . . . . . . . 9-14Pan bread . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5-13 Soft Red Winter . . . . . . . . . . . . . . . . . . . . . . . 8-11Crackers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11 White wheat . . . . . . . . . . . . . . . . . . . . . . . . . . 7-11Biscuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0-11.0Cake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-9.5Pie crust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-10Cookies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9

SOURCES: S. Evans, “Wheat: Background for 1985 Farm Legwlation,” Agriculture lnformat!on BuIletln No 467, Economic ResearchServlce, US Department ofAgrlculfure, Washington, DC, 1984, and J. Halverson and L. Zeleny, ’’Criteria of Wheat Quality,” Wheaf Chemistry and Technology. Y Pomeranz(ed) (St Paul,MNAmerican Association of Cereal Chemists, 1988)

body the characteristics suitable for the desired wheat has been the preferred U.S. wheat classend products. Table 5-3 provides a guide to re- imported by Far East Asian countries undergional tastes and preferences for end products Public Law 480, and the region still imports sub-as well as the required flour protein levels and stantial amounts of White wheats from thewheat types to produce them. Western White United States and Australia {41 Besides hav-

Table 5-3.—Regional Tastes,

Region

Far East Asia . . . . . . . . . . . . . . . . . . . . .

Middle East and North Africa . . . . . . . .

Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Latin America. . . . . . . . . . . . . . . . . . . .

9 3

Preferences, and the Requirements for Wheat-Based End Products

Major productsconsumed

Pan bread Steamed productsNoodlesChappatis

BreadCouscous, Pasta,Bulgur, FereekWhite pan breadRollsPasta

BreadsPasta

SOURCE Canada Grains Council, Wheats of the Workl (Wtnnlpeg, MB 1979)

ing appropriate protein content, White wheatsare preferred because they produce productswith acceptable color,

Wheat importers in regions of high bread con-sumption have more than one option for achiev-ing protein levels required based on relativeprices and qualities, Government policies, andother factors (4). If there is sufficient domesticproduction of soft wheat, high-quality wheatscan be imported for blending to upgrade theflour. This is customary in the United Kingdom,which imports CWRS and HRS for this pur-pose. In regions of insufficient or no local pro-duction, flour millers can import either moder-ately high-quality wheat, all of which is thedesired protein content, or a combination ofhard and soft wheats to blend together toachieve the required protein level. In the Med-iterranean region, medium-hard White wheatsfrom the United States and Australia are im-ported to fill the gap between domestic produc-tion and total wheat needs.

The Dynamics of the Wheat Market

International wheat trade has been charac-terized by change. As a result, there has beenno consistent indication by the market of idealwheat quality. Major importers purchase avariety of classes and grades. Many new im-porters that have entered the market requiredifferent characteristics from the quality breadwheats in high demand during the last two dec-ades. Changes in milling and baking technol-

Average requiredprotein level

12-1410-119-11.5

9-1o

Types of - - -

wheat used

Hard Red ‘-

Medium-hardSoft to Medium-hard WhiteSoft to Medium-hard WhiteDurum, medium-hard White and Red

9-11 Durum10-12 Hard Red, domestic soft

9.5Durum

10-14 Hard Red, domestic softDurum

ogy have resulted in lower protein require-ments, while increased sophistication in millingand baking technology has made knowledge ofthe specifications of wheat shipments more im-portant. Generally, the required average flourprotein differs by country and end product, asindicated in chapter 4.

Developing countries are rapidly becomingthe areas of growth in world market demandfrom a total wheat import perspective. Tradi-tional importers such as Japan and WesternEurope have declined in relative importance.This trend is expected to continue as importsby developing countries account for a greaterproportion of world trade. Africa and the Mid-dle East have historic wheat consumptiongrowth rates of 8 percent, compared with 3 per-cent for Japan and 4 percent for the world.

Related to this is the observation by severalresearchers that wheat product consumptionpatterns in developing countries differ from theleavened bread orientation of industrial coun-tries. The demand growth in non-bread-con-suming countries has switched the emphasisin world trade away from high bread-makingquality wheats toward lower priced, lower pro-tein wheats. Technological changes and declin-ing consumption in industrial countries havealso aided this shift.

Analysis Results

Many factors influence demand for qualitycharacteristics, as indicated. Relative prices,

----- ——

94

income, domestic production, and preferencesall have an effect.

Relative Prices

One important factor influencing demand forwheats of different qualities is the variabilityin relative prices. Price differences in interna-tional markets were relatively small prior to1973, probably reflecting the supply/demandsituation and the lack of need to distinguish be-tween wheat classes, Since then, differentialshave increased dramatically in nearly all mar-kets, indicating the increased differentiation inthe international market (2). Notable gaps1occurred between the prices of stronger wheat(HRS and CWRS) and all other classes, and therelative increase in CWRS has exceeded thatof HRS. Embedded in these prices are implicitvalues for quality characteristics. Analysis ofthese va lues ind ica te s tha t s ign i f i can tpremiums exist for Canadian wheats (or dis-counts for U.S. wheats), that significant implicit!values exist for spring v. winter planted, andthat the implicit value of protein has been in-

1 creasing throughout the 1980s.

Income and Domestic Production

With the importance of developing countriesin the growth of the world grain trade, it is es-sential to examine the role of income in the qual-ity of wheat purchased. In addition, the impor-tance of the level of per capita domestic wheatproduction is considered. Countries withhigher wheat production may have differentrequirements regarding imported wheat qual-ity than those with little or no domestic pro-duction.

Countries representative of wheat producersand importers with different income levelswere selected for analysis (table 5-4). Breadprices range from $().4()/kilogram in Pakistanto $1.88/kilogram in Sweden. Per capita con-sumption for food ranges from 47 kilogramsin Brazil to 164 kilograms in Greece, comparedwith 86 kilograms in the United States.

Previous studies indicate a tendency for high-income countries to use relatively more wheatfor feed (5). The logic is that in times of wheatsurpluses the price differential between wheatand coarse grains may be reduced to the point

Table 5-4.–Wheat Consumption in Selected Countries, 1984/85—-

Bread price Real income Wheat consumption;

(cents per (thousand dollars (kilogram per person)

Country kilogram) per person) Total Food

Importers:Austria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Greece. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exporters:Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6185

133965277

1515678

17340

13649

1889853

6.93050.05407.63548.76451.56323.10689.66210.93517.24269.20840.23051.43302.60398.0802

11.59795.7339

112.84847,518

342.857157,437185.930210.734

52.216117.262132.45591.787

133.24769.065

149.702102,638121.118184.422

41 0.0130 152.824106 7.9079 187.967129 9.7567 207.043129 6.0351 233.236177 12.3430 132.512

71.78847.51892.36877.738

163.819112.99451.033

117.26283.91179.710

133.24764.025

103.81566.30791.14997.681

150.332146.396107.561113.70685.998

SOURCE: Office of Technology Assessment, 1989

—.-

95

where feeding wheat becomes economical, andgenerally only high-income countries can af-ford to feed large livestock populations. OTAanalysis indicates that a significant inverse rela-tionship exists between the proportion of wheat used for food and income. A smaller propor-tion of wheat is used for food in higher incomecountries or they use relatively more wheat forfeed. Lower income countries, on the otherhand, consume a greater proportion of wheatas food.

Table 5-5 shows market shares by class ofwheat imported. CWRS, HRS, and EC wheatdo relatively well in Western Europe. Correla-tions between market shares, income, and do-mestic production were computed (table 5-6).A number of points are clear. First, marketshares for stronger, high-protein wheats arepositively related with income. Second, mar-ket shares of HRW and SRW are inversely re-lated to per capita income. Third, domesticwheat production is inversely related to HRWand Argentine shares, but positively related tothe CWRS market share. These results suggestthat income level and domestic production in-fluence wheat import patterns. Countries withrelatively large domestic per capita productionhave a tendency to import a greater proportionof Canadian wheat and less Argentine andHRW. Lower income countries tend to pur-chase the less expensive wheats, possibly dueto reduced ability to pay or because they do not

require the characteristics of stronger wheats.The level of domestic wheat production affectswheat class market shares, likely reflectingblending v. filler wheat requirements. Thus, thetendency is a shift to CWRS by countries withhigher levels of domestic production and a shiftaway from HRW.

Preferences

Considerable variation exists among marketsin the wheat classes imported, their relative im-portance, and historic growth rates. Useful in-formation can, therefore, be gained by ana-lyzing class or quality import demand on amarket-by-market basis. Such an analysis, aspreviously noted, shows that relative prices andincome are significant determinants of marketshares. In addition, however, it indicates thata different preference structure exists for indi-vidual wheat classes.

The most prominent shifts are away from thedominant HRW and toward weaker wheats (ECand SRW) or stronger wheats (HRS, CWRS, andDurum) (table 5-7). In the overall world trademarket, preferences shifted from HRW andtoward all other classes. Results from most re-gional markets are similar. Growing nonpricepreferences for SRW, HRS, and CWRS existin Asia. SRW and Durums are gaining prefer-ence in Africa relative to HRW. In Japan, HRWis losing preference to White and HRS. In addi-

Table 5-5.–Market Shares of Imported Wheat Classes, 1984/85

EuropeanArgentina Australia Canada Community Us .

Country (ARG) (ASW) (CWRS) (EC) HRS HRW SRW White Durum

Brazil . . . . . . . . . . . . . . . . 0.15Denmark . . . . . . . . . . . . . 0.00France . . . . . . . . . . . . . . 0.00Germany. . . . . . . . . . . . . 0.00Greece . . . . . . . . . . . . . . 0.00Japan . . . . . . . . . . . . . . . 0.00Jordan. . . . . . . . . . . . . . . 0.13Netherlands . . . . . . . . . . 0.04Norway . . . . . . . . . . . . . . 0.27Pakistan . . . . . . . . . . . . . 0.02South Africa. ., . . . . . . . 0.03Spain. . . . . . . . . . . . . . . . 0.00Sweden. . . . . . . . . . . . . . 0.00Switzerland . . . . . . . . . . 0.00United Kingdom . . . . . . 0.00

0.000.000.000.000.000.170.150.000.000.600.930.000.000.000.00

0.270.000.730.660.000.230.000.100.530.000.000.000.600.360.93

0.010.000.000,000.000.000.010.000.190.140.000.000.400.630.00

0.00 0.54 0.01 0.000.00 0.00 0.00 0.000.02 0.00 0.00 0.000.33 0.00 0.00 0.000.00 0.00 0.00 0.000.17 0.22 0.00 0.180.00 0.69 0.00 0.000.69 0.00 0.01 0.000.00 0,00 0.00 0.000.00 0.00 0.04 0.170.00 0,02 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.06 0.00 0.00 0.00

0,000.000.230.000.000.000.000.140.000.000.000.000.000.000.00

SOURCE: Office of Technology Assessment, 1989,

96

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I

I

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I

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I I

I I

m

ml

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al0.-=

0

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InInm7j

Table 5·7.-Average Growth Ratesa of Wheat Class Imports by Country, Region, and World, 1961/62·84/85 (percent)

unnea \:)lales l,;anaaa Total Country/reqion HRS HRW SRW WHI DL R ARG ASW r.WRS r.An Fr. imnnrtc:. r.nnc:.llmntinn

Millva ..................... . ~ . .:: Iv.U 1::1.1 £0::1 jj.l ::1./j /j.::1 Asia ....................... 9.2 -3.3 34.8 3.0 5.9 1.1 2.8 3.6 2.4 Japan ...................... 24.6b 3.6 2.8 4.3 0.20 3.3 Latin American 7.5 6.0 5.7 -0.3 17.2 -1.1 7.6 3.2 5.1 Middle East 3.2 9.2 18.1 2.9 15.2 0.6 9.5 United States ............... 1.4 2.4 1.9 2.1 2.6 2.1 World 8.5 3.0 8.6 3.6 4.3 3.3 2.7 6.0 4.0 bU"TlV"U orum 0 s,mp,e regression or logu. = y + ts • I uSing autoregression tecnnlQues. u. IS annual Imports of Class i. T is time trend. and B is the growth rate and the reported coefficient

This figure IS relatively high because In early years HRS imports were nil.

SOURCE Office of Technology Assessment. 1989.

. . . . . . ..

98

tion, CWRS, though preferred, is losing rela-tive to White and HRS. But the Latin Americanmarket has a strong preference for HRW. Sim-ilarly, there are strong and relatively stablepreferences for HRW in U.S. domestic markets,

Simulations of changes in wheat class mar-ket shares that extrapolate historical preferencechanges identify important changes (table 5-8).The important underlying assumption is thatof constant relative prices. The SRW share ofthe Asia market is expected to grow by 14 per-cent by 1995 with losses between 2 and 5 per-centage points for most other competitors. InJapan, the HRS share increases by 5 percent.HRW consistently loses between 2 and 4 per-cent in all regional import markets except LatinAmerica.

Case Study Summary

The analysis measured and compared under-lying nonprice shifts in preferences occurringthrough time. Several regional shifts of particu-lar interest include:

● increases in SRW, HRS, and CWRS in Asia;● increases in SRW and Durum in Africa,

and decreases in HRW;• decreases in HRW in the Middle East; and● decreases in SRW in Latin America and

increases in HRW and spring wheats.

In general, the world market is experiencingnonprice shifts in preferences away from HRWand toward soft wheats (SRW and EC) and HRS.

Numerous changes in market shares of wheatclasses are expected in specific markets, andin some cases these are relatively large, In gen-eral, these changes reflect the shifts in prefer-ences. However, despite the shift in preferencestoward HRS, growth in this market will bestalled due to the current high price for thisclass relative to others.

In general, the results indicate that qualitydifferentials are important in international mar-kets, affecting both relative prices and sharesin particular markets. Given the unique de-mands for different classes of wheat and thekey underlying shifts in imports, the ability todifferentiate wheats of different classes is animportant component of international compe-tition. A particular concern, however, is thatin many markets the preferences for U.S.wheats are distinctly different from like wheatsof competitors. In some markets, imports tendto shift toward stronger wheats as income in-creases. This is not generally true, however, andin fact in some cases higher incomes throughtime result in more imports of softer wheats,Thus, strong wheats are not necessarily a lux-ury, and softer wheats are not necessarily in-ferior.

Table 5.8.—Simulated Changes in Wheat Class Market Shares, 1985/95 (percent)

Region Class: HRW SRW

Africa:1984 share . . . . . . . . . .1985-95 change . . . . . .

Asia:1984 share . . . . . . . . . .1985-95 change ... , . .

Japan:1984 share . . . . . . . . . .1985-95 change . . . . . .

Latin America:1984 share . . . . . . . . . .1985-95 change . . . . . .

Middle East:1984 share . . . . . . . . . .1985-95 change . . . . . .

United States:1984 share . . . . . . . . . .1985-95 change . . . . . .

World:1984 share . . . . . . . . . .1985-95 change . . . . . .

14.5 19.9–3.1 1.6

7.2 18.3–4.0 14.3

22.9 ––2.0 –

48.0 5.40.5 –0.2

12.0 3.4–2.5 –0.3

48.7 25.0– 1.0 0.0

19.1 7.1– 1.3 1.7

WHI EC ASW

. 46.6 —— –0.8 –

17.1 — 18.4–0.7 – –0.1

1.5 2.4 ––0.1 –0.2 –

9.3 21.9 42,80.8 0.6 0.8

7.5 – –0.6 – –

6.0 18.2 15.9–0.1 0.5 –0.4

ARG HRS CWRS OUR CDUR

5.0 9.6 4.4–0.8 0.1 3.0

19.3 — —–2.3 — –

23.4 – ––2.5 – –

15,5 2.7 —1.0 0.8 —

10.7 — –0.6 – –

— 3.8 –— 0.1 –

20.2 – ––0.9 – –

SOURCE Office of Technology Assessment, 1989

99

1.

2,

3.

CHAPTER 5

Agriculture Canada, AnaZysis of Strategic Mixesfor Canadian Wheat Exports, Guelph, Ontario,1980.International Wheat Council, VVorZd Wheat Sta-tistics, Annual Issues, London, 1960-1985.A4i)ling and Baking News, “Programs To Im-prove Flour Quality Showing Promise, ” 67(5]:l&30, 1988.

REFERENCES

4. Oleson, B., “Price Determination and MarketShare Formation in the International WheatMarket, ” unpublished Ph.D. dissertation,University of Minnesota, St. Paul, MN, 1979.

5. Woodhams, R., Wheat to 1991: Adapting toOversupply, Special Report No. 1070 (London:The Economist Intelligence Unit, 1986).

Chapter 6

Genetics

----- T . - . . . . . -. - .-

ContentsPage

Wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..103Objectives of Genetic Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......103G e n e t i c I n f l u e n c e s o n W h e a t Q u a l i t y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0 4Role of Publ ic and Pr iva te Wheat Breeders . . . . . . . . . . . . . . . . . . . . . . . . . . .106Variety Release Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........106Wheat Breeding Technology . . . . . . . . . . . . . . . . . . . . . . . . ...............108

Soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....................114Objectives of Genetic Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......114G e n e t i c I n f l u e n c e s o n S o y b e a n Q u a l i t y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 5Role of Publ ic and Pr iva te Soybean Breeders . . . . . . . . . . . . . . . . . . . . . . . . . 118Variety Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............120Soybean Breeding Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , .122

Corn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................123Objectives of Genetic Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ....123Genetic Influences on Kernel Quality . . . . . . . . . . . .....................125Role of Public and Private Corn Breeders . . . . . . . . ....................127Variety Release Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...........128Corn Breeding Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........129

Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...........................130Chapter preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................131

FigureFigure No. Page

I U.S. Corn Yields and Kinds of Corn Over Years . ...................124

TablesTable No. Page

6-1. Grain Yield and End-Use Quality Characteristics of Four WheatVarieties in North Dakota, 1981-85 . . . . . . . . . . . . . . . . . . . . ...........104

6-2. Environmental Influence on Important End-Use Quality Traits inWheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ...105

6-3, Generational Advance in a Typical Pedigree Wheat Breeding Program .1086-4. Breeding and Seed Increase History for Stoa Hard Red Spring Wheat .1106-5. Genotypic Correlations in Soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...1176-6. Mean Performance of Check Cultivars and Breeding Lines With

Higher Percent Seed Protein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......1186-7. Soybean Cultivars Released by Public Institutions in the United States

and Canada Prior to 1976 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....1216-8. Soybean Cultivars Released by Private Companies Under Plant Variety

Protection Certif icates, April 1973-November 1987 . . . . . . . . . . . . . . . . . .1216-9. Summary of Studies on Breeding Gain in Corn . . . . . . . . . . . . . . . . . . . . .125

—

Chapter 6

The Genetics of Grain Quality

The most fundamental starting point for ef-forts to improve the United States’ ability toproduce, handle, and deliver quality grain isthe seed, The role of plant genetics cannot beoverstated, Indeed, if the genes for physical andintrinsic quality are not present, little can bedone in the rest of the system to improve quality.

Quality is influenced by plant genotype andthe environment in which the plant is grown,Genotypes often can be altered using classicalplant breeding methods so that changes in qual-ity result, This has not generally been the aimof breeders, however, as their focus on in-creased yield often means quality factors suchas protein or oil content remain the same oreven decline unless special incentives are pres-ent for the grower. Likewise, some environ-mental factors can be changed, such as soil fer-tility through fertilizer application or water

status through irrigation. Many others, how-ever, cannot be affected, such as weather andsoil type.

Plant breeding can offer a partial solution toproblems caused by environmental variation,through consideration of genotype-environ-ment interactions, This chapter considers forwheat, soybeans, and corn:

●

●

●

●

the objectives of genetic selection;direct genotypic influences on physical andintrinsic quality and the interactions be-tween genotype and environment that af-fect seed quality;the procedures, tests, and criteria for re-leasing seed varieties; andemerging plant breeding technologies toimprove quality.

The wheat plant and the grain it bears haveevolved over many centuries into the plantsgrown today. Early humans over thousands ofyears selected types of wheat with the largestseeds, leading to the wheat grown in crop agri-culture in Europe and Asia prior to migrationof people to North America in the early 17thcentury. Early North American immigrantsbrought wheat seed with them that had beenselected from variable native species withdifferent characteristics that were used to makedifferent foods. This led to the different classesof wheat with different end uses now grownin the United States.

Differentiation of end-use characteristics ofthese different wheats is important. Becausethe science of wheat breeding has many com-mon points across wheat classes, however, thissection is organized by topic area, Any impor-

tant differences by class will be highlighted inthe discussion. ’

Objectives of Genetic Selection

Wheat breeders have two major objectives:to raise yield and to increase end-use quality.A secondary objective is to improve resistanceto diseases, pest, and environmental stress.Reaching these goals is difficult. High yieldsare an important attribute that farmers demandin a new variety, On the other hand, millersdesire wheat with good end-use characteristics,such as high protein content, Yet an inversegenetic relationship exists between yield andprotein content in wheat.

‘This section is based on Jack F. Carter et al., “wheat Ilreed-ing Issues Related to Grain Quality, ” prepared for the Office ofTechnology Assessment, U.S. Congress, Washington, Il(;, 1988.

103

104

The primary goal of wheat breeders is usu-ally increased yield, with protein and other end-use quality factors maintained at acceptablelevels. Table 6-1 illustrates this point with newHard Red Spring (HRS) varieties produced inNorth Dakota and tested from 1981 to 1985.Waldron is the check or control variety, andeach new variety exceeded Waldron in yieldby 6 to 15 percent. To achieve higher yield, how-ever, protein percentage decreased by as muchas 0.5 percent on average. Other selected end-use quality factors stayed about the same or de-clined compared with the check variety.

This is not to suggest that improvements incertain quality have not been made. In HardRed Winter (HRW) wheat, traits that have sig-nificantly improved include test weight, flouryield, mixing time, loaf volume, and crumbgrain. But protein percentage has remained es-sentially constant (16). In HRS and Durum, thesame characteristics have improved.

Genetic Influences on Wheat Quality

Table 6-2 lists important end-use qualitytraits, the estimated number of genes thoughtto control a trait, and the degree a trait is influ-enced by the environment. Environmental var-iation influences the expression of all herita-

ble traits. Those whose expressions are largelyinfluenced by the environment have low herita-bilities, i.e., the majority of the variability forthat specific trait is due primarily to the envi-ronment and not to the genotype.

Functional quality is the interaction of all thetraits in table 6-2 plus others. It is impossibleto select one trait individually and interpret end-use quality. Final bread-making quality is thetotal interaction of all these traits (23). Cerealchemists and wheat breeders use these traitsto estimate end use. If all the traits fall into iden-tified accepted categories, the final product isusually satisfactory.

Yield-Quality-Resistance Interactions

Grain yield, grain quality, and disease resis-tance cannot be separated in a wheat breedingprogram. Each fits into a package that is re-leased as a new variety. Wheat lines are notdeveloped that feature improvements in sometraits and the loss of others. Wheat diseases,lodging, and environmental stress produceshriveled grain that reduces grain yield, lowerstest weight, and decreases flour milling yield.However, the best bread-quality wheat is notgrown by farmers unless it yields competitively.As noted, yield and quality if evaluated sep-

Table 6-1 .—Grain Yield and End-Use Quality Characteristics ofFour Wheat Varieties in North Dakota, 1981.85 Average

LocationCultivar Dickinson Williston Minot Barrington Langdon Fargo Mean

SOURCE: Richard Frohberg, “Wheat Breeding at North Dakota State University,” presented at U.S Wheat End-Use Quality Conference, Fargo, ND, 1986

Table 6-2.—Environmental Influence on ImportantEnd-Use Quality Traits in Wheat

No. EnvironmentalTrait of genes influence

Physical quality:Hardness . . . . . . . . . . . . .Color . . . . . . . . . . . . . . . . .Kernel size . . . . . . . . . . . .Test weight . . . . . . . . . . .Flour yield . . . . . . . . . . . .

Biochemical quality:Protein percentage . . . . .Absorption . . . . . . . . . . . .Mixing tolerance . . . . . . .Loaf volume . . . . . . . . . . .Crumb grain . . . . . . . . . . .Crumb color. . . . . . . . . . .Loaf symmetry. . . . . . . . .Gluten strength . . . . . . . .Pasta quality . . . . . . . . . .

3 genes3 genes

manymanymany

few-manymanymanymanymanymanymanyfew

many

moderatemoderate

largelargelarge

largemoderate

largelargelarge

moderatemoderatemoderate

large

SOURCE: Office of Technology Assessment, 1989

arately as unique entities are usually negativelycorrelated, primarily due to the negative asso-ciation between protein percentage and grainyield (35). This negative correlation in softwheats is extremely beneficial as it allows forconcurrent progress in these traits. Low pro-tein percentage is a requirement for produc-ing high-quality end products from soft wheat,

Genotypic variability is generally interpretedas the range of expression for a specific trait,i.e., protein percentage can range from 7 to 30in wheat, Wheat has not been investigated ade-quately to determine the range of available ge-netic variation and to identify the appropriatebreeding procedure for each of the characterscontrolling quality. Wheat germplasm collec-tions have been evaluated primarily for agro-nomic characters, not for those controllingquality.

Wheat is a hexaploid species and has a largeamount of genetic variability. Protein percent-age is probably the most frequent quality com-ponent measured, and it can be improved bycrossing with distant relatives of wheat. A prac-tical limit exists, however, because twice asmuch energy is required to produce a gram ofprotein as a gram of carbohydrate (42), In thefuture, as more is understood about protein

105

quality, it may be more efficient to allow theHard Red Winter wheat plant produce primar-ily starch, and then to blend in protein to in-crease its percentage in wheat flour. The pri-mary use of the genetic variability in wheat inthe short term (especially in HRW programs)is to introduce new genes to protect planthealth.

Genotype v. Environment

Genetic variations, environment, and the in-teraction of these components affect the finalexpression of a trait. Genetic-environmental in-teraction is produced when different genotypesrespond differently to different environments,The HRW variety Newton, for example, pro-duces acceptable quality in western Kansas, butis poorer in eastern Kansas due to disease, inOklahoma because of late maturity, and in east-ern Colorado because of susceptibility to rootrot. Environment can be more responsible, inmany cases, than the varietal reactions for in-creased fluctuations in quality (34,41). Geno-type-environment interaction is of crucial im-portance because most HRW wheat varietiesare grown across a diversity of environments,and stable quality performance is desired, Inaddition, more extensive testing programs arerequired to identify stable genotypes,

Interactions between physical and biochem-ical characters are frequent, and usually nega-tive, The most noted association involves pro-tein, as discussed earlier. This makes it difficultto improve both traits. However, protein per-centage and protein quality are not correlated(23), It is possible to have extremely high pro-tein and very low protein quality. The HRWwheat variety Atlas is a good example. Otherinteractions that affect progress in a breedingprogram include kernel size and flour yield,high temperatures at grain filling, and weakermixing tolerance. Susceptibility to diseases andpreharvest sprouting have negative effects onquality. Associations between chromosomesthemselves affect quality. For example, at-tempts to breed resistance for wheat streakmosaic virus have been unsuccessful becausethe resistant genes for the disease are closely

- -- ---- - —- . .— — -—

106

linked to genes that have a negative effect onquality (38).

Role of Public and PrivateWheat Breeders

Public and private wheat breeders developand prepare release of new wheat varieties. Onemain difference is that public breeders gener-ally work with wheat only for the State or re-gions within it where they are employed,whereas private breeders develop wheat vari-eties for one or more States plus foreign coun-tries where the company may have a subsidi-ary. Another difference is that private breederscan respond more quickly to sudden needs orperceived opportunities for research and de-velopment.

One point currently under debate is whetherpublic breeders should only develop basic germ-plasm and let private breeders use the germ-plasm to develop the varieties for commercialsale—a system more or less followed in Eur-ope. An argument can be made for such a roledifferentiation. As the next section points out,however, currently the return on investmentin developing new wheat varieties has resultedin many seed firms eliminating wheat breed-ing from their research activities.

Public funding of wheat plant breeding is de-rived (in order of importance) from State legis-latures, Congress, farm commodity organiza-tions, and foundation seed royalties. Fundingis often closely related to the economic healthof the State. Overall, funding was relatively sta-ble from 1950 to 1980, but it has declined inreal terms since then. State Agricultural Exper-iment Station (SAES) funding for wheat breed-ing programs can vary from 35 to 75 percentof the total SAES budget. Some States have be-gun charging royalties on seed of new varietiesin order to help fund plant breeding researchas competition increases for use of limited pub-lic funds.

Private funding for wheat improvement re-search is corporate funding to produce a prod-uct for sale and, it is hoped, a high return oninvestment. The financial support and resources

may be more generous relative to public fund-ing, but they can be decreased or terminatedquickly if return on investment is inadequate.For example, many large and small seed com-panies initiated breeding programs soon afterthe passage of the Plant Variety Protection Actin 1970. Wheat breeding did not produce highrates of return for most, however; and todayonly a few large firms have programs on con-ventional wheat varieties and/or hybrid wheat.Thus most new wheat varieties are developedby the public sector.

Variety Release Procedures

Public and private wheat breeders attemptto create varieties excelling in both agronomicand end-use characteristics. The public breeder,who produces most of the new varieties, re-ceives guidance on criteria for release from theindividual State Agricultural Experiment Sta-tions. In turn, the SAES bases its recommen-dations on the national policy on release of seed-propagated plants adopted by the ExperimentStation Committee on Policy. However, the pol-icy is guidance only and States may and do varyfrom it. Private wheat breeders are influencedby the principles of this policy as well and bythe demands or needs of farmers.

The principles used to determine whether torelease superior experimental genotypes arebased on whether the candidate for release isbetter in one or more agronomic or quality char-acteristics as compared with “check” or “con-trol” commercial varieties. But market incen-tives to farmers and in turn to the wheat breedersignal advancement and release of experi-mental progenies having unusually high grainyield and not necessarily meeting minimumstandards of other agronomic and end-use char-acteristics. The market seldom rewards farmerswho produce wheat varieties with excellentend-use characteristics.

Public Breeder

The general procedures used to select a vari-ety for release are as follows:

● The plant breeder makes crosses of desiredparents and progenies and evaluates them

. . .

107

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over 5 to 8 years for agronomic and end-use characteristics. Those characteristicsare compared with a “standard check” or“control” variety, usually a commercial va-riety under production over a significantacreage in the target geographic area.The breeder evaluates and justifies therelease and name of the experimentalprogeny.A Variety Release Committee (VRC) of sci-entists of the wheat breeding team, appro-priate extension specialists, representa-tives from appropriate commodity andregulatory agencies, and the ExperimentStation Director recommends release or re-jection of the experimental line proposedfor release.If the VRC cannot agree, the final decisionis made by the Director of the ExperimentStation.The agricultural experiment station is usu-ally considered the “breeder of record” forpurpose of Plant Variety Protection androyalties.Basic seed stocks of the new variety areincreased to Foundation seed by SAES ora quasi-nonprofit agency for the publicvariety.Elite growers increase the new variety toRegistered and Certified seed for use bycommercial growers.The breeder deposits a small amount ofbreeders’ seed in the Germplasm Bank atthe National Seed Storage Laboratory.

Private Breeder

Based on mail inquiries to private breeders,the policies and procedures on variety devel-opment and release seem to be as follows:

. The wheat breeder makes hybrids of de-sired parents and progenies are evaluatedfor various agronomic and end-use char-acteristics. Most of the hundreds of proge-nies from the original “cross” of the twoparents are discarded at each testing stage,but a few superior ones are selected andadvanced after several generations asworthy of further evaluation.

• A preliminary test is conducted of appar-

●

●

●

●

●

●

ently superior wheat progeny lines at sev-eral locations, for 1 year, and each entryis evaluated for agronomic and end-usecharacteristics. Many wheat lines are dis-carded as not worthy of further testing,An advanced test is conducted at addi-tional locations, again for 1 year, with con-tinued evaluation and further discard ofsome lines and retention of the most su-perior ones.Elite testing is conducted at even morelocations for 2 years with continued agro-nomic and end-use quality evaluation at theprivate company quality laboratory and atindependent quality laboratories. The lat-ter might include Class end-use quality lab-oratories, private or public agencies, or acooperative facility with the milling indus-try (e.g., flour and bread evaluation by theSpring Wheat Quality Advisory Commit-tee (SWQAC)).Wheat progenies (lines) excelling in theelite testing receive Precommercial Nomi-nation based on 2 years of testing and satis-factory end-use quality scores. A Commit-tee or Director of Research, Crop Director,Cereal Chemist, Breeder(s), and Crop Mar-keting Analyst accepts the variety as pre-commercial if all agronomic, disease, andquality end-use data are satisfactory,A third year of elite testing is conducted,including evaluation by an independentagency such as SWQAC, Breeders seed isproduced to continue seed increase ad-vancement, if approved.The same Committee that considered pre-commercial status evaluates again and, ifapproved, Foundation seed is producedand sales divisions are notified. The PlantBreeding Division retains control of theprospective variety. If release is approved,seed is distributed to sales divisions for reg-istered and certified seed production. TheDirector of Plant Breeding and the CropDirector sign the official release announce-ment.A Commercial Number (equivalent to va-riety name) is assigned. Seed is conditionedat company plants and allocated to DistrictSales Managers who establish sales goals

. . ..

108

for each sales area. Farmer-dealers sell theseed. The company provides advertisingsupport.

Wheat Breeding Technology

U.S. public and private wheat breeding pro-grams annually release several dozen wheat va-rieties, each representing 8 to 15 years of re-search. The principal wheat-producing Stateshave had wheat improvement programs for atleast 60 years, and their accomplishments havebeen impressive. U.S. wheat yields since 1958rose from 25.1 to 33.1 bushels/acre, a 32-percentincrease. Comparisons from regional nurseriesindicate a 17-percent genetic gain, accountingfor about half the total yield or 0.2 bushels/yeargenetic gain (46). Production technologies—-including use of fertilizers, herbicides, pesti-cides, and machinery—accounted for the otherhalf of the yield increases.

This section provides a general perspectiveof wheat breeding by describing some of thecapabilities, methodologies, and limitations ofcurrent and future technologies.

The Breeding Program

Generalizing about procedures is difficult be-cause there are as many permutations and com-binations of managing the logistics of selectionand testing as there are programs. Neverthe-less, some primary features of wheat breedingcan be described by considering the basicframework of generational advance and test-ing (table 6-3).

The genetic variation to begin the breedingcycle is obtained through sexual recombinationin F1 plants from 200 to 700 crosses per year.Segregated populations of tens of thousands ofF2 plants, each one a new and distinctive geno-type, are grown each year. Genetic segregationcontinues in the F3, F4, and successive self-pollinating generations, diminishing by halfeach generation as the genotypes of lines be-come fixed,

In early generations, selection is based ontraits that are recognized visually or otherwiseevaluated easily, such as plant maturity, plantheight, stem and leaf rust resistance, and gen-eral plant appearance. Such selection is con-sidered fairly subjective.

Table 6-3.—Generational Advance in a Typical Pedigree Wheat Breeding Program

Season Generation a Breeding population size Selection/evaluation activities

1 Initial crosses 200 to 700 new crosses per year2 F1 200 to 700

3 F2 500 to 2,000 plants per F2

population

4 F3 5,000 to 50,000 total plant orhead rows

5 F4 1,000 to 5,000 observation rowsor head rows

6 F5 400 to 1,000 lines in preliminaryyield trials or observationrows

7 F6 150 to 400 lines in yield trials

8 F7 20 to 50 lines in advanced yieldtrials

9-11 F8 5 to 10 elite lines

——.Some selection among F1s based on additional data or

——

phenotype

Grown as spaced plants, sometimes as bulk populations.Strong selection between populations and for plantswithin populations, visual selection for easily classifiedtraits

Begin line selection, visual selection, visual selection foreasily classified traits, e.g., height, rust resistance

Continue visual selection with additional traits, possiblybegin protein, few quality evaluations

Testing becomes more quantitative, replicated, multi-Iocation, initial yield data, quality evaluations

Similar to F5

Yield trials at several locations, complete quality and diseaseresistance testing

Extensive yield testing in State and regional trials, completedisease and quality comparisons to standard varieties,identification of candidate varieties

Finally, seed increase decisions are made during final evaluation stages and at the time of varietal release.a .,Flllal generationSOURCE Office of Technology Assessment, 1989.

109

Selection for each trait further depends onthe time required to measure the trait, the num-ber of plots that must be evaluated to obtaina reliable estimate of the line’s performance,the amount of seed required for the test, andthe effect of environment on other traits beingselected.

Selection for quality in early generations andduring preliminary testing is accomplishedmainly by using micro-evaluation procedures.Cereal chemists and breeders have devised anarray of such tests that correlate with functionalprocessing quality. Mixograms, cookie tests,and micro-loaves are examples of tests that canbe done using small samples of wheat kernels,

Improving the Efficiency ofWheat Breeding

Each breeding program strives to improve theefficiency of its selection and testing proce-dures and to understand the available geneticvariation, The dynamics involve a steady flowof information and data from many sources,Crossing, selection, and testing decisions arerevised as agronomic, disease, and quality datafrom the current season’s nurseries, and areawheat crop are evaluated.

Experimental design, statistical analyses ofdata, and plot and testing equipment are refinedcontinually. Breeding programs collect enor-mous amounts of data each year. Much of theanalysis that formerly was done with main-frame computers now is being done with micro-computers. Also, computer programs are be-ing written that greatly facilitate variousorganization and data collection activities ofthe breeding program.

The impact that a new analytical techniquecan have on selection strategy is shown vividlyby the application of near-infrared reflectancespectroscopy (NIRS) to measure protein andmoisture percentages. NIRS, developed in the1970s, is rapid, practical, and inexpensive. Pro-tein percentage can be determined on about 200wheat or flour samples per day with a singleNIRS machine. For a wheat breeding program,this means that early generation selection forprotein percentage can become routine, sub-

stantially increasing the proportion of later gen-eration lines that have the desired protein level.

Replicated yield trials are expensive to con-duct. A breeding program must grow severalthousand yield plots each year at several loca-tions. In recent years, small-plot combines havebeen developed in which one to two yield plotsper minute can be harvested while maintain-ing seed integrity of each plot.

Other Quality Considerations

Wheat breeders encounter several breedingsituations in which quality can become a prob-lem. The most common one occurs when selec-tion for one trait causes changes in another traitor traits, The correlated response can be posi-tive or negative, and the degree can vary fromslight to very strong. For example, the gene inDurum wheat for white glumes and the genefor strong gluten strength are located near oneanother on the same chromosome. Durumbreeders have used this fortuitous associationeffectively to identify strong gluten Durumlines. In bread wheats, the negative correlationbetween grain yield and protein percentage thatexists in many breeding populations challengesthe breeder to find genes that increase proteinpercentage or improve the quality of the pro-tein without losing yield potential.

Other situations in which quality can be af-fected adversely involve the introduction ofgenes from related species. The best knownexample is the IB/IR wheat-rye chromosometranslocation. The rye chromosome introducedinto wheat carries valuable genes for diseaseresistance, but it also can cause problems withstickiness of bread dough, Problems with testweight, flour color, and other traits have beenassociated with an alien chromosome segmentintroduced for disease resistance in severalother cases,

Timetable of Wheat Breeding andVarietal Seed Increase

Evaluating past progress in wheat breeding,planning future research, and having some ideaabout the possible rates of progress of futureresearch requires an appreciation of the time

—. — -— . . ---- - - - - ——

110

required for varietal development, testing, andseed increase. The breeding and seed increaseschedule for Stoa, an HRS wheat variety re-cently released by the North Dakota Agricul-tural Experiment Station, provides an exam-ple (table 6-4). Greenhouses, off-season winternurseries, and early, coordinated increases ofseed can accelerate this schedule. But it is im-portant to remember that crosses for wheat va-rieties for the year 2000 are being made now,12 years before they will be released.

Some future technologies may shorten theperiod for varietal development far less thanintuitively might be expected. Much of theschedule for Stoa is devoted to the initial build-up of seed, to multiyear testing, and to increas-ing the varietal seed. This process must be doneregardless of how a line was produced initially.

Hybrid Wheat

Much progress has been made during the past25 years to develop germplasm and techniquesfor commercial production of hybrid wheats.A hybrid advantage for grain yield and othertraits similar to those found in corn, sorghum,rice, and other crops is the impetus for hybridwheat research. Because the farmer must pur-

chase hybrid seed each year—unlike varietalseed, which can be grown from the previousyear’s seed—the successful development of hy-brid wheats also would be the basis for a largecommercial seed industry in the United States.Several commercial seed and agriculturalchemical companies have hybrid wheat re-search efforts.

Two technologies are being used for hybridwheat development:

1.

2.

genetic systems that use a cytoplasmicmale-sterile female parent and a fertilityrestorer male parent for hybrid seed pro-duction, andchemical systems that use chemical hybrid-izing agents to treat and sterilize the femaleparent for production of hybrid seed bycross-pollination with the male parent,

Commercial hybrids have been produced andmarketed using both types of systems.

Current hybrid wheat research aims to im-prove hybrid performance and to reduce thecosts of producing hybrid seed commercially.The economic success of hybrid wheat will bedetermined by the hybrid breeder’s and seedproducer’s success in accomplishing thesegoals.

Table 6-4.—Breeding and Seed Increase History for Stoa Hard Red Spring Wheat

Year Season Generation Explanation of evaluation state

1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fall Cross ND527/Coteau sib//Era1974 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spring F, Grown in greenhouse1974 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F2 Space-planted populations1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F3 Head-row1976 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F3 F2-derived head-row1977 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F5 1 row selected, F4 derived line1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F6 Preliminary evaluation1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F7 Preliminary yield trial1980 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer F8 Elite yield trial1981-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer ND HRS variety trial (tested as ND582)1982-83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer HRS Uniform Regional Nursery1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summer Spring Wheat Quality Advisory Committee Test1984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Named and released

Seed increase (concurrent):1981-82 . . . . . . . . . . . . . . . . . . . . ., . . . . . . . Purification head rows near Yuma, Arizona1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase at North Central Station, Minot, North Dakota, 1½ acres1982-83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Winter increase near Yuma, Arizona1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increased in North Dakota1984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Released as a variety1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,000 acres certified plus noncertified acres1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Estimated acreage, 1 ½ to 2 million acresSOURCE’ Office of Technology Assessment, 1989

--

Quality standards and questions for hybridsin general are identical to those for conven-tional varieties. The end-use quality of hybridshas tended to be between their two parents formost traits. Some quality control can beachieved in hybrids by choosing parents thathave complementary quality traits.

As wheat hybrids must have a yield advan-tage to be economical, the breeder must be con-cerned about grain yield/protein percentagerelationships in the wheat classes where highprotein is desirable. Also, seed produced on ahybrid (Fl) plant differs from seed produced ona variety. The (F2) seeds are segregating, eachgenetically different from another. All seed inconventional varieties is genetically homozy-gous and is homogeneous. Although these ef-fects have not been examined in detail, gener-ally the maternal F1 plant of uniform genotypeseems to have the predominant effect on endo-sperm quality and on kernel characteristics.

Future Technologies

Genetic Engineering. -Advances in severaltechnologies for genetic manipulation of plantcells and genes, collectively termed biotechnol-ogy, have generated much discussion abouttheir application to important plant breedingproblems. The new technology having the great-est potential for expanding the genetic varia-tion available to plant breeders is genetic engi-neering. This term covers the technology orgroup of technologies with which scientists canisolate genes from one organism, manipulatethem in the laboratory, and then insert themstably into another organism. (This stable in-sertion is known as transformation. ) Thesecomplex technologies are the focus of exten-sive, very active research efforts (15,24,45).

The current capabilities of scientists to usegenetic engineering in wheat and most majorcrop plants are limited. These limitations re-garding wheat quality include:

1. insufficient knowledge of which genes af-fect quality;

2. great difficulty in isolating such genes,even if they are known;

3

4

inability to insert specific genes stably intothe host genome; andand lack of knowledge on how to regulatethe expression of inserted genes in the tar-get tissue.

While some of these limitations are likely tohave technical solutions in the near future,others could remain barriers to using these tech-niques in wheat breeding for some time.

Once specific favorable alleles of genes thatcode for glutenin or gliadin proteins are iden-tified, a process that could require a great dealof research, the isolation of these genes couldbecome fairly routine. Current research indi-cates that many wheat seed storage proteinsactually are “families” of proteins (many simi-lar but slightly different proteins) coded by“families” of genes.

Genetic engineering also can isolate seed stor-age protein genes from other crops. The poten-tial value of these proteins either to improvewheat quality or to impart additional process-ing attributes to wheat cannot be assessed un-til such genes actually are inserted into wheatand expressed in the seed.

Currently, there are no reports that cultivatedwheats have been transformed and a plant re-generated (15). Genes have been inserted intothe cells of a wild relative of wheat (Triticummonococcum L.), but no plant was regeneratedbecause of an inability to regenerate plants fromsingle cells, which requires an effective tissueculture system. Although Schell (45) has re-ported that DNA is taken up and is expressedtransiently in wheat embryos, he has not deter-mined if this DNA is transmitted to the off-spring—i.e., is heritable.

A prudent estimate is that appropriate tech-niques to engineer wheat genes will be devel-oped within the next 5 years, assuming ade-quate resources for experimentation, Howeffective or efficient these systems will be isdifficult to predict.

An example of a technology that must be de-veloped when wheat plants are transformedsuccessful y is the regulation of the expressionof genes for defined qualities. The genes must

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be expressed in the seed but not in other tis-sues. Experience with other crops suggests thatthe regulatory sequences for wheat seed pro-teins will have many of the necessary charac-teristics of regulating the added new genes (45).Genetic engineering allows the addition of rela-tively few genes, not a gene family. Becausegene families for quality characteristics are ex-pressed in the seed, the added genes may needto be strongly expressed, assuming they affectquality positively.

If detrimental proteins (e.g., the secalin pro-teins of the IB/IR rye translocation) are oper-ative, these families of genes may need tobe turned off, requiring techniques not nowknown. However, germplasm may be foundwith suitable analytical tools, either throughnatural variation or through chromosomal ma-nipulation, that lacks the detrimental family ofgenes.

It must be restated, however, that until use-ful genes can be successfully identified, iso-lated, stably integrated into the wheat genome,and sexually transmitted to offspring, geneticengineering of wheat remains a promise anda goal rather than a useful tool.

If procedures that allow routine genetic trans-formation of wheat should become availablewithin 5 years, how long would it take for thenew technologies to have a major effect onwheat quality? Research to improve under-standing of wheat proteins and the specificgenes that code for them, including methodsto isolate these genes, will proceed concurrentlywith research on genetic transformation. Ma-nipulating gene regulation fully in seeds willtake many years. Transformed plants must begrown to maturity to test seed for gene expres-sion. Small-scale baking quality tests to deter-mine if wheat quality has indeed been improvedrequires 300 grams (0.7 pounds) of seed. Ad-vanced hard wheat quality evaluations can re-quire up to 550 kilograms (1,200 pounds) ofseed.

The first U.S. field tests of transformed plants(mainly tomato and tobacco) were allowed in1987. Hence, little or no previous knowledgeand experience exists on which to base specu-

lations about the agronomic and quality per-formance of transformed wheat. Assuming thenew transformed wheat has excellent qualityand agronomic performance, another year ortwo of seed increase would be needed beforesufficient foundation seed could be sold to cer-tified growers who, in turn, must grow the seedfor 1 year before they can sell certified seed tothe wheat grower. The first genetically engi-neered seed will enter the commercial marketafter the following growing season (an addi-tional year), when the wheat grower harveststhe crop. Commercial acceptance and use ofthe new, genetically transformed variety thencan be determined.

Consequently, at least 7 years will be re-quired, under favorable circumstances, for aseed of a genetically transformed variety toreach the commercial market—plus possiblyanother 5 years to develop the transformationtechnology. Although this seems a long time,the total time from identification of beneficialgenes to new plant introduction maybe cut by4 to 6 years.

ELISA and DNA-Probe Screening Assays.—After proteins and genes that enhance or lessenwheat quality have been identified, rapid as-says using antibodies or nucleic acids can beused to identify lines having these genes. Anexample of this technology is the enzyme-linkedimmunosorbent assay (ELISA), which uses anti-bodies to identify proteins rapidly. ELISA tech-nology employs a “capture” antibody that isattached to a solid surface and that specificallybinds to a single protein from a complex pro-tein mixture. This protein-antibody complex isincubated with an enzyme-coupled antibodythat recognizes and binds to the protein. In thepresence of a colorless substrate, the enzymewill convert the substrate to a colored productthat can be measured spectrophotometrically.The presence of color, therefore, identifies thepresence of the (specific) protein that is boundto the capture antibody and to the enzyme-coupled antibody.

ELISA tests are used routinely to identify pro-teins associated with seed storage proteins andwith plant pathogens (as a diagnostic test for

113

diseased plants). Using ELISA techniques toidentify specific seed quality proteins is diffi-cult because these occur as families of similarproteins. Isolating specific proteins and obtain-ing precise antibodies can be difficult. Oncethe technique is optimized, however, selectionto save lines with favorable quality proteins andto discard those with unfavorable ones will bestraightforward.

The ELISA technology is not used widely yetbecause of lack of understanding about whichgenes affect a given quality. But basic researchto study these proteins, using ELISA techniquesand developing antibodies, should, if success-ful, make this technology available to breedingprograms.

Biochemical Selection and Doubled HaploidBreeding.—These two new technologies involvetissue culture and the ability to form unor-ganized tissue (called callus) from organizedplant tissue such as immature embryos and an-thers on a culture medium and then to reformorganized tissue that can be induced to regener-ate into plants.

With biochemical selection, the unorganizedtissues are challenged (exposed) to a chemicalthat inhibits normal growth, Cells that have un-dergone mutations or other genetic changesthat make them resistant to the effects of thechemical will grow normally and can be iden-tified. The power of this technique is that ap-proximately 2,25 million cells can be grown in30 milliliters (about 1 fluid ounce) of medium,Each of these cells potentially can regenerateinto a plant. An acre of wheat by comparison,has from 1 million to 2 million plants, depend-ing on seeding rate. For selection purposes, anounce of cells capable of regenerating intoplants is the numerical equivalent of 1 or 2 acresof wheat in a wheat nursery. It cannot be con-sidered the functional equivalent, however.

While selecting directly in tissue culture toimprove quality traits that are expressed in theseed may be difficult, selection may be possi-ble for overproduction of essential amino acidsthat limit nutritional quality (30). Little varia-tion for nutritional quality exists in wheat germ-plasm, and unconventional selection tech-niques may become an important objective forimproving nutritional quality (e. g., lysine con-tent) (33).

Wheat culture techniques to produce largequantities of regenerable cells routinely havenot been refined. Few plant traits, includingquality traits, can be selected at the cellularlevel, New biochemical strategies to improvenutritional quality probably will not be devel-oped until tissue culture systems are developedfully, probably within the next 5 years. Again,as with genetic transformation technology, 7years of testing and seed increase still will benecessary before the improved line would en-ter seed trade channels,

Doubled haploid breeding could shorten thetime needed to develop inbred lines of wheatthat normally are derived by generational ad-vance following crossing. Most commercialwheat varieties are relatively homogeneous in-bred lines, as are the two parents of hybridwheats. The value of this technique is that whenthe chromosome number is doubled, each ofits genes is copied identically.

The major limitation with doubled haploidbreeding in wheat is that an efficient systemfor producing doubled haploids has not beendeveloped. Using a relatively inefficient antherculture system, however, French researcherswho developed the wheat variety Florin, re-leased in 1987, believe they saved 4 years byreducing time needed for inbreeding.

-- - --- -- - - - —- —

114

SOYBEANS

Several thousand soybean strains were intro-duced from Asia in the early years of this cen-tury (28). Because soybean is photoperiod-sensi-tive, one of the initial tasks was to identify thepotential adaptation areas for these accessions.A maturity group classification system was de-veloped. Those materials adapted to northern-most latitudes were placed in Group 00 andthose adapted to southernmost latitudes wereplaced in Group X. The soybean’s potentialvalue as an oilseed was recognized and plantbreeding was begun for high oil and for adap-tation to North Central States. The cultivarsDunfield and Illini, released in the 1920s, re-sulted from this breeding effort and their oilcontent became the standard for succeedingcultivars (9). Soybean was also used as a for-age during this time, and prior to 1941 moresoybeans were grown for forage in the UnitedStates than for grain (28). As soybean gainedwider usage as a grain, breeding emphasis onseed yield increased. Early improvements inresistance to plant lodging, seed shattering, andfoliar diseases increased soybean adaptabilityand helped make this a suitable grain crop fora wide geographical area (9).2

Objectives of Genetic Selection

Two major objectives of soybean improve-ment programs are to raise seed yield and toincrease seed quality. As with wheat breedingprograms, a third objective is the protection ofcurrent levels of yield and quality by increas-ing resistance to diseases, pests, and environ-mental stress. Because high yield has alwaysbeen the primary attribute that farmers wantedin a new cultivar, it is the trait that has receivedthe most attention. Comparisons of old and newcultivars have shown that significant improve-ment in soybean yield potential has occurred.In a test of Group I, II, III, and IV cultivars re-leased between 1933 and 1971, yield increasedby 50 percent. In a similar test of Group II andIII cultivars released between 1923 and 1974,

‘This section is based on Joe W. Burton, “Soybean Breedingand Seed Quality, ” prepared for the Office of Technology\’ Assess-ment, LT. S. Congress, Washington, DC, 1988.

Wilcox et al. (62) found a total increase of ap-proximately 30 percent. Boerma (7) found thatyields of cultivars in Maturity Groups VI, VII,and VIII had increased about 42 percent since1914.

Resistance to insects has been an objectiveof some soybean breeding projects. Most re-search has been conducted in SoutheasternStates, where insects pose a greater threat toproduction. Although several insect species arepests, the genetic resistance that has been iden-tified seems to have some effectiveness againstmany of them (37). Improved insect-resistantbreeding lines have been released as germ-plasm, and one insect-resistant cultivar (Crock-ett) has been released in Texas.

Many studies aim at characterizing the ge-netic variation for protein and oil content insoybean and the genetic correlations betweenoil, protein, and seed yield (11). Yet for mostsoybean breeding projects, altering protein andoil concentration has been a low or nonexist-ent priority. Rather, the primary breeding goalhas usually been high yield with maintenanceof protein and oil at acceptable minimum levels,e.g., 41 percent protein and 20 percent oil. Thewell-documented negative relationship be-tween protein and oil has meant that selectionfor either trait alone has resulted in a declinein the one not selected (10,13). Likewise, yieldand protein are often negatively correlated andit has been difficult to increase both simultane-ously (10). Soybean producers, the primary cli-entele of breeders, do not receive payment forthe beans they produce according to chemicalconstituency. As a result, they have shown nointerest in cultivars with high oil or high pro-tein and this lack of interest has influencedplant breeding objectives.

Three cultivars have been released that are8 to 12 percent higher in protein concentration.Protana and Provar were developed in Indianaand Iowa, respectively, and released in 1969(57). Because the yielding ability of these culti-vars was below that of other varieties beinggrown at the time, neither gained much accept-

115

ance by farmers. A third cultivar, Tracy, wasdeveloped in Mississippi, and because it hadgood yielding ability and resistance to Phytoph-thora rot and some foliar diseases, it achievedwide usage in Southeastern States, The culti-var Ransom, developed in North Carolina, hasa higher than average oil concentration [23 per-cent). But it achieved wide usage because ofits high yielding ability and not because of itshigh oil content.

While most soybean breeding has been di-rected toward increasing or protecting produc-tivity, a considerable amount of research hasalso been aimed at developing germplasm withnovel seed traits that would fit particular enduses and markets. These novel types, as usu-ally visualized, would be sold outside the graintrade (probably on a contract basis) and thushave an opportunity to bring a premium price.The development of the cultivar Vance offersa good example of soybean breeding for a spe-cial end use. Vance was derived from a crossbetween the cultivar Essex and a wild soybean(Glycine soja) line. It has tiny seeds (8.8/100seeds), which makes it very suitable for use innatto, a Japanese food product. Currently thiscultivar is being grown in North Carolina andVirginia and is being sold directly to a Japa-nese importer for more than the soybean grainmarket price.

Tofu is another soybean food product thatcould be made from a specialty variety. Whiletofu can be made from any soybean, high pro-tein seeds with yellow seedcoats and hila arepreferred (22), The variety Vinton, which has44.9 percent protein, was developed for thispurpose (5).

Genetic Influences onSoybean Quality

Seed coat and cotyledon color are controlledby a relatively small number of genes. Likewise,small numbers of genes are usually involvedin disease resistance. In cases like these wheretraits are simply inherited, genetic alterationis not difficult, provided the presence or ab-sence of gene expression can be determined.Thus, the seed quality traits related to seed color

and disease can be easily manipulated usingstandard plant breeding methods if genes fordisease resistance have been identified in thesoybean germplasm collection.

Protein and oil concentration (percentages)in soybean seeds and seed size are quantitativetraits known to be under the influence of manygenes. These can also be changed by classicalplant breeding methods, but the task is usuallymore difficult. The challenge to plant breedersis mainly that of incorporating the large num-ber of genes affecting the trait into an agronom-ically acceptable cultivar. This is complicatedby the fact that genetic alteration of one traitfrequently leads to undesirable changes in otherplant characteristics.

When quantitative inheritance (i.e., con-trolled by many genes) is involved, knowing theheritability of a trait is the key to determiningan appropriate plant breeding strategy forchanging the trait. The expression of the quan-titative trait depends on which genes arepresent in a given plant. Also, the trait is usu-ally influenced by environmental conditions,which also contribute to the variation in expres-sion. Heritability is a measure that estimatesthe proportion of the total variation in expres-sion that is due to strictly genetic influences.Thus, as with wheat, a trait with high herita-bility is subject to less environmental influence,which means that the genetic worth of a par-ticular plant is more easily determined. Thisusually means that progress in changing thetrait through breeding is more rapid.

Johnson and Bernard (32), Brim (8), and Bur-ton (13) have presented heritability estimatesfor quantitative traits that are usually measuredin soybean breeding populations. The estimateswere taken from several independent studiesof different populations of soybean lines,Heritability estimates for seed protein percent-age ranged from 51 to 92 percent. Seed oil esti-mates of heritability were similar, ranging be-tween 51 and 93 percent, By comparison, seedyield estimates are lower, between O and 73 per-cent. This suggests that seed composition is lessaffected than seed yield by environmental fac-tors. Thus, the genetic worth of a soybean line

116

as it pertains to protein and oil composition iseasier to determine than its genetic worth rela-tive to seed yield.

YieId-Quality-Resistance Interactions

Breeding a cultivar for disease or pest resis-tance requires that resistance genes be incor-porated into a high-yielding, agronomicallyacceptable genotype. If the resistance genes arelocated in a high-yielding adapted cultivar, thenthe transfer of resistance can usually be accom-plished without yield loss. Such would be thecase with resistance to soybean mosaic virus(SMV). High-yielding SMV-resistant cultivarsare currently available. On the other hand,when resistance genes must be acquired fromnonadapted plant introductions, transfer of re-sistance without some yield loss is difficult.

A major problem in selection for altered seedprotein or oil composition in most soybean pop-ulations has been, as mentioned, the negativegenetic correlations between protein percent-age and the two other economically importanttraits, yield and oil percentage. Thus, selectionfor increased protein usually results in de-creases in percentage oil and commonly in de-creased yield (10,61). Similarly, selection for in-creased seed oil percentage results in decreasedprotein. Percentage protein and percentage oilwere found to be negatively correlated in 12soybean populations investigated in 5 separatestudies (table 6-5). Most of these correlationshad absolute values greater than 0.50. Negativecorrelations between percentage protein andyield, though frequent, were usually not great,with only 2 having absolute values greater than

When considering the problems of geneticallyincreasing the quantity of protein produced bya soybean crop, there must be a recognition ofthe producer’s desire for high yield and the soy-bean processor’s desire for high protein per-centage and acceptable oil levels. Thus, breed-ing methods have been varied depending onthe breeding goals. The negative relationshipbetween protein and oil has led some investi-gators to attempt to increase protein indirectlyby selection for low oil. This has some economic

advantages in that percentage oil can be meas-ured rapidly and nondestructively in soybeanseeds by magnetic resonance imaging spec-troscopy.

Increased protein yield can also be accom-plished by selection for increased yield, pro-vided percentage protein does not decline sig-nificantly. In this respect, recurrent restrictedindex selection could be used to hold proteinconstant while increasing yield. In two cyclesof selection, using such an index, yield in-creased from 32.0 to 32.5 bushels/acre whileprotein and oil remained constant at 45.8 per-cent and 17.8 percent, respectively (31). It mightbe possible to select for protein yield directly,although there is the risk that percentage pro-tein would decline.

Genotypic Variability

There is a wide range, approximately 15 per-centage points, in seed protein percentageamong lines of the U.S. soybean germplasm col-lection. About 10 percent of these have a pro-tein percentage higher than 44.5 percent. Seedoil percentage for lines in the U.S. germplasmcollection acquired before 1970 range between13.2 and 23.5 percent. Because most currentlygrown cultivars have between 20 and 23 per-cent oil, there seems to be more opportunityfor increasing protein than oil percentage withthe germplasm resources currently available.

With the breeding methods mentioned in theprevious section, genetic lines have been de-veloped with higher protein content and simi-lar yielding ability compared to standard cul-tivars. Three examples of such lines haveprotein percentages between 44.2 and 45.5 andwere recently evaluated in the U.S. Departmentof Agriculture (USDA) Uniform Soybean Tests(table 6-6). When protein content was higherthan the check cultivars, oil content was lowerin these three lines.

Genotype v. Environment

As discussed in the section on wheat, varia-tion in the expression of a quantitative trait inany plant population is due to genetic and envi-ronmental influences and an interaction be-

I

Table 6-5.—Genotypic Correlations in Soybeans

Johnson et al. Thorne and Fehr Shorter et al. (1955) (1970) (1976)

Population 1 2 3 4 5 6 Percent oil genotypic .... -0.48 -0.70 NAb NA -0.96 -0.35 Percent oil phenotypic ... -0.48 -0.69 -0.66c -0.58c -0.79c -0.24 Percent yield aenotyoic .... -0.64 -0.12 NA NA NA NA Percent yield phenotypic ... -0.33 -0.08 -0.21 -0.27 NA NA ~Random F. lines from crosses between unadapted high protein lines and adapted average protein lines (UH X AA).

NA ~ not applicable CSignificant at < 0.5.

SOURCE: Office of Technology Assessment, 1989.

Simpson and Wilce

7a 8a 9' -0.15 -0.96 -0.

NA NA N, +0.54 -0.74 -0.-

NA NA N,

.

118

Table 6-6.—Mean Performance of Check Cultivarsand Breeding Lines With Higher Percent Seed Protein

— . .Yield Protein Oil

Line (bu/acre) (percent) (percent)

D82-4098 a . . . . . . . . . . 45.8 44.2 18.1Centennial . . . . . . . . . 43.8 42,9 19.0N84-1256 b . . . . . . . . . . 37.0 45.5 18.7Check cultivarc . . . . . 37.5 41.5 21.0LN82-4049 d . . . . . . . . . 45.4 44.8 20.2Sparks . . . . . . . . . . . . 44.0 41.2 21.5aTe.st@ lrl Itle Regional Prel Imlnary VI, The Uniform Soybean Tests—Southern

Region, 1984bTeSted {n five North Car~llna envlronmf+!ntsCBraXtOn, Ransom, or GasoY 1 TdTeSted in tfle Flegiorlal Prellmlnary IV A, The Uniform Soybean Tests— Northern

States, 1985

SOURCE Off Ice of Technology Assessment, 1989

tween the two. In defining issues related to theinteraction of genotype and environment inplant breeding, it is helpful to consider envi-ronmental variation in a continuum from pre-dictable to unpredictable. Predictable variationis due to those conditions that can be controlledin some way (e. g., irrigation) or those that havepermanent characteristics (e.g., photoperiodand soil type). Weather-related conditions gen-erally contribute most to unpredictable var-iation,

Most problems in seed quality that arise be-cause of weather have no real genetic solutions.Sometimes, genetics can lessen the impact ofa weather-related problem. For instance, thehard-seed coat genotype develops less seed dis-ease when harvest is delayed after maturity.Other genetic sources of resistance to fungalseed pathogens lessen the problem but do noteliminate it. Many seed disease problems arerelated to cultural practices and harvest. Usu-ally changes in farming, harvesting, and stor-ing practices are much more likely than varietaldisease resistance to be effective in controllingseed disease.

Most soybean breeding programs have re-gional testing efforts to evaluate genotypesacross a wide array of environments. A geno-type is selected from these tests on the basisof ability to perform well in most environments.Statistical analyses have been developed to de-termine the relative environmental stability ofcultivars. Evaluation and selection of stable cul-tivars is the most common way that environ-

mental influence is moderated by genetics. Theother way is to attempt to tailor a variety fora particular environment. This can be quitesuccessful if the environment can be defined.Breeding for disease resistance f i ts thiscategory,

Role of Public and PrivateSoybean Breeders

Private industry investment in soybean breed-ing has been a relatively recent development.Prior to the passage of the Plant Variety Pro-tection Act in 1970, only six companies (withone plant breeder each) were engaged in soy-bean breeding because soybean is a self-pol-linated crop and, without the act, research in-vestment could not be recovered, Since then,an additional 25 companies and 61 breedershave been added to the private soybean breed-ing industry (63). Under the act, certificates ofplant variety protection can be issued that as-sure the “developers of novel varieties of sexu-ally reproduced plants . . . exclusive rights tosell, reproduce, import or export such vari-eties.” It was this guarantee of exclusive rightsthat enticed private seed companies to investin soybean research. Thus, the role of the pri-vate plant breeder is to develop novel soybeanvarieties that can be sold at a profit.,

Public soybean breeders have always beeninvolved in varietal development. Yet they havehad and continue to have a large role in basicsoybean breeding. The roles or responsibilitiesof public breeders in general have been identi-fied as to teach and train students as futureplant breeders, conduct “basic” research, anddevelop cultivars of minor and regionallyadapted crops (52). This latter would obviouslynot apply to soybean breeders. General agree-ment exists among those concerned with thisissue that training students is an important andappropriate responsibility of public breeders,and most agree that public breeders should con-duct basic research.

The changing role of publicly supported plantbreeding research was discussed at the 1982Plant Breeding Research Forum sponsored byPioneer Hi-Bred International, Inc., which was

119

attended by both public and private plantbreeders and administrators. The joint effortbetween public and private breeders was re-ported in the conference proceedings as beingmutually beneficial. Furthermore, the compe-tition in crops such as soybeans was consid-ered to be healthy because there is no assur-ance that developing varieties of self-pollinatedspecies will be profitable enough for privatecompanies to justify continued research invest-ment, because it is not possible to draw a lineseparating basic from applied plant breeding,and because no clear division exists betweengermplasm enhancement and cultivar develop-ment (43).

General agreement exists that increased sup-port for basic research is needed, particularlythat involving the collection, assessment, anddevelopment of germplasm resources (43,52).This is needed simply to maintain current levelsof crop productivity. The average lifetime ofa soybean cultivar in the United States is 5 to9 years, in part because of the dynamic natureof the agroecosystem. The sudden appearanceof a disease, changes in climate, water, or soilconditions, or changing cultural practices cannecessitate the replacement of a cultivar withone more adapted to the new environment, Thissituation is not likely to change. The newgenetic engineering technologies, such as pro-toplast fusion, if successful, will be a useful toolin cultivar development but will not eliminatethe need for traditional plant breeding researchactivities.

Rationale for Differentiation

Private plant breeding programs have basi-cally one goal—the development of an improvedcultivar that can be marketed and profitablysold to farmers. This permits a concentratedinvestment of resources for cultivar develop-ment that is usually much greater than a simi-lar investment by a public plant breeding pro-gram. For example, in 1983 Asgrow Seed Co.made 1,200 crosses combining geneticallydifferent material and screened 120,000 lineswith a professional staff of five Ph.D. plantbreeders (4), By comparison, the public soybeanbreeding program at North Carolina State

University in a typical year makes approxi-mately 6 crosses aimed at cultivar developmentand screens approximately 1,200 lines for agro-nomic performance,

Research funds and scientists’ time at mostpublic institutions that conduct soybean breed-ing are spent on a variety of activities notdirectly related to cultivar development, suchas teaching, evaluating germplasm, devisingand testing breeding methodologies, and do-ing inheritance studies. Without a profit mo-tive, publicly funded soybean breeders are usu-ally under less pressure than private soybeanbreeders to develop and release cultivars. Pub-licly funded soybean breeders also are freer toconduct long-term research projects that havea low probability of yielding any immediate eco-nomic return, The “high risk” nature of basicresearch means it probably will only be con-ducted by public institutions (43).

Funding

Soybean breeding by a private company isfunded by profits from the sale of seeds of’ thevarieties the company produces. If soybean va-rieties are not profitable, then the funds comefrom some other division of the company thatis profitable. Funding decisions are based oncompany managers’ assessment of the marketpotential for soybean varieties with particularcharacteristics—e.g., maturity group, resistanceto a disease, and so on.

Soybean research has four sources of publicfunding. These sources and their relative con-tribution in 1984 were:

State appropriations (37 percent);USDA-Agricultural Research Service (29percent);Hatch Act formula (10 percent); andfunds to land grant universities and con-tracts, grants, and cooperative agreementsfrom Federal, State, and farmer check-offsources (24 percent) (3).

Farmer check-off in the 1980s has amountedto between 7.4 and 8.1 percent of the total soy-bean research funding. Grower funding variesa great deal among soybean-producing States.

120

Grower funding in 1984 amounted to 25.7 per-cent of the total soybean research budget inNebraska, whereas in Ohio there was none.

Even though studies measuring return to in-vestment in agricultural research show ratesof at least 15 percent, State and Federal sup-port (in real dollars) for agricultural researchhas remained nearly constant since 1965 (43).In recent years, as plant breeding positions inpublic institutions have become vacant, theyhave been converted to genetic engineering po-sitions so that research in biotechnology canbe emphasized. This has meant an overall de-crease in funding of traditional plant breedingresearch. This reduction in public support forplant breeding is generally viewed with greatconcern.

Alternate means of financing public plantbreeding research are being explored. One sug-gestion is that private industry become moreinvolved. For instance, a private companycould support graduate student training andresearch. It is also suggested that private in-dustry could support research that benefits theindustry itself. Some State universities are con-sidering patents on products of their plantbreeding research as a means of generating rev-enue. Increased funding from commodity orga-nizations is another possibility.

All these suggestions have been criticized be-cause funding of this nature is usually unpre-dictable and tied to particular short-range goals.It does not provide for the long-term, higherrisk research that requires a continual resourcecommitment. A recent suggestion has been therelease by State Agricultural Experiment Sta-tions of soybean varieties eligible for royalties,by the brand name Variety Not Stated. This ideahas not been viewed favorably by either publicor private soybean breeders. It is believed thatsuch a system would tend to shift more re-sources toward short-term basic research, im-pede the free flow of germplasm among exper-iment stations, and limit a farmer’s ability toknow whether or not two varieties are identical.

Variety Release

Prior to 1946, 194 soybean cultivars were re-leased in the United States and Canada (table6-7). Nearly all were plant introductions fromAsia or plant selections from those introduc-tions. Active soybean breeding increased after1945. Between 1946 and 1970, 110 cultivarswere released from public plant breeding proj-ects. As noted, private soybean breeding in-creased with the passage of the Plant VarietyProtection Act in 1970. Between 1973 and 1987,a total of 363 soybean cultivars were releasedunder plant variety protection (table 6-8). Mostof these were developed by private soybeanbreeding projects. Sixty-four public cultivarsin maturity groups 00 to IV were released be-tween 1971 and 1981 (5 I), and in maturitygroups V to VIII, 93 public cultivars were re-leased (29).

As the number of public varieties has in-creased, the number of acres planted with pri-vate cultivars also has increased. Currently 57private cultivars are available to farmers inNorth Carolina v. 23 public cultivars. The NorthCarolina acreage planted to public cultivars hasdecreased from 81.4 to 62.7 percent in the past4 years (19). The trend toward increased useof private cultivars will probably continue dueto the release of improved private cultivars andthe ability of private companies to market ef-fectively.

Procedures for Release

Most soybean cultivars are the inbred prog-eny from matings between two or three inbredlines or cultivars, They are usually “pure” lines,which means they have a high level of genetichomozygosity from having been inbred throughat least three generations of self-pollination. Asoybean breeder selects the “best” inbred linesfrom among several populations. These linesare tested in local and regional tests before adecision is made to recommend the line for re-lease as a cultivar. This decision is made basedon its yielding ability relative to currently grown

. . . .

121

Table 6-7.—Soybean Cultivars Released byPublic Institutions in the United States

and Canada Prior to 1976

Maturity groups Prior to 1946 1946-70 1971-76 Total

00-I, . . . . . . . 35 “-29 8 72-

II-IV . . . . . . 98 54 12 164V-Vll . . 43 22 6 71Vlll-X . . . . . . . . . . . 18 5 4 27

Total . . . . . . . 194- 110 30 334SOURCE T Iiymowltz C A Newell, and S G Carmer ‘ Pedtgrees of Soybean Cul.

tlvars Released I n the Un!ted States and Canada International Agrtcultural Publtcatlons, IN TSOY Ser ies No 13 Unwerslty of IlllnolsUrbana Champaign IL 1977

cultivars in the same maturity grouping. Deci-sion to release is also based on other traits thatcontribute to agronomic quality and yield sta-bility over a range of environments. In approx-imate order of importance, these traits includeresistance to plant lodging, disease and pest re-sistance, stress tolerance, rate of emergence,and protein and oil content.

Every State Agricultural Experiment Stationor private seed company has a committee thatreviews and approves prospective cultivar re-leases. A soybean breeder who has selected aline that is suitable for release as a cultivar mustprepare a report or “defense” of the line. Thisincludes a summary of pertinent test data anda statement of the rationale for release. The lat-ter explains the unique characteristics of theline that would make it an important additionto available cultivars. Productivity and use-fulness to growers are the primary criteria inreleasing new varieties, For private plant breed-ing companies, stability is also a critical con-sideration. Because a company’s name and rep-utation are associated with the cultivars theyrelease, the firm cannot afford to release a cul-tivar that performs poorly.

Every State has its own cultivar release pol-icies, although these have all been developedwithin the guidelines of USDA policy (57) andFederal law (Federal Seed Act of 1939 and PlantVariety Protection Act of 1970). As an exam-ple, the North Carolina Agricultural ResearchService makes the following statement in its

Table 6-8—Soybean Cultivars Released by PrivateCompanies Under Plant Variety Protection

Certificates, April 1973-November 1987

Number ofPVP cultivars Number of

not under Title V PVPCompany

Agratech Seeds . . . . . . . . . . . . . .Agripro, Inc. . . . . . . . . . . . . . . . . .Americana Seeds, Inc . . . . . . . . .Asgrow Seed Co.. . . . . . . . . . . . .B.B. Collier-Barney A. Smith .,Bryco Plant Research Division .BSF/Ag Research . . . . . . . . . . . .Callahan . . . . . . . . . . . . . . . . . . .Coker’s Pedigreed Seed Co. ., .Dairyland Seed Co., Inc. . . . . . . .Delta & Pine Land Co. . . . . . . . .Ferry-Morse Seed Co. . . . . . . . .FFR Cooperative . . . . . . . . . . . .Funks Seeds . . . . . . . . . . . . . . . .Goldkist . . . . . . . . . . . . . . . . . . . .Growmark, Inc. . . . . . . . . . . .Helena Chemical Co. . . . . . . . . .Identity Seed & Grain Co, . . . . .Illinois Foundation Seed . . . .Jacob Hartz . . . . . . . . . . . . . . . . .Jacques Seed Co, . . . . . . . . . . . .J.M. Schuetz Seed Co. . . . . . . .King Grain U. S. A., Inc. . . . . . . .Land O’Lakes, Inc. . . . . . . . . . .Louis Bellatti . . . . . . . . . . . . . . . .Lynnville Seed Co. . . . . . . . .Midwest Oilseeds, Inc. . . . . . . . .Milburn Farms . . . . . . . . . . . . . . .Nickerson American Plant

Breeders . . . . . . . . . . . . . . . . . .Nixon Seed Co. & L. . . . . . . . . . .North American Plant

Breeders . . . . . . . . . . . . . . . . . .Northrup King Co. . . . . . . . . . . . .pioneer Hi-Bred International,

Inc. . . . . . . . . . . . . . . . . . . . . .Prarie Seed Co., Inc. . . . . . . . . .Scientific Seed Co., Inc.. . . . . . .Soybean Research Foundation,

Inc. . . . . . . . . . . . . . . . . . . . . .,Stanford Seed Co. . . . . . . . . . . . .Syler . . . . . . . . . . . . . . . . . . . . .TerraI-Norris Seed Co., Inc.Teweles Seed Co. . . . . . . . . . . .Voris Seeds, Inc. . . . . . . . . . . . . .V.R. Seeds, Inc. ... , . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . . . . .

Title V

SOURCE Of ftce of Technology Assessment 1989

Plant Patent and Plant Variety Protection Pol-icy and Procedure Statement:

88-378 - 89 - 5

122

New plant cultivars and breeding lines maybe released for public use if judged to be ei-ther unique or superior to currently availablegermplasm, or equal to presently available cul-tivars if the genetic base of a crop is broadenedso as to reduce disease and other pest hazards(40).

The statement encourages release of new cul-tivars that enhance yield, but makes no men-tion of quality.

Length Of Time for Developmentand Release

In a survey of 64 Plant Variety Protection ap-plications for soybean cultivars, the averagetime required from cross to application was 9.2years (4). This development and release timeis similar for private and public cultivars. Theuse of a winter nursery in the inbreeding stagescan shorten the time between making a crossand development of a pureline that has varietypotential. This has already become common ofall soybean breeders, however, so the 9.2-yearestimate would include the time savings in-volved in winter nursery use.

New biotechnologies are unlikely to reducesignificantly the time for development and re-lease of a cultivar. They will, however, providethe opportunity for putting a new trait into aplant in a matter of months where now it cantake 5 to 7 years to breed into a variety a spe-cific trait through conventional breeding andbackcrossing. Field testing and seed manipu-lation steps are still necessary and will consumemost of the development and release time.

Soybean Breeding Technology

Present Technology

Soybean cultivars are typically developed byhybridization of two or more lines followed byself-fertilization to the F4 or later generation.Homozygous lines (purelines) are isolated andtested to determine those with superior per-formance and cultivar potential. With thismethod, the major issue has been how mate-rial in the F2, F3, and F4 segregating generationsshould be handled. The method used depends

on the plant breeding objectives and personalpreferences of individual soybean breeders.Pedigree selection or modified pedigree selec-tion are the most common methods for system-atic inbreeding (22). Backcross breeding is com-monly used for transferring a few gene locifrom a low-performing line to a high-perform-ing cultivar. Modification of those standardpractices include population improvementthrough early generation testing and recurrentselection, bulk breeding, and mass selection.

The other important issue that has receivedconsiderable attention is the most appropriateand efficient way to evaluate lines with respectto a particular trait. Various field plot and lab-oratory testing techniques have been developedand used (22). The appropriateness of a particu-lar technique depends on the trait being evalu-ated and the ease with which it is measured.Much of the success or failure of a particularbreeding project can be attributed to the qual-ity of the germplasm and the genotypic evalu-ation program.

These classical methods are adequate for thetransfer and recombination of genes within thespecies and have been successfully used to im-prove soybean cultivars. Higher yielding culti-vars with disease and pest resistance have beendeveloped and released over the past 40 years.Progress, while continuous throughout thisperiod, has been slow. The rate of increase inseed yield has been estimated at between 0.6and 1.0 percent per year (62). For at least thenext 10 years, the classical methods, becausethey are in place and successful, will likely con-tinue to be those most used to produce im-proved cultivars.

It is currently not possible to economicallyproduce the seeds for F1 soybean hybrids. Pat-ents for two F 1 hybrid seed production meth-ods have been issued. However, it remains tobe demonstrated that either can be used to pro-duce hybrid seed economically. Strong evi-dence for significant hybrid vigor in the soy-bean species is sparse (13). As a result, littleresearch is being conducted on F1 hybrid seedproduction for soybeans.

123

Future Technology

Future technology in the genetic alterationof soybean will undoubtedly include recombi-nant DNA methods (genetic engineering). Someprogress is being made in the regeneration ofwhole, fertile plants from soybean tissue andcells in culture, But it is impossible to predicthow long it will be before regeneration becomesroutine. Various methods for transferring genesinto plants are being developed, and plant trans-formations have been successful. For instance,a gene that imparts tolerance to glyphosate her-bicide has been introduced into Petunia (48),

If methods for foreign gene transfer and re-generation are developed for soybean, the sameproblems as in wheat will still apply—isolatinggenes, determining which ones can be benefi-cially introduced into a plant, and regulatingthe gene expression once it is introduced. Insoybean, the traits most likely to be alteredthrough genetic engineering are seed proteinand oil quality, plant stress tolerance, pest anddisease resistance, and herbicide tolerance (26).It is expected that desirable changes in thesetraits can be obtained by manipulating a few

genes, As of now, not many soybean genes havebeen cloned, sequenced, and had the gene prod-uct isolated. More basic genetic informationis needed about plant traits in order to makesignificant changes in soybean through geneticengineering (26),

Only the seed quality traits that are relatedto disease reaction, such as the mottling causedby soybean mosaic virus, are likely to be af-fected by new genetic engineering technologiesin the near future, Percent seed protein and oiland seed size, like seed yield, are polygenic.Many unidentified genes are involved in thedetermination of these traits. This makes themdifficult to evaluate at the cellular level and towork with at a molecular level (27).

The new molecular genetic technologies holdgreat promise, and much important biologicalinformation will be learned from moleculargenetic research. This will eventually translateinto practical ways to alter plants geneticallyin a desirable way. In the short term, however,most improvement in soybean seed quality willcome through classical plant breeding.

C O R N

Corn is the only important cereal crop in-digenous to the Americas, and more than twiceas much corn is produced in the United Statesas any other crop. Most modern races of cornare derived from prototypes developed in Mex-ico and Central and South America. An excep-tion to this is the sole product of NorthAmerica—the yellow dent corn that dominatesthe U.S. Corn Belt, Canada, and much of Eur-ope today. The late maturing Virginia Ground-seed and the early maturity Northeastern Flintswere crossed in the early 1800s, and the superi-ority of the hybrid was recognized. The crosswas repeated many times and out of these mix-tures eventually emerged the Corn Belt dents,the most productive race of corn found any-where in the world. The highly selected culti-vars of Corn Belt dents formed the basis of hy-

brid corn and were the source of the first inbredlines used to produce hybrids, {

Objectives of Genetic Selection

Corn breeding is accomplished by selectionfor desired plant traits during both inbred de-velopment and hybrid evaluation. Breedershave always selected for traits that give higheryield and easier harvest in accordance with cur-rent cultural practices, and harvest method hasbeen the most important cultural practice in-fluencing selection traits for corn. Quality fac-tors such as protein or starch content have notbeen a high priority.

‘This section is based on A, Forrest Troyer, “Grain Qualit\rand Corn Breeding, ” prepared for the Office of Technology\’ As-sessment, U.S. Congress, Washington, DC, 1988.

124

Since the introduction of hybrid corn, theU.S. average corn yield has increased steadily,from 16 bushels per acre in 1936 to 110 bushelsper acre average for 1981 through 1987. Sincesingle-cross hybrids (circa, 1960), the averageyield increase per year is 1.89 bushels (figure6-l). Most of this yield increase is genetic im-provement. Three investigations (14,20,44) com-pared yields of hybrids from various eras; thegain in hybrid performance due to breedingaveraged 64 percent of the total gain in annualcorn yields (table 6-9). The other 36 percent hasbeen attributed to improved cultural practicessuch as fertility, weed control, plant density,planting date, row width, etc. Corn breedershave successfully matched breeding objectiveswith improved cultural practices steadily andrapidly to increase national average yields ofcorn and will continue to do so in the future (55).

The other major objective of corn breedinghas been to accommodate harvesting methods.Hybrid corn made mechanical pickers possi-ble because of better standability. The corn-picker-harvest period (1940-60) saw many cornproduction improvements; increased fertilizeruse, higher plant densities, more continuouscorn, improved herbicides and insecticides,cheaper nitrogen, and earlier planting weresome of the more important. Cold tests andother indicators of seed vigor were devised bybreeders to develop corns adapted to earlierplanting. Plant and ear height were unaffectedby use of corn pickers, Most farms were stilldiversified, and livestock consumed much ofthe corn on the farm where it was grown.Breeders selected corns that would not shelltoo easily on snapping rolls and on husking bedsof corn pickers, Continuous corn led to root-

Figure 6-1. -U.S. Corn Yields and Kinds of Corn Over Years (b values show average yield increase per year)

●

b = 0.01 ● 9

SOURCE: A Forrest Troyer, “Corn Breeding and Gram Cluahty,” presented to North American Export Gram Assooatlon, May 1986

125

Table 6-9.—Summary of Studies onBreeding Gain in Corn

Hybrids Period GainStudy (number) (years) (percent)

Duvick, 1977 ..., . . . . . . . . . 19 -‘ - 32 57Duvick, 1977 . . . . . . . . . . . . . 50 40 60Russell, 1974 . . . . . . . . . . . . 25 48 63CastIeberry et al.,1984 . . . . 27 60 75

Average . . . . . . . . . . . . . . . 30 45 64SOURCE Of ffceof Technology Assessment 1989 —

worm buildup and strains of insecticide-resist-ant insects, so stronger rooted hybrids wereneeded. Farmers preferred hybrids that pickedcleanly and easily, so breeders selected forsmaller shank-to-ear attachment. Use of higherplant densities required selection by breedersof corn genotypes that tolerate stress due toplant crowding. About the same maturity cornswere still being grown in a given area (gener-ally full season), and test weight still was nota problem because corn sold off the farm wasnaturally dried ear corn.

The field-shelling-harvest period (1960 topresent) has brought larger farms, higher plantdensities and fertilizer rates, even more con-tinuous corn, and more corn marketed off thefarm (55). Artificial dryers became common-place throughout the Corn Belt. For a time, largefarms and small equipment increased the needfor better standing corns, and newer combinesand other equipment steadily increased oper-ational capacity. Corn became shorter andlower eared in this period as farmers shiftedto earlier corns in order to start combiningsooner. Before the invention of quick-attachheads for combines, stalk quality became ex-tremely important to large operators in cash-grain operations because corn harvest oftenwaited until soybean harvest was finished. Earretention was also very important to these oper-ators. Harder starch, or flintier types, allowedearlier start of harvest by reducing the num-ber of broken kernels with high moisture shell-ing. Artificial drying of corn (which lowers testweight), coupled with more direct selling fromthe field with test weight discounts, further in-creased the need for harder textured, flintiercorns, Hybrids with stronger cobs and easiershelling became an advantage for combine har-

vest, while those that dried faster in the fieldand in the dryer became more desirable as fuelcosts rose (54). Genetic selection for toleranceto higher plant densities reduced barrennessand increased frequency of two-eared plants.Adoption of minimum tillage to cut costs in-creased the incidence of diseases and insects(gray leaf spot, corn borer, etc.), leading to morebreeding emphasis on these problems.

Genetic Influences onKernel Quality

Corn kernels can be altered by genetic meansto give modifications in starch, protein, oil, andother aspects such as kernel hardness,

Starch Modification

Most genes affecting endosperm compositionare recessive. Starch from normal dent or flintcorn is composed of 73 percent amylopectin(starch fraction with branched molecules) and27 percent amylose (the fraction from linearmolecules). Corn breeders have been success-ful in developing waxy corn that has starch with100 percent amylopectin. However, yields ofthe waxy hybrids were less than those of theirnormal dent counterparts. But newer waxyhybrids are comparable to the better dent vari-eties. It has also been possible to increase theamylose content of starch up to 50 percent.Waxy and high-amylose hybrids are grown un-der contract for corn wet-milling.

OilThe oil content of most hybrids ranges from

3.5 to 6.0 percent, with an average of about 4.5percent. Experiments indicate that oil contentcan range from a low of 0.1 percent to as highas 19.6 percent (18). High oil hybrids with 6 per-cent oil content and above are lower in yieldthan hybrids with less than 6 percent oil. In-creasing oil content genetically is not difficult,because variation occurs in existing germplasmand most of it is heritable (2). Oil quality is afunction of the relative amounts of unsaturatedand saturated fatty acids, the amount of whichis under genetic control and can be alteredthrough breeding.

- .- —.———— - - - - - --- - - —

126

Analyses of hybrid crosses have shown a neg-ative correlation of – 0.49 between yield andpercent oil. Data from these experiments sug-gest that for significant increases in percent oilcontent, yield would have to be sacrificed.

Protein Quantity

The amount of protein in corn is a functionof cultural practices and heredity. The currentaverage protein content of U.S. hybrids rangesbetween 9 and 11 percent. Through selection,protein can be altered. Experiments covering70 generations of selection for protein haveproduced corn with a low of 4.4 percent pro-tein and a high of 26.6 percent (18). But thereis a trade-off between higher protein and yield.Genetic correlations between yield and proteinrange from – 0.41 to +0.34 and average – 0.06(17). Data from these experiments indicate thatwithin an intermediate range of approximately14 to 18 percent protein, yield and protein canbe increased simultaneously. For higher rangesof protein, yields will decrease. Not much in-terest exists in developing hybrids with higherprotein potential, however, because economi-cally available soybean protein can produce ananimal feed ration that is balanced with respectto the essential amino acids.

Kernel integrity

Damage to kernels during harvesting, drying,elevating, and moving grain through commer-cial channels is of concern. Contributing to theproblem is the change from harvesting on theear to using field picker-shellers. Artificial dry-ing was usually not needed for corn harvestedon the ear, because it dried naturally in the corncrib. Combine harvesters allow harvesting cornearlier to reduce field losses; however, grainusually has a high moisture content and re-quires artificial drying. Most farmers dry grainrapidly at high temperatures because of thesmall drying capacity of equipment, but thisexcessively rapid removal of moisture causescracks to occur in kernels. When grain is movedthrough market channels, kernels break easily,resulting in fine particles that lower the valueof the product.

Methods of determining breakage suscepti-bility have been developed that indicate manykernel characteristics are related to the break-age problem. These include the ratio of vitre-ous to nonvitreous endosperm, kernel densityand average weight, test weight, and kernel sizeand shape. Most of these characteristics areheritable, but corn breeders have not given highpriority to selection for kernel breakage reduc-tion. Research also indicates that differencesexist among genotypes for kernel fracturingcaused by fast, high-temperature drying. Selec-tion for resistance to this kind of kernel frac-turing should be possible.

Another solution to the problem is to allowcorn to dry in the field to a moisture contentthat would require less artificial drying. Devel-opment of fast-drying hybrids is possible.

Genotype v. Environment

The environment greatly influences the qual-ity of grain. Fall seasons with much rain canincrease ear rotting. The need for fast dryingin the field has caused selection of hybrids withless husk cover. These same hybrids may lackear protection from heavy rainfalls. The besthybrid for fast drying in a normal autumn maybe the worst hybrid for ear rot in a high-rainfallautumn. Early frosts may cause prematuredeath that reduces kernel size and test weight.Dry seasons in general favor insects becauseinsect parasites are inhibited by lack of mois-ture. Insects reduce grain quality by increas-ing broken kernels, foreign material, and ker-nel rot.

Genotype v. Management

Protein content can be increased with nitro-gen fertilizer. If the base yield is 75 to 100bushels per acre with 8.5 percent protein, andthe final yield with extra nitrogen is 100 to 125bushels, the first 100 pounds of nitrogen willprobably raise the protein about 1 percent. Thenext 100 pounds will raise the protein another0.5 percent (l). Higher protein contents havebeen found in corn after drought conditions be-cause a fixed nitrogen amount is distributed

127

through a smaller crop (25). This is becausemost nitrogen accumulation precedes en-dosperm filling. Only one-fourth of the proteinin the kernel is in the endosperm. The en-dosperm increases in size with higher yieldsand is mostly starch—86 percent starch and 9percent protein (60). Thus, a negative associa-tion occurs between yield and percent proteinat high yield levels or at low nitrogen fertiliza-tion levels.

Plant density can affect quality when enoughstress occurs to cause misshapen ears that maydry slowly or have many small kernels. Graintexture may also be affected by stress. Lateplanting dates reduce quality by causing flow-ering during hot weather and an immature cropat harvest with effects similar to early frost.

The chosen drying method is a big factor incorn quality. When corn was harvested on theear and dried slowly in the crib, test weight andbroken kernels were no problem. Field shell-ing (combining) has changed all that. In thenorthern and central Corn Belt, harvest at highmoisture followed by rapid drying at high tem-peratures can cause puffing and case-hardeningthat reduces test weight and increases brittle-ness, In the southern Corn Belt, ear quality candeteriorate in the field during humid fall con-ditions.

Ear-corn storage has given way to shelled-corn storage, As mentioned before, thesechanges in harvest methods have greatly af-fected corn breeders’ selection traits. Storedcorn typically has problems with molds and in-sects that interact with moisture content andtemperature of the corn.

Role of Public and PrivateCorn Breeders

Corn breeding at the Federal, State, and pri-vate level greatly increased subsequent to thedouble-cross-corn formula of hybrid productionthat made hybrids practical in spite of the weakinbreds and cultural practices of the period. In1955, the Federal Government spent $300,000($80,000 for basic research), State Agricultural

Experiment Stations (SAES) no more than$150,000, and private companies at least $2 mil-lion on corn breeding and yield testing (59). Esti-mates for 1987 are Federal Government (USDA)$4 million, State Experiment Stations throughthe Cooperative State Research Service (CSRS)$8 million, and private companies more than$70 million, For comparison, the 1987 Federalbudget contained $35 million (USDA Agricul-tural Research Service) and $46 million for StateExperiment Stations (CSRS) for projects relatedto biotechnology (6).

Until about 1960, for new inbreds most SAEShad delayed-release programs that served tomaintain State crop improvement programs byfavoring companies that sold State-certifiedhybrids. Delayed release policies plus the Fed-eral Seed Act of 1939 (58), which prohibits sell-ing the same pedigree under different names,were to exclude new public inbreds from pri-vate label seed companies. However, the Fed-eral Seed Act does not prevent this. Publicinbreds have been used in crosses and sold un-der different names (39), This confuses thefarmer and prevents the spreading of risk un-less the pedigrees of the purchased hybrids areknown.

At the beginning of hybrid corn, many smallseed corn companies were enticed into the busi-ness by promises of new inbreds from the StateAgricultural Experiment Stations. Inbred linesfrom public agencies became the parental linesfor SAES commercial hybrids and for devel-opment of new inbreds. By the late 1950s, largerseed corn companies had extensive researchprograms to develop inbreds, and publicbreeders started doing additional basic researchat the expense of inbred development. A totalof 156 public lines were released from 1946 to1955. An American Seed Trade Association sur-vey of the same period showed 52 hybrid corncompanies in 12 States were using these linesas 1 or more parents in producing about one-fourth of the hybrid seed used annually. About500 individual companies produced and soldhybrid seed in Iowa in 1940; only about 100companies were still in operation in 1957. Ob-servers of these changes concluded that pub-

128

licly supported corn research was more basicthan 10 years earlier and that breeders involvedfelt even more time should go to basic research.

Variety Release Procedures

The United States places few restrictions onthe release of new corn varieties developed bypublic or private breeders, Release of new va-rieties takes place at agricultural experimentstations within the land-grant system, Privatebreeding takes place at research stations oper-ated by private firms around the country, MostStates have laws that control labeling of newvarieties but these usually deal with seed pu-rity or certification procedures. For example,most State seed laws specify the informationrequired on the tag on each bag of seed, Michi-gan appears to exert more influence on varietyrelease than other States. According to breedersthere, public varieties cannot be released un-less they show an “acceptable level of merit.”

Public Varieties

As public breeders, agricultural experimentstations around the country follow generalguidelines set forth by the seed policy commit-tee or the general executive committee for re-search, entitled ESCOP (Experiment StationCommittee on Policy). ESCOP is organized un-der the Experiment Station Section of the Di-vision of Agriculture of the National Associa-tion of State Universities and Land GrantColleges in Washington, DC. The seed policysubcommittees under ESCOP represent exper-iment stations on seed matters, including pro-duction and technology, in appropriate agen-cies and associations. General policiesregarding variety release procedures and otherbreeding issues are established through thesecommittees. A function of ESCOP and its seedpolicy committee is to maintain consistency inprocedures and policies regarding release ofpublic varieties. ESCOP holds no legal powerover experiment stations or variety releases,

The variety release decision within eachState’s experiment station involves a commit-tee within the College of Agriculture. At theUniversity of Illinois, for example, this com-

mittee is called the PVRC (Plant Variety ReviewCommittee), and it serves in an advisory capac-ity to the Dean of the Experiment Station whois appointed by the Chancellor of the Univer-sity. Each State Agricultural Experiment Sta-tion that has an active breeding program hasa PVRC similar in function to that at the Univer-sity of Illinois. Although patenting of germ-plasm and plant protection of varieties are cur-rently being discussed, the general philosophyof public institutions regarding variety releasehas been one of information exchange and min-imum control.

Private Varieties

Evaluation of new varieties developed by pri-vate firms occurs without significant State orFederal intervention. The decision to releasea new variety is an internal one arrived at byreview committees that vary according to firmsize.

Each plant breeding company in the UnitedStates has a procedure for determining the use-fulness or worthiness of new varieties. Theseprocedures are generally informal in the caseof smaller companies, but more formal andstructured in the case of larger firms. The de-cision to release a new variety often evolvesduring a series of meetings with company ad-ministrative personnel, breeders, sales staff,and so on. Large companies (nationals and mul-tinationals) do their own screening and testingof new varieties, and the data are made avail-able at each variety review stage. Recommen-dations on retesting, rejection, and release aremade on the basis of performance data and ad-vice from company personnel. A large firmmight start out with several thousand crossesand end up with just a couple that actually meetall necessary criteria. In private firms, the cri-teria reflect field performance data as well asinformation on the potential for effective sales,marketing, and advertisement. All of these arerelated to the firm’s profitability.

Michigan is an exception among the Midwestcorn-and soybean- producing States in thatState law requires public or private certifiedseed to be subjected to performance trials for

129

at least 1 year before it can be sold as certifiedseed. This does not preclude selling uncerti-fied seed, nor does it prevent companies fromother States selling seed within Michigan thathas not been subjected to these tests. It doesprevent any dealer in Michigan from labelingseed as certified unless it has been subjectedto the performance tests established under au-thority of the State.

Field Performance Criteria

In a 1981 survey, 454 commercial hybridswere offered for sale; 212 precommercialhybrids were in final testing stages; 7,400 ex-perimental hybrids were in advanced trials; and61,000 hybrids were in preliminary trials. About2,800 proven inbreds were on hand and 23,000inbreds were in preliminary tests (21).

Criteria for judging new varieties in the fieldare similar for both public and private breeders.Performance criteria for measuring corn vari-eties are more diverse than those for judgingsoybeans and wheat. For all grains and soy-beans, yield is the number one criteria asbreeders try to persuade farmers that their va-riety is superior to others in the market.

Private and public corn breeders interviewedfor this assessment stated that after yield, theranking of remaining performance criteriadiffers among firms. This is in part a responseto different environmental factors, herbicidedevelopments, or changes in production prac-tices that prompt a change in research empha-sis. Variation in the relative importance of fieldperformance criteria may also relate to differ-ences in the ability to measure various perform-ance criteria and differences in terminologyamong firms, since many performance judg-ments appear to incorporate some subjectivefactors.

Several corn breeders indicated that for corn,disease and pest resistance is the second mostimportant performance criterion, with the thirdbeing maturity, i.e., length of dry down timerequired in the field. One firm indicated thatstandability was the second most important fac-tor, while another ranked standability seventh.Again the difference probably relates to the

firm’s ability to measure standability and to howdirectly the firm relates standability to drydown time or disease resistance. Other criteria,ranked loosely in order of importance, are her-bicide tolerance, feed value, percent earlystand, plant height, percent dropped ears, flow-ering date, percent barren plants, and testweight.

Corn Breeding Technology

Most U.S. Corn Belt germplasm used todayinvolves only two races, southern dents andnorthern flints, but more than 100 fairly dis-tinct races of corn exist. From this standpointthe available germplasm base is more than ade-quate, Considerable genetic variability existsamong kinds of corn in terms of adaptation,size, and purpose. It is likely that all traits cur-rently needed to improve corn quality alreadyexist. The problem is to identify exactly whatis needed so that seedlots in germplasm bankscan be efficiently screened for necessary traits.Certainly a large range of test weight, kerneltexture (ratio of hard to soft starch), and kernelsize is presently available among materials ac-tively being used by U.S. corn breeders. Thehope that an existing, unidentified trait for ker-nel integrity can be found depends on an ac-curate and rapid test to identify it.

As noted, present corn breeding technologyhas worked well. U.S. average yields are in-creasing almost 2 bushels per acre per yearlargely due to the highly competitive seed cornindustry striving to provide hybrids that givethe highest net profit to the farmer. Cornbreeders today emphasize high yields, easy har-vest, and fast dry down with modern culturalpractices. The current system relegates cornquality to fourth rank or lower. Making grainquality or any other desired trait more profita-ble to the farmer will stimulate more breedingeffort for that trait under the present system,

Future corn breeding technology will includemore of the present methods plus the biotech-nology approaches discussed in the wheat andsoybean sections. Successful breeders are fit-ting these newer technologies into presentmethods, Transformation of plants with genes

130

from other species and with engineered genes germplasm storage banks. Ultimately, it maymay provide the needed trait with less effort be possible to build a needed DNA sequenceand fewer side effects than screening various and position it into elite lines.

FINDINGS

In examining the objectives of genetic selec-tion, genetic influence on quality, the roles ofpublic and private plant breeders, variety re-lease, and new technologies for wheat, soy-beans, and corn, a number of common find-ings are evident:

• Yield v. Quality. —An inverse relationshipexists between yield and quality in all threegrains considered. In wheat, corn, and soy-beans the trade-off is between protein andyield. Increasing the intrinsic factors thatimprove quality means that yield usuallydeclines.

● Objectives in Genetic Selection .—Yield in-crease and the agronomic characteristicsthat relate to yield are the major objectivesof plant breeders. Quality is not a high pri-ority in genetic selection but this varies bycommodity. The objective in wheat andsoybeans is to at least maintain qualitywhile improving yields. But this is difficultto attain. In corn, relatively less attentionis given to quality factors while striving toincrease yield.

● Genetic Influence on Quality.—In general,factors affecting quality are more herita-ble than factors affecting yield. The poten-tial for improving quality through geneticsis therefore high. However, many qualityfactors are quantitative traits known to beunder the influence of a number of genes.This makes the task of enhancing qualitymore difficult relative to altering a plant’strait influenced by only a few genes. Thisis further complicated by the fact that ge-

●

●

●

netic alteration (especially with many genesequences) of one trait frequently leads toundesirable changes in other plant traits.Procedures for Release.—There are no le-gally binding procedures for controllingthe release of new corn, soybean, andwheat varieties in the United States. EachState develops voluntary variety releasepolicies, and the criteria for release differby commodity and geographic location.Public and private breeders have yield astheir primary criterion and seldom includequality of the harvested grain in their per-formance tests.Time for Development and Release.—Newcrop varieties require approximately 9 to12 years for development and release, Ifplant breeding program objectives were tochange in 1988, such as aim to develop newvarieties with enhanced quality factors, itwould be the year 2000 before new vari-eties were commercially available.New Plant Breeding Technologies.—Geneticengineering will in the future provide theopportunity for putting a new trait into aplant in a matter of months where it nowtakes 5 to 7 years to breed into a varietya specific trait. Much of the time is takenup in testing cultivars under farm condi-tions and in seed increase, These stepsmust be taken regardless of how a cultivaris produced initially, However, total timefrom identification of beneficial genes tonew plant introduction may be reduced by4 to 6 years.

131

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1 97~l.

.— - . . . . —- —

Chapter 7

TechnologiesAffecting Quality

— .— . . . . — —. .- . - . ——

CONTENTS

Page

Harvesting Technologies. . . . . . . . .. ....137Curren t Technolog ies . . . . . . . . . . . . . . . 137Conditions Affecting Combine

Performance . . . . . . . . . . . . . . . . . . . . 139Effects of Harvesting Technologies on

G r a i n Q u a l i t y . . . . . . . . . . . . . . . . . . . 1 4 1New and Emerging Technologies .. ..143

D r y i n g T e c h n o l o g y . . . . . . . . . . . . . . . . . . . 1 4 3On-Farm Drying Systems . . . . . . . . ....144Off-Farm Drying Systems . . . . . . . . . . .146Conditions Affecting Dryer

P e r f o r m a n c e . . . . . . . . . . . . . . . . . . . . 1 4 8New and Emerging Technologies ....150

Storage and Handling Technologies ....151Curren t Technolog ies . , . . . . . . . . . . . . . 151Quality Problems That Arise During

Storage . . . . . . . . . . . ..............153Storage Techniques That Protect

G r a i n Q u a l i t y . . . . . . . . . . . . . . . . . . . 1 5 4Emerg ing Technolog ies . . . . . . . , . . . . . 158

Insect Management Interventions. . ....158C u r r e n t P e s t i c i d e s . . . . . . . . . . . . . . . . . . 1 5 9Conditions Affecting Insect

Management . . . . . . . . . . . . . . . . . . . .162New and Emerging Technologies ....164

T r a n s p o r t a t i o n . . . . . . . . . . . . . . . . . . . . . . 1 6 5Current Modes of Transport . . . . . . . . .165Quality Problems That Arise During

Transport . . . . . . . ................169Transport Techniques That Protect

G r a i n Q u a l i t y . . . . . . . . . . . . . . . . . . . 1 7 0Cleaning and Blending Technologies ...171

Cleaning . . . . . . . . . . . ...............171Blending . . . . . . . . . . . . ..............175

Interactions/Findings and Conclusions. .179Moisture . . . . . . . . . . . . . . . . . . . . . . . . . .179Broken Grain and Fine Materials.. ...181Ability of System to Maintain Quality. 182

C h a p t e r p r e f e r e n c e s . . . . . . . . . . . . . . . . . 1 8 4

Conventional Combine . ..........138Single-Rotor Rotary Combine .. ...139Corn Breakage v. Kernel MoistureContent for Laboratory Rasp BarSheller Operated at varyingSpeeds . . . . . . . . . . ...............142

7-1.

7-2.

7-3.

7-4.7-5.

7-6.

7-7,

7-8,

7-9,

In-bin Natural-Air Grain DryingSystem . . . . . . . . . . . . . . . . .........144In-bin Counterflow Grain Dryer ...145Portable Batch Grain Dryer ... ....145Continuous-flow Crossflow GrainDryer . . . . . . . . . . ................145Dryeration Grain Drying Systems. 147Two-Stage Concurrent-Flow GrainDryer With Counterflow Coolerand One Tempering Zone . . . . . . .148Fluidized-Bed Grain Dryer. ... ....150Cascading-Rotary Grain Dryer ....150Moisture, Temperature, andRelative Humidity Interactions ....153Moisture Migration Patterns inFalling Temperatures . ...........155Moisture Migration Patterns inRising Temperatures. . . . . . . . . . . . .156General Flow of Grain From theFarm Through the System ... ... ..166U.S. Soybean Quality by Region,1 9 8 6 . . . . . . . , . . . . . . . . , . . . . . . . . . . 1 7 7

TablesPage

Grain Temperature, MoistureContent, and Breakage Susceptibilityat Different Locations in the GrainColumn of a Crossflow Dryer .. ...146The Effect of Dryer Type on theDrying-Air Temperature, theMaximum Grain Temperature, andthe Breakage Susceptibility of Corn .149Breakage Susceptibility of DifferentC o r n G e n o t y p e s . . . . . . , . . . . . . . . . . 1 4 9Allowable Storage Time forlorn.. .154Relative Amounts of Breakage forGrains Tested Under Four HandlingC o n d i t i o n s . . . . . . . . . . . . . . . . . . . . . . 1 5 5Grain Hauled by Railroads andB a r g e s , 1 9 7 4 - 8 5 . . . . . . . . . . . . . . . . . . 1 6 6Comparison of Rail and Rail-BargeRates From Jefferson, Iowa, to New

Orleans in Dollars Per Ton . .......168Nutritive Value of Corn Fines, byP a r t i c l e S i z e . . . . . . . . . . . . . . . . . . . . . 1 7 3Blending of Four Soybean Lots toMake U.S. No. 2, Maximum 13%M o i s t u r e . . . . . . . . . . . . . . . . . . . . . . . . 1 7 8

——

Chapter

Technologies Affecting Quality

Producers are constrained by the qualitycharacteristics of the seeds available to them,as described in chapter 6. They cannot improvethe intrinsic quality of corn, wheat, or soybeansonce the seeds are planted. Yet they—and othersinvolved in the distribution of grain—can pre-vent a deterioration in intrinsic quality and candetermine the sanitary and some of the physi-cal quality characteristics, At each step alongthe way, the technologies applied and the waythey are used can prevent, or at least minimize,a loss of quality.

Farmers who run combines too fast, for ex-ample, can damage grain, especially as it dries,Grain that is either too dry or too wet whenharvested is more susceptible to damage. Pre-cleaning wet grain before it reaches the dryerwould improve the quality substantially, yet fewdryer operators choose to do this, Breakage dur-ing handling produces broken grains and finematerials, which increases storage problemsand the risk of infestation by insects or mold.

Cleaning and blending—the mixing of two ormore grain lots to establish an overall quality--are the focus of many concerns about thedeclining quality of U.S. grain, and indeedsparked the Grain Improvement Act of 1986.

This chapter therefore looks at these numer-ous technologies that are applied to grain asit moves from the field to the export elevatoror the unloading dock of a domestic food orfeed manufacturer. Considered in turn are tech-nologies for harvesting, drying, storing and han-dling, insect management, transporting, andcleaning and blending, The conditions farmersand handlers should strive for in one situationto maintain and deliver a quality product arenot always appropriate in another case. Highermoisture content and temperatures are optimalfor minimizing breakage of corn, for example,but not for safe storage. Giving producersenough information to consider all these inter-actions is one objective of this assessment.

H A R V E S T I N G T E C H N O L O G I E S

Harvesting can be defined as the process bywhich grains and oilseeds are removed froma plant, gathered, and physically removed froma field. The crop is also threshed (using com-bines to remove kernels from crop material),separated, and cleaned.

Self-propelled combines of either conven-tional or rotary design (figures 7-I and 7-2) har-vest nearly all the grain produced in the UnitedStates. Rotary combines damage wheat and soy-beans less than conventional combines do, al-though this is not the case for corn. Combinesales have dropped from a yearly average ofabout 30,000 units during the 1970s to fewerthan 1,700 units in 1986. The weak market hasslowed new combine development due to cut-backs in research and engineering funds.

The first workable combine was developedand patented in 1836 (54) for use on small

grains, In 1953 two individuals adapted thecombine for use on corn, which until then hadbeen harvested by picking the ear, The switchfrom picking corn by ear to combine shell-ing/harvesting increased corn production effi-ciency (52).

Rotary combines were introduced in the mid-1970s. The rotary’s ability to use centrifugal sep-aration resulted in fewer moving parts and re-duced grain cracking. Today, both designs areused throughout the United States (57),

Current Technologies

Wheat combines differ from those used toharvest corn and soybeans. Conventional com-bines are built in “grain” or “corn/bean” con-figurations, with different separation functionsin several areas, First, the concave in the corn/

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Figure 7-1 .—Conventional Combine

Equipped with windrow pickup header: 1—cylinder, 2—concave, 3—beater, 4—beater grate, 5—strawwalkers, and 6—shoe.

SOURCE: G.E. Frehlich et al., John Deere 8520 Titan II self-propelled combine Evaluation Report No. 425, prairie %viculturai Machinery Institute, Saskatchewan,Canada, 1985.

bean combine has wider gaps than in a wheatcombine to allow the larger seeds. The concavetransition grate is usually a finger-type unit oncorn/bean combines and a cell-type configura-tion on wheat combines. Second, strawwalkersin corn/bean combines have a louvered bottomdesign because the rectangular openings in thebottom of wheat strawwalkers are prone to clog-ging by corn cobs. Finally, the chaffer sieve incorn/bean combines has deeper teeth on the lou-vers and wider spacing between louvers.

In areas of the United States that grow wheatas well as corn or soybeans, corn/bean com-bines are often used for harvesting wheat. Theextent to which this compromises combine per-formance is not well documented. The expectedimpacts would be lower separation capacityand poorer cleaning due to the wide-spacedchaffer and higher cleaning-shoe loads pro-duced by the corn concave.

Conventional self-propelled combines aremost common, although variations in the sys-

tem have been developed to deal with specificproblems in certain areas of the country. Twosuch variations are the practice of windrow-ing wheat and the development of sidehill andhillside combines.

Windrowers in the Northern Plains States cutthe wheat and place it in a swath on top of thewheat stubble, where it is later picked up bya combine equipped with a windrow pickupdevice (figure 7-1) that offers gentler handlingthan auger-type headers. Windrowing gener-ally takes place when the wheat is at 30 to 35percent moisture (54). Although windrowingis an additional expense, it interrupts weed seeddevelopment, thereby improving weed controlin subsequent years; speeds wheat drying byup to 2 weeks and can shorten combining timeconsiderably; and allows the crop to better with-stand hail and high winds.

Combines with leveling in both pitch and rollmodes have been developed to accommodatethe tilling of 40 to 70 percent slopes in the Pa-

139

Figure 7-2.—Single-Rotor Rotary Combine

1—Rotor, 2—threshing concaves, 3—separating concaves, 4— rear beater, 5—shoe, and 6—tailings return.

SOURCE: G.E. Frehllch et al., Case IH Self-Propelled Combine Evaluation Report No. 531, Prairie Agriculture Machinery Institute, Saskatchewan, Canada, 1987.

cific Northwest. Such machines are heavilymodified production combines with unique sus-pensions, drive lines, and feeder modifications.Sidehill combines with only roll leveling weredeveloped in the mid-1970s for use on side-slopes of up to 20 percent, and are used pri-marily on the moderately rolling terrain of theMidwest.

Conditions Affecting CombinePerformance

To be competitive, combine manufacturersmust achieve an optimal balance between har-vest capacity, harvest losses, grain quality, andoperator safety and comfort. Combine fuel effi-ciency is also a concern, but is not the primaryfactor when designing combines. Conditionssuch as crop maturity, moisture content, stand-ability, the presence of insects or disease, andthe amount of weeds in the field are the maininfluences on combine performance.

Maturity and Moisture

Physiological maturity occurs when grain hasreached its maximum dry weight. Thus, thegrain’s moisture content at harvest directly af-fects the amount of kernel damage producedthrough combining.

Corn maturity is obtained at about 30 to 35percent moisture. While corn can be harvestedat this point, the soft pericarp will de damaged.In the Midwest, harvesting is generally not rec-ommended until the corn has field-dried to 26percent moisture. In some parts of the UnitedStates, such as south Texas, corn field-dries toacceptable moisture levels and is not a prob-lem. In the Northern States, however, obtain-ing 26 percent moisture is not possible duringwet fall harvest periods, and corn must be har-vested at higher moisture contents.

It is generally recommended that soybeansnot be harvested until they reach 13.5 percentmoisture. Soybeans readily absorb moisture

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overnight and during high humidity periods.After first being field-dried to 13.5 percent, soy-beans can be harvested at moistures up to 15.0percent. Soybeans at 14.4 percent moisture inthe morning can easily dry to 11.4 percent byafternoon (11). Soybeans below 12 percentmoisture are exceptionally susceptible to shat-ter loss during harvest.

Weeds

The main factor affecting combine cleaningI[ performance is the amount and type of weedspresent in the field at harvest. Weed controlis one of the most serious problems facing manyt

I U.S. wheat-producing areas and southeasternI soybean-producing areas, where a warm wetI

climate is conducive to weed growth. Theamount of weeds affects not only yield, but alsothe amount of foreign material present in theharvested grain and the combine’s ability to re-move this material.

Weeds types have a direct bearing on yieldand cleanliness. For example, the number ofHemp sesbainia in soybean fields has a directeffect on the amount of foreign material in com-bine samples (45). At 650 plants per acre, 0.8(

I percent foreign material was found; at 52,270I plants per acre, foreign material increased toI

f 20,3 percent. In weedy fields farmers usuallyincrease cylinder/ rotor speed to force the weeddebris through the combine, but this can leadto increased grain damage.

One way to reduce the amount of foreign ma-terial in soybeans due to weedy conditions isto reduce the combine’s ground speed. It hasbeen found, however, that in weedy fields (com-pared with weed-free ones) 50 percent or moreof the soybean pods are located on the lower6 inches of the plant. Thus, the combine oper-ator has to cut extra low, which increases thechance of picking up more soil.

Bromus sacalinus (cheat) is a major problemfor winter wheat producers in the centralPlains. One study found that between 66 and99 percent of the cheat was introduced into thecombine and 41 to 91 percent was delivered

to the clean grain bin (18). Several combinemodifications have tried to overcome this prob-lem. Three cascade gaps in the cleaning shoehave been introduced in some regions. Othermodifications include secondary cleaners andprecleaning grain prior to delivering it to thecleaning shoe.

The process of modifying combines to ade-quately harvest clean wheat from weedy fieldshas been complicated by the trend towardsmaller wheat kernel size, which is a concernbecause the seeds of most grassy weeds aresmaller and lighter than wheat. Thus, thesmaller wheat kernel size reduces the marginbetween wheat and weed size and therefore in-creases the difficulty of cleaning within thecleaning shoe (57).

Timeliness of Harvest

Timeliness of harvest often takes precedenceover other factors such as the optimal moisturecontent needed for reduced breakage or lowerfield losses. Everywhere in the United Statesfield conditions will permit harvesting for onlya limited number of days. For example, in cen-tral Illinois, September and October have had16 harvesting days in 8 years out of 10, basedon statistical weather records (48,65).

Producers must therefore match combine sizeand the number of combines available to thenumber of days required to harvest the totalacreage. Thus, when combine capacity is notavailable, long hours must be spent harvesting,which cannot be delayed because of grain mois-ture. The result of this dilemma is that produc-ers often push the moisture limits, accept higherlevels of kernel damage, and do not adjust com-bines as crop conditions vary.

In spite of the demands placed on the com-bine for high-capacity harvesting with minimalloss, field harvesting is only part of the totaloperation. Trucks, wagons, and drivers mustbe available to provide timely combine-tank un-loading. If the crop must be hauled to a grainelevator, long truck lines can slow the harvest.Thus, it is essential to match hauling, drying

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if needed, and storage capacity with harvest-ing capacity.

A large percent of the harvest in the GreatPlains is accomplished through custom wheatharvesting. The biological ripening of wheatbegins in Texas and proceeds up through theGreat Plains, This creates the opportunity forcombines to follow the harvest. With customcombines concentrated where the crop is ripe,wheat harvest is completed rapidly and thecrops’ exposure to the elements is lowered.

Combine Adjustments andOperator Proficiency

The combine is the most demanding machineto operate on most farms in terms of operationalworkload and knowledge required for adjust-ment and maintenance, Modern combines pro-vides at least 25 adjustments for tailoring themachine to specific conditions. Seven to tenof the most frequent adjustments are accessi-ble from the operator’s seat. Operators mustconstantly monitor ground speed, cuttingheight, reel speed, and reel height as the ma-chine moves through the field. In addition, cropconditions can demand readjustment withinthe same field on the same day.

Cylinder/rotor speed can be adjusted by theoperator and varies by crop, varieties, and mois-ture content. Generally, as moisture decreases,threshing speed should also be decreased, Con-cave settings must always be slightly larger thanthe size of the grain being threshed. A concavesetting that is too narrow causes severe kernelgrinding-like damage; if it is set too wide, ker-nels will be left in the head, on the cob, or inthe pod, contributing to high threshing losses,

The extent to which combine operators un-derstand and appreciate the interactions be-tween combine components and adjustmentsvaries widely. Because of the ease by which anonoptimal cylinder/rotor speed can be con-fused with an incorrect concave setting, con-siderable operator experience is required whenthe goal is to maintain low grain damage andlow header, threshing, and separating losses.

Effects of Harvesting Technologieson Grain Quality

The primary quality factors affected by com-bine harvesting are grain damage (which in-cludes damage to the pericarp, broken kernels,internal cracks, and splits) and cleanliness.Grain damage is linked with threshing and han-dling components within the combine; clean-liness can be attributed to header height andto separating and cleaning components.

Grain Damage

Cylinder speed, moisture at harvest, and theamount of grain damage are all interrelated.In general, damage occurs whenever grain isharvested. It increases significantly, however,on extremely wet or extremely dry grain. Whengrain is harvested at high moisture levels, thekernel is soft and pliable. Moist kernels deformeasily when a force or impact is applied, anda greater force is needed to thresh wet kernelsthan dry ones, so they suffer more damage.Drier kernels, however, can break when thesame force is applied, Therefore, optimal con-ditions exist for each grain when cylinder speedand moisture are balanced.

The impact of cylinder/rotor speed on cornbreakage varies by moisture level (figure 7-3),As moisture decreases, the impact increases.Breakage is higher at extremely high and lowmoistures regardless of cylinder/rotor speed.For wheat, the same principles apply: Cylin-der/rotor speed increases wheat breakage, andthe impact is more pronounced on wheat mois-tures of 14.6 percent than 18.9 percent, For allgrains, cylinder/rotor speed must be reducedat lower moisture levels to minimize graindamage.

The type of combine (rotary or conventional)affects grain damage in wheat and soybeans.Several studies have demonstrated reduceddamage from some rotary combines comparedwith conventional combines, One study on theamount of split soybeans from two types of ro-tary combines and a conventional combine

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Figure 7-3.—Corn Breakage v. Kernel Moisture Content for Laboratory Rasp Bar ShellerOperated at Varying Speeds

●

-40 30 20 10Kernel moisture content, (%)

SOURCE: G E Hall and W H Hohnson, “Corn Kernel Crackage Induced by Mechanical Shelling,” American Society of Agricultural Engineers 13(1), 1970

demonstrated the reduced amount of splitsusing rotary combines (47). Studies on rotaryand conventional combines for wheat indicatea two-third reduction in grain damage usingrotary combines (57). Studies of corn breakageusing the two combine types have not shownany significant differences (52).

Cleanliness

Three combine components directly affectthe combine’s ability to harvest and deliverclean grain: header height, separating, andcleaning shoe.

Header height must be set to operate near orat ground level. This is particularly true whenu

harvesting certain varieties of soybeans withpods set very low on the stalk. Cutting belowthe lowest pod or wheat head inadvertently in-troduces some soil into the combine. Most soilis aspirated out the rear of the combine unlessit is about the same size as the kernel. In thesecases, soil particles pass through the cleaningsieves with the grain.

Material that is fed onto the cleaning shoeafter passing through the cylinder concave orstrawwalkers is divided into three streams.Whatever does not move through the top sieve(chaffer) passes out the rear. Grain and otherplant parts that pass through the chaffer butnot the cleaning sieve are routed back to the

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cylinder/rotor for rethreshing. Grain that passesthrough the cleaning sieve is conveyed to theclean grain tank. Aspiration (using fans) is alsoused in this process to remove light material,If the fans are set too high, grain maybe drawnoff along with the lighter material.

This process removes material larger than thegrain (such as plant parts) and material signifi-cantly smaller (like sand and dirt), Sloping ter-rain, as previously discussed, can affect thisprocess. In wheat, the amount of foreign ma-terial increases as the angle of the cleaning shoedecreases (59). Side slopes also create problemssince the tendency is for material to congregateon the downhill side of the cleaning shoe.

New and Emerging Technologies

Changes in harvesting technology have beenevolutionary rather than revolutionary, For ex-ample, the rotary combines were widely publi-cized as a major breakthrough, yet studies ofcentrifugal separation had been conductedsome 15 years earlier. With declining combinesales over the past 8 years, revolutionarychanges are even less likely.

Current harvesting technology provides com-bines capable of obtaining low grain damagelevels and reduced foreign material with accept-able losses, The problem remains in gettingoperators to run the machines at the lowestgrain damage level the combine is capable ofdelivering. The major advance in this area isthrough new control systems and automation,

One recent aid for improving harvesting hasbeen the introduction of grain loss monitors.

These are mounted behind the combine’s sep-aration and cleaning sections and electronicallysense the number of kernels that hit a smallacoustical pad. Loss monitors have been mar-keted as a means of reducing threshing and sep-arating losses. They can, however, aid opera-tors in reducing threshing speed until lossesbecome noticeable, thus reducing grain dam-age. Since grain damage increases as thresh-ing speed rises, cylinder/rotor speed must bereduced as grain dries until threshing losses,observable on the grain loss monitor, start toincrease (52),

Information sensors are commonly providedas original equipment on newer combines. Suchsensors include digital readout of cylinder/ro-tor speed, fan speed, feeder shaft speed, reelspeed, engine speed, and ground speed. Sev-eral manufacturers now have warning lightsfor speed reductions of the fan, cylinder/rotor,discharge beater, straw chopper, feeder, rearbeater, clean grain elevator, and return eleva-tor. When this information is received, opera-tors can now make adjustments from the oper-ator station, but they still must decide if changesare needed.

Low-cost microcomputers and improved sen-sors mean many of the current operator deci-sions will soon become automatically con-trolled by computers. A limited number ofcomputer-assisted programs are already avail-able to assist operators in selecting proper com-bine settings.

DRYING TECHNOLOGY

Cereal grains and oilseeds are harvested inthe United States at moisture levels too highfor long-term storage or even short-term stor-age and transportation within the marketingsystem. Corn, which is harvested at 20 to 3 0percent moisture, must be dried to 14 to 15 per-cent for safe storage. Wheat and soybean har-vest moistures are substantially lower thancorn, with safe storage levels marginally lower

than harvest moisture. Since wheat (and, insome cases, corn and soybeans) dries naturallyin the field in some parts of the country, thisdiscussion mainly concentrates on drying tech-nologies as they relate to corn.

Considerable moisture is removed from grainduring drying. When taking corn from 25 t o15.5 percent moisture, 122 kilograms of water

)

,

I

I

!

1

I

III

I

bI

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are removed per metric ton. Drying grain inthe United States takes place on farm as wellas off farm in commercial handling facilitiesusing ambient air as the drying medium. On-farm drying systems are usually lower inthroughput than off-farm units and frequentlyemploy lower drying-air temperatures.

Dryer design depends on grain type. The re-quirements for drying-air temperature, airflowrate, and the time the grain remains in the dryerdiffer for wheat, corn, and soybeans. Dryingwheat in a corn dryer without modification willlead to a significant decrease in wheat quality,

It is generally agreed that the bulk of grainquality deterioration happens during drying (6).Too frequently, excessively high-drying-air tem-peratures and airflows are used to speed theprocess. This leads to excessive stress crack-ing in corn and soybeans and degradation inthe milling quality of wheat.

On-Farm Drying Systems

Cereal grains and oilseeds are mainly driedon-farm in the United States. Indiana is typi-cal: In 1984, less than 5 percent of the States’scorn was dried off-farm (37). On-farm systemsfall into three broad categories: bin dryers, non-bin dryers, and combination systems.

Bin Dryers

Bin dryer systems include: 1) in-bin naturalair, 2) in-bin low temperature, 3) solar, 4) in-bin storage layer, 5) in-bin counter-flow, and6) batch-in-bin. They all use a bin to hold wetgrain as it is dried. The drying-air temperaturesof the first four systems are relatively low, whilethe last two need temperatures as high as 70 “C.

In-bin natural air, low temperature, and so-lar drying systems are similar (figures 7-4). Wetgrain is placed in a bin to a depth of 2.5 to 5.0meters and slowly dried using an external fanas the airflow source. Each system can producehigh-quality grain. However, minimum airflowrates are critical for their success; these dependon the initial moisture content, harvest date,and environmental conditions. Airflow ratesvary by location and, consequently, farmers

Figure 7-4.—in-Bin Natural. Air Grain Drying System

Perforated f loor

SOURCE F W Bakker-Arkema, “Grain Drying Technology, ” background paperprepared for the Office of Technology Assessment, U.S. Congress,Washington, DC, 1988

need considerable expertise to operate thesesystems properly by selecting the correct air-flow rate. Slower drying than the required ratecan lead to grain molding before safe storagelevels are reached.

In-bin storage layer drying differs slightlyfrom natural air drying. Rather than filling abin all at once with wet grain, successive layersare placed in the bin after the preceding onehas almost reached the desired moisture con-tent. Like natural air drying, this drying sys-tem has low capacity, requires considerableoperator expertise, is energy-efficient, and canproduce excellent quality grain when operatedproperly.

In-bin counter-flow drying is relatively newand consists of two bins (figure 7-5). One is aheated air in-bin counter-flow dryer and theother is a natural air in-bin dryer and cooler.Wet grain is loaded into the first bin and drieduntil the bottom 10 centimeters has reached 16to 18 percent moisture. The partially dried, hotgrain is then moved to a second bin for slowfinal drying and cooling. The automatic natureof this process, along with the ability to pro-duce quality grain at fairly high capacities, hascontributed to the commercial success of in-bin counter-flow dryers.

Batch-in-bin dryers differ from in-bin coun-ter-flow dryers in that they lack the second dry-

745

Figure 7-5.— In-bin Counterflow Grain Dryer

SOURCE F.W. Bakker-Arkema, “Grain Drying Technology, ” background paperprepared for the Off Ice of Technology Assessment, U.S. Congress,Washington, DC, 1988

ing and cooling bin, Airflow rates and dryingtemperature are similar, but the energy effi-ciency as well as the grain quality characteris-tics are poorer (4).

Non-bin Dryers

Non-bin dryers are either portable batch orcontinuous-flow dryers. Over half the U.S. graincrop is dried (both on and off farm) in thesetwo types (6). They utilize drying air tempera-tures in excess of 100 ‘C or more and airflowrates over 110 cubic meters per minute per ton.Thus, the drying rate is high, but the resultinggrain quality is often lower,

portable batch dryers consist of a plenum sur-rounded by a 30 to 40 centimeter grain column(figure 7-6). Hot air traverses the grain layerquickly and in the process overheats and over-dries part of the grain column. The batch is re-moved from the dryer as soon as the desiredfinal moisture content and temperature arereached. A portable batch dryer is comparableto in-bin batch dryers except that grain is driedat higher temperatures and airflow rates dueto the reduced depth of the grain layer.

Continuous-flow dryers are predominantlyof the crossflow type (figure 7-7). The dryingair flows perpendicular to the grain flowthrough the dryer. The plenum/grain column

Figure 7-6.— Portable Batch Grain Dryer

Temperaturecontrol

SOURCE F W Bakker-Arkema, “Grain Drying Technology, ” background paperprepared for the Office of Technology Assessment, U S CongressWashington, DC, 1988

Figure 7-7.—Continuous-flow Crossflow Grain Dryer

SOURCE: F W Bakker-Arkema, ‘“Grain Drying Technology, ” background paperprepared for the Off Ice of Technology Assessment, U S Congress,Washington, DC, 1988

-- —.. .— —.. ----

146

t

,

is similar to that in a portable batch dryer. Cool-ing takes place in the bottom one-third of thedrying column. Airflow rates and drying tem-peratures are the same for both types; the onlydifference is the grain velocity.

Continuous-flow crossflow dryers do not drygrain uniformly because a large moisture gra-dient exists across the grain column when dry-ing is discontinued. During the cooling cycle,the degree of nonuniformity decreases, but adefinite moisture differential among kernelsstill exists when the grain leaves the dryer. Inone study, when drying 25 percent corn at110 °C to 16 percent average moisture, thecorn’s moisture content at the air inlet side ofthe grain column reached 8 percent. At the airoutlet side, the grain was still at 22 percent, thuscreating a moisture gradient of 14 percent (24).As table 7-1 indicates, part of the grain in acrossflow dryer approaches the drying-air tem-perature, which results in overdrying and sharpincreases in breakage.

Combination Drying

Combination drying is a system in whichhigh-temperature, high-speed batch or contin-uous-flow drying is followed by low-tempera-ture, slower in-bin drying and cooling. Thisattempts to maximize the advantages and min-imize the disadvantages of the two systems.

Combination drying is mainly used for corn.When corn is harvested in the 22 to 35 percentrange, it is dried in a high-temperature dryerto an intermediate moisture content of 18 t o24 percent and then moved hot to an in-bindryer and slowly final dried and cooled. Thein-bin dryer usually is a natural air dryer. Thebest known type of combination drying is dryer-

Table 7-1 .—Grain Temperature, Moisture Content,and Breakage Susceptibility at Different Locations

in the Grain Column of a Crossflow Dryer

Distance Grain Moisture Breakagefrom air temperature content susceptibilityinlet (cm) (°C) (in percent) (in percent)

1.25 . . . . . . . . . 102 10 487.50. . . . . . . . . 78 20

13.75 . . . . . . . . . 51 24 10SOURCE: R J. Gustafson et al , “Study of Efficiency and Quality Vanatlons for

Crossflow Drying of Corn, ” ASAE Paper No 81-3013, 1981

ation (figure 7-8). The two main advantages ofcombination drying over non-bin dryers are theincreased energy efficiency and improved grainquality.

Off-Farm Drying Systems

Grain dryers located off farm in commercialhandling facilities are non-bin continuous-flowmodels. Three types are currently in use: cross-flow, mixed flow, and concurrent flow.

Crossflow

Crossflow dryer design was discussed in theon-farm section, The distinguishing featurehere too is the perpendicular direction of thegrain and airflows, which results in non-uniform drying. Recent design improvementsfor off-farm crossflow dryers have improvedgrain quality and energy efficiency.

In a conventional crossflow dryer, the dis-charged air is only partly saturated, Recyclingpart of the drying air and all of the cooling airgreatly decreases energy requirements. Alongwith air recycling, airflow reversal has beenincorporated in some crossflow dryers in or-der to offset the large moisture differential inthe grain column. Placing a grain inverter inthe grain column is less expensive, but also lesseffective. Grain inverters turn the overheatedgrain at the air inlet side to the air exhaust sideof the column and thus minimize overheating(50). Crossflow dryers without air reversal orgrain inverters have moisture gradients acrossthe drying column as large as 20 percent andgrain breakage as high as 50 percent (24).

Two new features added recently to the basiccross flow design—differential grain speed andtempering—improve grain quality (40). A cross-flow dryer incorporating air recycling, airreversal, differential grain speed, and temper-ing is commercially available, but its high ini-tial cost is preventing general acceptance.

Mixed Flow

Mixed-flow dryers are also called cascade orrack-type dryers, Grain is dried by a mixtureof crossflow, concurrent flow, and counterflow

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Figure 7-8.— Dryeration Grain Drying Systems

Full bin

Layer

Batch-in-bin coolwith

recirculatoror stirrer

withaeration

Dry

SOURCE F W Bakker.Arkema, “Grain Drying Technology,” background paper prepared for the Off Ice of Technology Assessment, U.S. Congress, Washington,DC 1988

drying processes. The grain flows over a ser-ies of alternate inlet and exhaust air ducts. Thisresults in fairly uniform drying and thereforea relatively uniform moisture content and qual-ity. The drying temperature in mixed-flow dry-ers is higher than in crossflow ones becausethe grain is not subjected to the high tempera-ture for as long.

Mixed-flow dryers are more expensive tomanufacture and require more extensive airpollution equipment. For these reasons, thenumber of mixed-flow dryer manufacturers hasdecreased in the United States. In other coun-tries, mixed-flow dryers remain the predomi-nant large continuous-flow dryer (6).

Concurrent Flow

In concurrent-flow dryers the grain and dry-ing air flow in the same direction (vertically),Cooling occurs in a concurrent-flow cooler inwhich the grain and air flow in the oppositedirection. Commercial concurrent-flow dryersconsist of two or three concurrent-flow dryingzones and one counterflow cooler (figure 7-9).

The most distinguishing feature of thesedryers is the uniformity of the process. Everykernel undergoes the same heating/drying/cool-ing process, unlike in crossflow and mixed-flowdryers. The drying-air temperature is muchhigher than in other dryers because the wetgrain is subjected to the hot drying air not for

148

Figure 7-9.-Two-Stage Concurrent-Flow Grain DryerWith Counterflow Cooler and One Tempering Zone

Ricein

+ I Heater FanAmbient

air

First-stage Aconcurrent

dryingI I

I Tempering I I1 I

I drying I Air Irecycling I

i I

Riceout

SOURCE: F W Bakker-Arkema, “Grain Drying Technology,” background paper pre-pared for the Office of Technology Assessment, U S Congress, Washing-ton, DC, 1988

hours (crossflow dryers), or minutes (mixed-flow dryers), but only seconds. Thus, the graindoes not approach the temperature of the dry-ing air, as it does in other types.

The uniform, relatively gentle grain dryingand cooling in concurrent-flow dryers resultsin dried grain of superior quality (table 7-2).Breakage susceptibility in concurrent-flow dry-ers is half that of mixed-flow and one-fourththat of crossflow dried corn.

Conditions Affecting DryerPerformance

Dryer performance is affected by physical,biological, economic, and human factors. Eachcan have an impact on grain quality.

PhysicaI Factors

The physical factors affecting drying per-formance are climate and weather. The climatedetermines the type of hybrids that can begrown in a particular region, the expected mois-ture content range, and the weather at harvest.Initial grain moisture entering a dryer has a sig-nificant effect on dryer performance. Not onlyare dryer capacity, energy consumption, andoperating costs influenced by the initial mois-ture, so is grain quality. When grain is harvestedabove or below its optimum harvest moisture,quality losses during drying increase (12). Thus,in Northern States, where harvest moistures fre-quently exceed optimum value, corn and soy-bean quality is inherently inferior to that ofgrains grown, harvested, and dried in the Cen-tral Corn Belt States.

Certain years will be wet in the summer andfall and result in grain with excessively highmoisture content reaching the dryers, Thisleads to lower dryer capacity, higher energyconsumption, higher drying cost, and de-creased grain quality. Weather conditions havea direct effect on the performance of some on-farm bin dryers. These low-capacity systemsmay not be able to dry wet grain before mold-ing sets in (58). Off-farm systems are lessdirectly affected by weather conditions.

BiologicaI Factors

Two biological factors affect dryer perform-ance: grain type and genotype. First, wheatdries most rapidly and corn most slowly. Aconcurrent-flow dryer has a 23 percent higherthroughput for wheat than for corn while oper-ating at the same drying temperature. The max-imum drying temperature for corn is substan-tially higher than that for wheat, thus affectingthe quality of these two grains differently. Also,energy use is affected by grain type.

Genotype determines the drying rate of sin-gle corn kernels (64). Some genotypes dryslowly and others dry fast. Dryer capacity andfuel efficiency are higher with new genotypes.Drying rates for wheat and soybeans, however,

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Table 7-2.—The Effect of Dryer Type on the Drying-Air Temperature,the Maximum Grain Temperature, and the Breakage Susceptibility of Corn

Drying-air Maximum Breakagetemperature grain temperature susceptibility

Dryer type ( c) ( c) (percent)Crossflow . . . . . . . . . . . . . . . 80-110 80-110 20Mixed-flow . . . . . . . . . . . . . 100-130 70-100 10Concurrent-flow . . . . . . . . . 175-285 60-80 5SOURCE F W Bakker.Arkema. ‘ Grain Drvtna Technoloav, ” background Da~er DreDared for the Off Ice of Technoloav Assess

ment U S Congress , Wash ington DC 1988 ‘“ -

are not influenced by genotype (46). Breakagesusceptibility after drying also varies by geno-type (5 I ,63). Table 7-3 shows that a fivefold in-crease in breakage susceptibility may occurwhen switching genotype.

Economic Factors

Economics can affect dryer performance byinfluencing fuel prices and availability. Therelative price of natural gas, fuel oil, liquid pro-pane, and electricity varies from year to year.At the present time, natural gas is the least ex-pensive and electricity the most expensiveenergy source in the United States. The typeused affects dryer operation because it influ-ences burner efficiency and drying-air quality.

Grain dryers are directly heated in the UnitedStates, while indirect heating grain drying sys-tems are common elsewhere. Indirect heatinguses heat exchangers and is less energy-effi-cient, more costly, and less grain polluting thandirect heating. It is used to prevent absorptionby the grain of polycyclic aromatic hydrocar-bons contained in the drying air. Of the threefossil fuels commonly used in direct-heated dry-ers in the United States, only fuel oil causeshydrocarbon absorption by grain (35).

Table 7-3.–Breakage Susceptibility ofDifferent Corn Genotypes

Breakage susceptibilityGenotype (percent)FRB 73 FR 18. . . . . . . . . . . . . . . . . . . . . 23.5FRB 73 PA 91 . . . . . . . . . . . . . . . . . . . . . 10.5FRB 73 FR Mo 17 . . . . . . . . . . . . . . . . . 7.5FR Mo 17 x Fr 634 . . . . . . . . . . . . . . . . . . 4.3SOURCE M R Paulsen “Corn Breakage Susceptlbll!ty as a Function of Moisture

Content “ ASAE Paper No 83.3078 1983

Grain drying is a complicated heat/mass/mo-mentum transfer process of a heat-sensitive bio-logical product and is frequently not well un-derstood by the average dryer operator. At mostcommercial handling facilities, the dryer oper-ator job is seasonal: It requires 12-hour days,7 days a week, for 2 to 3 months. The pay rateis marginal and job training is usually by trialand error. Therefore, it is not surprising thatdryer maintenance, supervision, and operationare far from optimal. All these factors affectthe performance of the typical dryer with re-spect to capacity, energy efficiency, and grainquality (5). The most frequent mistake is usingexcessively high temperatures in order to in-crease dryer capacity.

Auxiliary Factors

Several auxiliary equipment (instrumenta-tion) items influence grain dryer performance,Included here are the grain moisture meter, theair temperature meter, and the dryer controller.

Moisture meters are an integral part of thegrain drying system. Electronic meters are usedat grain handling facilities. Meters commer-cially available have an accuracy of ± 1 per-cent at the 13 to 16 percent moisture range and± 2.5 percent at higher moistures (34). This con-tributes substantially to overdrying or un-derdrying of grain.

Air temperature measurement in a graindryer is usually accomplished by a single ther-mocouple or thermistor, an acceptable prac-tice when the temperature distribution in thedryer plenum is uniform. This is not the case,

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however, in many off-farm dryers (2) or on-farmmodels (58). Temperature differences of 20 to35 °C in the plenum are not uncommon, result-ing in overheating of part of the grain columnand deterioration of average grain quality.

Controlling dryers is usually manual, andoverdrying is frequently the result. Automaticcontrol systems have recently become commer-cially available for in-bin and continuous-flowgrain dryers. Their use leads to savings inenergy and drying costs and limits the degreeof overdrying and grain quality deterioration.

New and Emerging Technologies

Some new and emerging drying technologieshave the potential for a significant impact onoverall grain quality, especially in corn. Com-bination drying has already been discussed,along with its ability to improve corn qualityat the farm level. Although the procedure hasbeen known for a decade, it is still used onlysparingly because of the more demanding lo-gistics and additional grain-handling equip-ment required. No other promising technologyappears to be on the horizon for on-farm graindrying.

Mixed-flow and concurrent-flow drying areoff-farm drying technologies that producehigher quality grain than the standard cross-flow dryers do. Both dryer types are commer-cially available in the United States. Their highinitial cost (10 to 20 percent more than com-parable crossflow dryers) has thus far preventedtheir widespread use. The same can be said forautomatic moisture controllers. If the paybackperiod of these technologies can be shortened,rapid market penetration can be expected (6).

Two off-farm systems not used in the UnitedStates for corn are the fluidized-bed dryer andthe cascading-rotary dryer (figures 7-10 and 7-11). A fluidized-bed grain dryer was at one timecommercially available in the United States, butproduction was discontinued due to high elec-tricity costs and excessive air pollution. Thecascading rotary dryer is used in the UnitedStates to dry parboiled rice. High initial and

Figure 7-10.--Fluidized-Bed Grain Dryer

Air exit

Dryer

Star

Air inDisperser plate

from fanHeater

SOURCE: F W. Bakker-Arkema, “Grain Drying Technology,” background paperprepared for the Office of Technology Assessment, US. Congress,Washington, DC, 1988.

Figure 7-11 .—Cascading-Rotary Grain Dryer

Quenchair

To cyclonesand fan.

Dry product

SOURCE: F.W. Bakker-Arkema, “Grain Drying Technology,” background paperprepared for the Off Ice of Technology Assessment, U S. Congress,Washington, DC, 1988.

maintenance costs plus high energy consump-tion characterize the U.S. rotary dryer design.

At least two companies have experimentedwith microwave grain dryers, but both havemarketed commercial models without success.The advantages of low energy consumption andhigh grain quality were offset by high initialcost and low product throughput. It is unlikelythat microwave grain dryers can compete withconventional drying techniques as long as theeconomic return of improved grain quality re-mains low.

A technology that could aid the drying rateof corn is the use of ethyl oleate and ethyl ole-

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ate/ethyl sterate mixture. Small-scale prelimi- drying rate. The National Corn Growers Asso-nary tests show that these chemicals applied ciation is coordinating a series of larger scaleto high moisture corn significantly increase the tests of the chemicals at several universities.

STORAGE AND HANDLING TECHNOLOGIES

The usual surplus of U.S. grain means stor-age is required for longer and longer periods.With the increasingly large carryovers and thenecessity to store more grain for more time,grain could be stored for a year or longer. Grainis a perishable commodity with a finite shelflife. Storage can only extend that shelf life, notimprove it.

The total U.S. grain storage capacity in 1987was about 23 billion bushels. Of this 14 billionare located on farm, and the other 9 billion offfarm (56). Illinois leads in off-farm capacity,followed by Iowa, Kansas, Texas, and Nebraska(l). These States account for 53 percent of alloff-farm storage. The number of off-farm stor-age facilities totaled 13,873 on December 1,1987. Smaller proportions of wheat and soy-beans are stored on farms (31 percent for wheatand 25 percent for soybeans) than of corn (47percent), Major wheat-producing States in theSouthern Plains tend to have more wheat storedoff farm in commercial facilities than the North-ern Plains States. Over 80 percent of the cornand soybean inventories are stored in the ma-jor corn- and soybean-producing States.

Current Technologies

Grain is stored in buildings or piles for fu-ture marketing and in transportation modes enroute to destination. A wide variety of sizes andtypes of structures are used. The basic storagetypes can be classified as upright concrete ormetal bins (vertical storage), buildings (horizon-tal or flat storage), and onground piles. The han-dling equipment used in each type is similar.

Handling Equipment

Handling equipment can be broken downinto two categories, based on grain movementdirection: vertical or horizontal (56).

The belt bucket elevator using an elevator legis the primary means of moving grain verticallyin commercial grain facilities. The leg consistsof a vertical endless belt with buckets spacedevenly all along it. The buckets are filled byscooping up the grain at the bottom (boot) ofthe leg. Grain is discharged at the top by cen-trifugal force as the buckets pass over the top(head) pulley. Recent elevator designs haveeliminated the need for traditional elevator legsby introducing incline belts to move grain ver-tically, After discharge, the grain flows by grav-ity through spouting or horizontally by beltsor other conveying devices.

Commercial elevators using elevator legs orincline belts are available in any size and ca-pacity to meet the vertical lift requirements ofboth large and small facilities. Elevators usinglegs can operate relatively economically at lessthan their rated capacity, unlike some othergrain-handling devices. There is no problemwith increased grain breakage resulting fromlegs being used at less than rated capacity. Theamount of grain breakage occurring in eleva-tors using legs is affected by the type and sizeof the buckets, belt velocity, and transfer load-ing of the buckets. Overloading the bucketscauses spil lage and can increase kernelbreakage.

Loading grain on the up side of the leg causesmore damage than loading on the down side(20), which should be a consideration for ele-vators handling corn. For wheat, no differencecan be detected as long as the leg is operatedat normal speed.

Belt conveyors are the primary means of mov-ing grain horizontally in most commercial fa-cilities and, as mentioned, are becoming in-creasing popular for vertical lifting. Theyconsist of an endless belt supported by rollers

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and driven by a shaft-mounted speed reducermotor. They are usually open, but may be cov-ered when used outside a building. Belt widthvaries and can be operated at 500 to 550 feetper minute. Conveyors can be inclined up to15°, but should be horizontal at the point ofloading. They can accommodate a wide rangeof speed or volume demands, are energy-effi-cient, and have relatively low maintenance andoperating costs. Grain breakage is minimalwhen moved this way. Most belt conveyors areused in fixed installations, but portable inclinedmodels are available for use in loading flatstorages.

Other types of conveying equipment includedrag flight, screw auger, and pneumatic con-veyors. Drag flight conveyors are enclosedtubes in which a chain with paddles or flightsmoves. The chain is driven by a shaft andsprocket in the head discharge section with anidler shaft and sprocket in the tail section tomaintain tension on the chain. As the flightingmoves, it carries grain along with it.

Drag conveyors are available in a wide rangeof sizes and capacities and as fixed or portablemodels. They are relatively inexpensive, easyto load, move grain at low velocities, and re-quire less space than conventional belt con-veyors. Since they are enclosed, they are sub-ject to higher levels of insect infestation thanbelt conveyors are, The demand for low-costconveyors has resulted in a substantial increasein the use of drag conveyors.

Screw auger conveyors have for many yearsbeen the principal means of moving grain onfarm or where inexpensive portable equipmentis needed. They consist of a round tube witha continuous spiral or screw inside and can bepowered by farm tractors or electric motors.They are space-efficient and portable, and canmove grain horizontally or at relatively steepangles. On the negative side, they have highpower requirements and can cause consider-able grain breakage, depending on the designand operation of the auger.

Pneumatic conveying is a system that movesgrain by air inside a pipe. The air-moving de-vice must be able to provide the air velocity and

sufficient pressure to overcome the airflow re-sistance and the resistance of the grain to flowthrough the system. Pneumatic system capac-ity is a function of conveyor size, power sup-plied, and the vertical or horizontal conveyingdistance. Pneumatic conveying normally re-quires more power than bucket legs. Factorsthat increase grain breakage include air veloc-ities, poor pipe joint connections, and overload-ing the air-lock feeders. As with other handlingequipment, breakage is not as great a concernfor wheat as for corn. Pneumatic systems arenot widely used in commercial facilities mainlybecause of the high energy input and powercost.

Storage Types

The most common and easily managed stor-age type is upright concrete or metal bins (32).Bin sizes can range from as little as 3,000 bushelfarm bins to over 500,000 bushel bins at com-mercial facilities. Upright bins are generallyfilled from the top and unloaded from the bot-tom by gravity flow. Bins can be variousheights, with deep concrete bins ranging from98 to 164 feet. The bottoms can be flat or con-structed with hoppers. Flat bin bottoms requirethe manual removal of grain left over after grav-ity flow has ceased. Most commercial bins havehopper bottoms that allow complete grain re-moval without assistance. Configurations canrange from one or more individual farm binsto a multitude of bins tied together with han-dling equipment in commercial facilities.

Horizontal systems have long been used forextended storage. These buildings may be con-structed of metal, wood, concrete, or any com-bination of these materials. Horizontal storagesusually have flat floors and are filled from con-veyors in the roof or by portable incline belts.The grain is removed by conveyor tunnels inthe floor and manual movement with front-endloaders. Movement into and out of these build-ings is very labor-intensive. Grain depth is lowerin horizontal storage than in most upright com-mercial bins. Storing grain in large buildingscreates additional problems in that the largeroof area increases the risks of water leaks.These types of structures can stand alone or

be tied in with upright bins in commercial fa-cilities.

Grain can also be placed in piles directly onthe ground or on pads and can be either cov-ered (usually with a vinyl tarp that providessome protection from the elements) or left un-covered. Piles can be contained by fixed or mov-able sloping walls or circular rings. Any typeof onground pile is difficult to load and unloadand is very labor-intensive.

Quality Problems That AriseDuring Storage

Grain quality can be compromised by physi-cal damage during handling and by biologicalagents (mold and insects) during storage. Graindamage during handling stems from breakage,which produces broken grains and fine mate-rials, Storage problems increase when this hap-pens, and damage from molds and insects ismore likely to occur with higher amounts ofthese materials.

Insects create numerous problems in storedgrain:

● economic losses because of the amount ofgrain consumed,

• wastes left behind in the grain,● insect fragments in finished products, and. grain heating,

Insects’ metabolic processes can raise graintemperatures and moisture to ideal conditionsfor mold growth. In addition, another problemarises from the residues of pesticides used tocontrol insects. (Insect control is covered in thenext section of this chapter.)

When molds grow they produce heat, mois-ture, and carbon dioxide. The heat and mois-ture provide even better growing conditionsand the molds proliferate. Molds are parasitesthat obtain their sustenance from the grain theygrow on. Grain quality is affected in that moldgrowth creates damaged kernels, deposits toxicsubstances, and creates a loss in dry matter,with accompanying decreases in density.

Interactions between moisture, temperature,and relative humidity spurs mold growth and

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increases insect activity. Basically, a grain mois-ture in equilibrium with 65 percent relative hu-midity will support mold activity. Differentgrains will create the optimum relative humid-ity at different moisture levels, which is whysoybeans cannot be stored at the same mois-ture content as corn (figure 7-12).

Many fungi species can develop in storedgrain and each has its own requirements forgrowth. Aspergillus flavus is a prime examplein corn. This species produces aflatoxins whenhumidity is at 75 to 85 percent (15). Other spe-cies grow at lower humidities and tempera-tures, Fungi are more sensitive to moisture con-tent than to temperature, with some species stillactive at near-freezing temperatures but highhumidities.

Additional biochemical changes accompanydamage from mold and insect invasion. A lin-ear relationship has been established betweenfree fatty acid content in soybeans and dam-age (38). In wheat, heating grain destroys glu-

Figure 7-12.-Moisture, Temperature, and RelativeHumidity Interactions

Percent relative humidity

SOURCE: Office of Technology Assessment, 1989

88-378 - 89 - 6

..

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ten protein functionality. Damaged kernels mayor may not reduce feed value per unit of weight;studies have reported varying results. Moldykernels have a greater risk of containing oneor more toxins.

Moisture weight is lost during routine aera-tion. Also, when grain spoils, it heats, and theheat liberated is capable of evaporating addi-tional water. Investigations suggest that asdamaged kernels increase, additional weightis lost. Kernel weight and density also reflectloss in dry matter. One study reported a 1 to2 pound test weight loss in the entire grain massfrom typical insect infestation (61).

Increases in damaged kernels and reductionsin test weight are exponentially related to grainmoisture and temperature (60). This researchled to development of an Allowable StorageTime Table for corn (table 7-4). At the end ofthe Allowable Storage Time, corn will be onthe verge of dropping one grade as defined bythe U.S. Standards for Corn and will have lostabout 0.5 percent of its original dry matterweight.

Neither grain temperature nor the moisturecontent of a spoiling mass remain constant overtime (15). Other recent studies show that moldtoxins can be produced before the AllowableStorage Time is reached. Extensive work to de-velop an Allowable Storage Time Table forwheat and soybeans has not been done. How-ever, the basic principles are the same; the onlydifferences would be the moisture content andnumber of days.

Storage Techniques That ProtectGrain Quality

Controlling Breakage

Research has shown that breakage duringhandling is more significant in corn than inwheat and soybeans (43). Drop height in free-fall and spouting tests were found to be the mostsignificant variables, with the largest amountof breakage occurring when dropping grainagainst a hard surface. Higher moisture con-tent and temperatures are the best conditionsfor minimizing breakage, but these are not op-timal for safe storage.

The National Grain and Feed Association hasfound that “repeated handlings showed that theamount of breakage was cumulative and re-mained constant each time grain was handledor dropped: This was found true whether ornot the broken material was removed from thetest lot before subsequent handling” (43). It alsofound that belt speed in bucket elevators hasno measurable effect on grain damage, but grainthrower tests show breakage increased with in-creased belt speed. Tests for impacts showedslightly less breakage against wooden bulkheads than against steel ones. Grain breakagewas also found to increase in screw conveyorsnot operated at full capacity. Three factors mustbe controlled to reduce the amount of breakage:

1. velocity,2. repeated handlings, and3. impact surface.

Table 7-4.—Allowable Storage Time for Corn

Corn moisture (percent)Grain temperature (oF) 18 20 22 24 26 28 30

days in storage30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648 321 190 127 94 74 6135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 214 126 85 62 49 4040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 142 84 56 41 32 2745 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 95 56 37 27 21 1850 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 63 37 25 18 14 1255 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 42 25 16 12 9 860 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 28 17 11 8 7 565 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 21 13 8 6 5 470 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 16 9 6 5 4 375 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 12 5 4 3 280 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 9 4 3 2 2SOURCE: Midwest Plan Service, “Low Temperature and Solar Grain Drying, ” Iowa State University, Ames, 1A, 1980.

.—

Grain velocity is considered the most impor-tant factor to be controlled (table 7-5).

Monitoring Moisture Content

Molds will grow on any kernel or group ofkernels that provide the right conditions. Mois-ture content and uniformity within storage fa-cilities is therefore critical to maintaining grainquality. As demonstrated by the Allowable Stor-age Time Table for corn, knowledge of the mois-ture content is a key element in determiningstorability. Moisture uniformity within a stor-age facility, on the other hand, is subject to thelimitations of measurement equipment and theability to segregate differing moisture levelswithin the facility.

Moisture meter accuracy was discussed inthe drying technologies section of this chap-ter. The meters provide average readings, butmoisture levels within a grain sample can varygreatly. This can lead to false assumptions andhamper appropriate actions based on the aver-age moisture reading, especially when handlingnonuniformly dried corn that has been blendedwith high and low moisture levels and whenhandling freshly harvested corn. The problemis compounded by the fact that the moisturecontent of corn kernels on one ear can varyfrom 1 to 4 percent. Also, moisture will neverfully equalize, If the spread from high to lowis 4 percent, moisture will equalize within 1percent (49). The net result is that moisture var-iation in a grain sample cannot be detected andthe diversity of moisture being placed into stor-age cannot be controlled.

Nonuniform moisture levels in a storage fa-cility can also be a function of the number andsize of storages available. Segregating differ-

Table 7-5.—Relative Amounts of Breakage for GrainsTested Under Four Handling Conditions

Percentage of grain breakage caused by:Free-fall Spouting Grain Bucket

Grain drop drop thrower elevatorCorn ., . . . . . 6.3 3.2 1.6 1.1Soybean . . . . 2.0 1.0 0.7 0.3Wheat . . . . . . 0.2 0.15 0.2 0.1SOURCE: J E Maness, “Malntaln Grain Quality Through Good Handllng Prac.

t!ce, ” National Grain and Feed Assoclatlon, Washington, DC, 1976

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ing moisture levels in horizontal or pile stor-age is difficult, and several different moisturelevels are often comingled. Large upright binspredominate in some corn- and soybean-pro-ducing areas. Depending on the number andsize of bins available, and on the moisture levelsbeing stored, differing moisture levels must becomingled.

Moisture content in any one particular loca-tion within a storage facility is subjected to themoisture/temperature/humidity relationship.Nonuniform moisture levels can lead to spoil-age in localized areas within storage (14,17).These locations are commonly referred to ashot spots; if left unattended, they can spreadto the entire grain mass.

Even assuming that moisture and tempera-ture are uniform within a grain mass, they willnot remain so over time, as noted earlier. Mois-ture will migrate in response to temperaturedifferentials (figures 7-13 and 7-14). When the

Figure 7-13.—Moisture Migration Patternsin Falling Temperatures

,1

moisture accumulation

4

.- .’ . .

.-

SOURCE G H Foster and J L Tulte, “Aeration and Stored Grain Manaae.merit. ” I n Sforage of Cerea/ Gra/ns and The/r Products (St Pau 1, M-NAmerican Assoctatlon of Cereal Chemists, 1982)

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Figure 7-14.—Moisture Migration Patternsin Rising Temperatures

SOURCE G H Foster and J L Tulte, “Aeration and Stored Grain Manage-merit, ” In Storage of Ce;ea/ Gra/ns and The/r Products (St. Paul, M-N’American Assoclatlor l~tCereal Chemists, 1982)

outside air is warmer than the grain, the areaof condensation is several feet under the grainsurface, but still in the center.

This moisture migration during storagemeans that grain assumed to be in a storablecondition will not remain so over time. Coldweather migration primarily affects grain inland-based storage, causing deterioration astemperatures rise in the spring. Warm weathermigration is particularly vexing for grain intransit both from cold to warm areas of theUnited States and from the United Statesthrough warm waters to foreign buyers. A bargeor ocean vessel is basically a storage bin andwill experience the same moisture migrationphenomena as land-based storage facilities. Al-though aeration is the tool for managing mois-ture migration, grain in transit cannot be aer-ated, and ventilating the top of barges or oceanvessels does little to remove moisture or heat.

Maintaining low temperatures and moisturelevels in grain is the principal way to preservegrain quality and prevent damage from moldsand insects. Aeration is a very effective tool forcontrolling moisture content and temperature.The rate of development for both molds andinsects is greatly reduced as the temperatureis lowered.

Aeration systems generally provide an air-flow rate of 0.02 to 0.10 cubic feet per minuteper bushel of grain. This is equivalent to 2 to12 changes of air per hour. Aeration fans canbe located at the base of a bin to create eithera positive pressure pushing air up through thegrain or a negative pressure by pulling air downthrough the bin. Some installations use fansmounted in the roof or bin top and some usefans, top and bottom, that pull and push the air.

Resistance to airflow increases with graindepth, so more power is required to aerate deepsilo-type bins than shallow horizontal storage.Aerated bins and warehouses must have ade-quate ventilator area in the top to allow air toenter or exit when the fans are running.

The equipment and methods used to fill a stor-age bin affect the aeration system’s perform-ance. Dropping grain into the bin’s centercauses a cone to develop—with the lighter, lessdense material concentrating in the center(spoutlines) while the heavier, denser materialflows to the sides. This impedes airflow dur-ing aeration and molds can begin to growalmost immediately. In grains with relativelyhigh amounts of fine material, such as corn,spoutlines are often removed from upright stor-age bins by drawing some of the grain out fromthe bottom, a practice called coring.

In large horizontal storages, loading from thecenter or from a loader that is gradually movedbackward through the center of the buildingas the pile is formed causes similar problems.If grain is piled over each aeration duct on thefloor by moving the loading device back andforth, airflow will be greatly increased. Airflow

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distribution is not as uniform as in upright bins,however. Some methods of filling piles also re-sult in fine material concentrating in localareas. Piles, however, are difficult to aerate andtheir shape alone restricts uniform airflow.

Condensation in aeration ducts can be a prob-lem when the fans are not running during warmweather and when the grain mass is cold. Ifoutside air can enter the duct, moisture will con-dense there. Likewise, moisture from warmgrain can condense on a cold aeration duct ex-posed to outside air, The accumulated mois-ture allows mold to grow, sometimes cakingthe grain around the perforated ducts, Airvalves or tight-fitting covers should thereforebe used to prevent air infiltration when the fansare not running.

Although aeration is primarily used for tem-perature control , grain moisture can bechanged depending on the humidity, airflowrate, and length of aeration time, If wheat with13 percent moisture is aerated with air at 40percent relative humidity, there will be a grad-ual moisture loss from the grain. Humiditiesabove 70 percent tend to add moisture to thegrain. For this reason, coupled with the costof operation, aeration systems are often run atthe minimums considered necessary.

Many bins, especially on the farm, areequipped with aeration systems but are oftennot used effectively (27). Farm storage bins,especially smaller and older ones, often are notaerated. Small bins (holding less than 3,000bushels) will cool or warm quickly enough withthe changing season that moisture condensa-tion may not be a serious problem. Farm binsthat are aerated, on the other hand, are morelikely to have systems improperly sized for thebin.

A majority of farm aeration systems are ei-ther not operated at all or not operated suffi-ciently (61). The most common problem is notrunning the fans long enough to bring the en-tire grain mass to a uniform temperature. If acooling front is moved through only part of thegrain, a moisture condensation problem is likely

at the point where the warm and cold grainmeet,

Temperature Monitoring

One way to monitor temperature is throughthe use of temperature cables. These can behung from the roof or bin top and extend downthrough the grain mass. Each cable has a steelsupport cable and a number of thermocouplewires in a protective plastic shield. Cables canbe placed in the bin before it is filled or canbe probed into the grain, as is the case for hori-zontal storages and piles. As grain that is heat-ing more than 1 or 2 feet from a thermocouplemay not be detected until considerable dam-age is done in the hot spot, spacing and the ex-tent to which detection is desired are critical.

Temperature increases that cannot be ex-plained by changes in ambient conditions area signal of possible mold or insect problemsand should be investigated. Commercial facil-ities have relied on temperature monitoring sys-tems for years, and many farmers also moni-tor grain temperatures.

Most temperature monitoring at commercialfacilities is done on a fixed schedule either man-ually or by automatic recording equipment. Afew facilities have installed programmableequipment that can be used in conjunction withaeration fan controllers. The system can be pro-grammed to respond to higher temperatures byswitching on an aeration fan. The cost of suchsystems has thus far limited their use to a fewlarge companies,

Transfer Turning

Transfer turning is the process of physicallymoving grain from one storage bin to another,It is used primarily in upright storage facilitiesthat have bins linked together by conveyingequipment. The turning process mixes grainand contributes to a more uniform moisture andtemperature. When hot spots are detected, theaffected bin may be unloaded and transferredto another bin to break up the hot spots andallow the facility manager to identify and treat

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the cause. In facilities not equipped with aera-tion, turning has been the traditional means ofgrain cooling, It requires much more energythan aeration does, however, and can contrib-ute to physical damage by breaking the kernel.

Turning grain cannot be performed in hori-zontal or pile storages because of the difficultyin unloading and moving the grain. To turngrain efficiently, a facility should have emptybins at its disposal that are connected by a con-veying system. This is not the case on mostfarms. When bin space is limited, a bin can beunloaded and reloaded in one continuousoperation.

lNSECT MANAGEMENT

Emerging Technologies

Little new technology is available in grainstorage, but some technologies have been re-cently improved or applied. Programmable con-trollers for aeration systems are now availablethat monitor ambient temperature and humid-ity as well as grain temperature and that canbe set up to run aeration fans. These will re-duce management errors such as not moving acooling front completely through the grain or aer-ating when weather conditions are unsuitable.

As indicated in the preceding section, insectscreate numerous economic and quality prob-lems in stored grain. Losses due to insectsworldwide range from 3 to 40 percent of thegrain produced (44).

Preventing insect infestations should beginon the farm with an effort to clean grain andremove foreign material, (Cleaning technol-ogies are discussed more fully later in this chap-ter.) A protective treatment, such as malathion,should be used if grain will be stored on farm.Beyond routine cleaning and spraying of emptystorage facilities, few preventive treatments areapplied to freshly harvested grain (7,61). Thesetreatments are performed mostly on wheat, butsometimes on corn or soybeans. Also, protec-tive treatments are used most frequently in thesouthernmost grain-producing States, wherethe climate is most favorable for insect activity.

As grain is marketed and moves from thefarm through various facilities for export or do-mestic use, it is impractical to maintain theidentity of a particular lot that has been treated,Thus, a treated lot may receive additional in-secticides or fumigants as it moves through themarketing chain, This can result in adultera-tion of either the grain or the finished productwith excessive pesticide residues.

I N T E R V E N T I O N S

In the absence of preventive treatment, in-festations are controlled on a case-by-case ba-sis as they occur. If grain is turned, a protec-tive treatment may be applied. Exposed adultinsects may be killed, but the immature onesinside the kernels will not be killed until theyemerge as adults. Even when grain is fumi-gated, a 100-percent” kill may not be achieved.The population may be reduced to an undetect-able level and several generations may pass be-fore infestation is detected. In either case, nu-merous immature and even pre-emerging adultinsects remain inside the grain kernels. Manyare not removed by the preconditioning proc-esses used in the milling process, and insectfragments can be found in finished products.

With present technology, pesticides are theonly available and entirely satisfactory methodof ridding grain of live insects. The use of othercontrol measures is severely limited by the in-ability to penetrate grain depths, available timefor application and kill, quantity to be treated,and the product cost (including labor).

Pest control in grain storage facilities andtransportation vehicles is therefore economi-cally driven, If it costs money it will in all likeli-hood not be undertaken unless not doing so wouldprohibit grain sales, Of course, this is true not

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only for the use of pesticides, but also for aera-tion, turning, cleaning, or other measures tocontrol damage and/or prevent quality losses.Although this approach is an option in a freemarket, it can result in situations where buil-dup reaches such proportions that preventiveapproaches such as aeration, turning, and theapplication of residual pesticides no longerwork, Emergency or corrective actions, suchas the use of a fumigant, are then needed.

Current Pesticides

The pesticides used to control live insects canbe divided into two broad categories: insecti-cides and fumigants. Insecticides are appliedto facilities or directly to grain. The term “grainprotestant” refers to the application of an in-secticide to grain as it is conveyed into stor-age. The application is expected to provide aresidue that will protect the grain from insectsduring storage. When properly applied, grainprotestants should prevent or minimize addi-tional damage caused by existing infestationand protect clean, uninfested grain from be-coming infested. Insecticides labeled as grainprotestants can also be applied to empty stor-age facilities, although these must be cleanedbeforehand if the full value of the treatment isto be realized.

The term “fumigation” is often used incor-rectly today. Many people believe that any ap-plication of fine insecticide particles into anenclosure or building as an aerosol, fog, mist,or smoke is to fumigate. But fumigation is a sep-arate technology from other chemical controlmethods:

. . . a fumigant is a chemical which, at a re-quired temperature and pressure, can exist inthe gaseous state in sufficient concentrationsto be lethal to a given pest organism (9).

As this definition implies, fumigants act asa gas in the strictest sense of the word; theycan penetrate into the material being treatedand can then be removed by aeration. Fumiga-tion, therefore, is a highly specialized art in-volving the application of some of the most

toxic and unique pesticides. It requires profes-sional personnel who are well trained and ex-perienced regarding both the fumigant and thetarget organism.

Insect infestations usually involve a complexof insect species, and each species and life stagediffers in its susceptibility to an insecticide orfumigant (22,26), The dosage must therefore bedirected against the least susceptible life stage.

Grain Protectants

For many years, synergized pyrethrins werethe only insecticides approved for use as a grainprotestant, although none are approved for useon soybeans, Consequently, they have a longhistory of safe usage. Pyrethrins are both toxicand repellant to many species and have a rapid“knock down” effect. This does not mean theinsects are dead; in fact, they may recover withno detrimental effect (42). Even though pyre-thrins have been used for many years, insectshave developed little resistance to them.

Several factors have limited the use of pyre-thrins during the past 15 to 20 years. Pyrethrinextracts must be imported and, as such, the sup-ply is not as reliable as desired. With theapproval of malathion as a grain protestant,pyrethrins were no longer economically com-petitive. Also pyrethrins lacked the biologicalefficacy desired as a grain protestant (less than100 percent kill of some species and life stages)that appeared more promising with malathion.

Malathion has been the insecticide of choicefor more than 20 years, although it too has neverbeen approved for use on soybeans, Convinc-ing evidence of insect resistance to malathionwas first reported in the mid-1960s, and dur-ing the last 15 years alarmingly high levels ofresistance have been reported. Because thereis no practical and economical alternative,malathion continues to be used even thoughits value as a grain protestant is doubtful inmany cases (23).

Pirimiphos-methyl has been recently intro-duced. The commercial name for this product

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is Actellic. It controls a wide range of insectspecies, including those resistant to malathion.Pirimiphos-methyl was approved for use on ex-port corn and wheat (but not on soybeans) in1986. In 1987, it was approved for domesticcorn use. It is approved for use on stored grainin 14 other countries (36).

Chlorpyrifos-methyl has also recently beenintroduced. The commercial name for this in-secticide is Reldan 4E. It controls a wide rangeof insect species including those resistant tomalathion. In 1986, it was approved for use onwheat but not on corn or soybeans. A dust for-mulation has been approved for use as a pro-tectant for wheat and corn but not soybeans.

Bacillus thuringiensis (BT), a bacterium, isthe only insect pathogen used as a grain pro-tectant. To be effective, the spores must be in-gested by the insect; however, only moth spe-cies of grain pests are controlled by BT. BTprovides little or no control of grain beetles orweevils.

Inert dusts, such as silica aerosols, magne-sium oxide, aluminum oxide, diatomaceousearth, and clays, have varying degrees of po-tential as grain protestants. In general they areslow-acting and kill insects mainly by an abra-sive action that results in desiccation of the in-sect. They do not perform well in moist grainor in high temperatures. The disadvantages tousing inert dusts may outweigh their value.These include environmental contamination,damage to machinery, increased fire risk, lungdamage to workers, and reduced grade and/ortest weight of grain. As such, relatively littleuse has been made of inert dusts in the UnitedStates (26).

Fumigants

A structure must be gastight for fumigationto be successful. The fumigant gas concentra-tion must be maintained long enough to kill theleast susceptible life stage of the insects in-volved. Most fumigation failures can be tracedto inadequate gastightness of a storage facil-ity; higher dosages will not compensate for suchdeficiencies (66).

An

1.

2.

3.

4.5.

6.

7.8.

90

10.

ideal fumigant should be:

highly toxic to all life stages of the targetinsect;relat ively nontoxic to humans andanimals;highly volatile, with good penetratingability;noncorrosive to metals;nonflammable or explosive under prac-tical conditions of usage;nonreactive with the commodity (does notproduce an adverse flavor, aroma, orresidue);nonharmful to seed germination;economical, readily available, and simpleto use;fast acting, able to be aerated quickly, andnonharmful to the environment; andeasily detectable, with adequate warningproperties.

Unfortunately, there is no ideal fumigant.However, the grain fumigants available possesssome of these characteristics. Therefore, it isvery important that fumigators be well in-formed on the performance characteristics ofeach fumigant so that a fumigation can be per-formed in a safe and effective manner. Twocompounds—methyl bromide and hydrogenphosphide—are presently available as grain fu-migants. Of these hydrogen phosphide is thefumigant of choice.

Methyl bromide is highly toxic to all lifestages of grain insects and humans. Becauseit is essentially odorless, extreme care is nec-essary to avoid exposure. As methyl bromideis a liquid under pressure, it is highly volatile,but to achieve good grain penetration, forcedrecirculation is required. Methyl bromide gasis noncorrosive to metal, but the liquid phasereacts with aluminum in the absence of oxy-gen to forma compound that ignites spontane-ously in the presence of oxygen. It is, however,neither flammable nor explosive under practi-cal conditions of fumigation.

This fumigant reacts with most food com-modities and grains to produce inorganic bro-mide residues that are permanent and accumu-

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late with each additional fumigation. It alsoreacts with a host of other nonfood items, espe-cially those that contain sulfur compounds. Thedegree of reaction is relative to the dosage ap-plied, product temperature, duration of the fu-migation period, and the number of times it isapplied. When the inorganic bromide toleranceis exceeded, adverse flavor or aroma (or both)of the product may occur.

Methyl bromide is economically competitivewith other fumigants and is readily availableto authorized personnel. Using it requires spe-cial equipment both for application and safety,Because it is a liquid under pressure, knowl-edge and experience in using the equipmentis essential. The need for recirculation substan-tially limits its use. Recirculation equipment isexpensive and can only practically be used infacilities that are sufficiently gastight to pre-vent gas losses caused by the positive pressureof the system.

Fumigations can be completed within 16 to24 hours, as methyl bromide is considered tobe as fast acting as most fumigants. The recir-culation system used during application canbe used as an aid in aeration. Most of the un-reacted methyl bromide can be aerated in 3 to4 hours; however, atmospheric aeration shouldcontinue for 48 hours or more before movingthe grain. As methyl bromide is practicallyodorless at low levels that are dangerous to hu-mans, it lacks adequate warning properties.

Hydrogen phosphide will probably continueto be the fumigant of choice within the fore-seeable future. It falls short of the ideal, but hasmany usable qualities not available in any otherfumigant. It is highly toxic to all life stages andis very toxic to humans. Hydrogen phosphideis highly volatile with excellent penetratingquality. It is formulated as a solid either as alu-minum or magnesium phosphide. Gas is releasedwhen the formulation is exposed to the atmos-pheric moisture. However, it is corrosive to cer-tain metals such as copper, gold, and silver.

This fumigant can be highly flammable o reven explosive under conditions of misuse,such as application resulting in extremely high

concentrations of gas. It does not react withgrain to cause either adverse flavor or aromanor does it cause excessive residues. Hydro-gen phosphide is economical, readily available,and the simplest fumigant to apply. A formu-lation can simply be scattered randomly, placedsystematically on the grain surface, or sub -merged into the grain. Many methods havebeen developed to increase gas distribution inthe grain mass. Hydrogen phosphide is not afast-acting fumigant compared with methyl bro-mide, and it can take 3 to 5 days or longer de-pending on the temperature. Even longer peri-ods are required when large masses are to b efumigated.

With cross-ventilation, hydrogen phosphideis removed from the free space in storage facil-ities within minutes. Low gas levels may con-tinue to evolve from the grain, but with con-tinued cross-ventilation, people can enter thefacility and even work with the grain. Hydro-gen phosphide is easily detected by use of de-tector tubes and contains an odor so it can b edetected at very low levels, Although the odorcan be a useful warning sign, it may not per-sist throughout the fumigation to therefore pro-vide adequate warning during aeration.

Among the chemicals used as insecticides,fumigants are the finest tools available. Fumi-gation, however, is the last line of defense whenall other insect control methods fail. Specialcare needs to be exercised to avoid any exceed-ing tolerances that may lead to cancellation byregulatory authorities or the loss of effective-ness due to development of insect resistance.Although the technology is available to accom-plish 100 percent kills of the target insect, thediversity of storage facilities and conditions un-der which fumigation is performed means a 100percent kill is seldom achieved.

Most fumigations are of a commercial or eco-nomic control type. This is accepted becausemost storage facilities are not su f f i c i en t lygastight to retain the fumigant, and the cost ofsecuring gastightness maybe prohibitive. Thistype of fumigation is often accepted where verylarge grain masses are involved or when time

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is limited, such as in large elevators and exportgrain in shipholds. Although some of these fa-cilities may be sufficiently gastight, the tech-nology for achieving gas distribution through-out the grain mass has not been adequatelyresearched and developed.

If there are enough insects to require fumi-gation, there are greater numbers of immatureinsects living inside individual grain kernels.Commercial or economic control fumigationsoften do not kill these immature insects. Thoughthe grain may pass visual inspection for liveadult insects, many of the immature insects de-velop and emerge as adults within the next 2to 4 weeks and the grain is reinfested.

Two important problems arise from this typeof fumigation. First, shipments certified as notbeing infested may arrive at their destinationinfested. Second, insects not killed by fumiga-tion are exposed to sublethal dosages, whichis the basis for developing resistance. Insect re-sistance to any of the fumigants means a ma-jor loss in this last line of defense.

Conditions Affecting InsectManagement

The application and effectiveness of resid-ual insecticides and fumigants may be seriouslylimited by the amount of time available, thespace or volume of grain to be treated, the eco-nomics or dollar value saved or gained by theiruse, or legal restrictions on the use of variouspesticides by local, State, or Federal authorities.The effectiveness of residual insecticides de-pends on the grain and storage facility beingproperly treated: The insect must come in con-tact with the residual before the pest will bekilled. Similarly with fumigants, if there is notsufficient time for the gas to reach all parts ofthe grain mass in the required quantity and forthe required duration, the pest will survive.

Types of Storage

The types and quality of grain storage facil-ities vary greatly, as noted earlier in this chap-

ter. Farm storages have generally been suitablefor fumigating with liquid fumigants (e.g., car-bon tetrachloride, ethylene dibromide, ethylenedichloride, carbon disulfide, and chloropricrin)that were poured, sprinkled, or injected intothe grain. These liquid fumigants are no longeravailable, and it is questionable whether someof these facilities can be sealed adequately andeconomically to retain fumigant gas such ashydrogen phosphide. In some cases, farmersmay be advised to increase fumigant dosage tocompensate for gas leakage. This will result infailures and can lead to insect resistance andultimately the loss of the fumigant from themarket.

For several reasons—such as remoteness offarm storage facilities, small amounts of grainto be treated, inadequate storage structures, andlack of information—much on-farm grain maynever receive properly applied insect controls.When this infested grain is marketed, it co-mingles with noninfested grain and inflates theproblem (7).

Although many high-quality on-farm storagefacilities boast good pest management prac-tices, the well-constructed facilities that utilizepest management technologies are generallyfound in commercial handling facilities that useupright silos (or bins) or horizontal (flat) stor-age. They are usually equipped with some typeof forced aeration for cooling and drying. Thesesystems are not designed for recirculation,which is required for fumigation with methylbromide. Most horizontal or flat facilities arenot adequately gastight for fumigation with ei-ther of the available compounds. Hydrogenphosphide can, however, be used when facil-ities are adequately gastight.

Most upright storage structures are gastightor can be made adequately gastight with a min-imum of sealing. The ideal time to fumigatewith hydrogen phosphide or apply an insecti-cidal protestant is when the grain is conveyedinto storage. However, it is impractical to ap-ply a fumigant at this time because the flow orsupply of grain is irregular, and much of the

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harvest must be completed before the storageis filled. Thus, a great deal of the fumigant gasis lost as grain is added, The next best treat-ment opportunity is when turning grain fromone full tank or silo to an empty one. This i snot always done because empty storage spacemay not be available and it is expensive to turngrain. Sometimes grain is fumigated by prob-ing or submerging fumigants into the grain sur-face. Most of these fumigations are only par-tially effective because sufficient time is notallocated to effect gas distribution.

Port Facilities

All port facilities have upright storage struc-tures, although these are best described as han-dling, not storage, facilities. Any type of insectcontrol remedy can cause expensive delays inloading. Because of the different types a n dgrades of grain handled, even the largest portfacility can seldom store enough grain for oneshipment. Instead, enough grain is held to be-gin loading a ship, then a constant flow of grainfrom railcars and barges is unloaded into thefacility and transferred directly onto the ship.Incoming grain that is infested can be set asideand fumigated before unloading, but grainfound to be infested after loading on the shipis usually fumigated with hydrogen phosphidewhile in transit.

Transportation Modes

The time grain normally spends in varioustransportation modes—combines, trucks, rail-cars, and barges —is minimal. Yet these can beimportant sources of infestation. prolongedstorage, especially in ocean vessels, is a uniquesituation that should be treated as storage ratherthan transportation.

To be effective, a fumigant gas must be dis-tributed throughout the grain mass and heldfor the duration required to kill the insects in-volved. Few transportation modes are ade-quately constructed to retain fumigant gases.Those that may be sealed or made gastight in-clude covered hopper railcars and hopper-type

trucks, Other types of railcars, trucks, and evenbarges cannot be made gastight either at all oreconomically, Ocean vessels, on the other hand,have proved to be effective locales for fumigat-ing grain in transit,

Outside Factors

Physical.—Many physical factors affect theperformance of chemical interventions. Amongthese are temperature, moisture, and humid-ity. Temperature probably has the grea tes timpact. Usually within well-defined limits, anincrease or decrease in temperature means asimilar increase or decrease in the insecticide’sperformance, Temperature most dramaticallyaffects the performance of fumigants, especiallymethyl bromide, High-moisture grain increasesabsorption of fumigants such as methyl bro-mide, requires higher dosages, and acceleratesthe breakdown of protective treatments suchas malathion, The influence of humidity is var-ied, with minimal effect on the performanceof most pesticides. However, hydrogen phos-phide formulations require at least 25 percentrelative humidity to cause the chemical reactionthat releases the gas.

Foreign material and dockage covers a widevariety of items, but grain dust and other finematerials have the greatest effect on the per -formance of insect control interventions. Whena protective treatment is applied, grain dustmay absorb much of the insecticide, reducingits effectiveness. Likewise, concentrations o fdust and fine material may require increaseddosages of a fumigant to penetrate the gra inmass. Dust also inhibits penetration of fumi-gant gases and causes the gas to channel so thatpenetration is slow or nonexistent in certainparts of the grain mass .

Human.—The competence of applicators isa major factor in the performance of any pestmanagement intervention. An incompetent orinadequately trained applicator may apply toolittle or too much pesticide. The grain is eithernot protected or it may be contaminated withresidues from high dosages, Inadequate train-

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ing and experience are most likely on the farm,where pesticides are often applied by farmersthemselves.

Biological. —Several biological factors mustbe taken into account for successful insect con-trol. Some of the most important factors includethe species and life stage of the insects involved,insect resistance to the insecticide, kind andcondition of the grain to be treated, and thepresence of beneficial organisms such as par-asites and predators.

Infestation usually involves several insectspecies, and susceptibility to insecticides variesamong species, life stages, and even the age ofthe insects within a species. Therefore, the in-secticide or fumigant must be directed towardthe least susceptible species and life stage. Sev-eral insect species are highly resistant to mala-thion and/or moderately resistant to synergizedpyrethrins (69), and a few species have devel-oped low levels of resistance to hydrogen phos-phide (13).

Financial.—The cost involved should not bea deterrent to the timely and proper applica-tion of insect control. Studies indicate that ma-terials cost less than 1 cent per bushel and thatcomplete programs involving treating emptybins or warehouses average 2 cents per bushel(67). Other studies indicate that farmers do lit-tle to maintain quality during storage on thefarm even though grain is discounted for liveinsects (7).

Discounts assessed for live insects are quitevariable. Discounts in Minnesota are reportedas high as 17 cents per bushel for corn to 33cents per bushel for wheat (27). A survey of com-mercial handling facilities across the Mid-western States reported discounts ranged from1 to 20 cents per bushel (62). Obviously, the in-centives to initiate and maintain insect controlmeasures and deliver insect-free grain are ei-ther lacking or in question.

New and Emerging Technologies

The greatest potential for new residual-typepesticides may be in expanding the approvedusage of the relatively new insecticides pirimi-

phos-methyl and chlorpyrifos-methyl. Bothcompounds appear promising as replacementsfor malathion. Both are effective against mala-thion-resistant insects, but are less than totallyeffective against the lesser grain borer, a ma-jor pest to stored grain. In Australia, mixturesof bioresemthrin, a synthetic pyrethroid, withchlorpyrifos-methyl have been shown to be ef-fective. The use of insecticide mixtures has notreceived much attention in the United Statesbecause regulation requires safety data on allcomponents as well as the mixture.

Several new approaches to insect control orprevention have been researched and broughtto a usable point, but they have received littleor no acceptance within the grain marketingsystem because of costs or predetermined per-formance limitations.

Modified atmosphere is a relatively new tech-nology. Its basic performance needs are simi-lar to those of a fumigant in that the facilitymust be gastight to retain a modified atmos-phere of either nitrogen, carbon dioxide, or nooxygen for several days. The use of carbon di-oxide appears to have the greatest potential,

Regardless of whether nitrogen or carbon di-oxide is applied or an exothermic burner andcondenser is used to create a low oxygen atmos-phere, the logistics of providing large quanti-ties of these substances or the initial cost andmaintenance of the burner system will hinderimplementation.

Hermetic storage involves total sealing, af-ter a facility is completely filled, to exclude oxy-gen. Then, during long-term storage, the natu-ral respiration of the grain and insects willdeplete the oxygen and create an atmospherelethal to the insects.

Much research has been completed on usingirradiation to kill or sterilize insects and to dis-infect grain. Recent studies indicate that theelectron acceleration method of irradiation isthe most practical and may be the most eco-nomical. Adoption of irradiation has beenlimited because of the high initial cost of in-stallation. Installing an accelerator capable oftreating 1,000 tons of grain per hour would cost

some $4 million (10). By operating the unit twoshifts per day, 6 days a week, the maximumannual throughput would be 5 million tons.With this throughput and taking into accountall foreseeable operating costs, treatment wouldcost about 23 cents per ton.

At a temperature of 16 °C or lower, insectactivity ceases. Little or no feeding or repro-duction occurs, but many insects will survivelong periods at these temperatures, At temper-atures near freezing, it requires 10 days or moreto actually kill some species. Obviously the tech-nology is available to modify temperatures to

maintain quality of certain high-value agricul-tural products, However, it would be economi-cally impractical to freeze large grain massesby mechanical refrigeration. Where climateprovides naturally cold temperatures, aerationsystems in storage facilities are used to reducegrain temperature to achieve insect control.

High temperatures can also kill insects. Stud-ies using high temperatures concluded that mi-crowave and infrared radiation can heat grainin thin layers, such as found on conveyor belts,to disinfest it (39).

T R A N S P O R T A T I O N

The U.S. grain transportation and distribu-tion system is probably the most efficient onein the world (8), Much of this efficiency wasachieved during the 1970s when demand forexport grain placed enormous stress on the sys-tem. Improvements made then resulted in high-speed, low-cost transportation and grain dis-tribution. It is estimated that the United Statesis now capable of exporting over 8 billionbushels of grain per year, whereas in the midto late 1970s the system was under great stressto export 3.5 billion to 5,0 billion bushels.

Current Modes of Transport

Grain may be moved from farms to countryelevators or to inland terminal elevators, ordirectly to domestic end users (figure 7-15). Do-mestic users may obtain grain directly fromfarms or from country, subterminal, or termi-nal elevators by truck or train. Grain for exportcan be shipped from these elevators directlyby rail, by truck to barge, or by rail to bargeto export elevators in major U.S. ports for load-ing onto ocean-going vessels. Some farmersclose to export elevators bring grain directlyto these facilities by truck. Grain is also shippedby rail from subterminal or inland terminal ele-vators to Mexico, and small amounts of wheatand corn move directly into Canada by truck.Thus, the major carriers of grain are trucks,trains, barges, and ocean vessels.

Accurate measurement of the share of grainhauled by each mode of transportation is diffi-cult since no agency collects data on grain ship-ments by truck. Also, more than one transpor-tation mode may be used to move grain froma country elevator to the final user. Informa-tion on the total quantities of grain moved byrail and barge is available (table 7-6). The shareof transportation by train ranged from a highof 80 percent in 1974 to a low of 66 percentin 1982. Barge shares tend to rise and fall asexports increase or decrease, primarily becausemost grain moving by barge is destined for ex-port. The share of grain moving to export byrail declined from 62 percent in 1974-75 to 38percent in 1983-84, while the share by bargeincreased from 37 to 60 percent (3).

By Rail

Trains have been the major carrier since thelate 1830s, and single boxcar shipments re-mained the dominant grain transportation tech-nology until the late 1960s. The use of boxcars,however, resulted in grain damage. The grainwas loaded through a center door using flexi-ble pipes that direct the grain flow into eitherend of the boxcar. Grain throwers were alsoused to assist in this process. Once loaded, thegrain was leveled by hand. Since boxcars hadno unloading devices, unloading involved anelectric shovel that was dragged or pulled by

III

IIII

,

1

166

Figure 7-15.-General Flow of Grain From the Farm Through the System

River Portelevator elevator

Overseasprocessor

SOURCE: U S Department of Agriculture, Office of Transporlatlon, “The Physical Dlstnbutlon System for Gram,” Agriculture Information Bulletin No 457, Washington, DC,October 1983 -

Table 7-6.—Grain Hauled by Railroads and Barges,1974-1985

Billions of bushelsmoved by Percent moved by

Year Rail Barge Rail Barge

1974 . . . . . . . . . . . . 4.21 1.031975 . . . . . . . . . . . . 4.06 1.201976 . . . . . . . . . . . . 4.10 1.611977 . . . . . . . . . . . . 3.91 1.521978 . . . . . . . . . . . . 4.12 1.631979 . . . . . . . . . . . . 4.41 1.621980 . . . . . . . . . . . . 5.00 1.911981 . . . . . . . . . . . . 4.38 1.991982 . . . . . . . . . . . . 4.22 2.181983 . . . . . . . . . . . . 4.72 2.111984 . . . . . . . . . . . . 4.81 1.971985 . . . . . . . . . . . . 3.99 1.67

80.3 19.777.3 22.771.8 28.272.0 28.071.7 28.373.1 26.972.4 27.668.8 31.266.0 34.069.1 30.970.9 29.170.5 29.5

SOURCE Association of American Railroads, The Gra/n Book 1986(Washington,DC 1987)

a cable to the center door, using an electric mo-tor. Unloading devices were designed to lift andtip the entire car in either direction so the grainwould flow out the center doors. The whole pro-cess of transporting by boxcar was labor-intensive and damaging to the grain.

Boxcars were also a ready source of insectinfestation since they have an inside wood wallliner. Frequently these were damaged, and bulkmaterial, including grain from previous ship-ments, became lodged behind the liners. Thismaterial was for all practical purposes impos-sible to remove and, therefore, became infestedand contaminated the next cargo.

The advent of the covered hopper car in themid-1960s greatly reduced the loading and un-

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loading stress on grain quality. Covered hop-per cars have full-length top hatchways for rela-tively easy loading that does not requirethrowing or leveling. Each car consists of threeto four smooth, hopper bottom compartments.Since grain is unloaded by gravity flow, eachcompartment is essentially self-cleaning, reduc-ing the risk of insect infestation in the next ship-ment. The covered hopper car is tight and es-sentially leak-proof, making it easier to fumigatethan boxcars. Moreover, loading and unload-ing is less labor-intensive and damaging tograin. By 1985, 99.6 percent of all grain trans-ported by rail moved in covered hopper cars.

Until the mid-1960s, almost all grain trans-ported by rail moved under single-car transitrates, This means that grain was shipped to atransit location (an elevator), unloaded for stor-age, and later reloaded and shipped to its finaldestination, The transit rate was usually lowerthan the inbound rate to a location plus the out-bound rate to the final destination. In the mid-1960s, however, rail companies began offeringlow-cost, multiple-car and unit-train rates fromcountry elevators direct to final destination,thus el iminating the stopover at t ransi tlocations.

Unit trains are a group of railcars shippedfrom one origin to one destination on one billof lading and consist of 50 or more railcars.The unit-train concept eliminated the need tostop at numerous elevators to pick up cars forswitching into a train. Turnaround time fromthe country elevator was much faster for unittrains than for single-car shipments. Thus, unittrains lowered costs of switching, fuel, andcrews, and enabled companies to haul moregrain with existing fleets. A portion of thesesavings were passed onto shippers in the formof lower rates, which enabled rail companiesto be more competitive,

By the mid-1970s, multiple-car and unit-trainshipments became the standard method fortransporting corn and soybeans by rail. Thisshift to large direct rail shipments reduced notonly grain transportation costs but also graindamage by eliminating unloading and reload-ing at transit elevators.

While the single-car transit system has beenvirtually nonexistent in the corn and soybeanmarket since the mid-1970s, it continues to per-form a major function in wheat distribution,particularly in areas producing Hard Red Win-ter wheat. More than half the wheat transportedby rail from Kansas, Oklahoma, and Texasmoves under transit rates. In part, this is be-cause a large percentage of the grain storagecapacity in these areas is located at inland ter-minals. In contrast, most storage capacity inthe Corn Belt and the wheat-producing areasin the Northern Plains States is located at coun-try elevators, and multiple-car and unit-trainshipments are now standard. In addition, ag-gregating large quantities of wheat at inlandterminals permits blending of Hard Red Win-ter wheat to meet export standards. Only a smallnumber of country elevators in these areas arecapable of blending wheat to meet export speci-fications.

By Barge

Most grain moving by barge originates on theMississippi River system, which includes theIllinois and Ohio rivers. These rivers becamenavigable when a system of locks and damsmade the entire river system navigable at 9-footdrafts in the 1930s. The major export locationsserved by barges are the Mississippi River ele-vators in New Orleans and the Pacific North-west ports that are served by the Columbia andSnake rivers.

All grain moving by barge must be trans-ported by truck or rail to barge-loading facil-ities, unloaded, and then reloaded into thebarge. Barge tows, consisting of 12 to 30 bargespushed by a towboat, make the trip from bargeloading facilities on the upper Mississippi toexport elevators in New Orleans in 15 to 25days.

Barges are not self-unloading, so unloadingcauses more grain damage than unloading hop-per-type railcars. Typically barges are unloadedby lowering into the barge a marine leg or ver-tical belt with large buckets attached to scoopup the grain, When a barge is partially un-loaded, a small crawler tractor with a front-endblade is lowered into the barge to push the re-

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maining grain to the marine leg to completeunloading.

The major advantages of barges over railcarsare the large carrying capacity of barge towsand the relatively low rates charged to trans-port grain to deep water ports in New Orleans.Table 7-7 shows the range of rail and rail-to-barge rates for grain shipped from central Iowato New Orleans. Rail rates decline as the sizeof the shipment increases in both situations,but are still higher than for barge shipments.

Barge rates respond to supply and demand.During the 1970s, barge rates fluctuated be-tween 100 and 200 percent of the MerchantsExchange of St. Louis trading benchmarks.Even with barge rates at 200 percent of tariff,however, the combined rail-to-barge rates aresharply lower than rates on rail direct to NewOrleans. The rail rate advantage only increaseswith origins located closer to New Orleans.

Other advantages of barge movements arethat they can be used as an extension to the ex-port elevator for storage and that barges canbe marshaled and unloaded in the New Orleansarea. Many export elevators in New Orleansare high-speed transfer facilities with limitedstorage that are equipped to unload barges rap-idly, usually one per hour. These elevatorswould be hard-pressed to unload the equiva-lent amount of grain from railcars in an hourand still maintain low-cost, high put throughrates. Barges with specific qualities and quan-tities being stored on the river are controlledby the grain companies in the New Orleans

Table 7-7.—Comparison of Rail and Rail. Barge RatesFrom Jefferson, Iowa, to New Orleans

in Dollars Per Ton

Rail toRail Clinton, 1A,

direct barge toSize of to New New

Mode shipment Orleans Orleans

Rail . . . . . . . . . . . . . . . . . . . . 25-car $25.40 $7.2050-car 23.60 6.6075-car 21.40 6.00

Barge at 100°/0 of tariff . . . 5.32Barge at 200°/0 of tariff . . . 10.64SOURCE: C.P. Baumel, “Alternative Grain Transportation and Distribution Tech-

nologies and Their Impacts on Grain Quality, ” background paper pre-pared for the Office of Technology Assessment, U S. Congress,Washington, DC, 1988.

area. These can be collected and moved to theelevator based on quality demands of a particu-lar shipment at specific times desired. Unload-ing railcars means extra work in dealing withindividual smaller units and storing specificquantities in the facility. Also, switching rail-cars into the facility and removing empty carsis subject to the availability of train crews. Thisplaces the facility at the mercy of the rail com-panies regarding delivery schedules when anentire export shipment is not in the facility.

By Ocean Vessei

In the 1960s, the Public Law 480 programdominated grain exports. A substantial portionof these exports were shipped in small (10,000to 15,000 ton) vessels. Many of these were mul-tipurpose vessels (’tween deckers) with severaldecks and small holds. Loading often causedgrain damage. To provide cargo and vessel sta-bility and to obtain full utilization of capacity,these vessels had to be trimmed, which involvedthrowing the grain under ledges and intocorners of small holds, causing more grain dam-age. These vessels were difficult to unload andfumigate for the same reasons.

During the 1970s world prosperity increasedcash export sales substantially. Importers andexporters shifted a high percentage of theirshipments to larger vessels (50,000 tons or more)to gain lower per-ton shipping costs. These ves-sels are relatively easy to load and unload be-cause of their large open holds with rolltophatches and smooth sides, and thus create lessgrain damage than the “tween deckers.”

Grain can also be transported in tankers thatare used primarily to ship oil. Loading tankerscan damage grain, especially corn, because itmust be loaded through a small opening, justbig enough for a person to enter, in the middleof each hold. In each opening there is a perma-nently affixed ladder. As grain is loaded, itbounces off the ladder, causing increased break-age. Also, holds must be filled through verysmall openings at the corners to increase thehold’s capacity. Based on the location of theseopenings, grain may have to be thrown anddiverted into the opening. Unloading tankers

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is more difficult and causes additional graindamage because pneumatic unloaders are re-quired.

Quality Problems That AriseDuring Transport

The grain transportation and distribution sys-tem aims to move grain from the farmer to itsfinal destination at minimum cost, subject tomaintaining a specified level of grain quality.As figure 7-15 indicated, a large number ofroutes are available. Assuming a minimum oftwo handlings (one in and one out) at each loca-tion, grain might be handled six to eight timeswhen moving through this system. This figuredoes not include the number of times grain ishandled on the farm or within facilities. Thus,the relationship between the transportation anddistribution systems affects grain quality.Changes in one system will require changes inthe other.

The grain distribution system, as currentlyorganized, has large investments in duplicateand out-of-location facilities, which tends to in-crease the number of handlings. The abandon-ment of a large number of branch rail lines dur-ing the 1970s left many country elevatorswithout rail service. Most of these facilities,however, are still in operation. A substantialportion of grain received at these locations mustbe trucked to another facility that unloads,stores, and reloads the grain into railcars. Atleast two handlings could be avoided if farmersdelivered grain directly to facilities with railservice. In effect, the facilities on abandonedrail lines recreate the transit system for cornand soybeans that caused additional breakagedue to increased handlings. (This is not as im-portant for wheat, which is less affected by ex-tra handling.)

Other than increased breakage during load-ing and unloading, grain quality deterioratesin shipment in much the same manner as it de-teriorates during storage. The negative impactson grain quality presented in the storage sec-tion of this chapter regarding moisture uniform-ity and migration, temperature and humidity,insect invasion, and mold development also ap-

ply during shipment. This is because grain isin fact being stored while in transit,

Several factors peculiar to grain transporta-tion must be noted, however. The areas dis-cussed in the storage section as they pertainto solutions or preventive measures are notapplicable to grain during shipment. For ex-ample, no mode of transportation is equippedwith aeration, nor can grain temperatures andcorrective actions be taken during shipment.Therefore, moisture uniformity is critical tomaintaining quality. Moisture migration canbe more dramatic during shipment since graincan undergo several outside air temperatureand humidity changes. This is especially truewhen grain is loaded in a cold climate andmoved through warm water rather quickly toa warm, humid climate.

Barge shipments appear to be more suscep-tible than railcars to these influences, sincemore time is spent in transit. One explanationis that railcars are more uniformly loaded thanbarges in terms of moisture, as barge-loadingfacilities have fewer bins for segregating differ-ent moisture levels. Also, barges are primarilyused to transport corn and soybeans, with mois-ture and damage at higher levels than in wheat.Once grain is loaded into the mode of trans-portation that will carry it to its destination,maintaining grain quality is out of humancontrol.

Grain travels up to 2,000 to 3,000 miles fromthe major grain-producing regions in the UnitedStates to ports. In the case of barge shipments,up to 3 weeks might be spent in less-than-optimum storage conditions. Spoilage in bargeshipments to New Orleans have been found dueto high moisture levels in portions of the barges.This happened in less than 3 weeks. Vesselsused to transport grain to foreign buyers cantake up to 50 days, not including port delaysfor unloading. This time increases the poten-tial for grain spoilage and has been the focusof several studies on grain quality and the ba-sis for many foreign complaints.

As discussed previously, as bulk grain isloaded, fine materials tend to accumulate in thecenter while the larger material tends to roll

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to the sides. The impact that concentrations offine materials (spoutlines) have on grain qual-ity can be minimized to some degree by mov-ing the loading spout around so those materi-als do not concentrate in one spot. This cannotbe done in tankers. But no degree of spoutmovement can completely eliminate the segre-gation of material in the hold of a vessel.

This creates some unusual problems beyondthe effect fine materials have on quality. As ves-sels have gotten larger (for the reasons previ-ously discussed), foreign buyers are receivingquantities that must be divided for distributionto the ultimate users. Many times the entirecargo is not reblended before being divided anddistributed. This results in some users receiv-ing higher quality (as defined by the averageamount of fine material reported for the entireshipment) and some receiving poorer quality,even though the entire cargo was within speci-fication.

Transport Techniques ThatGrain Quality

Identity Preservation WithinShip Holds

One of the problems associatedbulk shipments is the nonuniform

Protect

with largenature in a

ship hold of the grain that will ultimately bedistributed to several users. One way to over-come this problem is to place a layer of burlapor plastic cloth and plywood between individ-ual portions. Some countries specify that indi-vidual portions destined for specific users beseparated in this manner.

Direct Transfer

One method for reducing the number of grainhandlings is to transfer grain directly from onemode of transportation to another without un-loading it into an elevator. For transfer froma railcar or truck to a barge, direct transfercould involve unloading the railcar or truck intoa pit and transferring the grain by belt directlyinto a barge, thus eliminating the elevator han-dling. This method is currently being used insome locations.

Direct transfer from a barge to an ocean ves-sel can be accomplished with conventional un-loading methods, marine legs, and movementby belt to the ocean vessel. A second methodinvolves floating rigs. Currently, nine floatingrigs in the New Orleans area perform this serv-ice. The cost, however, of direct transfer usingfloating rigs is higher than moving grainthrough export elevators,

Bagging

Export bagging facilities are currently inplace at export elevators in Corpus Christi andHouston, TX, as well as in Pascagoula, MS. Thebagging operation consists of placing grain intobags, sewing the bag shut, placing it on a pal-let, and transferring the full pallet to a ware-house on the dock for loading to a vessel.

Most of the export bagging is currently be-ing performed for Public Law 480 shipmentsof 1,000 to 4,000 tons per order. The cost is sub-stantially higher: Bagging, including movingfull pallets to a warehouse and then loadingthem, costs about $27.30 per metric ton com-pared with less than $1.00 for loading bulk grain(8). Bagging grain at country or inland eleva-tors and shipping the bags to a port for loadingwould decrease the number of handlings.

Containers

Since the mid-1970s, most of the manufac-tured U.S. imports have been shipped in 20-and 40-foot containers. A large share of thesereturn empty to Japan, South Korea, and Tai-wan. Special high-quality grains such as seedsand soybeans for human consumption have beenexported in these containers. However, littleor no commercial-grade grains have beenshipped in containers.

The cost of shipping containerized grain issignificantly higher than any of the current bulkshipping technologies. One recent attempt toship corn from Iowa in containers cost twiceas much as the least-cost bulk handling rate.Grain loaded into containers at interior loca-tions could be shipped overseas, thus reduc-ing a significant number of handlings (8).

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Identity-Preserved Shipments

The basic concept behind identity preserva-tion is that individual grain shipments shouldnot be comingled with others. Thus, the grainshipped from a specific location in the UnitedStates is the exact grain that the final user re-ceives. Any of the previously mentioned modifi-cations can be used for identity-preserved ship-ments. The associated costs are thereforerelated to the type of transportation modeselected. Much discussion has taken place onthe merits of this concept, and several ship-ments have originated from interior locationsfor delivery to importing countries with theiridentities preserved.

Emerging Technologies

Only two new transportation technologiescould help preserve grain quality: capsule pipe-lines and long-distance belts. The pipeline tech-nology would move grain in capsules propelledby air pressure, Long-distance belts would carrythe grain gently from one point to another.

Recent studies on the economic feasibility ofcapsule pipelines indicate that distance and

quantity carried are the major determinants ofthe economic feasibility. The pipelines arecheaper than unit trains on shipments less than300 miles and quantities in the range of 70 mil-lion to 80 million tons per year (8). The shortdistances mean that shipments would be lim-ited to river terminals for loading onto bargesfor shipment to a port.

Large volume requirements are unlikely tobe available to any inland shipping elevator un-less the grain is trucked or railed to the pipe-line loading elevator. This would raise costs andnumber of handlings. Once grain is loaded intoa truck or railcar, usually the least cost methodof transportation is to haul it directly to its des-tination.

The final remaining possibility for pipelinesor belts is to transfer grain very short distancesfrom large elevators to nearby export elevatorsor from export elevators to ocean vessels un-able to reach the elevator because of shallowwater, The widespread distribution of grainsupplies in the United States effectively rulesout the use of these technologies for movinggrain from country elevators.

CLEANING AND BLENDING TECHNOLOGIES

Cleaning and blending are operations at theheart of many grain quality controversies. Thepurpose of cleaning is to remove material otherthan grain, shriveled kernels, and broken piecesof kernels. Blending is the mixing of two ormore grain lots to establish a quality differentfrom either lot. Blending is performed by ex-porters, individual elevator managers, and pro-ducers to assure uniformity and increase prof-its (33). Concerns over cleaning and blendinginitiated the Grain Quality Improvement Actof 1986. In essence, many people believed thatthere was something inherently wrong aboutreintroducing material that had been removedfrom the grain. The act prohibits: 1) recombin-ing or adding dockage, dust, or foreign mate-rial to any grain at export facilities; 2) blend-ing different kinds of grain; and 3) addingbroken kernels from one grain to another.

CIeaning

Cleaning wheat in commercial handling fa-cilities is normally limited to removing dock-age, insects, and to a limited degree shrunkenand broken kernels. In corn, cleaning regulatesthe amount of broken kernels and foreign ma-terial; in soybeans, it controls the amount offoreign material and split soybeans. The han-dling and harvest properties of each grain,along with the location of grain cleaners, dic-tate the amount of cleaning required to meetvarious contract specifications. For example,corn harvested at low levels of broken corn andforeign material but high moisture must bedried and, due to its inherent nature, it breaksup during each handling.

Thus, cleaning corn to remove broken cornand foreign material is required at each han-

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dling in order to meet contract specificationsand avoid discounts. As most dockage in wheatis generated during harvest, and as normal han-dling does not cause significant dockage in-creases, cleaning is not required each timewheat is handled. Soybeans, on the other hand,fall somewhere in between regarding breakagesusceptibility and the amount of cleaning re-quired at each handling.

Data are not available on the number ofcleaners on v. off farms. The number on farmsis probably related to the particular crop, theamount of on-farm storage, and the number ofoperations performed on the crop at the farmlevel. For example, most corn is stored anddried on farm. In wheat, on the other hand, dry-ing is not required and the amount of dockagecan be regulated by the combine. Therefore,significantly fewer cleaners are probably foundon wheat then on corn farms.

Principles of Cleaning

The most common types of cleaners are me-chanical screening and scalping devices. Scal-pers remove material larger than grain and al-low the grain and fine material to pass through.Smaller screens are used to retain the grain andallow small material to pass through. Screensmay be stationary, with grain flowing or beingswept along them, or they may be shaken orrotated. Cleaning grain using screen and scalp-ing devices makes a particle size separation.Screen sizes vary by commodity, but usuallycoincide with the sieve sizes used in each Offi-cial U.S. Standard for Grain to define the re-spective factors.

Other types of cleaning devices use aspira-tion. This separates grain from less dense ma-terial by drawing air over a falling grain streamand pulling the lighter material into a cyclone-type separator. In addition to removing fine ma-terial, aspiration has also been found to be ef-fective in removing insects from wheat. Clean-ers using gravity tables (seed weight separation)and length graders (seed size separation) areused by seed conditioning plants. Screens andaspirators, however, are the only methods with

the throughput capacity needed for modernbulk handling facilities.

The Official U.S. Grain Standards for cornand soybeans use particle size to discriminatebetween whole and broken kernels and foreignmaterial. In wheat, particle size separations andaspiration are used to separate all matter otherthan wheat. This process does not distinguishbetween whole or broken kernels. The scalp-ing process removes material considered to beforeign to grain (i.e., stems, chaff, cobs, etc.)and also does not distinguish between wholeor broken grains. Screening removes smallerforeign matter, dirt, weed seeds, etc., but de-pending on screen size can also separate whole,broken, or split grains.

When establishing screen sizes, the relation-ship between removing unwanted foreign ma-terial and removing broken, split, or shriveledgrains is important. Whenever grain is cleanedby screening to remove foreign material, screensize has an impact on the amount of brokenor shriveled grains that will ultimately passthrough, but no matter what screen size is estab-lished, screens cannot remove everything. Forcorn, the common screen size is a 12/64-inchround-hole sieve. This size has recently causedmuch discussion since it removes a large per-centage of broken kernels. It is generally agreedthat scalpers remove unwanted foreign mater-ial, but much debate has centered on the valueof the broken grain removed at the same time.Since cleaning is intended to remove materialthat is lower in value than the remaining grain,setting screen size, especially in corn, is a bal-ance between separating material that may havevalue from material that is of no value and thatmay cause quality deterioration.

A more recent discussion on setting screensize centers on the particle sizes that formspoutlines. Recent studies have shown thatcrevices between kernels act like a screen. Fineparticles small enough to fall into these crevicesform spoutlines. One study found larger parti-cles in corn spoutlines than in soybean spout-lines, and that spoutlines essentially do not ex-ist in wheat. It concluded that the best screen

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sizes for corn and soybeans would be ones thatwill remove all particles of a size to formspoutlines.

Aspiration, which is predominantly used toclean wheat and in some areas has been usedto remove insect infestations, has been effec-tive in removing the lighter, less dense mate-rial normally considered to be of no value. Theproblems associated with the percent and valueof broken and shriveled kernels removed, there-fore, would appear to be less. However, den-sity decreases with particle size (31,68), andaspiration cleaning will produce cleanings oflower density than screen cleaning for the samepercentage of material removed. One studyfound that low-density whole corn kernels arenot of inferior feed value (28), but more recentstudies show that they are a detriment to mill-ing operations (53).

Another study measured the nutritive valueof various corn particle sizes (30) (table 7-8). Noparticle size discriminated by nutrient content,nor was nutrient content. dramatically reducedwith decreasing particle size. On the otherhand, the majority of the dust and inert mate-rial was concentrated in the sizes 8/64 inch andbelow, while weed seeds were mostly betweenthe 10/64 and 6/64 size.

The relationship between screen size and thevalue of the material removed is further com-plicated by the fact that smaller particle sizescontain less available starch to support moldgrowth (30), However, studies have also shownthat concentrations of broken and fine mate-rial are conducive to insect growth and reduceairflow during aeration. Broken corn betweenthe 16/64 and 8/64 sieves has been found to be

more biologically active than the sieve sizes cur-rently being considered for inclusion in the Offi-cial Standards for Corn (8/64 and 6/64) (30). Thedebate continues, therefore, on what should beremoved and how much, and the material’s re-lationship to setting grade limits and its effecton storability.

Current Procedures

Cleaners in commercial facilities are nor-mally placed after the final elevation, Clean-ing, therefore, is performed during loadout un-less the grain is being cleaned to enhance dryerperformance or is going into storage. On-farmcleaning, when done, is primarily to improvedryer performance.

Introducing clean grain to the dryer has thefollowing advantages: 1) it results in more uni-form airflow in the dryer and thus a more uni-form moisture content of the dried grain, 2) itdecreases the static pressure (airflow resistance)of the grain, thus increasing the airflow rateand dryer capacity, 3) it eliminates the dryingof material that deleteriously affects final grainquality, and 4) it results in less air pollution (55),

Obviously, cleaning before drying also hassome disadvantages. It requires additional in-vestments in cleaners, the handling of wet bro-ken corn and fine material, and the rapid saleof wet, easily molding material: it also resultsin some dry matter loss. Although the advan-tages of precleaning wet grain are fairly wellunderstood by dryer operators, most do not doit. The quality of U.S. grain would improve sub-stantially if precleaning was adopted (21).

Commercial cleaning requires high flowrates. Gravity or vibrator screen cleaners with

Table 7-8.— Nutritive Value of Corn Fines, by Particle Size

Size range, 64th-inch

Property Whole corn 15-12 12-10 10-8 8-6 6-4.5 <4.5

Protein, percent dry basis . . . . . . 10.20 10.06 10.35 10.38 10.44 - 10.97 - 12.27Oil, percent dry basis . . . . . . . . . . 4,47 3.86 4.25 3.40 2.48 2.43 2.43Fiber, percent dry basis . . . . . . . . 2,24 2.34 2.64 2.85 3.51 4.24 5.91Digestible energy, Kcal/lb. . . . . . . 1,785.80 NA 1,717.30 1,691.50 1,660.50 1,631.90 1,610.80NA = not available.

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SOURCE L D HIII et al , Changes In Qualtty of Corn and Soybeans Between the United States and England Special Publlcatlon No 63 Agricultural Experiment Statlon, Unlverslty of Illlnols, Urbana, IL, 1981

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capacities up to 40,000 bushels per hour arethe norm. The general configurations of clean-ing systems are found in commercial facilities.First, the entire grain stream can be passedthrough the cleaner, with the throughput ad-justed to produce the desired amount of mate-rial in the cleaned product. Alternatively, thegrain stream can be overcleaned and the cleanout metered back as required.

Second, the entire grain stream can becleaned using a screen larger than the size re-quired. The cleanings can either be recleanedto remove smaller material or reintroduceddirectly. This option is particularly useful whenhandling both corn and soybeans because it al-lows the facility to use corn screens, thus re-ducing the time and costs associated withchanging screens. Third, the grain stream maybe divided so that only part is cleaned and partleft uncleaned,

All these designs are useful only if part orall of the grain exceeds desired levels. This maynot occur at the first point of sale. Studies onhandling breakage indicate that for corn, about0.5 percent broken corn and foreign material,as defined by a 12/64-inch round-hole sieve, iscreated at each handling. This percentage couldbe higher or lower, depending on the particu-lar handling facility and the drying method.Breakage susceptibility in wheat is far less.

Once inert material such as stems, pods, cobs,weed seeds, dirt, and chaff is cleaned out, nofurther cleaning is required. However, depend-ing on the type of grain and its susceptibilityto breakage, breakage will occur at each han-dling throughout the marketing chain. Thuscorn and soybean cleaners are located through-out the marketing chain and in every exportelevator, whereas wheat cleaners are locatedcloser to the first point of sale and, except ina few instances, are not found at export ele-vators.

The amount of cleaning is dictated by the lim-its established by official grades, subsequentdiscounts for particular factors, and storabil-ity. For corn and soybeans, official grade limits

are not normally exceeded at the first point ofsale. As these commodities move through themarketing chain, however, they must be con-tinually cleaned in order to meet grade limits.

Wheat dockage levels delivered by the farmerto the first point of sale are purchased, withdockage being deductible as a reduction fromweight, Cleaning wheat to remove dockage atthis point and throughout the marketing chainis therefore strictly a function of economicsand, in many instances, quality is better regu-lated through blending instead.

In practice, four basic economic factors de-termine whether wheat should be cleaned ornot:

1. the cost of cleaning,2. the price of screenings,3. dockage levels, and4. the cost of transportation.

A 1987 publication by North Dakota State Uni-versity reported on the results of its yearly sur-vey of elevator operators in that State (16). Of168 elevator managers surveyed, 159 indicatedthat wheat was cleaned prior to shipment. Theyalso indicated that incoming harvest wheat wascleaned when dockage levels reached on aver-age 2.6 percent. Wheat shipments exceedingthe 2.6 percent average were cleaned down toan average 0.9 percent. After harvest, incom-ing dockage exceeding an average 2.1 percentwere cleaned down to an average 0.8 percent.

The North Dakota survey also indicated thatthe cost of cleaning can range from 2 to 5 centsper bushel, depending on cleaner capacities(16), Since dockage is treated as a deductionto weight, transportation costs to the final des-tination and price for cleanings are criticalwhen determining the economics of cleaning.Transportation rates as well as the price forcleanings have decreased in the mid-1980s.Multiple-car and unit-train shipments have re-duced the cost of moving wheat from the North-ern Plains States to the Pacific Northwest.When the cost of cleaning, transportation rates,and the price of cleanings are evaluated, the

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survey indicates that it is not economical toclean wheat in these areas unless dockage levelsexceed 2 percent.

The amount of grain cleaning prior to stor-age revolves around the risk of grain deterio-ration as a result of mold and insect invasionsand the costs associated with maintaining qual-ity. The effects of mold and insects on grainquality, along with technologies used to main-tain quality, are discussed in the section deal-ing with storage and handling technologies.

Fine material segregates in spoutlines, as dis-cussed in other sections of this chapter. Hall(25) found that materials that pass through a12/64-inch round-hole sieve segregate in spout-lines, while larger pieces rolled with the wholecorn to the sides, This phenomena affects aer-ation since fine materials have higher airflowresistance than whole kernels, and the airdetours around them, commonly causing over-aeration.

Several other investigations on the effect ofcorn particle size on aeration have been con-ducted. Small pieces (12/64 inch in diameterand smaller) cause the most increase in airflowresistance during aeration, and the finer theparticles, the more the resistance. However, thelevel of broken corn and foreign materialpresent in the grain mass can also have an im-pact. Even though the impact of cleaning ondryer performance and storage technologies iswell known, moisture content is the principalfactor in decisions regarding storability anddryer performance, not cleaning.

New and Emerging Technologies

Aspiration cleaning is a relatively new tech-nology being used in some wheat-producingareas to clean grain and remove insects. Mul-tipass systems, in which grain is aspirated sev-eral times at progressively increasing air ve-locities, have improved efficiency. Aspirationcleaning will become more prevalent if clearlydemonstrated to be capable of cleaning at nor-mal production handling rates.

Several cleaners in Europe are arranged touse centrifugal force rather than vibratory mo-tion or impact to cause screen separation. Theone offered in the United States also has aspi-ration before the screens. The principle wasdesigned to preclean wet grain before drying.With the majority of corn being dried on-farm,it is doubtful that a moderate capacity (4,000to 10,000 bushels per hour) cleaner will pene-trate the commercial market. However, it is aviable concept for preparation of specialty ship-ments and might be useful to clean corn aftercommercial drying.

Rapid sensing systems for physical proper-ties open possibilities for on-line control ofcleaning systems. No commercial devices ofthis type are available, but investigative workis being done.

Blending

Blending can be defined as mixing two ormore grain lots to establish an overall qualitythat may or may not be different from any oneindividual lot. Blending occurs for threereasons:

1.

2.

3.

there are economic incentives for grain tobeat a specific quality, no better or worse;the uniformity of the reblended productmakes it better suited for handling, stor-age, or utilization; andsometimes an aspect of a particular proc-ess requires a specific quality or range ofquality in preference to other possible qual-ities.

Except for factors such as protein and fallingnumber in wheat, the present U.S. marketingsystem does not normally emphasize user prop-erties, so the first two explanations are the mostapplicable. However, as more user properties(e.g., protein, oil, and starch) become tradingfactors, situations will occur when a blendedproduct will be more valuable to the user.

The central issue in blending is whether ithas a positive or negative impact. The list ofimportant quality factors can be divided into

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two categories: those that are defects (or willcause defects) and those that are specially tiedto individual end use. The line is not alwaysclear, but defect factors are of negative valueto all users whereas user-sensitive factors willbe evaluated differently, even oppositely, bydifferent users. Primary examples of defect fac-tors are foreign material and damaged kernels.As all defect factors have negative value, blend-ing these factors will not improve the value ofgrain (29).

Blending can be neutral or even beneficialfor user-sensitive factors such as protein inwheat. If the value of factors can be determinedon a linear continuous scale (e. g., protein inwheat and soybeans and oil in soybeans), thendeliberate blending will neither help nor hurt.However, if the premium scale is not propor-tionally sensitive, then blending may may notbe beneficial. Processes may also have to be ad-justed to make the most use of varying quali-ties (e.g., steeping time in wet milling or pro-tein in wheat milling), which means thatuniformity within the shipment as evidencedby test results clustered around some meanvalue will be preferred to random distributions.

Principles of Blending

Many States contribute to national wheat,corn, and soybean production. Weather, genet-ics, and agronomic differences virtually assurequality differences within and across crop yearsand contribute to the lack of uniformity withina particular grain. These differences exist forwhatever factors are used to describe quality.For example, if an importer were to purchasewheat today, the shipment could be comingledwith a multitude of varieties, from severalregions, covering several crop years.

As intrinsic factors start to be measured andtaken into account in the marketplace, theregionality problem will be magnified. Figure7-16 presents data on regional soybean proteinand oil. Blending will have to occur if fixedspecifications are set. If soybean protein andoil are priced on a continuous scale with no

mandatory targets, growers in some areas willface discounts relative to growers elsewhere,

The basic mathematics of blending are rela-tively simple. The quality of a blend is theweighted average of the qualities being blended.The application is straightforward when twoor fewer are involved. If several characteris-tics have economic value, however, then a prof-it function must be set up in terms of all rele-vant factors. The optimum blending proportionis the one that yields maximum profit. Manyother considerations—storage space, market ex-pectations, shiploading plans, and so on—mustbe included. Linear program methods havebeen used to analyze complex blendingproblems (4 I).

If more than one factor is being controlled,then the blend is most easily optimized if theone quality factor is concentrated in all grainlots used in the blend. This minimizes the ef-fect of blending for that factor and allows con-centration on the others. When the levels forthe factor are low, then concentrating on theindividual factor being blended will minimizethe number of secondary streams. This explainswhy cleaning and relending broken grainsand/ or foreign material is preferred over blend-ing two grain streams of differing percentages.It is also easier to hold a uniform blend whencontrolling a small flow rate of pure foreignmaterial, pure damage, or clean, high-moisturegrain.

U.S. grain-handling facilities are designed tostore large masses of relatively uniform grainof some intermediate quality, with small spe-cial storage for lots concentrated in one qual-ity factor (high moisture, high damage, high pro-tein, etc.), although to a lesser degree in springand Durum wheat-producing areas. This is pos-sible because the most heavily traded gradesallow the majority of the grain to fall withinbroad limits and thus be stored en masse. Asadditional quality factors are introduced, thisdesign and management philosophy will pre-sent more difficulties, since there will be morefactors to consider in profit maximization. In-

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Figure 7-16.–U.S. Soybean Quality by Region, 1986

SOURCE. American Soybean Association, 1987

trinsic factors cannot be as readily concentratedor manipulated as physical factors.

Current Procedures

Premiums and discounts can encourage ordiscourage blending and are set by merchantssubject to buyers’ needs and supply conditions.For example, high-damage corn is more likelyto be directed to export for blending into No.3 than to a domestic processor buying No. Z.Likewise, poorer quality soybeans are more aptto fit in No. 2 export cargoes than in No. 1 pur-chases by domestic processors. On the otherhand, protein in wheat can be directed to eitherthe domestic or the export market using pro-tein premiums and discounts.

A case in point is protein content in springwheat using March 1988 protein premiums anddiscounts in both the Pacific Northwest andMinneapolis markets. The base protein value

markets is 14 percent, In the Pacific Northwest,protein premiums of 3 cents were being paidfor each 0.25 percent over the base, whereas6-cent discounts were applied to shipments un-der the base, At the same time, in the Min-neapolis market premiums of 5 cents were paidfor every 0.2 percent over the base with dis-counts of 3 cents being applied for shipmentsunder the base. With such a schedule, a ship-per would be better off blending protein levelsfor shipment to the Pacific Northwest and ship-ping 13 and 15 percent shipments separatelyto the Minneapolis market.

Grain handlers do not solve complex mathe-matical formulas to adjust blending proportionsas they move grain. Table 7-9 shows a typicalexample of four soybean lots being combinedto make a U.S. No. 2 grade. The equal-propor-tions blend would not necessarily be the high-

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Table 7.9.—Blending of Four Soybean Lots to Make U.S. No. 2,Maximum 13% Moisture

Moisture DamageLot

Value a

(percent) (percent) (dollars per bushel)

11.5 1.02 . . . . . . . . . . . . . . . . . . . . . 14.5 1.23 . . . . . . . . . . . . . . . . . . . . . 12.5 1.04 . . . . . . . . . . . . . . . . . . . . . 11.5 4.0

Average value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Blend of equal

proportions. . . . . . . . . . . 12.5 1.8Contract specification . . . 13.0 2.0

1.0 6.001.0 5.825.0 5.941.0 5.88. . . . . . . . 5.91

2.0 6.003.0 6.00

aga~ed on typical d~gcount schedules relative to U.S. NO. 2. base Price of *.~/b”.

SOURCE: C.R. Hurburgh, “The Interaction of Corn and Soybean Quaiity With Grain Storage,” background paper prepared forthe Office of Technology Assessment, U.S. Congress, Washington, DC, 1988.

est profit one, but is quite common. If the for-eign material were removed and reblended aspure foreign material, more wet soybeans (lotZ) and more damaged beans (lot 3) could beblended without exceeding specifications. Like-wise, if lot 3 were more concentrated in dam-age, it would exert more effect on the damagepercentage and less on other factors. Overall,

I however, profits from blending are possibleI only if the average quality of grain normally

exceeds specifications. The closer the specifica-tions are to the available average quality, theless the potential for blending.

Operationally, blending is accomplished withvarying degrees of sophistication. At export,barge, and major inland terminals, grain is con-tinuously sampled with a mechanical diverteras it is being loaded. Samples are analyzed andchanges to the mix can be made. Generally, thefacility manager will target quality somewhatbetter than the specifications to protect againstthe chance that normal variability in loading,sampling, and analysis will yield a result ex-ceeding specifications.

Modern facilities have proportioning gatesthat control the flow of individual qualities tothe blend. If the facility is equipped for any ofthe cleaning/reblending options discussed inthe cleaning section, cleaner throughput andrelending rates will also be controlled fromthe loadout control center. Older facilities donot have continuous sampling and automatedflow control.

Quality Factors Affected by Blending

Moisture.—The primary reason for moistureblending is purely economic, and it is most com-mon at interior locations where high-moisturegrain is more available. Handlers and growersroutinely capitalize on cold weather to storemoderate-moisture corn (up to 20 percent) andsoybeans (up to 15 percent). Furthermore, car-ryover stocks from previous years are usuallymuch drier than market limits, offering an op-portunity for blending with fresh wet grainfrom the field at harvest. Moisture blending cancause grain deterioration, as discussed in thestorage and humidity technologies section ofthis chapter.

Particle Size.—Blending for particle size fac-tors has stirred the most controversy becausethese include dockage, foreign material, anddust. As discussed in the cleaning section, cornand soybeans break during each handling, cre-ating foreign material and dust. This is com-pounded by the fact that corn breakage suscep-tibility increases about 40 percent for each1-percent reduction in moisture (19). Soybeanbreakage susceptibility increases 22 percent foreach l-percent reduction in moisture (32).Breakage is not the critical factor in wheat.However, since dockage in many areas of thecountry is not removed, each handling gener-ates dust, which is collected. Therefore, blend-ing of these factors is essentially a defensiveoperation to minimize the economic effects ofconstant handling, breakage, and dust gen-eration.

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As mentioned in other sections of this chap-ter, as grain is loaded, fine material concen-trates in the center of a grain mass and uni-formly blended grain streams will not stayuniform once loaded because fine materialsegregates. No amount of blending will elimi-nate this problem.

Kernel Damage.—Blending damaged kernelsis a purely economic operation that exists be-

cause normal damage levels are less than al-lowed in specifications. Corn is harvested withabout 2 percent damaged kernels, soybeans nor-mally with less than 0.5 percent, and wheat wellwithin the limits of No. 1 (2.0 percent). Gradelimits for damaged kernels in export shipmentsof No. 3 corn (7 percent), No. 2 soybeans (3 per-cent), and No. 2 wheat (4 percent) are wideenough to accommodate blending of any un-usual or storage-damaged lots.

INTERACTIONS/FINDINGS AND CONCLUSIONS

Grain is a living, breathing organism and assuch is a perishable commodity with a finiteshelf life. The best harvesting, drying, storing,handling, and transporting technologies in theworld cannot increase quality once grain is har-vested. Each technology is a self-sustainingoperation, but the way each is used affects theability of the others to maintain quality. For ex-ample, if grain is harvested wet, not only willthis lead to increased breakage during harvest-ing, but it means the grain must be dried. Im-properly used dryers means more breakage andnonuniform moisture content. Moisture con-tent, uniformity of moisture content, and theamount of broken grain and fine materials af-fects storability and can have an impact on thetechnologies used to maintain quality duringstorage. Therefore decisions made at harvest,as well as at each step thereafter, influence thesystem’s ability to maintain and deliver a qual-ity product,

As discussed throughout this chapter, grainmoisture and amount of broken grain and finematerials stand out as the two critical factorsaffecting the performance of each technology.

Moisture at harvest directly affects theamount of kernel damage produced throughcombining. For corn, physiological maturity isobtained at about 30 to 35 percent moisture.Although corn can be harvested at this point,it is damaging to the kernel’s soft pericarp andis not recommended. In the Midwest, it is gen-

erally recommended not to harvest until thecorn has field-dried to 26 percent moisture.However, obtaining a 26 percent moisture inthe Northern States is not possible during wetfall harvest periods, and corn must be harvestedat higher moisture contents or it will not getharvested at all,

Since cereal grains and oilseeds are harvestedin the United States at moisture levels that aretoo high for long-term storage or even short-term storage and transportation, these com-modities must be dried to acceptable moisturelevels. Corn, harvested at 20 to 30 percent mois-ture, must be dried to 14 to 15 percent for safestorage. Wheat and soybean harvest moisturesare substantially lower, with their safe storagelevels marginally lower than harvest moisture.In certain regions of the United States, wheatdries naturally in the field. In some cases thisis also true for soybeans.

The process of drying has a greater influenceon grain quality than all other grain-handlingoperations combined. For superior grain qual-ity, it is imperative to optimize dryer type andoperation since half the corn crop is dried incontinuous-flow, portable batch, and batch-in-bin dryers of the crossflow type. Of particularconcern is the increase in breakage of corn andsoybeans and the decrease in milling qualityof wheat. Artificial drying of wheat and soy-beans, however, is not frequently required.

The main dryer operating factors affectinggrain quality are air temperature, grain veloc-ity, and airflow rate. Operators can adjust the

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first two on every dryer and, on some units,can adjust all three. Collectively, the three con-ditions determine the drying rate and maximumtemperature of the grain being dried, and thusestablish the quality of the dried lot.

Over 80 percent of the United States corncrop is dried on farms. On-farm dryers fall intothree categories—bin, non-bin, and combina-tion dryers. Bin dryers are in general low-capacity, low-temperature systems, able to pro-duce excellent quality grain. Non-bin dryers,the most popular dryer type, are high-capacity,high-temperature systems that frequently over-heat and overdry the grain, and thereby causeserious grain-quality deterioration. Combina-tion drying combines the advantages of bothsystems (i.e., high capacity and high quality)but requires additional investment, and islogistically more complicated. A switch byfarmers from non-bin to combination dryingwould significantly improve U.S. corn quality,

Off-farm dryers fall into three classes—crossflow, concurrent-flow, and mixed-flowdryers. All are high-capacity, high-temperatureunits. In the United States, crossflow modelsare the most prevalent; they dry the grain non-uniformly and cause excessive stress-crackingof the grain kernels. Mixed-flow dryers are com-mon in other major grain-producing countries;the grain is dried more uniformly in these, andis usually of higher quality than that dried incrossflow models. Concurrent-flow dryers havethe advantage of producing the best qualitygrain; their disadvantages are the relatively highinitial cost and the newness of the technology.A change from crossflow to mixedflow/concur-rent-flow dryers will benefit U.S. grain quality.

Moisture content and uniformity within astorage facility are critical to maintaining grainquality, as demonstrated by the Allowable Stor-age Time Table for corn. The interaction be-tween moisture, temperature, and relative hu-midity spurs mold growth, increases insectactivity, and causes other quality losses. Basi-cally, grain moisture in equilibrium with 65 per-cent relative humidity will support mold ac-tivity, but different grains will create theequilibrium relative humidity at different mois-

ture levels. That is why wheat and soybeanscannot be stored at the same moisture contentas corn. In the case of controlling insects, highmoisture contents increases absorption offumigants such as methyl bromide, requires anincrease in dosage, and accelerates the break-down of protective treatments such as malathion.

The equipment and methods used to fill a stor-age bin affect the performance of aeration sys-tems used to control the effects of moisture/tem-perature/humidity. Dropping grain into thecenter of a bin causes a cone to develop, withthe lighter, less dense material concentratingin the center (in spoutlines) while the heavier,denser material flows to the sides. This impedesairflow during aeration, and molds can beginto grow almost immediately.

In large horizontal storage areas, loadingfrom the center or from a loader that is grad-ually moved backward through the center ofthe building as the pile is formed causes simi-lar problems, If grain is piled over each aera-tion duct on the floor by moving the loadingdevice back and forth, airflow will be greatlyincreased. However, airflow distribution is notas uniform as in upright bins. Some methodsof filling piles also result in fine materials con-centrating in local areas. These accumulationsare more subject to insect and mold growth,and they divert airflow. But piles are difficultto aerate, and the shape of some restricts uni-form airflow.

Nonuniform moisture levels can lead to spoil-age in localized areas within a storage facility.Even assuming that moisture and temperatureare uniform within a grain mass, they will notremain so over time. Moisture will migrate inresponse to temperature differentials. If the out-side air is warmer than the grain, the circula-tion reverses, and the area of condensation isseveral feet under the grain surface, but stillin the center.

The effect of moisture migration on storageis that grain assumed to be in a storable condi-tion will not be. Cold weather migration pri-marily affects grain in land-based storage, caus-ing deterioration as temperatures rise in thespring. Warm weather migration is particularly

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vexing for grain in transit both from cold towarm areas of the United States and from theUnited States through warm waters to foreignbuyers, A barge or ocean vessel is basically astorage bin and will experience the same migra-tion phenomena as land-based storage facilities.

Broken Grain and Fine Materials

Three factors—cylinder speed, moisture atthe time of harvest, and amount of graindamage—are interrelated. In general, whenevergrain is harvested, damage or breakage occurs.However, grain damage is much greater in eachcase on extremely wet or extremely dry grain.When grain is harvested at high moisture levels,the kernel is soft and pliable. Moist kernels de-form easily when a force or impact is applied,and greater force is needed to thresh wet ker-nels than dry ones, Thus, wet kernels suffermore damage than drier kernels. However,drier kernels can break when the same forceis applied. Therefore, optimal conditions existfor each grain.

In addition to grain breakage due to mois-ture content, factors such as weed control andkernel density, especially in wheat, also affecta combine’s ability to harvest and deliver cleangrain. Cutting below the lowest pod or wheathead inadvertently introduces some soil intothe combine. Most soil is aspirated from therear unless there are soil particles about thesame size as the kernel, in which case they passthrough the cleaning sieves with the grain.

Harvesting technologies normally removematerial larger than the grain (such as plantparts) and material significantly smaller (likesand and dirt). Sloping terrain, however, canaffect this process. Side slopes also create prob-lems since the tendency is for material to con-gregate on the downhill side of the cleaningshoe.

The main factor affecting the combine’scleaning performance is the amount and typeof weeds present in the field during harvest.Weed control is one of the most serious prob-lems facing many wheat producers in theUnited States. This is also true for Southeast-ern U.S. soybean-producing areas, where a

warm wet climate is conducive to weed growth,The amount of weeds affects not only yield, butalso the amount of foreign material present inthe harvested grain and the combine’s abilityto remove this material.

Combines are being modified to improve per-formance in weedy fields. In the case of wheat,kernel size has been decreasing, which com-plicates this modification. The trend towardsmaller kernel size is a concern because theseeds of most grassy weeds are smaller andlighter than wheat, Thus, smaller wheat ker-nel size reduces the margin between wheat andweed size and, therefore, increases the diffi-culty of cleaning within the combine.

As discussed in the drying technology sec-tion, rapidly drying moist grain with heated aircauses stress cracking. The drying operationitself does not cause grain breakage, but canmake grain more susceptible to breakage inlater handlings. Cleaning grain before it reachesthe dryer can improve dryer efficiency. Intro-ducing clean grain to the dryer:

●

●

●

results in a more uniform airflow in thedryer and thus a more uniform moisturecontent of the dried grain;decreases the static pressure (airflow re-sistance) of the grain, thus increasing theairflow rate and dryer capacity; andeliminates the drying of material thatdetracts from final grain quality,

Obviously, precleaning also has disadvantages.It requires additional investments in cleaners,the handling of wet broken corn and fine ma-terial, and the rapid sale of wet, easily moldingmaterial, and it results in some dry matter loss.Although the advantages of precleaning wetgrain are fairly well understood by dryer oper-ators, most do not preclean. The quality of U.S.grain would improve substantially if preclean-ing were adopted,

Mechanical damage during handling resultsin grain breakage, which produces broken grainand fine materials, This causes a decrease inquality, greater storage problems, and an in-crease in the rate at which mold and insectsinvade stored grain,

—

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Research has shown that breakage in han-dling is more significant for corn than for wheatand soybeans. Higher moisture content andhigher temperatures prove to be the optimumconditions to minimize breakage but are oppo-site of the optimum safe storage moisture andtemperature. The effect of repeated handlingson grain breakage is cumulative and remainsconstant each time grain is handled or dropped.This is true whether or not broken material isremoved before subsequent handlings.

The impact of grain breakage and fine mate-rials on all aspects of the system has resultedin the need to clean grain. Cleaning wheat incommercial handling facilities is normallylimited to removing dockage, insects, and toa limited degree shrunken and broken kernels.For corn, cleaning regulates the amount of bro-ken kernels and foreign material, and for soy-beans, the amount of foreign material and splitsoybeans.

Cleaning corn to remove broken corn and for-eign material is required at each handling inorder to meet contract specifications and avoiddiscounts. For wheat, however, the majority ofthe dockage is generated during harvest andnormal handling does not cause significant in-creases. Therefore, cleaning is not required ateach handling. Soybeans, on the other hand,fall somewhere in between regarding theirbreakage susceptibility and the amount of clean-ing required at each handling.

The amount of grain cleaning prior to stor-age involves the factors of risk to grain deteri-oration as a result of mold and insect invasionsand the costs associated with maintaining qual-ity. In the case of fumigation: broken grains,grain dust, and other fine materials have thegreatest effect on the performance of insect con-trol interventions. When a protective treatmentis applied, grain dust may absorb much of theinsecticide, which reduces the effectiveness.Likewise when a fumigant is applied, concen-trations of dust and fine material may requireincreased dosages to penetrate the grain mass.Dust also inhibits penetration of fumigant gasesand causes the gas to channel so that penetra-tion is slow or stopped in certain parts of thegrain mass.

Ability of System to MaintainQuality

Technologies are in place to harvest, main-tain, and deliver quality grain. Each technol-ogy must be used, however, in a manner con-ducive to maintaining grain quality.

Although data indicate that nearly any com-bine can deliver acceptable quality, farmer-operated combines tend to have higher levelsof grain damage than the combine should de-liver. From a technology standpoint two areasneed emphasis:

1.

2.

greater education efforts to help operatorsbetter understand the interactions of cyl-inder/rotor speed, concave openings, fanspeed, and sieve openings with grain qual-ity and grain losses; andmore monitoring devices and possibleautomatic controls on combines-to helpoperators adjust or fine tune the combine.

Weed control and its relationship to kernelsize and density are critical to optimum com-bine performance. Unless new technologies ad-dressing this area are developed or better weedcontrol measures for use by the farmer areforthcoming, the combine’s ability to harvestand clean grain will continue to presentproblems.

A significant improvement in grain qualitycan be obtained by optimizing the dryer oper-ating conditions of existing crossflow dryers,by precleaning wet grain, by selecting the bestgrain genotypes, and by installing automaticdryer controllers.

Molds will grow on any kernel or group ofkernels that provide the right conditions. There-fore, moisture content and moisture uniform-ity within storage facilities are critical tomaintaining grain quality. Maintaining lowtemperatures and moisture levels in grain arethe principal ways to preserve grain quality andprevent damage from molds and insects. Aer-ation is also a very effective tool. The rate ofdevelopment of both molds and insects isgreatly reduced as temperature is lowered.

Many storage bins, especially on the farm,are equipped with aeration systems that are

. . . - . .- . —

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often not used effectively. Farm storage bins,especially smaller and older ones, often are notaerated. Small bins will cool or warm with thechanging season quickly enough that moisturecondensation may not be a serious problem,A majority of farm aeration systems are eithernot operated at all or not used enough. The mostcommon problem is not running the fans longenough to bring the entire grain mass to a uni-form temperature level. If a cooling front ismoved through only part of the grain, a mois-ture condensation problem is likely at the pointwhere the warm and cold grain meet.

In addition to aeration, the turning and trans-fer process mixes grain and contributes to amore uniform moisture and temperature. In fa-cilities not equipped with aeration, turning hasbeen the traditional means of grain cooling.However, turning requires much more energyto cool grain than aeration does, and it can con-tribute to physical damage by breaking thekernel,

Turning grain cannot be performed in hori-zontal or pile storages because of the difficultyin unloading and moving the grain. In orderto turn grain, a handling system must haveempty bins connected by a conveying system.This is not the case on most farms.

Most grain storage facilities provide a natu-ral habitat for stored-grain insects even whenthe facility is empty. Grain residue in floorcracks and crevices, wall and ceiling voids, andledges provide an ample supply of food to sus-tain several insect species. Thorough cleaningis the first and most effective step toward pre-venting insect infestation of freshly harvestedgrain. Because insects live from season to sea-son, cleaning and removing trash and litter isimportant. Also, a thorough cleaning shouldprecede any insecticidal treatment of storagefacilities if the full value of the treatment is tobe expected.

For several reasons—such as remoteness offarm storage facilities, small amounts of grainto be treated, and lack of information—farm

storage facilities are inadequate to receive aninsect control treatment. Therefore, when grainthat has not received a properly applied treat-ment is marketed, it becomes mixed with nonin-fested grain and magnifies the problem, thuscreating greater loss and the need for more ex-pensive and time-consuming remedies,

The high-speed, low-cost U.S. grain systemdoes not readily accommodate special qualityneeds. While these needs can be met by slow-ing belt speed, installing and using cleaningequipment, eliminating unneeded handlings,and preserving the identity of grain, most ofthese actions increase costs.

All the factors affecting quality just discussed—nonuniform moisture, moisture migration,temperature and humidity, insect invasion, andmold development—have an impact on grainquality during shipment. No mode of transpor-tation is equipped with aeration, nor can graintemperatures and corrective actions be takenduring shipment. And moisture migration canbe more dramatic during shipment since graincan undergo several outside air temperatureand humidity changes, This is especially truewhen grain is loaded in a cold climate and trans-ported through warm water rather quickly toa warm humid climate. Therefore, moistureuniformity is critical to maintaining quality dur-ing shipments.

The interactions between technologies re-garding moisture content and breakage on grainquality are evident. Each technology is capa-ble of preserving grain quality. Once inert ma-terial such as weed seeds, dirt, stems, cobs, andso on are cleaned out of grain, no further clean-ing is required. But grain, especially corn, mustbe cleaned to overcome breakage due to han-dling in the system and is inevitable. Once grainquality deteriorates at any step in the process,it can never be recovered. As demonstrated bythe Allowable Storage Time Table for corn,shelf life is a time line with a certain share ex-pended at each storage condition, Once thistime has passed, there is no way to recover whathas been lost.

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Stored Grain Management Practices,” Univer-sity of Minnesota Experimental Station Bulle-tin AD-SB-2705, 1985.Hill, G., and Hill, L. D., “Test Weight as a Grad-ing Factor for Shelled Corn, ” AERR-124, De-partment of Agricultural Economics, Universityof Illinois, Urbana, IL, 1974.Hill, L. D., “Principles for Evaluating Presentand Future Grain Grades, ” Paper 85 E-329, De-partment of Agricultural Economics, Universityof Illinois, Urbana, IL, 1985.Hill, L. D., et al., “Changes in Quality of Cornand Soybeans Between the United States andEngland, ” Special Publication No. 63, Agricul-tural Experimental Station, University of 11-linois, Urbana, IL, 1981.Hurburgh, C. R., “Particle Size Characteristicsof Unit-Train and Barge Corn Shipments, ” De-partment of Agricultural Engineering, IowaState University, Ames, IA, 1986.Hurburgh, C. R., “The Interaction of Corn andSoybean Quality With Grain Storage, ” back-ground paper prepared for the Office of Tech-nology Assessment, U.S. Congress, Washington,DC, 1988,Hurburgh, C. R., “Cleaning and Blending ofCorn and Soybeans, ” background paper pre-pared for the Office of Technology Assessment,U.S. Congress, Washington, DC, 1988.Hurburgh, C. R., and Hazen, T. E., “Performanceof Electronic Moisture Meters in Corn, ” Dry-ing Tech. 2(1):149-156, 1984.Hutt, W., and Oelschlager, W., “Influence ofBurner Emissions on the Concentration of anOrganic Deposit in Grains Dried With DirectHeating,” Grundl, Landtech 26(3):134-140, 1976.ICI Americas, Inc., Agricultural Chemical Divi-sion, Product Specimen Labels, 1986.Indiana Crop Livestock Reporting Service(ICLRC), Indiana Agricultural Report, vol. 4, No.9, Department of Agricultural Statistics, PurdueUniversity, West Lay fayette, IN, 1984.Iverson, M. L., “The Effect of Changes in In-terpretive Lines for Damaged Soybeans Uponthe Free Fatty Acid Content of Graded Soy-beans,” Special Study SS-3-1986, Federal GrainInspection Service, U.S. Department of Agricul-ture, Washington, DC, 1986.Kirkpatrick, R. L., and Tilton, E. W., “ElevatedTemperatures To Control Insect Infestations inWheat,” }. Georgia Entomol. Soc. 8(4):264-268,December 1973.Kuppinger, H., “Investigation and Improvementof Crossflow Drying of Grain, ” Ph. D Thesis,

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Newberry, R. S., et al., “Soybean Quality WithRotary and Conventional Treshing,” Trans-action of ASAE 23:303-308, 1980,Nolte, B. H., and Byg, D. M,, “Timely Field Oper-ations for Corn and Soybeans in Ohio, ” Coop-erative Extension Service Bulletin 605, OhioState University, Columbus, OH, 1976,Nugyen, V. T., et al., “Breakage Susceptibilityof Blended Corn, ” Transaction of ASAE 27:209-213, 1984.Otten, L., Brown, R., and Anderson, K., “AStudy of a Commercial Crossflow Grain Dryer,”Canadian Agricultural Engineer 22(2): 163-170,1980,Paulsen, M. R., “Corn Breakage Susceptibilityas a Function of Moisture Content, ” ASAE Pa-per No. 83-3078, 1983.Paulsen, M. R., “Effect of Harvesting Technol-ogies on Corn and Soybean Quality, ” back-ground paper prepared for the Office of Tech-nology Assessment, U.S. Congress, Washington,DC, 1988.Paulsen, M. R., and Hill, L. D., “Corn Quality Fac-tors Affecting Dry Milling Performance, ” Jour-nal of Agricultural Engineering Research31:255-263, 1985.Quick, G. R., and Buchele, W. F., “The Grain Har-vesters, ” American Society of Agricultural Engi-neers, St. Joseph, MO, 1978.Regge, H., and Minaer, V., “Grain Precleanersand Trends of Their Develop merit,” Agrartech-nik 29(8):349-352, 1979.

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Sauer, D. B., and Converse, H. H., “Handling andStorage of Wheat: An Assessment of CurrentTechnology,” background paper prepared forthe Office of Technology Assessment, U.S. Con-gress, Washington, DC, 1988.Schrock, M., “Wheat Quality as Influenced byHarvesting Machinery, “ background paper pre-pared for the Office of Technology Assessment,U.S. Congress, Washington, DC, 1988.Silva, J. S., “An Engineering-Economic Compar-ison of Five Drying Techniques for Shelled Cornon Michigan Farms, ” Ph.D Thesis, MichiganState University, East Lansing, MI, 1980.Simpson, J. B., “Effect of Front-Rear Slope onCombine-Shoe Performance,” Transaction ofASAE 29:1-5, 1986.Steele, J. L., et al., “Deterioration of Shelled Cornas Measured by Carbon Dioxide Production, ”Transaction of ASAE 12:685-688, 1969.Storey, C. L., et al., “Insect Populations in Wheat,Corn, and Oats Stored on Farms,” Journal ofEconomics of Entomology 76:1323-1330, 1983.Storey, C. L., et al., “Present Use of Pest Man-agement Practices in Wheat, Corn, and OatsStored on Farms, ” JournaZ of Economics Ento-mology 77:784-788, 1984.

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Stroshine, R., et al., “Comparison of DryingRates and Quality Parameters for Selected CornInbreds/hybrids, ” ASAE Paper No. 81-3529,1981.Stroshine, R., and Martins, J., “Varietal Differ-ence in High Temperature Drying of Maize inthe Midwestern United States,” presented at theFifth International Drying Symposium, Cam-bridge, MA, 1986.Successful Farming, “Machinery Manage-ment,” June-July 1979.Winks, R. G., “Phosphine Fumigation—26 YearsLater,” Bulk Wheat, pp. 69-70, 1980.Womack, H., et al., “Summary of Losses FromInsect Damage and Costs of Control in Georgia,1985,” University of Georgia, Agricultural Ex-periment Station, Special Publication No. 40,December 1986.Yang, X., “Airflow Resistance of Fine MaterialRemoved From Corn, ” M.S. Thesis, Iowa StateUniversity, Ames, IA, 1987.Zettler, J. L., “Insecticide Resistance in SelectedStored-Product Insects Infesting Peanuts in theSoutheastern United States, ” Journal of Eco-nomics Entomology 75:359-362, 1982.

Chapter 8

Analysis of

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CONTENTS

Page

Inspection and Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ....189FGIS Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...............190Non-FGIS Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....,..... 190Export Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...................190Testing Technologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............191Establishing Grain Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....196

Evaluation of Grain Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......200Historical Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..........201Objectives of Grain Standards . . . . . . . . . . . . . . . . . . . . . . . . ..............201Integrating the Four Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ....204Alternatives to the Present System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....205

Apply ing Economic Cr i te r ia to Gra in S tandards . . . . . . . . . . . . . . . . . . . . . . . . 209Grade-Determining, Non-Grade-Determining, and Official

Criteria Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............210Establishing Grade Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...211Number of Grades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............211

Evaluation of Recent Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ....212Optimal Grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......212The Grain Quality Improvement Act of 1986 . . . . . . . . . . . . . . . . . . . . . . ...212Prohibitions. Market Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......212

Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............213Chapter 8 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................215

BoxBox Page

8-1. Testing Technologies for Aflatoxin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..194

Figure Page

8-1. Alternative Authorities to FGIS for Implementing New Tests . ........197

TablesTable Page

8-1. Wheat Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................1988-2. Corn Standards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...........1998-3. Soybean Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...............1998-4. Examples of Quality Measures Under USGSA and AMA. . . . . . . . . . . ..199

Chapter

Analysis of U.S. Grain Standards

The evaluation of the current U.S. inspectionsystem, possible alternatives, and proposedchanges in grain standards requires principleson which to base the criteria for change. Thischapter sets forth those principles. No attempthas been made to assess the economic conse-quences of the alternatives because they dependon the market response to the actions of manyindividual companies involved in marketinggrain, Uniform, accurate, and objective qual-ity measurement should be based on the logicand consistency of the system, not on the eco-nomic benefits to individual companies or sec-tors (2).

Marketing efficiency requires a system of de-scriptive terms that enable purchase and saleby description. The sale of millions of bushelsof grain by telephone and telex would not bepossible without the common language on qual-ity and value provided by U.S. grain standards.Since most commercial transactions use onlyone or two grades, the many diverse qualitiesproduced by nature and varying farm practicesare combined into a few relatively uniformstandardized categories during the marketingprocess. The move toward a uniform product,however, conflicts with the profit-maximizingprinciple of product differentiation,

private gains from product differentiation areoffset by aggregate losses in the efficiency ofmarket transactions, It is not surprising to findindividual exporters and domestic grain han-dlers unwilling to support change despite evi-

INSPECTION

Grain can be inspected many times as itmoves from the farm to its ultimate destination,as demonstrated by figure 2-2 in chapter 2. Nor-mally grain is tested for one or more impor-tant characteristics each time it is moved intoor out of a grain elevator. The number and typeof tests performed vary from those providedfor in the grain standards to specific end-use

dence that it would benefit the industry as awhole. Measures of oil and protein in the soy-bean standard may logically meet oppositionfrom individual firms whose profits depend onbeing the first to identify sources of soybeanswith oil content above the average for that cropyear,

Uniform grain standards provide all buyersand sellers with equal access to information onvalue. This forces competition on the basis ofoperating efficiency, rather than on control ofinformation, The inability to gain acceptanceof voluntary standards prior to the 1916 UnitedStates Grain Standards Act (USGSA) can betraced to conflict between market opportunityfor individual firms through product differen-tiation and the efficiency of marketing asso-ciated with product uniformity. Only throughnationally enforced grain standards could in-dividual firms reap the benefits of industrywidemarket efficiency emanating from uniformstandards.

The 1916 USGSA and subsequent amend-ments and regulations have established twoareas of responsibility for the Federal Grain In-spection Service (FGIS) of the U.S. Departmentof Agriculture (USDA):

to establish uniform grades and standards,andto implement national inspection pro-cedures to assure accurate and unbiasedresults.

AND TESTING

tests, such as breakage susceptibility in corn,to laboratory tests like dough handling proper-ties of flour.

No single national policy outlines what testswill be performed or who will perform them.The USGSA requires that grain standards bedeveloped and used when marketing grain. The

189

standards provide tests covering such items asmoisture content, bulk density, and amount ofimpurities, but do not specify who will performthe tests or what tests will be conducted ongrain moved within the United States. In fact,two USDA agencies have been authorized byCongress to provide testing services, using thegrain standards, on grain moving domestically.Except for protein content in wheat, other testssuch as for protein/oil quantity and quality andspecific end-use tests are performed at the dis-cretion of the ultimate user. The only manda-tory testing is performed by FGIS on exportgrain.

In practice, grain traded between two com-panies is normally tested by FGIS or one of itsaffiliated agencies, using tests contained in thegrain standards. However, some domestic proc-essors and nearly all grain companies that buyfarmer-owned grain purchase it on the basisof tests performed by their own personnel.These groups, except in cases where a particu-lar buyer requires additional tests, normally usesome or all of the tests provided for in the grainstandards. In other cases, in-house testing isused by grain companies on shipments mov-ing between their own facilities.

FGIS Inspection

The inspection system mandated by USGSAcurrently consists of FGIS offices with Federalinspectors located at major ports, 72 designatedState and private agencies located in the interiorof the United States, and 8 delegated State agen-cies at ports not serviced by FGIS. FGIS admin-isters field offices throughout the country tooversee the activities of State and private in-spection agencies.

All nonfederal employees employed by Stateand private agencies authorized to perform in-spection on behalf of FGIS must pass exami-nations on grading proficiency and must belicensed. These individuals can be licensed toinspect one or more of the grains for whichstandards have been established. In no instance,however, can individuals perform official in-spections unless they hold a valid license forthat grain.

In addition to developing standards and pro-viding inspection services, FGIS:

●

●

●

●

●

●

develops and publishes inspection pro-cedures,evaluates and approves equipment for useduring inspection,monitors inspection accuracy of FGIS em-ployees and licensed inspectors,periodically tests sampling and inspectionequipment for accuracy,provides appeal inspection, andresponds to complaints regarding service.

FGIS also audits its own activities to ensure thatservice is being provided on a nondiscrimina-tory basis and that no licensed individual hasa conflict of interest.

Non-FGIS Inspection

Inspection services using grain standardsestablished under USGSA may be performedby grain company employees or by private com-panies not affiliated with FGIS. Grain receivedfrom farmers is seldom graded by FGIS or FGIS-licensed inspectors but by employees of the ele-vator or processing firm.

The standards established under USGSA aregenerally used as the basis for inspection bycompany employees. FGIS procedures may ormay not be followed, based on individual com-pany policy. Equipment and inspection ac-curacy are not monitored unless the companyhas established an internal monitoring pro-gram. In many cases, company inspectors com-pare their test results to those obtained by FGISor FGIS-licensed inspectors on the same grainin an effort to ensure accuracy. Either buyeror seller may request FGIS or an FGIS-licensedinspector to check the grain if the results of theprivate inspection are in question. However,neither party is required by law to abide by theinspection results.

Export Inspection

USGSA requires that all grain being exportedbe inspected by FGIS or a FGIS-delegated Stateagency. The only exceptions are for grain mov-

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ing into Canada and Mexico by land carrier andfor small exporters who ship less than 15,000metric tons in a given year.

Notwithstanding this requirement, importersoften request private companies in the UnitedStates to represent their interests and inspectthe grain as it is being loaded. Such inspectionscan include checking for grade as defined byUSGSA grain standards or for factors not cov-ered by these standards, such as falling num-ber in wheat or oil and protein in soybeans.When private companies perform inspectionsusing the grain standards, two groups issuecertificates—FGIS and the private company.

Samples obtained by private companies areoften submitted to FGIS for analysis and grade,and results from FGIS are then used as the ba-sis for the private company’s certification. Inother instances, private company inspectorsactually perform the inspection. Settlement inmost instances is based on the results providedby FGIS or a FGIS-delegated State agency. Inrare cases settlement has been based on the pri-vate inspector’s results or destination grades.

Testing Technologies

Since no single policy exists for inspectinggrain, no one group is responsible for develop-ing and overseeing the tests and equipmentused. FGIS provides independent, third-partyservices using tests contained in the standards.Other tests such as for protein content and fall-ing number tests in wheat, aflatoxin in corn,and ethylene dibromide residue are also pro-vided, All tests done under the authority of FGISare regulated in that the equipment must be ap-proved, procedures for its use developed, andthe accuracy of results monitored.

Tests provided under the authority of theWarehouse Division of the USDA, on the otherhand, are not regulated to the same degree. Norequirements for type of equipment, proceduresfor its use, or monitoring of equipment accuracyhave been developed under this program.

In some instances, individual States have de-veloped criteria for approving equipment andmonitor the equipment’s accuracy. Professional

societies such as the American Oil Chemists’Society and American Association of CerealChemists develop criteria for approving tests,publish performance procedures, and establishprograms to ensure equipment accuracy. Manytests covered by professional societies are notin the grain standards.

Regardless of which tests are performed andwho performs them, several factors are impor-tant. These include instrument precision andstandardization, calibration, the choice of refer-ence methods and traceability to standard refer-ence methods when developing rapid objectivetests, and natural error resulting from sampling.

Standardization

The term standardization means that a meas-uring device has been adjusted to be in fun-damental agreement with a universally ac-cepted standard and that ongoing efforts aremade to keep it in agreement (4). Standardiza-tion is vital to fair trade and will be even moreimportant as technologically advanced testingequipment is introduced into the marketplace.The validity of a commercial measurement isjudged by comparing it with a more stringentmethod that is accepted as determining the truevalue. The standard is the base method definedas being the true value. Working standards aredevices and methods used to actually validatean individual test instrument. For dimensionalmeasures such as mass, time, and volume, thereference standards are very precise. The pro-cedure of matching routine devices against work-ing standards and working standards againstreference standards introduces little variability.

Probably the most visible example of stand-ardization is the weights and measure programcoordinated by the National Bureau of Stand-ards (recently renamed the National Instituteof Standards and Technology* (NIST)) of theDepartment of Commerce in conjunction withthe National Conference of Weights and Meas-ures. NIST develops specifications for instru-

*The National Bureau of Standards was recently renamed theNational Institute of Stand arcls and Technology (NIST) \t.ith thepassage of the Omnibus Trade and Competitiveness Act of 1988(Public Law 100-418) as of August 1988.

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ment precision and accuracy along with scaletolerances, and maintains national standards.Scale testing agencies follow NIST proceduresin performing periodic testing using field stand-ards that can be traced back to the NIST na-tional standard. In the case of grain measuresother than weight, no single national organiza-tion exists for standardizing tests.

Measuring grain quality is difficult to stand-ardize because the true answer is not alwaysknown, as in the case of characteristics suchas moisture, protein, and oil content. The refer-ence method is therefore defined rather thanproven. Choosing the reference method, how-ever, can be difficult since it can also be as vari-able as the instruments themselves. For mois-ture, the standard reference is the air-ovenmethod; for protein, it is the kjedahl procedure.

The kjedahl procedure for determining pro-tein is internationally accepted and used. Cur-rently, protein can be determined rapidly byusing near-infrared-reflectance analyzers (NIR).These instruments measure reflectance read-ings at various wavelengths. The precision(repeatability) of the kjedahl procedure is+ 0.15and for NIR it is ± 0.10. Therefore the NIR ismore precise than the kjedahl, but after stand-ardizing NIR to the kjedahl procedure, the re-sults obtained with NIR are ± 0.2 to the kjedahl.

In the case of moisture, choosing a referencemethod is more difficult since no one methodis universally accepted. As on electronic mois-ture meters, FGIS has approved the Motomcobrand meter for its testing program and cali-brates it to the air oven. In States that do notenforce moisture meter accuracy or that allowdifferent sets of calibrations to be used, severaltypes of meters test 1.0 to 1.25 percentage pointshigher than the air oven and the Motomco. Inaddition, some meters used on farms are lessaccurate than those used by industry (5). Thiscould result from the fact that not all manufac-turers standardize to the air oven since there

Photo credit: OTA Staff Photo

The near-infrared-reflectance analyzer (NIR) is themost advanced rapid objective testing technology. Itcurrently is used to measure protein content in wheat.It will soon be used to measure oil and protein content

in soybeans and corn protein.

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is no legal requirement to do so. As all ovenmethods are empirical, relying on weight lossthat is assumed to be water, varying oven pa-rameters will give varying results. Most inter-national buyers use an oven method standard-ized to the Karl Fisher titration method. In theUnited States, this is not the case, and somefeel that the United States is underestimatingcorn moistures by as much as 0.7 percent.

Further difficulties arise in standardizingtests when subjective measurements are in-volved. Results for many of the current testscontained in the grain standards are performedby visual and sensory evaluation and rely onhuman judgment. FGIS monitors its own ac-curacy and has developed visual aids as the ba-sis for determining many visual tests, such asthe degree of damaged kernels. These types oftests are difficult to standardize, and accuracycan vary widely especially when the same testsare performed without using FGIS visual aidsor being subjected to FGIS oversight.

Calibration

In addition to having standardized tests, theequipment used to determine grain quality mustbe calibrated to standard reference methods.The calibration must always contain the fullrange of properties and equipment variationsthat will be encountered in general use, so thatthe instrument will not be overly sensitive toinevitable variations. However, the major cali-bration issue in grain testing is the pervasivevariability of these tests. Calibration is furthercomplicated by having to use actual grain sam-ples to calibrate instruments, which introducessampling variation independent of analyticalerror. As discussed, both the instruments to becalibrated and standard reference methods aresubject to error. Changes in grain propertiesdue to climatic variables complicate the prob-lem of obtaining truly representative samplesets. In addition, as with NIR analyzers, unitsof the same brand are not identical, whichmeans that the same calibration constants can-not be universally used. It should be noted thatNIR calibrations require continuous monitor-ing for accuracy. Lack of monitoring contrib-

uted to the recent controversies over the ac-curacy of FGIS wheat protein testing.

The chain between the instrument used inthe field to the standard reference method isreferred to as traceability. The more steps thereare in the traceability chain, the more chancethere is for compounding random errors fromone step to the next. In the case of moisture,for example, a standard meter in the main lab-oratory is standardized to the air oven, stand-ard meters in the field can then be checked tothe standard meter in the main laboratory, andfield-standard meters can be used to check in-dividual meters. Minimizing the number ofcomparison steps in the traceability chain mayor may not maximize accuracy, depending onthe actual size of the random variations.

Source of Testing Errors

Since any test result is based on a small sam-ple that represents the entire population, testsample portions are subject to bias and varia-bility, and any test result is really only an esti-mate of the properties of the entire population.The types of variation can be described as ran-dom and nonrandom. Nonrandom variationoccurs from uneven distribution of grain prop-erties, improper sampling procedures, and in-accurate measurement. Random variation isnatural and unavoidable, since each grain ker-nel differs from all others.

If a load of grain is homogeneous, the close-ness of the test result to the actual conditionis governed by the laws of probability. The sam-ple size required to produce a result that hasthe desired probability of approaching the ac-tual condition of the grain can be calculated.To increase the probability, additional quanti-ties of grain must be obtained or the size of thesample actually tested must be increased. Forexample, at a 90-percent confidence level a testportion size will produce results within a de-fined range. To narrow the range, a larger por-tion is required or more than one analysis mustbe performed to increase the accuracy of theresult.

When setting portion sizes, the frequency ofoccurrence within a grain mass must also be

194

considered. For example, aflatoxin in corn canaffect only a few kernels in a grain mass andin order to detect levels of 20 parts per billion,which is the limit established by the Food andDrug Administration (FDA), 10 pounds of cornshould be examined. This compares to only 2.5pounds of grain required to determine theweight per bushel. (For additional informationon aflatoxin testing technologies see box 8-l.)

Uneven distribution in a load of grain is moreof a nonrandom error problem with some char-acteristics than others. For example, variancein weight per bushel—even though it can fluc-tuate within a load—is normally not that great.Moisture, on the other hand, can vary due tomixing or flow characteristics of damp and wet

corn. Other factors, such as fine material, seg-regate and cause uneven distribution within aload. The method and type of sampling is there-fore critical to obtaining a truly representativesample. Other nonrandom errors involve in-accurate measurements from incorrectly cali-brated and maintained instruments, fromhuman error, or from not following correctprocedures.

Knowledge of the source of the variation iscritical for assessing and improving the ac-curacy of test results. For example, improvingmoisture meter precision is an unnecessary ef-fort because it contributes less than 10 percentof the total variability associated with the test(4). Moisture measurement errors arise mainly

Box 8-1.—Testing Technologies for Aflatoxin

Aflatoxin, a known carcinogen, appeared in a large proportion of the corn crop for the first timein many years due to the extremely dry weather conditions in 1988. The principles discussed in thissection are very germane to the ability to test for aflatoxin.

Aflatoxin is a secondary metabolize produced by the fungus, aspergillus flavus, which infects thecorn during field growth. Environmental conditions that favor the production of the mold are hightemperatures coupled with dry, drought type conditions during kernel maturation. Aflatoxins areparticularly important metabolizes because they are toxic and potent animal carcinogens in excessof certain threshold levels.

It is not uncommon for some of the corn crop in the South and Southeast to be infected withaflatoxin at levels that exceed FDA guidelines. Due to the stress this year’s crop underwent, the inci-dence of aflatoxin extended well beyond these regions into the corn belt, especially the Eastern corn belt.

At the present time, testing technologies are not adequate. The rapid test used at the countryelevator or terminal is not always reliable. And the more reliable tests are not conducive to elevatorenvironments. The most common and rapid test is examination of corn under an ultra-violet light.This is a screening method which does not quantitate the aflatoxin. Contaminated corn will havespots on the kernel that fluoresce a bright greenish-yellow (BGY). But the presence of BGY does notnecessarily mean aflatoxin is present. The possibility therefore exists of false positive test results.

Corn can also be tested with the Holaday-Velasco minicolumn or thin-layer chromatography meth-ods. The minicolumn test, which takes about 45 minutes, gives indications of whether the corn ex-ceeds the 20 parts per billion guideline established by FDA. Thin-layer chromatography, which takesbetween 3 and 4 hours, provides quantitative results of aflatoxin levels.

The minicolumn and thin-layer chromatography tests are most suited to laboratory environments.Both use chemicals that must be controlled and are not suited to the normal grain elevator environ-ment. Recently, several new technologies, such as methods based on enzyme immunoassay or rocketimmune assay techniques, have been developed to detect aflatoxin that require less chemicals andare more suited for use in grain elevators. They also produce results in a more timely manner. Thesetechnologies are currently being reviewed by the American Association of Cereal Chemists. As withany method, adequate sampling must be used because aflatoxin is not uniformly distributed amongkernels.

195

from differences in electrical properties of grainsamples, not from the meter’s precision. Whenexamining the variability of any test made withan instrument, it is essential to know the rela-tive contribution of instrument error.

Sampling

Grain samples are obtained with either on-line or stationary methods. On-line samplingcan be done manually, using an Ellis cup ora pelican sampler, or mechanically, using adiverter-type mechanical (D/T) sampler. Thisequipment allows samples to be drawn froma moving stream of grain being carried on abelt or within a spout, or from a free-fallingstream. Samples drawn on-line are generallyconsidered to be most representative since thegrain is sampled more frequently and is morehomogeneous in nature than stationary grain.

Export cargoes must be sampled with a D/T.Many barge and railcar shipments are also sam-pled with this method even though there is norequirement to do so. D/Ts provide quite largesamples that must be reduced in a secondarysampler to more workable sizes. The smallersamples are further divided in a laboratorydivider to the prescribed test portion sizes. Itis important to recognize that every subdivi-sion as well as the initial sample collection con-tributes potential errors. Shippers must there-fore allow for sampling variations as well as

established testing procedure errors when load-ing grain of a desired quality.

Stationary sampling is usually performedwith a grain probe. Because a probe obtainssamples from only one point in the grain massat a time, multiple probings are crucial in ob-taining representative samples. Probing pat-terns have been developed to ensure represen-tative samples are obtained and to counteractthe segregation of fine material in grain at restin a carrier. However, probes cannot reach thebottom of barges or hopper railcars, which af-fect the representativeness of the entire grainmass.

Probing grain is time-consuming and labor-intensive, and current probing patterns onlyobtain about 5 pounds of grain. Mechanicaltruck probes have been developed and are be-ing used in some locations to reduce the costand labor requirements. But, in many locations,such as country elevators, only one or two prob-ings per truckload are taken or a pan full ofgrain is taken as the truck is unloaded. Thiscompares to the five-to-nine probings requiredunder FGIS procedures. Limited samplingmakes the test results more vulnerable tononuniformity within the grain mass.

As indicated, the sample size used has a directbearing on the test result’s accuracy. Foraflatoxin, the 10 pounds required to accurately

Photo credit: U.S. Department of Agriculture

The diverter-type mechanical (D/T) sampler allows grain to be drawn from a moving stream.Samples drawn from a D/T sampler are considered to be most representative since grain

is sampled more frequently and is more homogeneous than stationary grain.

Photo credit: OTA Staff Photo

Stationary sampling is performed by a grain probe.Mul t ip le prob ings are cruc ia l in obta in ing arepresentative sample. In many locations, such ascountry elevators, only one or two probes are taken

compared to the five to nine probes requiredunder FGIS procedures.

detect aflatoxin requires that a truck be sam-pled twice using the current five-to-nine prob-ing pattern, which only yields 5 pounds. Get-ting 10 pounds from a D/T sampler is simplersince large quantities are obtained through thenormal course of sampling. If increased ac-curacy is required, or as additional tests areadopted requiring larger sample sizes, the im-pact on the test’s accuracy must be weighedagainst the cost of obtaining the sample. Thiswill be especially relevant to samples obtainedat the first point of sale from trucks.

Criteria for New Technologies

As additional tests on an ongoing basis be-come more relevant, criteria must be estab-lished to govern the design of rapid test require-ments. Yet, development of rapid tests mustmeet the basic criteria associated with stan-dardization, traceability to standard referencemethods, and calibration. In addition, rapidtests must be evaluated in terms of speed, cost,accuracy, durability, and capability of handlingwide ranges in quality.

The most notable advance in rapid objectivetesting technology has come from using NIRs

to measure protein content in wheat. This tech-nology has been discussed to some degreethroughout this section. Considerable work isbeing done to develop additional tests with NIR,which will be particularly important at the firstpoint of sale. Calibrations for barley protein arebeing developed. Work is also being done ondeveloping calibrations for determining soy-bean oil and protein along with corn protein.The ability of NIR to determine wheat hard-ness, along with other important tests for wheat,is also being investigated.

The first point of sale will probably be themost difficult place to introduce new technol-ogies, The time constraints are severe and theresources, both human and capital, are limited.Yet, the demands of testing at this point shouldbe paramount in designing new tests. As theseare developed and introduced, the impact ofthe amount of sample required to perform notonly the particular test but more importantlyall the tests required at the first point of salemust be evaluated in terms of practicality.

Many of the potential new tests require thegrain be ground or processed before testing,while the tests currently in the grain standardsare performed on the grain as a whole. As moretests are introduced that require processing, theimpact of the sample size required to provideaccurate results versus the quantity of sampleobtained through stationary sampling becomescritical. For example, FGIS introduced a testfor sunflower seed oil content, The sample sizerequired to predict oil content accurately wasdetermined to be 250 grams, which would haverequired double probing of stationary grain lotsand consequently increased testing time andcosts. Thus a trade-off between accuracy andcost became necessary. To overcome this prob-lem, a smaller sample size (45 to 50 grams) wasestablished but duplicate tests were requiredto help minimize the impact of lowered accu-racy due to smaller sample size.

Establishing Grain Standards

Standards are established by FGIS under theauthority of Section 4 of USGSA. In the case

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of corn and wheat, the factors contained in thestandards were selected in the early 1900s. Soy-bean standards were established in 1922 asvoluntary and brought under the USGSA bycongressional amendment in 1941. No changeswere made in the number of factors includeduntil moisture was removed as a factor fromwheat in 1934 and from corn and soybeans in1985, The grade limits and factor definitionshave been changed frequently during the years,however; tables 8-1,8-2, and 8-3 contain the cur-rent standards for wheat, corn, and soybeans.

The procedure for changing grades is clearlyspecified in USGSA. Proposed changes requirepublication in the Federal Register, solicitationof comments, and, in the case of the new oramended policies, a 1-year waiting period be-fore becoming effective.

Introducing new factors requires an under-standing of the alternatives available to FGISfor implementing a new test or quality factor.The agency operates under two authorities—USGSA and the Agricultural Marketing Act(AMA)–and new tests can be implemented un-der either one (figure 8-l).

Three methods for implementing tests areavailable under USGSA. The category “officialcriteria” is used for tests provided only at therequest of buyer or seller. Factors containedin the category of “standards” must be deter-mined for each inspection. However, non-grade-determining factors are always reportedbut have no maximum or minimum associatedwith assigning a numerical grade, whereasgrade-determining factors establish a numeri-cal grade according to the lowest factor ap-proach. Examples of current tests are given intable 8-4.

The Food and Drug Administration also hasresponsibility for grain quality issues as theyrelate to health and safety. Under the FederalFood, Drug and Cosmetic Act (FDCA), grainis deemed to be adulterated if it bears or con-tains an added or a naturally occurring poison-ous or deleterious substance that may renderit injurious to health. Aflatoxin-contaminated

Figure 8-1.– Alternative Authorities to FGIS forImplementing New Tests

New test

Grade-determining Non-grade-determining

SOURCE: Office of Technology Assessment, 1988

corn is one example. It was an FDA ruling thatthe addition of water to grain to increase itsweight or value was adulteration and subjectto prosecution. FDA also regulates color addi-tives mixed with grain for identification pur-poses and the adhesives and coatings that maycome in contact with grain transported in rail-cars and barges,

The FDCA prohibits food products contain-ing whole insects, insect parts, and excreta. Fu-migation or treatment of grains already infesteddoes not make grain legal under the act. Chem-ical treatment may be used as a preventive tokeep grain from becoming infested, but residuesfrom these chemicals must not exceed permis-sible tolerance levels. Grain is illegal if it con-tains residues of pesticides not authorized orin excess of safe tolerances set by the Environ-mental Protection Agency and enforced byFDA.

The separation of responsibilities betweenFGIS, FDA, and other government agencies issomewhat vague in principle, For example,grain dust is a health and safety issue covered

Table 8-1.—Wheat Standards

Minimum limits of— Maximum limits of—

Test weight per bushel

Hard RedSpring All other Damaged kernels Shrunken

wheat or classes Heat- and Wheat or other classesd

White Club and damaged Foreign broken Contrastingwheata subclasses kernels Total b material kernels Defects c classes Total e

Grade (pounds) (pounds) (percent) (percent) (percent) (percent) (percent) (percent) (percent)

U.S. No. 1 . . . . . . . . 58.0 60.0 0.2 2.0 0.5 3.0 3.0 1.0 3.0U.S. No. 2. . . . . . . . 57.0 58.0 0.2 4.0 1.0 5.0 5.0 2.0 5.0U.S. No. 3. . . . . . . . 55.0 56.0 0.5 7.0 2.0 8.0 8.0 3.0 10.0U.S. No. 4. . . . . . . . 53.0 54.0 1.0 10.0 3.0 12.0 12.0 10.0 10.0U.S. No. 5. . . . . . . . 50.0 51.0 3.0 15.0 5.0 20.0 20.0 10.0 10.0

U.S. Sample grade:U.S. Sample grade is wheat that:

a. Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; orb. Contains 32 or more insect-damaged kernels per 100 grams of wheat; orc. Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more

pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown for-eign substance(s) or a commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent quantity of otheranimal filth per 1,000 grams of wheat; or

d. Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); ore. Is heating or otherwise of distinctly low quality.

~These requirements also apply when Hard Red Spring or White Club wheat predominate in a sample of Mixed wheat.Includes heatdamaged kernels.

cDefect~ include damaged kernels (total) foreign material, and shrunken and broken kernels. The sum Of these three faCtOrS may not exceed the limit for defects ‘Or each ‘Umerical grade‘Unclassed wheat of any grade may contain not more than 10.0 percent of wheat of other classes.elncludes contrasting classes’

SOURCE: Federal Grain Inspection Service, U.S. Department of Agriculture, 19SS.

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Table 8-2.-Corn Standards

MinimumMaximum limits of—

test weight Damaged kernels Broken corn andper bushel Heat-damaged Total foreign material

Grade (pounds) kernels (percent) (percent) (percent)U.S. No. 1 . . . . . . . . . . . . . . . . . . . . 56.0 0.1 3.0 2.0U.S. No. 2 . . . . . . . . . . . . . . . . . . . . 54.0 0.2 5.0 3.0U.S. No. 3 . . . . . . . . . . . . . . . . . . . . 52.0 0.5 7.0 4.0U.S. No. 4 . . . . . . . . . . . . . . . . . . . . 49.0 10.0 5.0U.S. No. 5 . . . . . . . . . . . . . . . . . . . . 46.0 15.0 7.0

U.S. Sample grade:U.S. Sample grade is corn that

a. Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; orb. Contains 8 or more stones which have an aggregate weight in excess of 0.20 percent of the sample weight, 2 or more

pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or moreparticles of an unknown foreign substance(s) or a commonly recognized harmful or toxic substance(s), 8 or more cock-leburs (Xanthium spp.) or similar seeds singly or in combination, or animal filth in excess of 0.20 percent in 1,000 grams; or

c. Has a musty, sour, or commercially objectionable foreign odor; ord. Is heating or otherwise of distinctly low quality.

SOURCE Federal Grain Inspection Service, U.S. Department of Agriculture, 1988.

Table 8-3.—Soybean Standards

Maximum limits of—

Minimum Damaged kernels

test weight Heat Foreign Soybeans ofper bushel damaged Total material Splits other colors

Grade (pounds) (percent) (percent) (percent) (percent) (percent)

U.S. No. 1 . . . . . . . . . . 56.0 0.2 2.0 1.0 10.0 1.0U.S. No. 2 . . . . . . . . . . 54.0 0.5 3.0 2.0 20.0 2.0U.S. No. 3a. . . . . . . . . . 52.0 1.0 5.0 3.0 30.0 5.0U.S. No. 4b . . . . . . . . . 49.0 3.0 8.0 5.0 40.0 10.0U.S. Sample grade:

U.S. Sample grade is soybeans that:a. Do not meet the requirements for U.S. No. 1, 2, 3, 4; orb. Contain 8 or more stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces

of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.) 4 or more particlesof an unknown foreign substance(s) or a commonly recognized harmful or toxic substance(s) 10 or more rodent pellets,bird droppings, or equivalent quantity of other animal filth per 1,000 grams of soybeans; or

c. Have a musty, sour, or commercially objectionable foreign odor (except garlic odor); ord. Are heating or otherwise of distinctly low quality.

‘Soybeans that are purple mottled or stained are graded not higher than U.S. No. 3.!Soybeans that are materially weathered are graded not higher than U.S. No. 4.

SOURCE: Federal Grain InspectIon Service, U.S. Department of Agriculture, 1988.

Table 8-4.—Examples of Quality MeasuresUnder USGSA and AMA

Authority Example factors

USGSA:Grade-determining standards . . Foreign material

DamageTest weight

Non-grade standards. . . . . . . . . . MoistureOfficial criteria. . . . . . . . . . . . . . . Protein in wheat

AMA:Official criteria. . . . . . . . . . . . . . . Aflatoxin

Falling numberPesticide residue (EDB)

SOURCE: Office of Technology Assessment, 1989.

by the Occupational Safety and Health Admin-istration (OSHA) but prohibiting its reintroduc-tion into grain falls to FGIS. A Memorandumof Understanding between FGIS and FDA hasenabled the two agencies to work together inseveral areas. FDA has established action limitsfor many factors, such as aflatoxin in corn andpesticide residues in grain. The agreement be-tween agencies requires that FGIS report toFDA whenever inspection results for the itemsidentified in the agreement exceed FDA’slimits.

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EVALUATION OF GRAIN STANDARDS

Recent debates over grain standards, foreignbuyers’ complaints, and the numerous propos-als for regulatory and legislative changes echoearlier calls for change. Recent complaints con-cerning certificate final contracts, excess for-eign material at destination, spoilage, and heat-ing during transit are nearly identical to thoseof the late 1800s. (Certificate final in the ex-port/import contract means that grade is de-termined at the point of loading and the buyerhas no legal recourse regardless of deliveredquality, unless it can be proved the origin gradewas incorrect at the time of loading.)

These problems have been documented re-peatedly in congressional hearings in 1908,1928, 1975, and 1986 (3). Even the wording isalmost identical, despite a span of some 75years. The Senate Report 988, of July 27, 1912,criticized the current system for rewardingadulteration:

Under the present conditions an enormoussystem of mixing or adulteration of grain isforced on all the home markets and also the for-eign market, destroying all confidence in ourgrades and working to the detriment of thegrain trade.

In 1986, Representative Byron Dorgan (D-ND)used similar phrases:

In short, the U.S. system being what it is al-lows and encourages dockage to be added backinto wheat shipments . . . unless we confrontthis problem, we will further erode our exportpotential,

Historical Review

The legislation establishing Federal grainstandards was passed in 1916 following morethan 50 years of debate and repeated attemptsby the grain industry, trade associations, andboards of trade to establish private and regionalmeasures of grain quality. Private firms can in-crease profits by individually differentiatingquality from that of other firms. As notedearlier, this self-interest blocked every attemptat obtaining voluntary adoption of uniformstandards even though the trade associations

recognized that the industry as a whole wouldbenefit.

After many years of educational efforts andattempts to obtain support, the National Grainand Feed Dealers Association agreed to endorsea compromise bill for Federal standards. Thecompromise garnered reluctant support fromthe two opposing positions of voluntary adop-tion of inspection and grain standards versusfull Federal control. The compromise allowedFederal supervision of uniform standards andinspection by private firms, many of whichwere already in business in 1916.

More than 150 bills and amendments havebeen submitted to Congress since Senator Pad-dock first proposed Federal legislation in 1890to establish measures of quality that would beuniformly and objectively applied. Yet the basicpremises and procedures of the Grain Stand-ards Act of 1916 remained intact until 1986.Further, the complaints and persistent prob-lems regarding quality have continued for overa century despite all the legislative, adminis-trative, academic, and industry efforts spenton improving quality measurement. Several ob-stacles to a permanent solution must be recog-nized and dealt with if current efforts of Con-gress and industry are to succeed:

●

●

●

The changing nature of the industry interms of technology and genetics resultsin quality characteristics that change fromone crop year to the next and from one partof the country to the next. All these diversequalities enter the marketing channels andmust be handled.Industry and government have often re-fused to accept that problems exist. Faithin the infallibility of a market system hasmade it difficult to accept that governmentagencies have a function in setting uniformgrain standards in order to facilitate an ef-ficient market.Most of the participants in the debate haveseen themselves as adversaries since thebeginning of the discussions. Each group–farmers, processors, grain merchandisers,

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and government—has expended consider-able public effort trying to blame one ormore of the other groups.The USGSA and the regulatory agenciesimplementing the act have focused on oneobjective— “to facilitate marketing.” Eco-nomic principles have not been incorpo-rated into the grade factors, factor limits,or the many seemingly arbitrary changes.

Objectives of Grain Standards

Since the beginning of Federal regulation in1916, the official purpose has been to provideuniform standards for promoting and protect-ing grain moving in interstate and foreigncommerce “so that grain can be marketed inan orderly and timely manner and that tradingin grain maybe facilitated. ” It has seldom beenrecognized that the lack of an economic justifi-cation in that directive has caused much of thedifficulty in arriving at a consensus on grainstandards and standardization within the grainindustry. Although early researchers frequentlyreferred to “intrinsic value” and “value in enduse,” these criteria were seldom in evidencewhen developing standards, or in the numer-ous changes that were introduced in subsequentyears.

Much of the disagreement over specificchanges is the result of explicit or implicit dis-agreement over the objectives of standards.Each group held a different view. Many in in-dustry and government viewed standards as aconvenience for merchandisers. Processorswanted the standards to indicate yield of proc-essed products. Farmers wanted assurance thatdiscounts associated with grade factors werebased on differences in real value in use. Con-gress often viewed the standards as a cause offoreign complaints and lost export markets.Clearly, if grain exporters, grain processors,Congress, and farmers hold divergent views onwhat grain standards are intended to accom-plish, they cannot be expected to agree onwhich grade factors would meet their diverseand conflicting purposes.

The lack of clear goals, objectives, and cri-teria inevitably led to reversals as well as arbi-

trary inconsistencies. For example, test weightlimits in corn for grades No. 1 and No. 2 werein the original standards in 1916; were addedto grade Nos. 3, 4, and 5 in 1918; were loweredin 1934; and were raised in 1959. Throughoutall these changes, researchers questionedwhether test weight was a relevant measure ofvalue in any grade. Those who argue that theonly objectives of standards is to describe phys-ical and biological characteristics have been un-able to find a criterion by which they couldjustify the characteristics chosen. For example,why measure kernel density but not kernel size?Why measure the percent of split and brokenbeans but not the percent of whole kernels incorn? Grain has many physical and biologicalproperties, and without additional criteria forguidance, the factors and factor limits becomearbitrary numbers.

In practice, few markets quote prices for No.1, 2, and 3 corn, soybeans, or wheat. In nearlyall cases, a base price is given for one gradeand discounts or premiums attached to devia-tions on each factor from that base. At the coun-try elevator level, for example, nearly all cornis purchased on a No. 2 base and farmers’ pricesare established by discounting each factor thatfalls outside of the No. 2 limits. Internationalmarkets generally specify No. 2 soybeans or No.3 corn, and prices in the contract are usuallyquoted for that one grade with adjustments fordeviations.

A set of clearly stated objectives for stand-ards based on sound economic principles wasabsent in legislative and administrative changesbetween 1916 and 1986. The many changes dur-ing that period did little to resolve the basicproblems and issues. In 1986 a relatively sim-ple change in the language of the USGSA openedthe door to a new era in the identification ofquality as a means of efficient communicationof information about value.

In June 1986, the North American ExportGrain Association submitted a report emanat-ing from a series of industrywide workshops.This report, entitled “Commitment to Quality,”presented a consensus to serve as guidelinesfor Congress and FGIS in revising standards

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(6). One of its most important aspects was a newdefinition for the objectives of grain standards.The four objectives were identified as:

1. to define uniform and accepted descrip-tive terms to facilitate trade,

2. to provide information to aid in determin-ing grain storability,

3. to offer end-users the best possible infor-mation from which to determine end prod-uct yield and quality, and

4. to create the tools for the market to estab-lish incentives for quality improvement.

These objectives were incorporated in the1986 Grain Quality Improvement Act with thepassage of Public Law 99-641 on November 10,1986. FGIS for the first time had a set of cri-teria on which to base changes in standards andto evaluate the numerous proposals for change.Each criterion provides a basis for assessingcurrent standards and the recent efforts byFGIS to improve measurements of quality.

Facilitating Trade

Almost any set of factors can meet this cri-teria. It is important that grain be grouped intoa relatively few number of categories to makebuying, selling, and classification efficient andinexpensive. Trade is facilitated by having asmall number of grades determined by a mini-mum number of factors. From the standpointof trading simplicity, three numerical gradesin the corn standards may in fact be moredesirable than five.

The factors in the current grades are for themost part easily measured and provide a basison which buyers and sellers can communicateprice and appropriate discounts. Some have theadditional advantage of being commonly usedin international trade and thereby serve to fa-cilitate communication within the internationalas well as domestic market,

Since almost any set of factors and gradelimits can be handled equally well by the grainindustry as long as they are universally ac-cepted, recent FGIS changes have made littleimprovement on this criterion.

The technology and terminology for meas-uring current factors have been in use forenough time to make the trading of grain onthese factors and grades limits extremely effi-cient. Domestic and international contractshave been written using this terminology formany years. Trading in the marketplace is read-ily handled with a minimum of specification.These terms are adequate for basic contractsand quotes in the futures market as well as ininternational trade. Basing price on the numer-ical grade, millions of bushels change owner-ship with a simple phone call.

Aid in Determining Grain Storability

The factors that influence storability of grainhave been well documented by many scientists,dating as far back as the grain storage studiesdone in the early 1900s by Dr. Duvel of USDA.These factors are moisture, temperature, airflow, mold, and insect infestation. The moretechnical attributes of these characteristics arecovered elsewhere in this assessment. Thelength of time grain has been held in storageand the condition under which it has beenstored are also important criteria.

Current tests for factors contained in stand-ards provide little information on direct meas-ures of storability. Moisture content is providedin terms of averages, but it has been demon-strated that the range of moisture among indi-vidual kernels may be more important than theaverage. The standards identify damage, butthis is an arbitrary determination of a stage ofdevelopment and storage deterioration thatdoes not provide information on how muchlonger the grain may be stored before it goesout of condition. Numerical grades alone cer-tainly provide no information on storability.Foreign material, test weight, damage, andmoisture are thus indirect indicators at besteven though they are reported on every inspec-tion certificate.

Changes in inspection practices and stand-ards have done little to improve measurementof storability since the 1920s, when Dr. Duvelsuggested acidity as a measure of storage life

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and an indication of mixtures of old and newcrop grain. The 1986 changes in the interpretiveline slides used to identify damage in soybeansdid not improve the ability of the standards topredict storability. However, the correlation be-tween damaged kernels and levels of free fattyacid better equipped standards to indicate oilquality.

Most current measures for storage life arebased on laboratory procedures. No rapid com-mercial test is available to provide a quick in-dication of the stage of deterioration or the timeremaining before grain’s condition worsens.

Measuring Value in ProcessingProducts

Because most grains are used for more thanone purpose, it is not a simple matter to iden-tify the characteristics that influence value (seech. 4). The nutritional composition, starch con-tent, and recovery rate of corn and baking char-acteristics of wheat are all end-use propertiesdesired by processors. Few of these, however,can be converted directly to measures of phys-ical or intrinsic properties of the raw grain. Re-search in recent years has identified some fac-tors that relate to value that can be measuredin the commercial market channel. For exam-ple, hard endosperm corn provides a higheryield of flaking grits. Obviously, high oil andhigh protein soybeans provide higher yields ofoil and soybean meal. Breakage susceptibilitytests identify the ability of corn to withstandhandling without increasing breakage. Manytests—such as falling number, farinograph,hardness, and baking tests–are available thatindicate baking and milling characteristics ofwheat and are frequently used in laboratoriesin the United States and Europe. But the in-dustry does not completely agree that these at-tributes always clearly indicate value.

Factors currently contained in the standardsdo a poor job of meeting the criterion of end-use value. Soybean standards include little in-dication concerning oil and protein content.New varieties of wheat have diminished the ef-fectiveness of class and grade for evaluatingflour and baking characteristics. Information

from corn standard factors is often unrelatedto its feeding value or starch yield. In general,those characteristics of raw grain most closelyassociated with value of products derived arenot currently covered by the standards. Purityand cleanliness in terms of foreign material,numbers of insects, or other grains provide oneof the few indications of value in the currentstandards. Even here, however, there is lackof clarity; the term “foreign material” meansdifferent things in each grain, and the term“broken corn and foreign material” (BCFM)does not differentiate between broken corn andforeign material despite the difference in value.

FGIS in the last few years has moved towardimproving the measurement of end-use value.For example, even the simple step of roundingdockage percentage to the nearest one-tenth inwheat gives a better indication of the amountof grain versus nongrain being purchased. Com-pared with the previous method of roundingdown to the nearest half-percent, the new ap-proach better reflects true value. FGIS has alsotaken steps to differentiate more critically ondamage in soybeans. The change in the inter-pretive line slides has been linked to the levelof free fatty acid, which is in turn a direct meas-ure of the quality of oil derived from the soy-beans. Progress is therefore being made towardfinding better measures of value.

Additional measures are available that havenot been incorporated in the standards. Thereis a lack of total industry agreement that thesemeasures are sufficiently accurate and relia-ble to be introduced. Continued commerciali-zation of measures of breakage susceptibilityin corn and soybeans; intrinsic properties ofcorn, soybeans, and wheat; new measures ofbaking properties and classification of wheatvarieties; and rapid measures of oil and pro-tein in soybeans are all candidates for inclu-sion in the standards or should at least be madeavailable as information.

Providing Market Incentives

Measurement of factors that result in pricedifferentials in the market provide an incen-tive for each point in the market channel to

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make decisions to improve quality and avoiddiscounts. This incentive works back throughthe market channel to producers, who maychange harvesting, drying, and storing prac-tices (see ch. 7) or may select different varie-ties (see ch. 6). Preference for varieties with cer-tain quality characteristics will be conveyed toplant breeders who will in turn generate bet-ter varieties. In a competitive market, profit isa strong driving force in any company’s deci-sions, whether they be exporters, individual ele-vator managers, producers, or plant breeders.While the market itself sets incentives in termsof prices and price differentials, the standardsare not neutral in this scenario. For example,farmers have an incentive to select corn varie-ties that weigh at least 54 pounds per bushelin order to avoid discounts in the market. Thisproducer incentive translates into incentivesfor plant breeders, who have spent significantresearch funds to develop varieties that willproduce a high test-weight corn under normalconditions.

Current grain standards provide incentivesin several ways. For example, the allowanceof 3-percent BCFM in No. 2 corn, in conjunc-tion with the market practice of paying top pricefor No. 2 corn, gives farmers an incentive toincorporate 3 percent BCFM in their deliver-ies. By the same token, elevator managers havean incentive to clean or blend in such a wayas to deliver 3 percent BCFM throughout themarket channel. Any shipment containing lessthan 3 percent BCFM is a lost profit opportu-nity. Shipments containing more than 3 per-cent BCFM will usually receive a discount. Thestep functions between the grades create incen-tives for blending when grain is purchased ongrade alone. The wider the range betweengrades, the greater the number of factors, andthe greater the number of grades, the greateris the opportunity for blending when purchas-ing on grade without specifying factor limits.

The other side of this coin is the lack of in-centive for improving quality on those charac-teristics omitted from the standards. With noprice differential for soybeans with high oil andprotein, farmers have no incentive to select vari-eties that will represent greater value to the

processor. Yield becomes the primary and inmost cases the only criterion on which to selectthe variety to be planted, A second example isthe drying temperature of corn. Although mostcorn processors object to the use of high tem-peratures during drying, the market does notdifferentiate between corn dried at high andlow temperatures. The premiums paid by a fewdry millers for low-temperature-dried corn in-dicate that farmers do respond to these incen-tives when offered. At present the incentivesare not offered by means of the standards, butby means of contracts in localized areas. It isespecially difficult for buyers some distancefrom the production point to obtain qualitiesthey desire when those qualities are not incor-porated in uniform standards and terminology.

Recent FGIS efforts have had limited effectupon incentives within the market channel. Theremoval of moisture as a grading factor reducedthe number of factors on which blending wasrequired when purchasing on grade only, butthe market still generates income from blend-ing wet and dry corn. The change in roundingprocedures for dockage percentages in wheatremoved the incentive to blend dockage just be-low the next higher break point. However, thenumber of grades and the steps between gradeshave not been significantly altered, and incen-tives and disincentives still fall short of theideal.

Measurement and sampling technology ortesting is a problem in terms of incentives onlyso far as the accuracy of the equipment willnot accommodate a finer distinction betweenqualities on certain characteristics. Increasedaccuracy will permit narrowing the spread be-tween numerical grades, thereby reducing theincentives for blending when purchasing ongrade only.

integrating the Four Objectives

Changes in grade-determining factors, or fac-tor limits, should meet the four objectives ofgrain standards. But, not all alternatives willcontribute to all four objectives, and it is likelythat conflict between the objectives will de-velop. For example, complex and lengthy tests

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for measuring end-use value will slow the in-spection process, increase marketing costs, andthereby detract from the purpose “to facilitatetrade. ” Similarly, incentives are best createdby a continuous discount schedule on each fac-tor, starting from zero. But a zero base requireseach buyer to specify factor levels in the con-tract. Numerous contract specifications in-crease the number of segregated lots and re-duces the interchangeability of shipments,Increasing the amount of information availableto users increases the difficulty of merchandis-ing uniform lots.

The “perfect standard” that optimizes all fourobjectives may not exist. The final solution willbe a compromise among some of the objectives(e.g., sacrificing complete information for allusers in order to facilitate orderly efficient mar-keting) and among various buyers and sellers.

Alternatives to the Present System

An evaluation of the alternatives to the cur-rent system in the United States illustrates someof the trade-offs inevitable in establishing grainstandards. The system today is generally knownas “numerical grades determined by the lowestfactor.”

The “lowest factor” approach requires thatthe grade be set by the factor representing thelowest quality. For example, if the test weightof corn is 53 pounds per bushel, that sampleis graded No. 3 even though all other factorsare equal to No. 2 or better. This method hasthe advantage of simplicity and is used by manyof the major grain-exporting countries. How-ever, it does not always reflect true value sinceit fails to consider factors above the minimum.Considerable variation in quality can occur be-tween shipments without a grade change. Thelowest factor system also encourages blendingto bring all factors down to the quality of thelowest factor determining the grade, and there-fore does not generate incentives for quality im-provement unless limits are established by con-tract that are more restrictive than the gradelimit.

In export trade, most contracts specify thatthe grade determined at origin is the legal ba-

sis for any dispute or arbitration regarding qual-ity. This certificate final system, which was inuse prior to the USGSA, provides advantagesin terms of efficiency and costs. Other alterna-tives are currently used in other countries (seech. 10 and companion report) and variationsof the official U.S. system are being used evenin the domestic market. Understanding thebasics of each alternative can help develop pol-icy for directing future quality regulations,

Total Defects

Under the lowest factor approach, all factorscan be at the maximum limit for the determi-nation of a particular grade, For example, No.2 corn can have 54 pounds test weight, 3 per-cent BCFM, 4 percent damage, and 0.2 percentheat damage. This provides the opportunity toblend on one or more factors to achieve themaximum allowable limit within that grade. Asystem of “total defects” introduces one morelimiting factor that sums the defects in thatgrade across all factors and places a maximumthat would be more restrictive. Thus the accu-mulated value of the defects would becomemore restrictive than the individual factors, Inthe example just given, the defects are BCFM,total damage, and heat damage, Under the to-tal defects system, a maximum value of 6 per-cent might be established, for example, and thecorn would be considered No. 3 if the sum ofdamage, heat damage, and BCFM exceeded 6percent. Currently, the wheat standard includesa total defects factor with a maximum limit of3 percent for No. 1. If shrunken and broken ker-nels, for instance, are at the maximum No. 1limit, which is 3 percent, all other defects wouldhave to be at O. This approach provides addi-tional information about quality and an incen-tive to increase quality if the total defects fig-ure is more restrictive.

The total defects approach differs from thelowest factor only by accumulating the sum ofindividual factor results. The greater restric-tion it entails could also be achieved by chang-ing limits on the present grade factors. Totaldefects also contains a logical inconsistency:It establishes limits on three factors for No. 2wheat but if the sample meets all these criteria,

it will be classed as No. 4 on the basis of totaldefects.

Absence of Imperfections

The “total perfect kernels” approach alsosums the percent of defects, but subtracts thetotal from 100 to obtain the percent of perfectkernels. Each grade has a minimum limit onpercent of perfect kernels. Corn grades in Chinaare based on this system, and U.S. standardsfor oats include a factor for “sound oats.” Thissystem differs little from the “total defects” con-cept except that it reports absence rather thanpresence of defects.

Weighted Factor

The “weighted factor” approach would in-clude a set of grade-determining factors andfactor limits, but each factor would exert adifferent effect in terms of grade determination.This is in contrast to the lowest factor approach,in which the grade is lowered when any onefactor result exceeds the limit. Instead, defectswould be divided into major and minor cate-gories and each assigned a weight to be multi-plied times the percent of that defect present.The sum of the defects times the weighting fac-tor would determine the grade. Grade wouldbe influenced by the number of factors belowgrade, the distance each of those factors fellbelow the grade limit, and the relative serious-ness of the defect.

This system would incorporate more infor-mation in the numerical grade and allow finerdistinction among the combinations of factors.Its disadvantage is its complexity, the arbitrar-iness of the weighting factor assigned to eachdefect, and the lack of clear criteria on whichto set the break points between grades. In or-der for the numerical grade to indicate end-usevalue, the weighting factors would have to dif-fer among uses. The complexity of such a sys-tem would probably eliminate this alternativeon the criteria of the first objective of stand-ards—” to facilitate trade,”

Contract Specifications

The issue of whether standards are requiredor whether each buyer may simply specifyterms in their contract has been debated sincethe idea of numerical grades was first presentedto merchandisers in the late 1800s. So long ascontracts are legally enforced, buyers andsellers may agree to any set of factors, charac-teristics, and conditions of shipment they de-sire. The advantage of numerical grades overcontract specifications is that they facilitatecommunication. When the grain trade becametoo large for buyers and sellers to physicallyand simultaneously view the grain being sold,terminology was required that would permitdescription by factors. The numerical gradewas chosen as a way of describing several fac-tors in one number. Each buyer could identifythe characteristics and factor limits that bestmeet the conditions in a particular plant. If thebuyer’s needs are unique, however, resale inthe market becomes difficult and segregationis required for each one’s specifications. Theefficiency of the current marketing system re-lies heavily on uniformity for the majority ofthe crop being marketed.

Although most foreign buyers now use nu-merical grades for purchasing corn, soybeans,and wheat, they almost always include addi-tional factors besides the numerical grade intheir contracts. Numerical grade alone seldomconveys sufficient information to satisfy abuyer’s needs. Other factors are therefore speci-fied. It is a small step to go to an entire factorbasis system and eliminate numerical grades.The primary disadvantages are a much widerrange of quality characteristics between ves-sels and thus difficulty in resale if other buyersdo not want the same specifications, greaterdifficulty in segregation and blending to a widerrange of specifications, and increased complex-ity in writing contracts.

None of these disadvantages is insurmount-able. The problem of reselling uniform lots hasbecome much less important in recent years.

-- . . . —

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The number of times a vessel is resold after leav-ing port has fallen compared to the 1970s sce-nario. The complexity of identification is alsoless daunting since most buyers are alreadyspecifying grade plus two or three factors; theywould be specifying only one or two more.There would be greater problems in keepingqualities segregated throughout the marketchannel if there were no numerical grades.

One of the purposes of blending is to achievea uniform product, and the first objective ofstandards is to facilitate merchandising. Thispurpose is not accommodated by a systemwhere all buyers develop their own set of qual-ity factors, their own definitions, and their ownlimits. The complexity and inefficiencies ofsuch a market would result in a major reduc-tion in welfare for both buyers and sellersthroughout the market chain. Numerical gradestherefore are a means of creating uniformityof quality in the market channel. They are mostuseful if they reflect the needs of the majorityof buyers in the market so that additional con-tract quality specifications are the exceptionrather than rule.

Fair Average Quality

The contract for fair average quality (FAQ)specifies that the grain shall be equal to the aver-age quality of grain exported or imported at aspecific location. The most common FAQ con-tract in previous years has been the GAFTA(Grain and Feed Trade Association) of London,which specifies that quality delivered will beequal to the average of the quality from thecountry of export to the importing country forthe month in which the delivery was made.Samples are taken from each vessel and storedby GAFTA in their London laboratories. A com-posite sample at the end of each month is cre-ated as the standard, and shippers who thinkthat the quality of their shipments did not meetFAQ submit samples to be judged against theGAFTA standard. Arbitration decisions arebased primarily on visual inspection by an ar-bitration committee. Most GAFTA FAQ contracts

are based on delivered quality. The standardvaries between months, countries of origin, andcrop years. The quality characteristics are fewin number and consist primarily of visual ob-servation.

The advantage of FAQ is its simplicity andits flexibility for adapting to changing cropyears. This advantage to the seller is, of course,a disadvantage to the buyer. The contract doesnot cover all factors on which buyers might likeinformation, and the floating standard leavesthe buyer uncertain as to what quality may bereceived for processing. It is often a destina-tion contract (advantage to buyers, disadvan-tage to sellers) and covers factors not likely tochange in transit. Since half the vessels aremathematically below the FAQ standard, it isconceivable that many contracts would requirecourt arbitration. In fact, the system is man-ageable because FAQ factors and samplingmethods are not sufficiently specific to supportarbitration action except in cases of extremedeviation from the standard.

The FAQ system provides no incentive forimproving quality since it only describes what-ever quality is produced. The extent to whichthe FAQ system describes value to users de-pends on the factors included. In the case ofthe GAFTA corn contracts, the factors describeprimarily condition of the grain rather than in-trinsic value characteristics. Some of the soy-bean contracts include oil and protein. The sim-plicity of FAQ facilitates trade but the potentialfor disputes and arbitration can reduce mar-keting efficiency.

Variations on the FAQ system include con-tracts that specify origin instead of destination.Canada and Australia have sometimes gener-ated a fair average quality based on harvestedquality for that crop. The FAQ standard is usu-ally established with respect to selected char-acteristics of special importance.

In recent years the FAQ contract has beenless frequently used. Argentina, South Africa,and Brazil all report exporting primarily on nu-

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merical grades. However, European buyershave reported continued use of destinationFAQ on soybeans.

Destination Grades v. Certificate Final

Most contracts originating in the UnitedStates specify that grade is final at origin. Thismeans that the grade certificate, issued imme-diately after the vessel is loaded, is the final doc-ument on quality and the buyer has no recoursebeyond proving incorrect inspection on the ori-gin samples. Foreign buyers must prove thatthe vessels were improperly loaded or inspectedat origin before they can claim restitution forquality. Grain received in poor condition, badlybroken, spoiled, sprouted, or insect-infested isnot sufficient evidence on which to base claimsfor damage because the contract specifies ori-gin certificate final.

Certificate final is a highly efficient market-ing technique, and enables minimum cost qual-ity guarantees up to the point where the ex-porter transfers responsibility for quality to thecaptain of the vessel or to the importer. It hasthe disadvantage of the ultimate customers’ dis-satisfaction with the delivered quality and theirinability to control quality when several han-dlers stand between shipper and user. It alsoenables the shipper to load closer to the qual-ity limits without regard to the inevitable con-sequences of placing that quality in the vessel.

The alternative is destination grades (oftenin conjunction with a cargo, insurance, andfreight sale). In this case, the seller guaranteesdelivery to the foreign port and guarantees qual-ity at that destination. This alternative has oftenbeen suggested as a solution to the problem offoreign complaints. But many unansweredquestions remain about such contracts. For ex-ample, who will take the destination samplesand how? Second, what type of guarantee canshippers make for a vessel that will be distrib-uted among 10, 20, or even 50 different buyers,each one getting only a small portion from avessel with a highly variable quality amongholds? Third, since the buyer specifies the qual-ity characteristics and frequently requests amoisture content unsafe for long voyages

through warm water, how can shippers guar-antee quality at destination?

The buyer has always had the alternative ofusing a contract that specifies destination qual-ity. Few shippers are willing to take that typeof risk at a price the buyer would be willingto pay. With no control over unloading or sam-pling, shippers are in a poor position to guar-antee destination quality and the number ofcontracts taken into arbitration court would un-doubtedly rise dramatically, resulting in a sig-nificant increase in cost and delays in set-tlement.

Origin and destination contracts can be usedto guarantee quality under any set of standards.Yet, the two systems incorporate different in-centives. Destination guarantees place addi-tional responsibility, and thus economic incen-tives, on the exporter to load grain that willmaintain quality during transit as well as meetthe contract at time of loading. This alters theloading strategy. Under origin grades, for ex-ample, a 14. O-percent moisture contract couldbe met by blending 8 and 16 percent moisturecorn. Under destination quality guarantees, thisblending would not be a good strategy undermost time and temperature conditions. Thehigh-moisture corn would probably result indamage levels and spoilage at destination ex-ceeding the contract limit.

The issue of origin and destination gradesmust also be considered in the context of do-mestic markets. The same issues exist as in theexport market, but the results are different fortwo

1.

2.

reasons:

the time between origin and destination isusually much shorter in the domestic mar-ket; andsampling and inspection procedures at ori-gin and destination are subject to a singleset of regulations in the domestic market,whereas FGIS has no control over sam-pling and grading at foreign destinations.

Domestic contracts specify origin or desti-nation grades as well as whether settlement willbe based on official or private inspection re-sults. Confidence in accuracy is developed with

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a large number of transactions over a periodof time and by the option of calling for FGISinspection and an appeal if needed. This con-fidence often results in acceptance of non-FGISorigin inspection where direct contact betweenbuyer and seller has generated mutual trust.Trade rules and arbitration procedures estab-lished by the National Grain and Feed Asso-ciation also provide an important alternativeand supplement for domestic trade.

Dual Grades

A dual grading system could be based on sep-arating domestic and foreign markets or sepa-rating use, Separate export standards have oftenbeen suggested as a way to compete in inter-national trade with more restrictive qualityspecifications. The Canadian system establishesseparate grade requirements for export wheatand controls purchases, movement, and clean-ing procedures between country elevators andthe ports to administer this system (see com-panion report). Separate food grades and feedgrades have also been suggested for corn andwheat. Food grades would be more restrictive,

especially with respect to sanitary quality fac-tors, and could include more information onvalue in processing.

Separate standards for different users couldprovide more information on value. The foodgrade or export grade could have price differen-tials that would generate market incentives forimproved quality. The market would direct thehigher qualities into the higher valued uses. Thedual system would create a more complex mar-keting system and would probably increase thecost of segregation and transport. Probably thegreatest difficulty would be determining whichstandard and discount to apply to the producer.Since ultimate use would not be determinedat the time of farmer delivery and, in fact, in-tended use might be changed more than oncein the market channel, the higher discounts onfood grade or export grade would have to beapplied against the producer. This would gen-erate incentives for quality improvement on allgrain at a cost that would not be justified forfeed use in domestic markets. Dual standardswould thus not facilitate an efficient market.

APPLYING ECONOMIC CRITERIA

As the four objectives of grain standardsspecified in the 1986 Grain Quality Improve-ment Act do not lead directly to a system ofgrades and standards, an intermediate set ofguidelines is required to:

● Define uniform and accepted descriptiveterms to facilitate trade.

This requires a small number of catego-ries established by clearly defined factors.The factors must be readily measured in ●

commercial trade and objectively deter-mined by technology that gives repeatableresults at each point in the market chan-nel. The factors must be acceptable to andused by most participants in the market.Trade is also facilitated by stability and ab-sence of change, since any change resultsin uncertainty and adjustment.

● Provide information to aid in determininggrain storability.

TO GRAIN STANDARDS

This purpose would be met by tests thatreflect storage history as well as predict-ing remaining storage life. Information oninfestation by molds, fungi, and insectsneeds to be accompanied by the extent ofthe development and deterioration. Kindof infestation is also an important meas-ure of storability as a guide to actions re-quired to inhibit further deterioration.Offer end-users the best possible informa-tion from which to determine end-productyield and quality.

The characteristics of raw grain that in-dicate the quality and quantity of processedproducts differ with different industries.Factors selected for inclusion in standardsshould either be common to several indus-tries or be important to an industry con-suming a significant portion of the crop.The more directly the factor measures the

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desired end product, the more efficientlywill the standards reflect value.Create tools for the market to establish in-centives for quality improvement.

Incentives in standards are created inpart by including factors that are economi-cally important. To provide the market themaximum opportunity to establish priceincentives the standards should: 1) mini-mize the distance between factor limits foreach numerical grade; 2) report all valuesas accurately as measurement technologyallows, using standard mathematical pro-cedures for rounding to the nearest signif-icant digit; and 3) convey important eco-nomic information to producers that willenable them to respond to producer prefer-ences related to value. -

Grade-Determining,Non-Grade Determining, and

The factors selected as indicators of valuemay be included as grade-determining factors,as non-grade-determining factors, or as officialcriteria. As described earlier in this chapter,grade-determining factors set numerical gradeaccording to the factor limits established. Non-grade-determining factors contained in thestandards do not influence grade but must bereported as information whenever an officialinspection is made. Factors defined as officialcriteria are measured and reported only whenrequested.

Assigning each factor to one of the three cat-egories requires a guideline that can be usedobjectively. As noted previously, standardsshould serve the needs of a majority of usersand should reflect value for those uses. Thissuggests that grade-determining factors shouldbe those that relate to sanitary quality, purity,and soundness (absence of imperfections). Us-ing this guideline, the grade would be basedon factors such as impurities, foreign material,total damage, and heat damage. The lower thevalues of any of these defects, the greater is thevalue of the product. Non-grade-determiningfactors would be those related to properties

such as broken kernels, moisture, oil and pro-tein content, and other intrinsic characteris-tics or physical properties that influence valuefor the major processing uses. Higher or lowerpercentages for these do not necessarily meanhigher end-use value over the entire range. Forexample, the required level of protein in wheatdepends on the ultimate product to be madefrom the flour. Lower moisture content meansmore dry matter per pound, but 5 percent mois-ture corn is not generally of greater value than12 percent because of the effects of overdry-ing. Usually some optimum value is indicatedfor each of these factors, but the optimum varieswith the use and location in the market channel.

Under Section 4 of the USGSA, factors con-tained in the standards must be measured dur-ing any official inspection. Those consideredofficial criteria are measured upon request. Al-though the advisability of that particular partof the law is a matter of debate, in its presentform it leads to the conclusion that character-istics most important to the largest number ofusers would be incorporated into the standards.Those of lesser importance, or important to onlya few users, would be considered official cri-teria available upon request to buyers who needthem. Thus moisture and basic intrinsic prop-erties—such as protein content, kernel hard-ness, and falling number tests in wheat; pro-tein and oil in soybeans; and starch incorn—might be incorporated as non-grade-determining factors. Breakage susceptibilityand kernel hardness in corn and kernel size insoybeans are examples of factors to be madeavailable under official criteria.

The advantage of putting the major factorsin as non-grade-determining factors rather thanofficial criteria is that the characteristics wouldmove into the market channel much more read-ily. Obligatory measurement throughout themarket would spread the cost across the entireindustry. The cost per unit would be insignifi-cant and therefore the information would bereadily available as an incentive. A character-istic that must be specified by a separate re-quest from each individual buyer would in-crease the cost of information. For example,the true value of information on test weight is

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irrelevant under the present system since every-one is required to measure test weight. The mar-ginal cost to the buyer for that information isnearly zero. In contrast, if only one buyer speci-fies oil content in a soybean contractor fallingnumber in a wheat contract, the cost of infor-mation would be much greater because the costof measurement throughout the market chan-nel would be borne by the single buyer andwould be spread over only the bushels thatbuyer purchased.

Objective criterion based on the four pur-poses of standards has thus provided a basisfor choosing factors and for dividing themamong grade-determining, non-grade-deter-mining, and official criteria.

Establishing Grade Limits

As noted earlier, the grade limit on variousfactors is an automatic incentive throughoutthe market channel to add materials or to blendto reach that limit. Blending damaged soybeanswith good ones does not increase the value ofthe damaged soybeans, but it does increase theirprice, for they may now be sold as a highergrade. The criterion of providing incentives forimproving quality dictates that the base be setat zero. The overall objective of a standard is“to describe the value of the lot of grain beingsold. ” If the percent of damaged kernels canchange from 5.0 to 6.9 percent without chang-ing grade, then numerical grade alone does notprovide complete information on differencesin value. Current soybean standards allow 1.0percent foreign material and no discount is ap-plied by the market, implying that any level be-tween O and 1.0 percent represents equal value.The first 0.5 percent of foreign material in ashipment of soybeans has no more real valuethan the third 0.5 percent, even though the thirdis discounted and the first is not.

Tighter limits on existing grade factor limitswould reduce the incentives for blending andprovide a more accurate measure of value aslong as discounts continue to be applied on thesame grade. However, it is as difficult to justifyan arbitrary limit of 0,5 percent as it is to justifyan arbitrary limit of 1.0 percent. The only ob-jective limit is zero, with market discounts be-

ing applied for additional levels within the abil-ity of sampling technology to differentiate.

The base for the non-grade factors is of courseimmaterial, since it is not grade determining,and the market is now free to choose what, ifany, price adjustment is to be made for differ-ent levels of those factors.

The zero base concept is limited by the free-dom of the market to respond. Unless (or until)export contracts and prices are established atzero base, merchandisers could start discountsat any level they desired, including the currentfactor levels for No. 2 corn and for No. 1 wheatand soybeans.

Number of Grades

The final question in setting standards is thenumber of different grades required. The num-ber of numerical grades differs among grains—malting barley has three, soybeans and sorghumhave four, and corn and wheat have five—andall grains have a sample grade designation. His-torical records provide no rationale for thesenumbers and the justification for the differentnumbers between standards is not clear. Thefewer the numerical grades, the simpler is themarketing and the less space required to seg-regate these grades in storage.

A single grade would force the foreign buyerto specify the quality characteristics and thelevel of those characteristics desired. Buyerswould no longer receive 4 percent BCFM bydefault when ordering No. 3 corn. They wouldbe forced to specify the levels desired and wouldknow in advance the trade-off with price.

The market seldom uses more than twogrades. More grades increase the complexityfor the market and provide no increase in in-formation. The disadvantage of a single gradeis that nearly every buyer must use one gradeor specify levels on each factor. This would re-sult in increased diversity of contracts, less op-portunity to resell uniform lots, and increasedtransaction costs. The final number of gradesto be established for each grain must be a com-promise between the purposes of providing in-centives, identifying value, and facilitatingtrade.

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EVALUATION OF RECENT LEGISLATION

Optimal Grade

The optimal grade concept proposed a sin-gle grade, with low values for selected defectsand discounts on any defects above the base.The object was to reduce the incentive forblending built into the current standards bylowering the limits and thereby better meetingthe fourth objective of standards. It used theprinciple of grade factors being required to re-flect cleanliness, soundness, and purity. It setlow levels for that grade but not at zero. It wouldhave met the criteria of simplicity, facilitatingtrade, and removing incentives for blending.However, it did not meet the criterion for meas-uring quality for various uses. Its greatest defi-ciency was a failure to identify the non-grade-determining factors that would be incorporatedin the standards. It also failed to eliminate com-pletely the incentive to blend off large quanti-ties of poor quality grain by not setting the basevalues at zero. Congressional rejection of theoptimum grade was probably more a reflectionof problems of implementation than of failureto meet the criteria established by the purposesof grades.

The Grain Quality ImprovementAct Of 1986

Perhaps the most important contribution ofthis legislation was introducing into the USGSAthe four explicit objectives for grain standards,including three relating to economic value.Without these objectives, the standards had pri-marily reflected response to pressure from vari-ous groups. Without support from one or moremajor associations or organizations, it was ex-tremely difficult to make any changes in thestandards because the only criterion was thatof facilitating trade. As noted, FGIS now hascriteria on which to base changes and canjustify those changes in terms of what is bestfor the industry.

Prohibitions v. Market Incentives

Developing solutions to the problems and is-sues raised by grain standards faces two basicchoices:

1. legislative prohibitions against practicesthat are detrimental to quality; and

2. changes in the economic incentives ofstandards in pricing practices to allow themarket to discipline offenders.

The first alternative focuses on controlling theprocess by which grain is marketed; the sec-ond, on accurately evaluating the product andvalue of different qualities.

Throughout history numerous bills andamendments have tried to legislate specifics ingrain standards. Nearly all legislative attemptshave failed. The few successful activities sincethe late 1800s have focused on setting policyand creating a framework for administratorsto implement rather than legislating specifics.During the 1980s numerous bills or amend-ments have been submitted to restrict the wayin which foreign material, dockage, or dust canbe handled, particularly in the export markets.The 1986 Grain Quality Improvement Act in-cluded a prohibition against reintroducing dustor foreign material into the grain stream onceit has been removed. The intent was clear: toimprove the quality of the grain being exportedand especially to improve the U.S. image in in-ternational grain markets. The success of thistype of legislation is not yet clear. Yet severaldifficulties can be identified in implementingprohibitions while leaving intact the standardstructure that generated the incentives forblending when purchasing on grade only.

The prohibition in the 1986 Grain Quality Im-provement Act focuses on controlling the proc-ess rather than the product. Consequently, itsenforcement has presented numerous problems,not the least of which is a definition of what

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constitutes foreign material, which the stand-ards define in many different ways and iden-tify with many different names. For example,in corn only one factor encompasses all non-grain material: BCFM, which is defined as anymaterial passing through the 12/64-inch sieveplus noncom material remaining on top. Wheatincludes a factor for foreign material and onefor shrunken and broken kernels as well as acategory called dockage. Barley standards con-tain three factors: dockage, foreign material,and broken kernels. In nearly all cases, foreignmaterial is defined in conjunction with parti-cle size, meaning materials that got through acertain size sieve. The sieve size varies amonggrains. In almost all cases, not all foreign ma-terial is actually removed, and in almost allcases the foreign material contains small grainparticles that are not “foreign” at all. (For in-formation on problems in defining grain, seeref. 1.)

Another problem with the prohibition ap-proach is that the quantity of foreign materialor broken kernels incorporated into a grainshipment is controlled by the contract in con-junction with the grade limit. Therefore, theprohibition does not prevent leaving dirt, dust,

and foreign material in the grain, nor does itprevent blending of different lots of grain con-taining various levels of foreign material toachieve the maximum allowed. It only limitsthe procedure by which the maximum maybeachieved. In addition, some if not most of the“foreign material” in overseas processingplants is broken grain created during unload-ing of vessels. Consequently, it is unlikely thatthe actual amount of “foreign material” deliv-ered to the foreign buyer will change, but it maybe more expensive to attain the contract levelsat the export elevator.

The most basic problem is one of trying tolegislate restrictions to counter the economicincentives built into the standards themselves.Having an allowance of 4 percent BCFM in No.3 corn builds in an automatic incentive to addthat much foreign material to the load whencorn is purchased on the grade alone. Remov-ing that incentive would be more efficient thana prohibition. If a set of standards can be estab-lished that creates incentives to achieve thedesired end product in terms of quality, thelegislative prohibition would become unnec-essary.

F I N D I N G S A N D C O N C L U S I O N S

Continual review of grain standards sincetheir inception in the 1916 United States GrainStandards Act has generated numerous changesand proposals for change in factors and factorlimits. These have not resolved the problemsor foreign complaints related to quality. U.S.grain standards today:

●

●

●

create incentives for practices not consist-ent with good management and efficiency;fail to identify many of the characteristicsrelated to value in use;fail to reward producers and handlers forimproved drying, harvesting, handling,and variety selection; and

● include arbitrary grade limitations onmany factors that do not always reflect realdifferences in value, and in some cases arenot consistent with statistical principles.

The many regulatory and legislative stand-ard changes have failed to move the industryin a consistent direction. In fact, there havebeen numerous reversals of previous changes.What has been lacking is a clearly defined goaltoward which the system is being moved. Withthe four objectives for standards now estab-lished by legislation, it is possible to developfor each grain a set of “ideal” standards thatcould provide a direction for future changes

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and a yardstick against which to evaluate alter-natives. If each change adopted moves the oper-ational standards closer to the ideal, repeatedreversals should no longer create unnecessaryadjustment costs and confusion in domesticand foreign markets.

Conflicts between purposes can be explicitlyidentified and the trade-offs and economic con-sequences calculated and recorded as guidancefor a long-range consistent policy. The ideal sys-tem should include grade-determining factors,non-grade-determining factors, and definitionand measurement technology for officialcriteria.

Existing research is generally adequate toidentify grade-determining factors—sanitaryquality factors, damage that reduces yield andquality of processed products or value in use,and foreign material including dust. For No.1 grade, these factor limits should be set as closeto zero as measurement technology will allow.Any value above zero violates the third andfourth purposes of grades. The exact definitionof these factors, including sieve size for foreignmaterial, still requires additional research toevaluate the alternatives against the criterionof reflecting value accurately.

Non-grade-determining factors should meas-ure value for a majority of users. The preferredlevel may differ among uses. For example, splitsin soybean reduce oil quality only in propor-tion to the time in storage. Thus, domestic proc-essors buying for immediate use may allow highlevels of splits with no discounts. Foreignbuyers, whose processing of the soybeans maylag harvest by 12 to 18 months, may place muchmore restrictive limits and discounts on splits.

Many of the intrinsic and physical proper-ties that influence the quantity and quality ofproducts derived from the grain have not beenidentified. More research may add to the list

of properties to be included. The criteria forinclusion should be that the cost of obtainingthe information is less than the value of thatinformation to users who need the information.By starting with the major products generatedfrom each grain, a list of physical and intrinsicproperties can be developed that correlates withvalue in use. New, rapid objective testing tech-nology is also a requirement prior to inclusion.

The list of factors to be measured under offi-cial criteria is almost unlimited except by meas-urement technology. Any properties that canbe accurately measured can be requested bybuyers and sellers. These would be developedonly after evidence of sufficient demand tocover the cost. Information on the factors ofinterest for the various users could be providedby private laboratories and would be added toofficial criteria only after rapid objective tech-nology is developed and when there is suffi-cient demand by domestic or foreign buyersto justify including them.

Standards should be designed to reward posi-tive actions, such as genetic improvement, andsound harvesting, drying, and marketing prac-tices. They should also be designed to providethe best information available on the value ofeach shipment by descriptive terminology. Allchanges must be evaluated against the criterionof providing information that is worth the costof obtaining it. Optimum information, not max-imum information, is the goal. Proposals forchange must also be tempered with current ca-pabilities of the industry, the cost of adjust-ments v. potential benefits, the realities of in-ternational trading rules, and the historicalsequence by which the industry has attainedthe present situation. Measurement and de-scription of quality is only one part of the prob-lem. Quality must be evaluated in the contextof technology, competition, foreign demand,and processing requirements.

- - .- . -. - .—

215

CHAPTER 8 REFERENCES

1. Evans, Cooper, and Livingston, Kristi, GrainQuality: Positioning Ourselves for the Future,Iowa Quality Grain Study Final Report, CedarFalls, IA, 1987.

2. Hill, Lowell D., “Analysis of the United StatesGrain Standards,” background paper preparedfor the Office of Technology Assessment, U.S.Congress, Washington, DC, 1988,

3. Hill, Lowell D., Grain Grades and Standards: His-torical Issues Shaping the Future, submitted toUniversity of Illinois Press.

4, Hurburgh, Charles R., “Technology for the In-spection of Corn, Soybeans, and Wheat, ” back-

5.

6.

ground paper preparednology Assessment, U.S.DC, 1988.

for the Office of Tech-Congress, Washington,

Hurburgh, Charles R., Paynter, L. N., Schmitt,S. G., and Bern, C. J., “Performance of Farm-TypeMoisture Meters,” Trans. American Society ofAgricultural Engineers 29(4):1118-1123, 1986.North American Export Grain Association,“Commitment to Quality,” Washington, DC, June1986.

— - —— ——...—

Chapter 9Government Farm Policyand Economic Incentives

Affecting Quality

. . . . . . .

CONTENTS

PageGovernment Program Effects on Grain Quality . . . . . . . . . . . . . . . . . . . . .. ...219

Loan Rate Program Premiums and Discounts. . . . . . . . . . . . . . . . ... ... ...221Farm Programs and Variety Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,225Government Storage Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........228Impacts of Markets, Farm Programs, and Technology on Quality . ......232

Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............233Chapter preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................234

FiguresFigure Page9-1. Historical Loan Rate and Market Protein Premium for HRS

15 Percent and HRW 13 Percent, 1965-86 . . . . . . . . . . . . . . . . ..........2229-2. Producers’ Protein Choice for Wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .232

Table9-1.

9-2.9-3.

9-4.9-5.9-6.9-7.9-8.9-9.

9-1o.9-11.9-12.

9-13.

TablesPage

Loan Rates, Target Prices, and Deficiency Paymentsfor Wheat in the United States, 1974-86 . . . . . . . . . . .................220Loan Rates and Market Premiums for HRS and HRW, 1965-86 .. ....221Sedimentation Value Premiums and Discounts Providedby Loan Rate Program, 1963 and 1964.... . .......................223Loan Rate Premiums and Discounts on Wheat by Grade . ...........224Additional Loan Rate Discounts on Wheat for Test Weight... . ......224Additional Loan Rate Discounts for Damaged Kernels in Wheat. .....225Market Discounts for HRS, February 1987 . .......................225Wheat Quality Factors Determining Grade Standards . ..............226Average Price Adjustments for Each Factor Among North DakotaCountry Elevators, Fall 1984, 1985, and 1986 . . . . . . . . . . . . . . . . .. ....227Theoretical Revenue feral-AcreFarm in North Dakota, 1965-86 ....228Theoretical Revenue for a 1-Acre Farm in Kansas, 1965-86..........229Implied Premium Necessary for HRS Producers To Be IndifferentAbout Growing 14 or 15 Percent protein Wheat . ..................229Implied Premium Necessary for HRW Producers To Be IndifferentAbout Growing 11 or 13 Percent Protein Wheat . ..................230

.— —

Chapter

Government Farm Policy andEconomic Incentives Affecting Quality

Government farm policy and varying govern-mental economic incentives to the grain sys-tem have a significant influence on grain qual-ity. Government farm programs in particularplay an essential role in providing incentivesto farmers to produce a range of crop quantityand quality. In commodities such as wheat, soy-beans, and corn, where biological trade-offs ex-ist between yield and a major quality factor likeprotein, farm programs potentially have impor-tant impacts on quality,

Farm programs have played a key role in U.S.agriculture since at least the mid-1930s (4). Thenumerous programs have shifted graduallyfrom price supports to income supports. Theconstraints and incentives they provide aretransmitted throughout the production andmarketing system and consequently may havean impact on grain quality. Two provisions areparticularly important—the loan rate programand its associated premiums and discounts forquality differentials, and the target price pro-gram, which results in higher prices associatedwith yield. To the extent that yield and qualityare inversely related (see ch. 6), any program

resulting in increased yields also has the po-tential to reduce quality.

This chapter looks at the impacts of farm pro-grams on grain quality, which have historicallybeen stronger than they are today. It reviewsfarm program legislation with a focus on itsimpacts on grain quality, analyzes the extentof and dynamics in the trade-offs between yieldand quality, and considers potential impactsof higher prices on incentives to increase yieldsand decrease quality.

The analysis focuses on wheat because dataare more easily attained. But the principle canbe applied to any grain in which commercialpremiums and discounts exist for particularquality characteristics, and in which measura-ble trade-offs exist in production between yieldand quality. In the two classes of wheat dis-cussed here—Hard Red Spring (HRS), predom-inantly grown in North Dakota, and Hard RedWinter (HRW), in which Kansas is the leadingState—premiums and discounts play an impor-tant role in the marketing system and yield isinversely related to protein, an important qual-ity characteristic.

GOVERNMENT PROGRAM EFFECTS ON GRAIN QUALITY

One of the main purposes of government farm Wheat program participation prior to 1964policies since World War II has been to sup- was mandatory in most years. Acreage al-port farm incomes. Several different policies lotments were imposed along with marketingand programs have been used over time to quotas in 1951 and from 1954 to 1963 (l). Theachieve this goal. Loan rate provisions have allotments were set at the amount of acreagebeen in effect in wheat programs since before needed to produce a crop that, together withthe war. The target price/deficiency payment carry-over and imports, would provide a sup-system has been used since 1973; it did not have ply equal to a normal year’s domestic consump-major effects until 1977, however, because mar- tion and exports plus an allowance for reserves.ket prices at first exceeded the loan rate and Marketing quotas were used along with acre-in some cases the target price. age allotments as a more stringent means of

219

.— . .

220

controlling output. When expected supply fora year exceeded estimated use by a specifiedamount, marketing quotas had to be proclaimedby the Secretary of Agriculture. A quota becameeffective by a two-thirds vote of approval bywheat producers. When marketing quotas wereapproved, compliance with acreage allotmentwas mandatory; when they were not approved,the level of price supports was lowered sub-stantially.

Beginning in 1964, farm programs no longerrequired mandatory participation and market-ing quotas were voted out. From 1964 to 1973,loan rates were reduced and farm income wassupported by domestic certificate and exportcertificate payments in cash, based on a per-centage of production on a farmer’s allottedacres.

In 1973 marketing certificates were replacedby target price/deficiency payments as a meansof supporting farm income. From 1974 to 1976,wheat prices increased dramatically and werehigher than loan rates. Hence, government par-ticipation in the form of income support towheat producers, directly or via prices, wasvirtually nonexistent. Implementation of thetarget price program did not effectively beginuntil 1977 and is still in effect today. The per-bushel income support payment (called a defi-ciency payment) is the difference between thetarget price and the average price received by

farmers in the first 5 months of the marketingyear, or between the target price and the loanrate, whichever is higher. Historical loan rates,target prices, and deficiency payments are pre-sented in table 9-1. Deficiency payments in-creased dramatically in 1984 and have sincenearly doubled. As a result, in recent years pay-ments that are by definition based on yield ac-count for an increasing proportion of a produc-er’s income.

A producer’s total payment is calculated bymultiplying the per-bushel deficiency paymenttimes the program acres and then times theproven yield. Program acres are a historicalaverage of acres planted to wheat, and provenyield is a historical, 5-year moving average ofan individual producer’s past yields. These his-torical averages change over time, meaning pro-ducers increase or decrease the program acresdevoted to wheat and increase proven yield byaltering variety choices or production practices.The incentive encourages them to maximizeproven yields in order to achieve the highestdeficiency payment possible.

The Food Security Act of 1985, the most re-cent major farm legislation, made severalchanges in the loan rate and target price provi-sions. The loan rate for wheat in 1986 was re-duced 20 percent, from $3.30/bushel to $2.40,while the target price remained at $4.38/bushelfor 1986. This meant that with market prices

Table 9-1 .–Loan Rates, Target Prices, and Deficiency Payments for Wheat in the United States, 1974-86(In dollars/bushel)

National Actual Deficiency paymentsaverage deficiency as proportion of

Year market price Loan rate Target price payment target price (percent)

1974 . . . . . . . . . . . . . . . . . . . . . 4.09 1.37 2.05 — —1975 . . . . . . . . . . . . . . . . . . . . . 3.56 1.37 2.05 — —1976 . . . . . . . . . . . . . . . . . . . . . 2.73 2.25 2.29 —1977 . . . . . . . . . . . . . . . . . . . . .

—2.33 2.25 2.90 0.65 22.4

1978 . . . . . . . . . . . . . . . . . . . . . 2.97 2.35 3.40 0.52 15.31979 . . . . . . . . . . . . . . . . . . . . . 3.78 2.50 3.40 — —1980 . . . . . . . . . . . . . . . . . . . . . 3.91 3.00/3.30 3.08/3.63 — —1981 . . . . . . . . . . . . . . . . . . . . . 3.65 3.20/3.50 3.81 0,15 3.91982 . . . . . . . . . . . . . . . . . . . . . 3.55 3.55/4.00 4.05 0.50 12.31983 . . . . . . . . . . . . . . . . . . . . . 3.53 3.65 4.30 0.65 15.11984 . . . . . . . . . . . . . . . . . . . . . 3.38 3.30 4.38 1.00 22.81985 . . . . . . . . . . . . . . . . . . . . . 3.08 3.30 4.38 1.08 24.61986 . . . . . . . . . . . . . . . . . . . . . 2.40 2.40 4.38 1.98 45.2SOURCE: US. Department of Agriculture, Statistical Reporting Service, Agricultural Statisflcs, various issues.

.

221

near the loan rate, the deficiency payment in-creased from $1.08/bushel to $1.98/bushel in1986.

Loan Rate ProgramPremiums and Discounts

The loan rate program was the primary mech-anism for price support prior to 1973 and con-tinues to be an important form of support. Akey component of the loan rate program is theprovision that allows for adjustment in the loanprice a farmer receives based on quality differ-entials. Each year a schedule of premiums anddiscounts is published in the provisions for theloan rate program. In addition, the market es-tablishes premiums and discounts reflecting themarket-determined value of quality attributes.These provide incentives with the potential toinfluence yields and the allocation of wheat be-tween the market and government via loan for-feitures, This allocation may take place withinas well as between crop years. Administrationof the loan rate program has included premi-

ums for protein above a certain level and dis-counts for grade differentials. In addition, dis-counts originally used for loan rate adjustmentshave changed over time.

protein premiums as provided by the loanrate program have been relatively stable (table9-2). The premium applicable to HRW 13 per-cent protein over HRW 10.5 percent proteinhas been 4.5 cents/bushel since 1965 with theexception of 1973 and 1974, when it decreasedto 4.25 cents/bushel. From 1950 to 1965 thepremium for HRW 13 percent protein rose from3 cents to 4 cents/bushel. Throughout the 1950sand early 1960s the protein premium for HRS15 percent protein was 6 cents/bushel; itreached 10.5 cents/bushel from 1965 to 1976;and it increased to 16 cents/bushel in 1977.

The loan rate premium has been less than themarket premium in most of the past 22 years(figure 9-1). The market premium was lower inonly 5 years for both HRS and HRW. Thespread between the loan rate and marketpremiums has been increasing steadily since

Table 9-2.— Loan Rates and Market Premiums for HRS and HRW, 1965-86 (cents/bushel)

HRW HRS

Loan rate Market Loan rate Marketpremium 13% premium 13% premium 15% premium 15%

Market year over 10.5%a over ordinaryb Difference over 11.5%a over 12°/oc Difference

1965 . . . . . . . . . . . . . . . . . . . . 4.501966 . . . . . . . . . . . . . . . . . . . . 4.501967 . . . . . . . . . . . . . . . . . . . . 4.501968 . . . . . . . . . . . . . . . . . . . . 4.501969 . . . . . . . . . . . . . . . . . . . . 4.501970 . . . . . . . . . . . . . . . . . . . . 4.501971 . . . . . . . . . . . . . . . . . . . . 4.501972 . . . . . . . . . . . . . . . . . . . . 4.501973 . . . . . . . . . . . . . . . . . . . . 4.251974 . . . . . . . . . . . . . . . . . . . . 4.251975 . . . . . . . . . . . . . . . . . . . . 4.501976 . . . . . . . . . . . . . . . . . . . . 4.501977 . . . . . . . . . . . . . . . . . . . . 4.501978 . . . . . . . . . . . . . . . . . . . . 4.501979 . . . . . . . . . . . . . . . . . . . . 4.501980 . . . . . . . . . . . . . . . . . . . . 4.501981 . . . . . . . . . . . . . . . . . . . . 4.501982 . . . . . . . . . . . . . . . . . . . . 4.501983 . . . . . . . . . . . . . . . . . . . . 4.501984 . . . . . . . . . . . . . . . . . . . . 4.501885 . . . . . . . . . . . . . . . . . . . . 4.501986 . . . . . . . . . . . . . . . . . . . . 4.50

– 253

173

15658

444231

93953

1930193415

–6.500.50

– 1.5012.50

– 1.5010.50

1.500.503.75

39.7537.5026.50

4.50– 1.50

4.500.50

– 1.5014.5025.5014.5029.5010.50

10.5010.5010.5010.5010.5010.5010.5010.5010.5010.5010.5010.5016.0016.0016.0016.0016.0016.0016.0016.0016.0016.00

422171216

81269983619111650141820537478

0.50– 9.50–6.5011.506.501.505.50

–2.50– 1.5058.5087.5025.50

3.00– 5.00

0.0034.00–2.00

2.004.00

37.0058.0062.00

au s Depa~ment of Agriculture (USDA), Agricultural Stabilization and Conservation se~~ce, “Schedule of Premiums and Discounts,” various issuesblj&DA Economic Research se~ice, “Wheat Outlook and Situation,” various issues.cMinne’apolis Grain Exchange, Sfatistica/ Annual, VariOUS @UeS

— . .- . . . - —

222

Figure 9-1. - Historical Loan Rate and Market Protein Premium for HRS 15 Percent and HRW 13 Percent, 1965-86

1982. In general, the loan rate premiums

Year

Market premium HRW

Loan premium HRW

forprotein have not reflected market fundamen-tals, and this spread has been increasing in re-cent years in both the HRW and HRS market.This situation has a potential to distort produc-tion decisions of variety choice and fertilizerapplication to the extent that a trade-off existsbetween yield and protein. Storage decisionsare also likely distorted by the disparity in gov-ernment and market protein premiums. Pro-ducers have the incentive to put low-proteinwheat under loan and to forfeit the loan if mar-ket prices for that type of wheat do not appreci-ate. The market premium is typically highenough to encourage commercial sales ofhigher protein wheat. Consequently, the pro-

gram spreads relative to the market result inisolating lower protein wheat from the market,and may to some extent discourage develop-ment and adoption of lower protein varieties.

Other features of the loan rate program havechanged over time. Prior to 1973, two othermeasures were used to reflect quality in pro-gram prices. The first was called a sedimenta-tion test, which measures the quality of pro-tein content in wheat (5). This testis performedby suspending ground wheat in water and treat-ing it with lactic acid. The portion that within5 minutes settles to the bottom of a graduatedcylinder is the sedimentation value. Valuesrange from 3 for very weak wheat to 70 for very

223

strong wheat. Premiums and discounts for dif-ferent sedimentation values were used during1963 and 1964 (table 9-3).

The second measure was the discounts asso-ciated with varieties, which was used through-out the 1960s and up through 1972. Discountswere applied on varieties in each class of wheatdeemed “undesirable” due to poor quality char-acteristics. (The term “undesirable” was usedin the schedule of premiums and discounts,)The varieties and number of varieties changedover time to reflect newly released wheats. Gen-erally, a half-dozen varieties were subject to dis-count in any given year. Examples of “undesira-ble” HRW varieties in the early 1970s includedBlue Jacket, Purkof, Cache, Red Chief, Staffor,and Yogo. Examples of “undesirable” HRS va-rieties included Red River 68, Era, and Neep-awa. The discount was 20 cents/bushel through-out this period. This discount ended in 1973and is no longer used.

Wheat is subject to other premiums and dis-counts under the loan program. These are ap-plied by grade and not on an individual factor

Table 9-3.—Sedimentation Value Premiums andDiscounts Provided by Loan Rate Program,

1963 and 1964

Premium or Premium orSedimentation discount, 1963 Sedimentation discount, 1964value, 1963 (cents/bushel) value, 1964 (cents/bushel)

21 and below –9 22 and below – 622-23 – 8 23-25 – 524-25 – 7 26-28 –426-27 – 6 29-31 –328-29 – 5 32-34 . . . . . . ., –230-31 –4 35-37. ., –132-33 –3 3 8 - 4 2 034-35 –2 43-45 + 13 6 - 3 7 –1 46-48 ., +23 8 - 4 2 0 4 9 - 5 1 +343-44 +1 52-54. : : +445-46 +2 55-57 +547-48 +3 58-60 +649-50 +4 6 1 - 6 3 +751-52 +5 64-66 +853-54 +6 67 and above +955-56 +757-58 +859-60 +961-62 ., +1063-64 +1165 and over +12SOURCE: U S Department of Agriculture, Agricultural Stabilization and

Conservation Service, “Schedule of Prem!ums and Discounts,” variousissues.

basis as long as the grade is “sample” or better(table 9-4). Additional discounts based on fac-tors do apply on test weight and damage if thewheat is No. 4, No. 5, or sample grade in spe-cific years (tables 9-4, 9-5, and 9-6). The dis-counts applied to damaged kernels were sub-stantially reduced beginning in 1980.

Market premiums and discounts for gradefactors are measured differently than those inthe loan rate provisions. In market transactions,discounts are normally taken for individual fac-tors such as test weight, damaged kernels, orforeign material (table 9-7).

It is difficult to compare market discountswith loan rate discounts because they are notquoted on the same basis. In general, the loanrate discounts by grade while the market dis-counts on the individual factors that determinegrade. Individual wheat factors that determinegrade are presented in table 9-8, Comparisonsmust be tentative when using the quoted mar-ket discounts and premiums because they arefor a particular point in time and, even thoughthey may represent the market as a whole, theydo change.

Damage has been one of the more limitingfactors in recent years in grade determinationin HRS and is used here for comparison. Themarket discount for a sample with 4 percentdamage would be 10 cents assuming no otherfactor discounts. For comparison, 4-percent-damaged kernels would be graded No. 2 andwould result in a 2 cents/bushel discount fromthe loan rate. Thus, market discounts are sub-stantially greater than those in the loan rate pro-gram; if other factor discounts were also in-cluded (e.g., test weight or foreign matter), thecomparison would be even more dramatic,

Annual surveys of country elevators in NorthDakota on discounting practices suggest that,in general, market premiums and discountshave increased in the past 3 years (table 9-9).For example, the discount for 4-percent-dam-aged kernels (i. e., No. 2) rose from an elevatoraverage of 2 cents in 1984 to 8.9 cents in 1986.

The individual factors for discount in table9-4 are the factor levels allowable in order for

224

Table 9-4.—Loan Rate Premiums and Discounts on Wheat by Grade (cents/bushel)

No. 4Year No. 1 No. 2 No. 3 No. 4a No. 5a No. 5b

~Ontest weight otherwise No.3.No. 4or No.5 because containing Durumand erred Durum.

C$O.O1 premium for No. 1 heavy.dTest weight discount for No.4, N0.510r sampie.

‘No. 3 or better heavy.

SOURCE: U.S. Department of Agriculture, Agricultural Stabilization and Conservation Service, “Schedule of Premiums and Discounts,” various issues.

Table 9.5.—Additional Loan Rate Discounts onWheat for Test Weighta (cents/bushel)

Test weight 1962 1964

53 to 54.9 . . . . . . . . . . . . . . . . . –6 – 450 to 52.9 . . . . . . . . . . . . . . . . . –9 – 649 . . . . . . . . . . . . . . . . . . . . . . . . –13 – 948 . . . . . . . . . . . . . . . . . . . . . . . . –17 –1247 . . . . . . . . . . . . . . . . . . . . . . . . –21 –1546 . . . . . . . . . . . . . . . . . . . . . . . . –25 –1845 . . . . . . . . . . . . . . . . . . . . . . . . –29 –2144 . . . . . . . . . . . . . . . . . . . . . . . . –35 –2543 . . . . . . . . . . . . . . . . . . . . . . . . –41 –2942 . . . . . . . . . . . . . . . . . . . . . . . . –47 –3341 . . . . . . . . . . . . . . . . . . . . . . . . –53 –3740 . . . . . . . . . . . . . . . . . . . . . . . . –59 –41aApplicable if wheat isNo.4, No, 5, Or sample grade.

SOURCE: US. Department of Agriculture, Agricultural Stabilization and Confer-vation Service, “Scheduleo fPremiums andDiscounts,’’varlous issues.

wheat to grade No. 2. In adding up the discountsfor each factor except protein, the total possi-ble discount for wheat (i.e. on all factors to thelimit) that grades No. 2 by the market accord-ing to the survey was 36 cents/bushel in 1986.The discount for wheat grading No. 2 by theloan rate program is 2 cents/bushel. Wheat mustmeet the limit of only one of the factors listedin table 9-8 (except moisture and protein) in or-der to grade No. 2. In reality wheat would notlikely be discounted by all factors, and only oneor two factors would be limiting for discountpurposes. Generally, damaged kernels havebeen one of the more limiting factors in gradedetermination in this time period. The discountfor 4-percent-damaged kernels was 8.9 centsin 1986, assuming all other factor discounts

would apply, while the loan program discountNo. 2 wheat would have been 2 cents/bushel.

The differential between the loan rate andthe market premiums and discounts—a differ-ential that is apparently growing—has a signif-icant impact. Most important is the allocationof wheat with different qualities between theloan program and market. In general, thisdifferential results in higher quality wheat be-ing sold commercially, while the poorer qual-ity wheat, being subject to greater market dis-counts, is put under loan and stored since theapplicable discounts would be substantiallylower. (Domestic millers have methods of de-termining where the higher quality wheats arelocated and can purchase by location. Millerscan also specify other factors such as fallingnumbers, pesticide residue, and sedimentationbefore shipment.) With market prices hoveringaround loan levels, this wheat has the poten-tial of being stored for an extended time andof being released to the market only gradually.

For comparison, if loan rate premiums or dis-counts reflected or exceeded those of the mar-ket, the incidence of relatively poor qualitywheat would likely not be reduced due to muchof it being weather-related. Rather, it would re-sult in poor quality wheat being sold to the mar-ket directly, rather than being put under loanand stored. In this case the loan rate would sup-port prices of the higher quality grain, ratherthan that of lower quality, as is currently thecase.

-. -—

225

Table 9-6.—Additional Loan Rate Discounts for Damaged Kernels in Wheat (in cents/bushel)

1951 1962No. 4 or No. 4, No. 5 1977 & 1978 1980-86

Total percent damage No. 5 or sample sample sample

7.1 to 8.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –18.1 to 9.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –29.1 to 10.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –3

10.1 to 11.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –411.1 to 12.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –512.1 to 13.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –613.1 to 14.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –714.1 to 15.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –815.1 to 16.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A16.1 to 17.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A17.1 to 18.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A18.1 to 19.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A19.1 to 20.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A20.1 to 21.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A21.1 to 22.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A22.1 to 23.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A23.1 to 24.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A24.1 to 25.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A25.1 to 26.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A26.1 to 27.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A27.1 to 28.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A28.1 to 29.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A29.1 to 30.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/Aover 30.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

– 2– 3– 4– 5– 6– 7– 8

– l o–12–14–16–18–20–22–24–26–28–30–32–34–36–38–60

N/AN/AN/AN/AN/AN/AN/AN/A– l o–12–14–16–18–20–22–24–26–28–30–32–34–36–38

3 centseach percent

over 30.0

N/AN/AN/AN/AN/AN/AN/AN/A– 2

– 810

–12–14–16–18–20–22–24–26–28–30

3 centseach percent

over 30.0

N/A = not available

SOURCE: U.S. Department of Agriculture, Agricultural Stabilization and Conservation Service, “Schedule of Premiums and Discounts;’ various issues

Table 9-7.—Market Discounts for HRS, February 1987

Item Discounts

Farm Programs and tween yield and quality characteristics (proteinVariety Seduction in this case), any farm program not adequately

discounting for quality deviation will have anOne impact of farm programs is that they may effect on agronomic practices. This section

distort producers’ choices regarding variety presents a budget analysis of the impacts of loanselection. Given an inverse relationship be- rate protein premiums and deficiency pay-

Table 9-8.—Wheat Quality Factors Determining Grade Standards

Minimum limits of— Maximum limits of—

Test weight per bushel

Hard RedSpring All other Damaged kernels

wheat or classes Heat-Shrunken

and Wheat or other classesd

White Club and damaged Foreign broken Contrastingwheat a subclasses kernels Total b material kernels Defects c classes Total e

Grade (pounds) (pounds) (percent) (percent) (percent) (percent) (percent) (percent) (percent)U.S. No. 1 . . . . . . . . 58.0 60.0 0.2 2.0 0.5 3.0 3.0 1.0 3.0U.S. No. 2. . . . . . . . 57.0 58.0 0.2 4.0 1.0 5.0 5.0 2.0 5.0U.S. No. 3. . . . . . . . 55.0 56.0 0.5 7.0 2.0 8.0 8.0 3.0 10.0U.S. No. 4. . . . . . . . 53.0 54.0 1.0 10.0 3.0 12.0 12.0 10.0 10.0U.S. No. 5. . . . . . . . 50.0 51.0 3.0 15.0 5.0 20.0 20.0 10.0 10.0

U.S. Sample grade:U.S. Sample grade is wheat that:

a. Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; orb. Contains 32 or more insect-damaged kernels per 100 grams of wheat; orc. Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more

pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown for-eign substance(s) or a commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent quantity of otheranimal filth per 1,000 grams of wheat; or

d. Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); ore. Is heating or otherwise of distinctly low quality.

aThe~e ~e~ulre~ent~ also apply When Hard Red Spring or White Club wheat predominate In a samPle of Mixed wheat

blncludes heat-damaged kernels~Defects Include damaged kernels (total), foreign material, and shrunken and broken kernels The sum of these three factors may not exceed the Ilmlt for defects for each numencal grade

Unclassed wheat of any grade may contain not more than 100 percent of wheat of other classeselncludes contrasting classes

SOURCE: Federal Grain InspectIon Service, U S Department of Agriculture, 1988

. . . .-

227

Table 9-9.—Average Price Adjustments for Each Factor Among North Dakota Country Elevators,Fall 1984, 1985, and 1986 (cents/bushel)

Commodity(base grade) Factor 1984 average 1985 average 1986 average

HRS 57 Ibs. test weight. . . . . . . . . . . . . . . . . . . . . – 1.9#1 DNS 14.5% moisture . . . . . . . . . . . . . . . . . . . . . . . –5.9140/0 Protein 16% protein . . . . . . . . . . . . . . . . . . . . . . . . . . 41.0

12% protein . . . . . . . . . . . . . . . . . . . . . . . . . . –38.04% damaged kernels . . . . . . . . . . . . . . . . . . –2.01% foreign material . . . . . . . . . . . . . . . . . . . –1.45% shrunken and broken kernels . . . . . . . . –2.22% contrasting classes . . . . . . . . . . . . . . . . –1.65% wheat of other classes . . . . . . . . . . . . . —

–1.8–6.863.4

–67.4–6.6–1.3–3.0–3.2–7.0

–2.9–6.562.6

–43.9–8.9–1.7–4.2–3.5–8.6

SOURCE: B Clew, W. Wilson, andR Hielman, ‘‘Pricing and Marketing Practices for North Dakota Durum and H RS Wheat 1986 Crop Year, ” Department of AgriculturalEconomics, North Dakota State University, Fargo, ND, 1987.

ments. Typical producer situations are posedfor a North Dakotan and a Kansan wheat pro-ducer from 1965 to 1986.

The measure used in this analysis is total rev-enue. Costs per acre are assumed the sameacross varieties. The protein premiums usedfor HRS were the government loan ratepremium and the market premium for 14 per-cent and 15 percent protein; for HRW, thepremiums used were for 13 percent and 11 per-cent protein. Government program impactswere incorporated into the analysis in that tar-get price instead of market price was used tocalculate total revenue. This assumes 100 per-cent participation in government programs,Yield used in the analysis was 30 bushels/acrefor HRS 14 percent protein and 25 bushels/acrefor HRS 15 percent protein in order to reflecta typical yield/protein trade-off. For HRW, thefigures used were 35 bushels/acre for 13 per-cent protein and 41 bushels/acre for 11 percentprotein. Total revenue was calculated by add-ing the market protein premium or governmentpremium to target price and multiplying thissum by the yield per acre.

Total revenues under the market premiumcondition and the government premium con-dition would be relatively similar in thesehypothetical cases except for two brief periods(tables 9-10 and 9-11). In the mid-1970s and1980s, when market premiums were much higher,total revenue would be greater under them thanunder the government premium.

Of particular interest is the revenues per acreachievable under the loan program. The farm

programs have always favored higher yieldingwheats, but the difference increased during the1980s. In 1969 the difference in North Dakotawas $9/acre; in 1979 it was $16/acre. Since thenthe spread favoring production of higher yield-ing wheats has increased to $20/acre. Similarresults were observed in Kansas.

The shift toward higher yielding varietiesforces the market premium to increase in or-der to achieve a certain level of protein, To ana-lyze the potential impacts, the producer budgetsjust described were calculated under variousyield scenarios in order to determine the pro-tein premiums necessary for a producer to beindifferent about using high- or low-yieldingwheat. In the case of North Dakota, the totalrevenue was equated to $144/acre, which cor-responds with production of 30 bushels/acreand 14 percent protein in table 9-10.

The results are shown in table 9-12 for vari-ous yield levels, but in each case protein was15 percent and total revenue was constrainedto $144/acre. For example, if a producer couldachieve an increase of 1 percent protein witha decrease in yield of 1 bushel/acre, the pre-mium necessary for $144/acre is 53 cents/bushel. A more realistic situation is where 3bushels/acre would be foregone to increase pro-tein 1 percent. In this case the protein premiumwould have to increase to 75 cents/bushel per1 percent of protein.

The protein premium needed to neutralizea producer’s decision to produce 14 percent or15 percent protein wheat increases rapidly asthe yield difference increases. This is caused

. . .

228

Table 9-10.—Theoretical Revenue for a One-Acre Farm in North Dakota, 1965-86

25 bushel/acre/15% protein 30 bushel/acre/14°A protein

Protein premium Revenue per acre Protein premium Revenue per acre

Target (dollars/bushel) (dollars/acre) (dollars/bushel) (dollars/acre)

Year price a Market Loan rate Market b Loan rate c Market Loan rate Market b Loan ra tec

1965 . . . . . . . . . . . . . . . . . . . . . 1.69 0.111966 . . . . . . . . . . . . . . . . . . . . . 1.84 0.011967 . . . . . . . . . . . . . . . . . . . . . 1.73 0.041968 . . . . . . . . . . . . . . . . . . . . . 1.80 0.221969 . . . . . . . . . . . . . . . . . . . . . 1.89 0.171970 . . . . . . . . . . . . . . . . . . . . . 2.00 0.121971 . . . . . . . . . . . . . . . . . . . . . 1.79 0.161972 . . . . . . . . . . . . . . . . . . . . . 1.72 0.081973 . . . . . . . . . . . . . . . . . . . . . 1.47 0.121974 . . . . . . . . . . . . . . . . . . . . . 2.05 0.441975 . . . . . . . . . . . . . . . . . . . . . 2.05 0.711976 . . . . . . . . . . . . . . . . . . . . . 2.29 0.361977 . . . . . . . . . . . . . . . . . . . . . 2.90 0.191978 . . . . . . . . . . . . . . . . . . . . . 3.40 0.111979 . . . . . . . . . . . . . . . . . . . . . 3.40 0.161980 . . . . . . . . . . . . . . . . . . . . . 3.63 0.501981 . . . . . . . . . . . . . . . . . . . . . 3.81 0.141982 . . . . . . . . . . . . . . . . . . . . . 4.05 0.181983 . . . . . . . . . . . . . . . . . . . . . 4.30 0.201984 . . . . . . . . . . . . . . . . . . . . . 4.38 0.531985 . . . . . . . . . . . . . . . . . . . . . 4.38 0.741986 . . . . . . . . . . . . . . . . . . . . . 4.38 0,78

0.1050.1050.1050.1050.1050.1050.1050.1050.1050.1050.1050.1050.1600.1600.1600.1600.1600.1600.1600.1600.1600.160

454644515253494540626966778889

10399

106113123128129

4549464850534746395454607789899599

105112114114114

0.0600.0100.0400.1000.0700.0200.1500.0800.1200.2800.4400.2300.1100.0350.0100.2200.0600.0900.1500.3000.4200.430

0.0750.0750.0750.0750.0750.0750.0750.0750.0750.0750.0750.0750.0900.0900.0900.0900.0900.0900.0900.0900.0900,090

53565357596158544870757690

103102116116125134140144144

53575456596256544664647190

105105112117125132134134134

apriorto 1g73 target ~ric. is blended average Priceto program participants reflecting national average price received by farmers and the marketing ceflificate ‘alue

averaged for participant’s total production. Post-1973 target price is loan rate plus deficiency paymentbRevenue is market premium piustarget price times yield.cRevenue is government premium plus target price ‘imes yield

SOURCE: U.S. Department of Agriculture, Statistical Reporting Service, Agricu/tura/Statistics, various issues.

by the target price deficiency payment program,which pays a producer $1.98/bushel more thanthe market. Thus the opportunity cost of de-creasing yield and increasing protein is $4.38(target price) This creates a high-proteinpremium needed to render a producer indiffer-ent between producing 14 percent and 15 per-cent protein wheat. Similar results are shownin table 9-13 for HRW wheat in Kansas.

Government Storage Policies

The Commodity Credit Corporation (CCC) ofthe U.S. Department of Agriculture (USDA)enters into agreements with commercial ware-houses to handle and store grain. This coversgrain owned by CCC, pledged to the agency ascollateral under the price support program, de-livered to the warehouse for purchase by CCCunder a price support program, delivered to thewarehouse in liquidation of a price supportloan, or held by CCC for any other reason. Thecontractual agreement is referred to as the Uni-form Grain Storage Agreement (UGSA). It cov-

ers areas such as standards for approving ware-houses, inspection requirements, load out anddelivery requirements, and settlement proce-dures (3).

Warehouses, for the purpose of applying theUGSA, are defined on the basis of whether in-spections sponsored by the Federal Grain In-spection Service (hereafter referred to as "offi-cial inspection’’) and UGSA-approved weightsare available. Country elevators are those loca-tions where official inspections and UGSAweights are not available, while terminal ele-vators do have these available. Within theUGSA, different rules apply to country and ter-minal warehouses.

Inspection requirements obviously differsince the distinction between country and ter-minal elevators is based on whether official in-spection is available. In general, grain shippedinto and out of terminal elevators must be offi-cially inspected. However, CCC retains theright to have quality determined at other points

229

Table 9-11 .—Theoretical Revenue for a One-Acre Farm in Kansas, 1965-86

25 bushel/acre/15% protein 30 bushel/acre/14% protein

Protein premium

Target (dollars/bushel)

Year price a Market Loan rate

1965 . . . . . . . . . . . . . . . . . . . . . 1.69 –0.021966 . . . . . . . . . . . . . . . . . . . . . 1.84 0.051967 . . . . . . . . . . . . . . . . . . . . . 1.73 0.031968 . . . . . . . . . . . . . . . . . . . . . 1.80 0.171969 . . . . . . . . . . . . . . . . . . . . . 1.89 0.031970 . . . . . . . . . . . . . . . . . . . . . 2.00 0.151971 . . . . . . . . . . . . . . . . . . . . . 1.79 0.061972 . . . . . . . . . . . . . . . . . . . . . 1.72 0.051973 . . . . . . . . . . . . . . . . . . . . . 1.47 0.081974 . . . . . . . . . . . . . . . . . . . . . 2.05 0.441975 . . . . . . . . . . . . . . . . . . . . . 2.05 0.421976 . . . . . . . . . . . . . . . . . . . . . 2.29 0.311977 . . . . . . . . . . . . . . . . . . . . . 2.90 0.091978 . . . . . . . . . . . . . . . . . . . . . 3.40 0.031979 . . . . . . . . . . . . . . . . . . . . . 3.40 0.091980 . . . . . . . . . . . . . . . . . . . . . 3.63 0.051981 . . . . . . . . . . . . . . . . . . . . . 3.81 0.031982 . . . . . . . . . . . . . . . . . . . . . 4.05 0.191983 . . . . . . . . . . . . . . . . . . . . . 4.30 0.301984 . . . . . . . . . . . . . . . . . . . . . 4.38 0.191985 . . . . . . . . . . . . . . . . . . . . . 4.38 0.341986 . . . . . . . . . . . . . . . . . . . . . 4.38 0.15

0.04500.04500.04500.04500.04500.04500.04500.04500.04250.04250,04500.04500.04500.04500.04500.04500.04500.04500.04500.04500.04500.0450

Revenue per acre Protein premium(dollars/acre) (dollars/bushel)

M a r k e t b Loan rate c Market Loan rate

586662696775656254878691

105120122129134148161160165

616662656872646253737281

103121120129135143152155155

————————————

0.0050.0050.0050.0050.0050.0050.0050.0050.005

Revenue per acre(dollars/acre)

M a r k e tb Loan rate c

697571747782737160848494

119139139149156166176180180

697571747782737160848494

119139139150156166177180180

159 155 – 0.005 180 180aprior t. 1973 target price is blended average price to program participants reflecting national average PriCe received by farmers and the marketing certificate ‘alue

baveraged for participant’s total production. Post-1973 target prices is loan rate plus deficiency payment.Revenue is market premium plus target price times yield.

Cflevenue is go ev rnment premium plus target price times yield.

SOURCE:US Department of Agriculture, Statistical Reporting Service, “AgriculturalS tatistics;’ various issues,

Table9-12.—lmplied Premium Necessary for HRS Producers To Be IndifferentAbout Growing 14 or 15 Percent Protein Wheat

Yield Protein Premium a Loan rate Revenue b

(bushel/acre) (percent) (dollars/bushel) (dollars/bushel) (dollars/acre)

29. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 0.53 2.40 14428. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 0.64 2.40 14427. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 0.75 2.40 14426. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 0.87 2.40 14425. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.00 2.40 144aPremiums are derived from equating TR to $144/acre,bRevenue (TR) was der ived asTR = YP* Dp + (’fa ” po) + ‘a* ‘remium

where YP is proven yield (30 in this case), DP is the deficiency payment, Ya is actual yield (29. .25), P. is market priceor loan rate.

SOURCE: Office of Technology Assessment, 1989.

and as agreed to by the warehouse operationand CCC. The quality of producer deliveriesfor liquidating price support loans at terminalelevators is determined as agreed to by pro-ducer and warehouse receiver.

Quality determination on grain received intocountry elevators is based on agreement eitherbetween the warehouse and CCC or betweenproducer and the warehouse. For grain loaded

out of country elevators by truck, quality is de-termined on the basis and at a point specifiedin the CCC loading order. For all other carriers,it is obtained at destination or at a point speci-fied in the loading order.

When grain is accepted for storage, the ware-house operator must issue negotiable ware-house receipts that show results for all factorscontained in the grain standards and furnish

——

230

Table 9-13.—lmplied Premium Necessary for HRW Producers To Be IndifferentAbout Growing 11 or 13 Percent Protein Wheat

Protein Premium a Loan rate Revenue b

Yield (bushel/acre) (percent) (dollars/bushel) (dollars/bushel) (dollars/acre)

39. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 0.10 2.40 17937. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 0.24 2.40 17935. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 0.39 2.40 17933. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 0.56 2.40 17931 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 0.75 2.40 179apremium~ are derived from equating TR to $179/acrebRevenue(TR) w as d e r i v e d asTR = ‘P

“ ‘ p + ‘y ’ ● ‘!) +‘ a • ‘ r e m iu mwhere YOis proven yield (41 inthiscase), DPts the delclency payment, Ya isactualyleld (39 31), Po is market price orloan ratd,

SOURCE” Office of Technology Assessment, 1989

all weight and quality certificates to CCC. Thesereceipts are then used to determine the quan-tity and quality of the grain being stored forCCC and as the basis for issuing loading orders.CCC uses the individual factor results reportedon the various warehouse receipts for comput-erized blending to arrive at weighted averagegrade and factor results. These averages thenserve as the grade and weighted average qual-ity that appears on the loading order. In somecases, this has resulted in a higher grade thanis represented by any of the warehouse receipts(2). For example, grain at grade Nos. 2,3, and4 can be blended to arrive at a weighted aver-age grade of No. 1 even though no individualwarehouse receipts have been issued for No. 1.

Recently CCC amended the UGSA regardingload out and delivery requirements for termi-nal elevators in order to restrict computerizedblending to three broad categories. Factor re-sults for grade Nos. 1, 2, and 3 will be blendedtogether as one category, factor results fromgrade Nos. 4 and 5 as the second category, andresults from sample grade as the third. Theamendment also specifies that blending shouldnot result in a weighted average quality of ahigher grade than reported on at least one-thirdof the warehouse receipts used as the basis fordetermining quality.

Load out and delivery requirements con-tained in the UGSA call for the warehouse todeliver the grain ordered shipped by CCC. Atboth country and terminal elevators, the quali-ties represented by the warehouse receiptsserve as the basis for the load out quality re-quirements. When CCC surrenders receipts

representing a specific grade with weightedaverage quality to a terminal elevator, each ship-ment must meet the specific grade and weightedaverage results. CCC can request a unit ship-ment (a minimum 10 railcars shipped on thesame bill of lading to comply with a tariff thatoffers rate incentive). When unit shipments arecalled from a terminal elevator, individual rail-cars will be accepted if they do not grade morethan one grade below the weighted averagegrade and no lower than the lowest grade ware-house receipt.

CCC may reject shipments of grain loadedout of terminal elevators if:

1. the quality is lower than the weighted aver-age quality or specific quality called foreven though it meets the specific grade,

2. if it does not meet the unit shipment re-quirement, or

3. if it is not fairly representative of the qual-ity ordered.

At country elevators, the warehouse opera-tor must load a grade and quality that is fairlyrepresentative of the quality described by ware-house receipts. Unit shipments can be loadedfrom country elevators under the terms spelledout for terminal elevators when that is agree-able to the warehouse and CCC. On grain de-livered from country elevators, the grain maybe rejected if it does not meet the requirementsspecified in the loading order. CCC, however,will not reject individual railcars, except thosegrading sample grade, in a unit shipment fromcountry elevators as long as the whole shipmentis fairly uniform in terms of the quality calledfor in the loading order.

231

Settlement for load out is based on the valueof the grain delivered and the grain orderedshipped by CCC using premium and discountschedules established by the agency. On graindelivered from terminal elevators that is ac-cepted by CCC, settlement will be based on thevalue of the net deficiencies for all grain in theloading order. No discounts will be applied onunit shipments if the quality in all railcarsequals the weighted average quality called forin the loading order, The warehouse operatormust pay CCC for the value of underdeliveriesin quality, but CCC will not pay for the valueof overdeliveries. This is not the case for grainshipped from country elevators, as CCC willpay for the value of their overdeliveries.

When grain is rejected at terminal elevators,the warehouse will not be given credit for load-ing out that quantity. The rejected grain mustbe replaced even though additional grain mustbe obtained to meet the loading order issuedby CCC. The agency can accept rejected grainif agreement is reached between both partieson a discount prior to CCC’s authorization toship.

At country elevators, the warehouse opera-tor replaces the rejected grain at CCC’s option.If rejected grain is not replaced, however, CCCsells it for their account. In determining valuesfor grain shipped from country elevators, spe-cial provisions have been included for samplegrade shipments not required by the loadingorder and a 10 cents/bushel charge is includedfor rejected grain that is not replaced.

The differences in CCC rules as they pertainto country versus terminal elevators createssome unusual problems for grain quality. Thefact that CCC does not apply the same rules isa negative influence on the quality of CCC grain.Given that CCC premiums and discounts do notalways reflect the market, the possibility there-fore exists for quality deterioration of grainstored by country elevators and to some degreeby terminal elevators.

USDA publishes figures for State averageUGSA handling and storage rates for countryand terminal elevators. In Iowa, for example,

country elevators handling corn charge on aver-age 7.92 cents/bushel for handling inboundtruck deliveries and 8.79 cents/bushel for out-bound by rail. The average storage charge thereis 37.74 cents/bushel. Based on these figures,a country elevator that takes in corn, holds itfor 1 year, and then loads it out receives 54,45cents/bushel for handling and storing,

The USDA premiums and discounts for corndo not completely reflect the market discountlevels. For example, USDA for June, 1988assessed a 1-cent discount for corn damagedbetween 5.0 and 6.0 percent. A 2-cent discountwas assessed for every l-percent increase above6.1 percent. Yet, market discounts for corn ar-riving in Kansas City on June 15, 1988 were 3cents per percentage point above 5,0 percent,Thus corn containing 7.4 percent damage isassessed a 9 cents/bushel discount by the mar-ket, but only 5 cents/bushel by CCC.

All these considerations–the fact that CCCaccepts grain below the quality represented bywarehouse receipts, the costs of maintainingquality while in storage, the revenue receivedfrom handling and storage, and the less-than-market discounts that are applied—combine tocreate a situation in which the benefits of main-taining quality must be weighed against the eco-nomic benefits of delivering grain of poorerquality than indicated on warehouse receipts.Furthermore, the economics of this situationare more dynamic at country than at terminalelevators.

As noted, grain shipped from country eleva-tors can be rejected if it does not meet the qual-ity specified in the loading order, but countryelevators do not have to replace the grain, incontrast to terminal elevators. When countryelevators request unit shipments, the quality ofindividual railcars shipped as part of a unit willnot be discounted as long as the average forthe unit is fairly representative of the qualityordered. For unit shipments from terminal ele-vators, on the other hand, individual railcarsare discounted. CCC policies therefore allowmovement from country to terminal elevatorsof grain that is inferior in quality to what mustbe shipped from the terminal elevators, plac-

-———1

232

ing more responsibility on them to maintainquality.

Impacts of Markets,Farm Programs, and

Technology on Quality

Agronomic practices and variety choice in-fluence both the quantity and quality of pro-duction despite the uncertainties of biologicalprocesses. For example, the physical relation-ship between fertilizer and yield is well known,and there is some evidence that producers ad-just yields in response to changing economicconditions. It is also plausible that quality char-acteristics adjust with changing economic andtechnological conditions. Changes in farm pro-grams and market prices influence producerdecisionmaking regarding yield versus quality.This section examines the extent of and poten-tial for adjustments in quality content (via wheatprotein) in reaction to economic variables.

The trade-offs governing yield and proteinchoices are somewhat imprecise biological rela-tionships. In particular, yield and fertilizer arepositively related because soil nutrients stim-ulate grain production. Also, yield and proteinare inversely related because varieties may bechosen with relatively high yield and low pro-tein or vice versa.

Producers are faced with a conflict betweenincentives and trade-offs, or between improvingquality and reducing production. Productionon a given parcel of land can be expanded ei-ther through more intensive farming practicesor through reduction in crop quality. Resolu-tion of these alternatives requires evaluationof contributions to profits by small changes infertilizer and protein content. The profit con-tribution of a l-point increase in protein con-sists of an increase in revenue due to the higherprice and a decrease in revenue due to reducedyields. Profits can no longer be increased whenthe revenue gain from increased yield and theloss from reduced protein offset each other.

The functions influencing the producer’schoice of protein level are illustrated in figure9-2. The yield loss function is upward sloping,

Figure 9-2. - Producers’ Protein Choice for Wheat

Percent I(o-1)

c Protein

a: Percent yield loss from higher protein

b: Percent price gain from a protein increase

c: Protein level that would maximize profits

SOURCE: Office of Technology ~nt 1989

reflecting the reduced yields that accompanyincreases in protein. The shape of the percent-age price gain function depends on the char-acteristics of the protein premium schedule. Fordemonstration purposes, it is a downward slop-ing function of protein content. However, itcould be flat, which would imply the percent-age price gain is constant across protein levels.The protein level that would maximize pro-ducer profits occurs where the percentage pricegain and yield loss are equal. From the produc-er’s perspective, this would be the most desira-ble protein level.

Thus, the producer’s choice between expand-ing yield or protein entails evaluation of thetrade-off of the economic returns associatedwith each alternative. As protein premiumschange (e.g., due to a change in the market),the percentage price gain function (b) shifts,resulting in a different optimal protein level.Similarly, if target prices increase, at a givenprotein premium level in cents/bushel, the pro-tein premium as a percent of target price dimin-ishes, resulting in a reduction in the desired

. . -

233

protein level. Likewise, as technology changes,the yield loss function would change, also re-sulting in a different desired protein level,

This conceptual framework suggests that pro-ducers can and do respond to protein premiumsin their production decisions. An analysis ofthe extent to which producers have respondedto changes in the market in variety choice andtherefore protein levels in Kansas and NorthDakota showed that protein levels have beendecreasing in Kansas since 1978. Protein levelsin North Dakota have been more variable, witha reduction from 1979 to 1985, followed by aslight increase in 1986 (4).

This study found overall only a small and oc-casional protein response to market incentives.In North Dakota, a change in the protein pre-mium from historical minimum to maximumresulted in a 0.3 percent change in the averageprotein content. There is no evidence of anyprotein response in Kansas. Both States regis-tered a long-term downward trend in protein

level. One explanation is that in both cases, butespecially Kansas, only a narrow range of pro-tein choices is available from plant breeders,thereby limiting producers’ ability to respondto economic variables (4).

A decline in protein content of 0.2 to 0.5 per-cent has occurred in Kansas and North Dakotaduring the last 20 years (4). This decline co-incides with the adoption of new generationsof technology; semidwarf varieties releasedsince the 1970s have included varieties withlower protein levels than those previously avail-able. Producers’ choices among varieties in-clude several factors in addition to protein con-tent, such as yield advantage and diseaseresistance, that may be the primary influenceson seed selection. Decisions about yield advan-tage and disease resistance may have indica-tions for protein levels, but it does not appearthat protein incentives have a strong influenceon the average protein content of the GreatPlains wheat crop.

FINDINGS AND CONCLUSIONS

Farm programs have played an importantrole in U.S. agriculture. Because they send in-centives throughout the system, they have thepotential to affect quality. Two farm programprovisions are generally applicable: the loanrate program and its associated premiums anddiscounts for deviations from a specified qual-ity, and the target price/deficiency payment pro-gram, which bases payments on yield. To theextent that yield and quality are inversely re-lated, incentives to increase yield put pressureon producers to reduce quality indirectly. Anal-ysis of these two aspects of farm programs re-sulted in the following findings.

● The administration of loan rate values forwheat has changed over time. In the 1960stwo additional premiums/discounts forquality were available in addition to thosefor grade: one based on sedimentation testsand another for variety discounts. Thesewere discontinued in the early 1970s.

• Substantial differences exist between loanrate premiums and discounts relative to

●

●

those of the market. The spread of pre-miums and discounts for protein has nearlyalways been less than that for marketpremiums/discounts, and this differencehas been increasing in recent years. Thesignals transmitted via the loan rate thusdo not provide incentives for quality im-provement and, because of these spreads,inferior quality wheat will have a tendencyto go to the loan program.There is a distinct trade-off in productionbetween yield and protein. In recent yearsthis trade-off has been increasing, suggest-ing the opportunity costs of maintaininga certain protein level in terms of yield fore-gone is rising.The target price program provides an in-centive to increase yields because of ahigher price level per bushel. From a pro-ducer perspective the optimum proteinlevel decreases as target prices increase.As target prices stimulate higher yields andtherefore lowered protein levels, pressure

234

to increase protein premiums in the mar-ket has escalated due to a shortage of highprotein wheat.

Given these findings, a combination of pol-icy and institutional factors may inhibit pro-ducer response to quality incentives. Publicinformation about the yield and quality conse-quences of particular variety selections is notgenerally available. Further, in some regionsof the country the first point of receipt in themarket channel typically does not apply to in-dividual producers premiums and discounts forquality. And finally, the range of protein or qual-ity choices available to producers from the plantbreeders is small and may preclude adjustment.

Farm programs potentially have importantimpacts on quality in commodities such aswheat, corn, and soybeans in which the loanrate program is an important feature and wheretrade-offs exist between yield and a major qual-ity factor such as protein. When the loan rateprogram is less than market premiums and dis-counts, it results in distortions. The most im-portant one is that the incidence of inferiorquality is not reduced. Given the amount ofcarryover storage of grain in the United Statesbetween crop years compared with other ex-porting countries, inferior quality grain is dis-tributed over several subsequent years.

1.

2.

3.

CHAPTER 9

Cochrane, W., and Ryan, M., American FarmPolicy (Minneapolis, MN: University of Min-nesota Press, 1976).National Grain and Feed Association, Grain Mer-chandising and Storage in 1987-88 (Washington,DC: 1987).U.S. Department of Agriculture, CommodityCredit Corporation, “Uniform Grain StorageAgreement (UGSA),” Pub. No. CCC-25, Washing-ton, DC, 1988.

The target price program has longer term im-pacts. Incentives are transmitted throughoutthe production sector to increase yields. Thetransmission of signals from producers to plantbreeders and ultimately to variety developmentis along, dynamic process. The target price pro-gram causes underlying pressure for reducedprotein levels in the market and thus fundamen-tal pressure on protein premiums. There hasbeen little response in the past to variability inprotein premiums. This could be due in partto constraints of technology and variety devel-opment, and in part to release programs thathave been given persistent signals over theyears for increased yield.

Results of this analysis of farm programs werepresented in testimony before the Senate Com-mittee on Agriculture, Nutrition and Forestryand the House Agriculture Committee. Con-gress then amended the U.S. Grain StandardsAct in Public Law 100-518 to direct the Secre-tary of Agriculture to establish a pilot projectfor the 1989 wheat, soybeans, and feed grainscrops to determine a method of requiring theCommodity Credit Corporation to determinea schedule of premiums and discounts on grainoffered as loan so as to encourage the market-ing of high-quality grain.

REFERENCES

4. Wilson, W., Gallagher, P., and Riepe, J., “Analy-sis of Demand for Wheat Quality Characteris-tics,” a background paper prepared for the Officeof Technology Assessment, U.S. Congress,Washington, DC, 1988.

5. Zeleny, L., “Criteria of Wheat Quality,” WheatChemistry and Technology (St. Paul, MN: Ameri-can Association of Cereal Chemists, 1978).

—. - —..

Chapter 10

Comparison of Technologiesand Policies Affecting

Grain Quality in MajorGrain-Exporting Countries

- - . --- - . . -

CONTENTS

Page

Production Technologies and Practices. . . . . . . . . . . . . . . . . . . . . . ..........237Handling Technologies and Practices at First Point of Receipt . ..........239

Drying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................239Cleaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ . ..................239Storage and Handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............239Transportation to Ports . . . . . . . . . . . . . . . . . .,....... . ................239

Handling Technologies and Practices at Export . . . . . . . . . . . . . . . . . . ......241Storage. ... ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .........241Drying and Cleaning . . . . . . . . . . . . . . . . . . . . . . ........................241Blending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... ......241

Institutions and Regulations Affecting Grain Quality . ...................241Seed Variety Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -............241Grain Receival Standards . . . . . . . . . . . . . . . . . . . . . . ! . . . . . . . . . . . . . ......244Marketing by Variety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............244Grain Inspection Authority and Grade Standards . ....................244

Government Policies Affecting Grain Quality. . ........................244Price Policy. . . . . . . . . . . . . . . . . . . . . . . . ....... . ...................244Farm Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...................,246

Comparison of U.S. Institutions, Policies, and Technologies WithThose of Other Grain-Exporting Countries. .. -.. ....... . ......-.-246

Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., . . ........ . . . . . . . ........ ..246Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ...246Technologies and Grain-Handling Practices . . . . . . ........ . ..........247

Table10-1.

10-2.

10-3.

10-4.

10-5.

TablesPage

Comparison of Production Technologies of Major Grain-ExportingCountries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. ... ... ...238Comparison of Handling Technologies and Practices at FirstPoint of Receipt of Major Grain-Exporting Countries . ..............240Comparison of Handling Technologies and Practices at Exportof Major Grain-Exporting Countries . . . . . . . . . . . . . . . . . . . . .........242Comparison of Institutions and Regulations Affecting GrainQuality of Major Grain-Exporting Countries . . . . . . . . ........ .. ....243Comparison of Government Policies Affecting Grain Quality ofMajor Grain-Exporting Countries . . . . . . . . . . . . . . . . . . .. .. ....-....245

. . .

Chapter 10

Comparison of Technologies andPolicies Affecting Grain Quality in

Major Grain-Exporting Countries

This chapter focuses on the grain systems ofthe other major exporters—Argentina, Brazil,Canada, France, and Australia—in order to un-derstand better their grain systems as they re-late to quality and to consider adopting someaspects of those systems.

Observed differences among countries areimportant because the differing strategies in-fluence incentives and the quality of the finalproduct. A comparison of the major technol-ogies, market channels, pricing strategies, andgrading practices in each country provides thebackground for a comparison and analysis ofthe quality delivered into the domestic and ex-port markets of each. Little published informa-tion is available about the grain systems of theother countries, especially with regard to tech-nologies, institutions, and policies affectingquality; Canada is a major exception. To pro-vide the documentation needed to prepare thischapter, OTA formed study teams to travel to

each country except Canada to gather neededinformation. The study teams arrived duringthe harvest to observe the system at work. In-formation was gathered via numerous inter-views with producers, handlers, processors, ex-porters, grain inspectors, plant breeders,researchers, and government officials. Detailedreports on each country are found in a secondreport in this assessment, Grain Quality inInternational Trade: A Comparison of MajorU.S. Competitors.

This chapter looks at the technologies, han-dling practices, institutions, and governmentpolicies that affect grain quality in each coun-try and compares them in each case with theU.S. system. The technologies are basically thesame, with some minor variations. But majordifferences exist in the use of technologies, ininstitutions established, and in policies that af-fect grain quality.

The major grains—corn, wheat, and soybeans—are grown under various soil and climate con-ditions and differing cultural practices (table10-1). Most of the best soil conditions in eachcountry are used to produce these grains. Cul-tural practices differ, depending on site condi-tions. All the countries, however, use mecha-nized soil preparation, seeding, and cultivation.Differences exist in the degree to which fer-tilizer, insecticides, and herbicides are used.France is the most intensive user of fertilizer,and this is reflected in its tremendous increasein wheat yield over the past 10 years. The highyields and fertilizer rates are primarily a re-sponse to economic incentives provided by the

Common Agricultural Policy of the EuropeanCommunity (EC).

Harvesting technologies are similar in allcountries. The only difference of note is in Aus-tralia, where a second screen may be used onthe combine to filter nonmillable materials fromthe wheat. Farmers have the incentive to usethis practice because they do not want theirwheat rejected at the country terminal. No suchincentive exists in the United States at the pointof first receipt.

Major differences among countries can befound in the capacity for and reliance on on-farm storage. The United States has the capacity

237

Table 10-1 .—Comparison of Production Technologies of Major Grain-Exporting Countries

Act iv i ty Uni ted States Argent ina Brazil, . . ,.

Soils and

t o p o g r a p h y M a j o r p r o d u c t i o n a r e a s

are on stable soils. Low

eros ion. Fer t i l i t y s tab i -

Iized. Soybeans usually

incorporated in a rota-tion with corn or othercrops. Winter wheatgrown under dry landconditions.

Flat, fertile soils in thecorn belt. Rolling landfarther south in wheatand sorghum area. Longrotations including leg-ume pasture. Soybeansand wheat are oftendouble-cropped.

—

Expanding productionon newly cleared soils.Long slopes and year-round erosion and leach-ing create more prob-lems of maintaining fer-tility. Extensive terracingrequired. Continuoussoybeans not unusual inParana and Mato Grosso

do Sul.

France

Major production areasfor wheat located northand southwest of Parison stable, low erosionsoils. Rolling land farthersouth in corn-producingarea.

Cul tural pract ices. Fert i l izer, insect ic ide, Limited use of fertilizer Fertilizer, insecticide,and herbicide used as on corn, increasing use and herbicide used asneeded. Mechanized soil on wheat. Limited use of needed. Mechanized soilpreparation, seeding and herbicides and insecti- preparation, seeding andcultivation. cides. Mechanized till- cultivation.

age seeding and culti-vation.

High use of fertilizer, in-secticide, and herbi-cides. Mechanized soilpreparation, seeding,and cultivation.

Canada Australia

Wheat grown for export Major wheat productionin four soil zones in areas include south andwestern Canada.wheat grown underland conditions.

All east coast, and westerndry- Australia. Rolling, dry

land. Extended rotationswith clover.

Fertilizer, insecticide, Phosphatic fertilizers, in-and herbicide used as secticides, and herbi-needed. Mechanized soil cides used as needed.preparation, seeding, Mechanized soil prep-and cultivation. aration.

Harvesting . . . . . . . . . . Self-propelled combines. Self-propelled combines. Self-propelled combines. Self-propelled combines. Self-propelled combines. Self-propelled combines.Wheat crop in Northernplains is swathed beforeharvest.

On-farm storage On-farm storage availablefor about 50 percent ofcorn and soybeans.

SOURCE: Office of Technology Assessment. 1989

Wheat crop is swathedbefore harvest.

Only 5 to 10 percent Virtually no on-farm stor- Very little stored on On-farm storage for the Virtually no on-farm stor-stored on farms. Only age. farms, majority of wheat. age.very large farms use on-farm storage. ——. .— .

. . . . -—

239

to store about half the on-farm grain produced.In Argentina, Brazil, France, and Australia, on-farm storage capacity is small. Quality controlis the major reason given by Government agen-cies for discouraging on-farm storage. In Aus-tralia, for example, the Wheat Board empha-sizes cleanliness and insect control in wheat.It is their belief that storage provided off-farmby handlers, more experienced with and knowl-edgeable about the procedure, results in fewer

quality problems. Greater use of on-farm stor-age would, according to the Australians, in-crease infestation and/or pesticide residue, Animportant fundamental of grain marketing inmany countries is that the establishment ofstringent requirements at the first point of re-ceipt precludes problems downstream in themarketing system. Minimal on-farm storage isan important component of that concept.

HANDLING TECHNOLOGIES AND PRACTICESAT FIRST POINT OF RECEIPT

Handling technologies and practices at firstpoint of receipt include the receiving, drying,cleaning, storage, conveying, and transportingof grain (table IO-2). Few differences existamong the countries in how grain is received.Country elevators basically accept grain in ei-ther farm wagons or trucks. Some countries (theUnited States) are more mechanized than others(Brazil). But the differences are minor and in-consequential as far as quality is concerned.

Drying

The same type of drying technology basicallyis used in all countries, Most corn needs to bedried everywhere. Soybeans in Brazil are usu-ally dried, but in Argentina and the UnitedStates this is done to a lesser extent. High-temperature dryers, either gas- or oil-fired, areused for the most part. Wheat drying varies bycountry. France harvests wheat above 15 per-cent moisture and dries it for safe storage. Aus-tralia, on the other hand, rarely needs to drywheat because of’ the country’s dry climate.

Cleaning

Cleaning practices differ by country. In theUnited States and Canada, grain is generallynot cleaned at the first point of receipt. In Ar-gentina, Brazil, and France, economic incen-tives exist to clean grain at this level in themarket channel. In fact, in France it is not un-common for wheat to be cleaned going in andcoming out of country elevators. Not cleaning

grain at the first point of receipt ensures thatforeign material remains, adding to the cost oftransporting and handling grain throughout therest of the marketing channel.

Storage and Handling

The technologies for storage and grain han-dling are the same for all countries. Differencesarise in the configuration of storage units andin the speed of handling equipment, In somecountries, such as the United States, verticalor upright storage facilities predominate. Flatstorage is most prevalent in Brazil. And in Aus-tralia, storage facilities vary by state.

Transportation to Ports

Rail and truck are the major modes for trans-porting grain to port facilities in most coun-tries. The United States is an exception in thatit also has major waterways for transport. Bargetransportation is more cost-effective than truckand rail. From a quality viewpoint, however,it has potential problems. As discussed in chap-ter 7, moisture uniformity is important in main-taining quality. During shipment, moisture mi-gration can be significant if grain is exposedto several outside temperature and humiditychanges. Barges seem to be more susceptibleto these factors than railcars. In addition, grainmay need to be handled more at times becauseof barge movement, which increases the likeli-hood of damaging the kernel–especially forcorn, The United States may have an advan-

Table 10-2.—Comparison of Handling Technologies and Practices at First Point of Receipt of Major Grain-Exporting Countries—

Activity United States Argentina Brazil France

Receiving . . . . Truck dumps and hoists Truck dumps and hoistsfor virtually all farm wag- at larger facilities. A fewons and trucks. receiving stations lack

hoists. Waiting lines arecommon at harvest.

Drying . . . . . . . The majority of corn is Majority of corn and some

dried and stored on farms. soybeans and wheat are

Most of the corn delivered dried in high-temperature

at harvest is dried by first dryers. Nearly all country

h a n d l e r i n g a s - f i r e d e l e v a t o r s h a v e d r y e r s .dryers. Little drying of Usually oil-fired.soybeans or wheat.

Cleaning . . . . . Generally grain is notcleaned when it comes offthe farm. It is placed inbins according to qualityso that it can be blendedwith grains of differentquality when loaded out.

Storage . . . . . . Flat and upright storage.Upright predominates.

Truck dumps and hoistsat larger facilities. Manyvehicles unloaded byhand.

Major i ty of soybeansdried. Wood and coalused for fuel.

Truck dumps and hoistsfor farm wagons andtrucks.

— . . ..—Some drying of wheat ifharvested above 15%moisture Majority of corndried with high- tempera-ture dryers similar tothose used in U.S.

Canada Australia— —Truck dumps and hoists Truck dumps and hoistsfor farm wagons and for farm wagons andtrucks trucks.

The majority of wheat is Generally wheat does notdried and stored on farm. need to be dried. NoPropane dryers are most dryers at bulk handling au-common. thority (BHA) facilities.

Since there is a premium Soybeans that exceedfor No. 1 grain, most grain Brazilian export qualityis cleaned to less than (foreign material 1.OO/O) are1.OO/O foreign material. cleaned. Corn is cleaned

to less than 1.0%.

Flat and upright storage. Flat and upright storage.Determined by relative Flat predominates.costs and handling re-quirements.

Most wheat cleaned going Very little cleaning done Generally wheat does notinto country elevator and at this level of marketing need to be cleaned. Nosome cleaned going out. system. cleaners at BHA facilities.Corn routinely cleaned be-cause of broken kernels.

Upright storage predomi- Vertical cement bins; flat Upright, flat, and bunker.nates. Grain often turned storage and steel tanks. Predominance of any typeand sampled for end-use Vertical predominates. varies by state.quality tests. Also use flatstorage with numerousvertical bins,

Handling . . . Use augers, conveyors, Use augers, conveyors, Use augers, conveyors, More use of chain con- Use augers, conveyors, Use augers, conveyors,belts, and vertical legs. belts, and vertical legs. belts, and vertical legs. veyors than belts.

Transportationto ports . . . . . . Trucks for short hauls. Truck and rail choice de- Truck predominates for all Grain predominantly trans-

Rail and water for long termined by cost and distances. Water available ported by truck.distance. shortage of rail service. only in southern district

Barge available for move- moving beans to Rioment to Buenos Aires. Grande do Sul.—.

SOURCE Off Ice of Technology Assessment, 1989

belts, and vertical legs. belts, and vertical legs.

Grain predominantly Most wheat is moved bymoved by rail over long rail, some by truck.distances.

.—

241

tage compared with other countries becausebarge transportation is more cost-effective thanalternative modes of transportation. But from

a quality standpoint, this may not be an ad-vantage.

Many of the handling technologies at the fi-nal point in the marketing channel are similaramong the countries (table IO-3). But, as withthe practices at first point of receipt, how theyare used differs.

storage

Storage technologies do not vary among thecountries. The number of bins for segregatingby quality does differ, however, as well as thespeed of moving grain in and out of storage.The United States has the capacity to segregategrain into multiple bins for storage, which ex-pedites blending. Other countries, such as Ar-gentina and Brazil, have few bins into whichgrain can be segregated by quality.

Drying and Cleaning

No major differences exist in either technol-ogies or practices of drying and cleaning grainat this point. As grain basically is dried andcleaned at the first point of receipt, there is lit-tle need for dryers or cleaners at export. TheUnited States is somewhat of an exceptionbecause many export facilities receive graindirectly from farmers. And grain must be con-

ditioned for safe storage and handling. But inmost other countries, such as Argentina andAustralia, grain received at export has alreadybeen conditioned at the first point of receipt.A major exception is Canada, which cleanswheat at the port facility. However, Canada ispresently studying this practice and the re-search indicates that cost savings exist in clean-ing wheat at inland terminals versus at export.A basic marketing fundamental of most export-ing countries is to condition grain at the firstpoint of receipt and avoid problems and costsat later stages in the marketing channel.

Blending

Canada blends wheat to a degree at primaryelevators but is limited to the extent it allowsblending at export terminals. Other exportersblend grains only to a small degree, mainly be-cause it is uniform upon receipt. The physicalfacilities in these countries have been con-structed to limit blending of wide margins ofquality. In contrast, grain moving through themarketing channel in the United States is notuniform. Blending is done across diverse qual-ities in an attempt to produce a uniform prod-uct for export.

Although the technologies of producing, Seed Variety Controltransporting, and handling grain do not differsignificantly among exporters, the use of them The fundamental area for influencing qual-does. And they differ to a large extent because ity is through incentives to plant breeders. Allof the varying institutions in each country. This major grain-exporting countries except thesection discusses the institutions and regula- United States have instituted formal mecha-tions important in influencing grain quality in nisms for controlling variety development andthese countries (table IO-4). release. In France, Canada, and Australia, va-

Table 10-3.—Comparison of Handling Technologies and Practices at Export of Major Grain-Exporting Countries

Activity United States Argentina Brazil France Canada Australia—.Storage . . . .

Drying . . . .

Cleaning .

Blending . . .

SOURCE Office

Vertical storage with mul-tiple bins, high speed inand out. Segregated byquality to expedite blend-ing at time of shipping.

Most export facilities havelarge drying capacity. Cornis often dried if receiveddirect from farmer but soy-beans and wheat are sel-dom dried.

Most export facilities havecapacity for cleaning.Grain (mostly corn) oftencleaned prior to exporting.

Normal practice. Econom-ic incentive for blending ofwide range of quality dueto the extremes in qualityof grain accepted into thesystem.

Vertical silos predominate.Few bins for quality segre-gation.

Grain dried by first han-dler; dryers at export areseldom used.

Grain cleaned by first han-dler. Relatively small ca-pacity cleaners.

Limited blending becauseof uniform grain receivedand lack of physical facili-ties for blending.

.of Technology Assessment, 1989.

Vertical and flat storage. Upright bins predominate, Ver t ica l , cement b ins pre- Ver t ica l s torage segre-Smal l number o f b ins s tored accord ing to end- dominate . B lend ing is very gated by qua l i tyI i m i t s s e g r e g a t i o n b y u s e q u a l i t i e s . l imi ted—grades must bequality. kept separate.

Very few export elevators Most export facil it ies have No dryers at export fa-..———

Grain dried by first han-dler, dryers at export sel-dom used.

Grain cleaned by first han-dler. Little or no cleaningcapacity.

Limited blending becauseof uniform grain receivedand lack of physical facili-ties for blending.

have dryers; grain is con- modest drying capacity.ditioned by first handler.

Most export elevators do Most cleaning of wheat isnot have cleaners; grain done at this point in mar-cleaned by first handler. keting system.

Some blending of wheat Blending at primary eleva-moving to export, but no tors, but at export only 2°/0incentive to blend wide of higher grade can be amargins of differing quali- blend from a lower grade.ties.

—

cilities

No cleaners at export fa-cilities.

———-——..Limited blending at exportbut only for a few factors.

Table 10-4.—Comparison of Institutions and Regulations Affecting Grain Quality of Major Grain-Exporting Countries

Act iv i ty

S e e d v a r i e t y c o n t r o l

Grain receivals t a n d a r d s . , . . .

Market ing by var ie ty . ,

-——United States

No State or Federalcontrol. Release of vari-et ies inf luenced tosome extent by land-grant universities.Largely the market de-termines adoption ofvarieties,

None. All types of qual-ity are accepted withappropriate discountsfor low-quality grain.

No mechanism existsfor variety identifica-tion.

Argentina

Committee of govern-ment and industry mustapprove agronomicproperties, Quality fac-tors of minor influence.

Grain not meeting as p e c i f i e d m i n i m u mqual i ty (Condi t ion Ca-mara) is rejected at firstpoint of sale.

Variety is not identifiedin marketing channel.

Grain inspectionauthority. . . . . . . . . . . . . Federal Grain Inspec- Junta Nacional de

tion Service (FGIS), U.S. Granos —GovernmentDepartment of Agricul- agency responsible forture. agriculture

Brazil

Committee with broadrepresentation directsresearch and approvesvarieties. Quality ispotential criterion butnot currently effective.

—.

Soybeans not meetinga minimum quality arerejected at first point ofsale.

Variety is not identifiedin marketing channel.

France

Formal mechanism ex-ists that regulates re-lease of varieties basedon agronomic and qual-ity criteria.

.———

Grain not meeting ex-port contract specifica-tions can be rejected bysurveying company orreceiving elevator.

Very common. Varietyoften specified inwheat contracts

Canada Australia

Formal mechanism - -

used to license newvarieties. Agronomicand qual i ty cr i ter iagiven equal weight intesting new varieties.

Formal mechanism fol-I owed as a prerequisitefor release of varieties.Quality and agronomiccriteria are used

Developed eight gradesfor CWRS to differenti-ate qual i ty, Lowestgrade goes to feed mar-ket.

Wheat must meet mini-mum quality standards.if not it IS allocated tofeed market.

Licensed grain must be Very common-use vari-visually distinguishable. ety control scheme to

facilitate segregationby classes.

Private inspection Private inspection Canadian Grain Corn- Export Inspection Serv-agencies. agencies. mission. ice of Department of

Primary Industry.

Grade standards . . . . . . . . Official standards es- Official standards es- Official standards are No official standards. Grain standards estab- Official standards es-tablished by FGIS. tablished by Junta. not used in export . Only of f ic ia l qual i ty Iished by Canadian tablished by Depart-

Quality is based on As- criteria are require- Grain Commission. ment of Primarysociation Nacional dos ments for intervention Industry.Exportadores de Cer- mechanism.eais contract.

SOURCE Off Ice of Technology Assessment, 1989

f&cd

244

riety approval and release must take into ac-count quality as well as agronomic criteria. Andquality is given equal weight with agronomiccriteria for approval of new varieties. Argen-tina and Brazil also have formal structures forrelease of new varieties, but currently give moreweight to agronomic criteria than quality. Im-proving yields in these countries is more im-portant than quality improvement at present.But the mechanism is in place to consider qual-ity criteria when it becomes necessary. TheUnited States stands alone as the only majorgrain exporter with no State or Federal Gov-ernment involvement in release of new vari-eties. The U.S. market largely determines thevarieties adopted.

Grain Receival Standards

Another common characteristic of most ex-porters concerns receival standards. All coun-tries except the United States have minimumquality standards that must be met for grainto be accepted at the first point of receipt. Grainthat does not meet these standards is rejected,and is diverted to the feed market in most coun-tries. However, the United States accepts allqualities of grain into the market channel, withappropriate discounts for low-quality grain.Uniformity of quality is more difficult to attainwithout minimum receival standards and pro-vides the incentive for blending discussedearlier.

Marketing by Variety

In some countries grain is identified in themarketplace by variety, which is used as a proxyfor end-use value. France and Australia are thecountries that use variety in the marketing ofwheat most extensively. Farmers in these coun-tries must declare in an affidavit the variety ofwheat marketed at the first point of receipt.France and Australia use variety to facilitatethe segregation of wheat by class. The UnitedStates has no mechanism for varietycation.

Grain Inspection AuthorityGrade Standards

identifi-

and

Most of the countries have official standardsestablished by the Government and the inspec-tion of grain is conducted by a Governmentagency. Brazil and France are major excep-tions. France has no official standards or Gov-ernment involvement in grain inspection. Qual-ity standards have been established by state andnational agencies in Brazil but domestic andexport trade is based on a contract under theAssociation Nacional dos Exportadores deCereais. In France the quality requirements forthe EC intervention mechanism provide theminimum standards. Private agencies in bothcountries provide grain inspection services.

GOVERNMENT POLICIES AFFECTING GRAIN QUALITY

As discussed in previous chapters, govern- program, premiums and discounts are estab-ment policies on agriculture play a major role lished for major grains, but as discussed earlierin determining the importance of quality in the the level of the premiums and discounts hasmarket. These policies differ considerably not reflected market conditions since the 1960s.among the grain exporting countries. The most In addition, economic analysis clearly showsimportant policies affecting quality include that the price signals of the loan program fa-price policy and farm storage (table 10-5). vor yield over quality (see ch. 9). At the other

extreme, the Argentine Government providesPrice Policy a minimum price and establishes premiums for

high-quality grain. The grain industry of Ar-Price policy and the signals it sends through gentina produces and conditions grain for the

the market vary among the exporters. At one best quality grade. Brazil, France, Canada, andextreme is the United States. Through its loan Australia also have Government price policies

Table 10.5.—Comparison of Government Policies Affecting Grain Quality of Major Grain-Exporting Countries——

Policy United States

Price . . . . . . . . . . . . Loan rate IS principalprice policy, Includespremiums and discountsfor major grains but hasnot been responsive tomarket conditions.

F a r m S t o r a g e Farm policy in past de-cade has encouraged ex-tensive on-farm storageand Inter-year storage

SOURCE Office of Technology Assessment, 1989

Argentina

Government establishesminimum prices for farm-ers and exporters, Gov-ernment also establishespremiums for high-qualitygrain.

Government policythrough pricing doesencourage on-farminter-year storage

notor

.——Brazil

Government establishesa minimum price prior toplanting. It is adjustedduring the crop year toaccount for inflation andpolitical pressure.

No Incentive for farmersto store on farm.

France

Key policy is EuropeanCommunity interventionprice, which includespremiums and discountsfor quality factors. Lowerqualities of wheat equat-ed to feed values.

Farm policy through theCommon AgriculturalPolicy (CAP) has not en-couraged development ofextensive on-farm stor-age. Also relatively limit-ed Inter-year storage dueto CAP.

Canada

Initial producer price i sthe principal price policy.Separate pr ices estab-lished for each grade ofgrain. Lower qualities ofwheat equated to feedvalues.

Producer deliveries ‘areregulated to primary ele-vators v ia quotas. On-farm storage is substan-tial.

Australia

Guaranteed minimumprice (GMP) is key pricepolicy. It is establishedby class and providesdifferentials for quality.Lower qualities of wheatequated to feed values

Use of GMP provides noIncentive for delivery inpost-harvest period, lead-ing to minimal use of on-farm storage.

246

that include quality incentives for the grain in-dustry.

Farm Storage

Government policies also influence theamount of on-farm storage. Most countries donot have policies that encourage on-farm stor-age and/or inter-year storage. The exceptions—Canada and the United States—do have incen-tives for such storage. But there are differences.Canada establishes quotas to regulate farmer

deliveries to primary elevators. On-farm stor-age therefore is a requirement. However, grainis moved through the system during the market-ing year. In contrast, the United States has en-couraged extensive on-farm storage through theloan program and farmers’ reserve. In addition,it is unusual to market the entire crop in anyone year. Indeed, it is more common for grainto be stored on-farm for more than a year, cre-ating more potential for quality problems todevelop.

COMPARISON OF U.S. INSTITUTIONS, POLICIES, ANDTECHNOLOGIES WITH THOSE OF OTHER

GRAIN-EXPORTING COUNTRIES

This final section focuses on the major differ-ences between the U.S. grain system and thatof other countries. No one system is ideal. Onlyby understanding how the U.S. system com-pares with other exporters is it possible to be-gin considering potential changes here to en-hance quality.

As noted, from a technological standpointfew differences exist among the countries. Themajor differences revolve around exporters’ in-stitutions and policies regarding grain qualitywhich influence how these technologies areapplied.

Policy

The United States has a farm price policy thataffects grain quality in at least two ways: it pro-vides economic incentive for yield v. quality,and it provides economic incentive for on-farmstorage. This stands in contrast to other coun-tries. As indicated in chapter 9, premiums anddiscounts are not reflective of market condi-tions. Even with price differentials, the eco-nomic incentive is for yield, and low-qualitygrain moves into government loan storageprogram.

On-farm storage is a unique characteristic ofthe U.S. and Canadian systems. The other coun-

tries do not provide incentives for on-farm stor-age. This allows grain to enter the market chan-nel with a better likelihood that it will behandled and stored with a minimum of qualitydeterioration. In fact, Australia has built its en-tire system around the concept of controllingthe grain as soon as possible off the farm tomaintain quality. However, another distin-guishing characteristic of the U.S. system is thatgrain has the potential for carry-over from oneyear to the next, sometimes for as long as 3 to4 years. Other countries do not have the stor-age capacity for such carry-over. This forcesthe marketing of most grain within a year ofproduction and nearly eliminates any problemregarding quality with inter-year storage.

Institutions

The U.S. grain system has three major institu-tional characteristics regarding quality:

1. lack of a seed variety development and re-lease program,

2. lack of a variety identification mechanism,and

3. no minimum receival standards for grain.

These major, fundamental differences fromother grain-exporting countries have a consid-erable influence on quality.

247

Seed Variety Developmentand Release

Chapter 6 discussed in detail the plant breed-ing programs for corn, soybeans, and wheat inthe public and private sector of the UnitedStates. There is at best a loose mechanism forthe development and release of new varieties.Committees, particularly at land-grant schools,can evaluate new varieties. But there is no Stateor Federal involvement in any formal way. Gov-ernment basically gives no formal signal as tothe criteria for release. The signal comes in-directly through the price support program,which emphasizes yield and the agronomiccharacteristics to achieve higher yields. In con-trast, Governments of other countries have for-mal input into the criteria for development andrelease and they formally approve new vari-eties. Quality is a major criteria they considerin the release of new varieties, at least for wheat,

Variety Identification

In some countries, mainly France and Aus-tralia, not only is variety controlled for use byfarmers but variety is also important as a proxyfor end-use value. An important feature of theFrench marketing system is that variety is oftena contract term. In practice, varieties are speci-fied as either an individual variety, a categoryof varieties, or excluded varieties. Given thatvarieties are in general not usually distinguish-able by visual inspection, various mechanismsare used at the first point of receipt to assurethe integrity of variety specification. First, inmost cases, the cooperative receiving the grainin France has sold the seed to the producer andknows its variety. Second, producers must de-clare the variety at the time of sale via anaffidavit. Third, the buyer can perform a rudi-mentary testing procedure or request an elec-trophoresis test from a laboratory to verify thevariety. By knowing the varieties at the timeof receipt, country elevators are capable of bin-ning by varieties, or categories of varieties, andof selling on that basis. The United States hasno mechanism for variety identification and in-stead relies on grade structure for segregatingquality, which is becoming more difficult as

new varieties, especially of wheat, are not eas-ily distinguishable.

Grain Receival Standards

As noted earlier, the United States is the onlycountry that does not have minimal receivalstandards for grain. Producers can deliver anyquality of grain and it will be accepted withappropriate discounts. Other countries wouldnot allow this. Grain that does not meet theestablished minimum quality may be rejectedat the first point of sale. Keeping low-qualitygrain out of the market channel eliminates mostquality problems at the export elevator and re-duces the opportunity for blending diverse qual-ities. Once low-quality grain is in the systemit is much more difficult to keep it segregatedfrom higher quality grain or to keep it from be-ing blended with such quality grain destinedfor export.

Technologies and Grain-HandlingPractices

The policies and institutional structure of theU.S. grain system provide the framework forvarious grain-handling practices. The technol-ogies for producing and handling are quite sim-ilar everywhere. The main difference is that theUnited States is slightly more efficient in theiruse. Differences do exist, however, as to whenthe technologies are used in the marketingchannel,

A case in point is cleaning. Most countriesexcept the United States clean grain at the firstpoint of receipt. Canada and Australia are twoexceptions, but for different reasons. Canada,however, is studying the economic feasibilityof cleaning grain in the country versus at ex-port and will probably change. Australia doesnot clean because unlike in the United States,the farmers deliver grain that does not need tobe cleaned. Basically, no economic incentiveexists to clean grain at the first point of receiptin the United States.

The other major handling practice in whichthe United States differs from all other ex-

. . - . — — - - - - . - —-

248

porters is blending. Blending of grain over widemargins of quality to create a uniform productfor sale is necessitated by the lack of any mini-mum receival standards. Blending does existelsewhere, but not to the same extent. Blend-ing in other countries is done over narrowranges in quality. These countries basicallyhave a uniform quality moving through the sys-tem at any point in time. The U.S. system lacks

uniformity in quality throughout the marketchannel. When grain reaches export, blendingis used in an attempt to produce a uniform qual-ity meeting the buyer’s specifications. The OTAsurvey of foreign and domestic buyers of U.S.grain clearly indicated that lack of uniformitybetween shipments is buyers’ biggest complaint(see ch. 4).

. .

Chapter 11

Policy Options for

and Dimensions

CONTENTS

PageProblems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .251

Fundamental Advantages of the U.S. Marketing System . ..............251Problem Areas .. ... .,...... . . . . . ., . . ...:..... . . . . . . . . . . . . . 252

Policy Options . . . . . . . . . . . . . . . .. . ..... .. .. .. .254Market Solutions and Regulations. .. .. . ~ . . . . . . . . . . . . . . ..............254Interdependence of the Grain System . . . . . . . . . . . . . . . . ..............256Fundamental Policy Alternatives, . . . . . . . . . . . . . . . . . . . . . . . . . ........ .257

Summary and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .267

F i g u r eFigure Page11-1.

Table11-1,

Components of the Interdependent Grain System . .................256

Fundamental Policy

TablePage

Al te rna t ives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

.- . . ---

Chapter 11

Policy Options forEnhancing Grain Quality

Grain quality is influenced by numeroushighly interdependent features of the U.S. grainmarketing system, including variety develop-ment, production, handling, and merchandis-ing. Trade throughout the system is facilitatedby a set of grain standards, and those involvedin the market channel respond to incentives anddisincentives established for quality character-istics. Much of the policy debate on U.S. grainquality has focused on grain standards, but theyare only one of many policy and regulatoryalternatives that influence quality. Quality mustbe thus viewed as part of an integrated system

focused on delivering the optimum quality foreach domestic and foreign user. The inter-dependence of the system means that more pol-icy alternatives exist than are traditionally con-sidered and that changes in any one part of thesystem will have impacts elsewhere.

The first section of this chapter on policyalternatives briefly describes the problems iden-tified during this assessment. The second sec-tion discusses the interdependence of the grainsystem, and identifies a number of policy alter-natives and their implications.

The system for marketing grain in the UnitedStates has a number of important characteris-tics that affect quality. The handling (includ-ing export) and transport industries are highlycompetitive, with relatively limited governmentintervention. One important principle through-out the system is decisionmaker sovereignty:Producers plant varieties that are perceived tobe in their best interest; users (domestic andimporters) specify and purchase qualities, givena range of alternatives and prices, that are intheir interest; handlers and exporters conditionand move grain in their own interest. Each de-cision assumes the sovereignty of the individ-ual decisionmaker and is based on incentivesand disincentives reflected in market premiumsand discounts for quality characteristics.

fundamental Advantages of theU.S. Marketing System

In comparing the grain systems of other ex-porting countries (see ch. 10), several fun-damental advantages of the U.S. marketing sys-tem are clear in addition to those discussed inchapter 2. At the risk of simplification and withthe intent of being general, five broad advan-

tages are identified that encompass severalothers.

1. Efficiency

The U.S. marketing system performs a num-ber of complex functions—assembling, han-dling, conditioning, and allocating differentqualities to domestic buyers in many locationsfor export from a multitude of ports. Indeed,the quantity of grain produced, the many differ-ences in qualities produced at different loca-tions, and wide-ranging locations of end-usersand ports all mean that the U.S. marketing sys-tem is more complex and performs more chal-lenging functions than the systems of any otherexporter. Yet the grain handling and transportsystem is more efficient than that of nearly allother countries. Efficiency is used here in thecontext of cost (or inputs used) in performingthe necessary marketing activities. Efficiencyand competition assure lower marketing mar-gins and higher prices to producers.

20 Productivity Growth

Plant breeding in the United States is rela-tively unfettered, compared with other coun-

251

252

tries, in terms of regulations over variety de-velopment and release. Success of a variety isultimately determined by the market for seedstocks. Producers make choices in response tomarket incentives. Where comparisons are ap-propriate (e.g., in wheat), productivity growthas measured by yield exceeds that of most otherexporting countries, with the exception ofFrance. Productivity differences are affectedby a multitude of factors including environ-ment, soils, other inputs, relative prices, insti-tutions, and policies. Thus it is impossible toattribute yield differences to the institutionalenvironment affecting varieties, but growthrates are influenced by variety release pro-cedures.

3. A Wide Range of Qualities

Compared with other countries, a widerrange of intrinsic qualities is available in theUnited States, particularly for wheat. This isobvious given the class differences in wheat,which are facilitated by production regions ofdiffering environments and soils. There is alsoa wider range of physical and sanitary qualityin the United States. Although this is an advan-tage in that more alternatives are available tobuyers, some at lower costs, it maybe viewedas a disadvantage in the sense that “reputation”is affected. The uniformity problem discussedlater in this chapter is a direct result of the mul-titude of qualities available. In addition, giventhe lack of controls in the system, the multi-tude of qualities requires expertise on the partof importers if they are to fully benefit fromthe wide range.

4. Grading and Inspection System

The grading and inspection system in theUnited States provides grade determination byan independent government agency (i.e., onenot having financial stakes in the transaction).The factors and limits in factors in the gradestandards are relatively stable across cropyears—e.g., No. 2 corn does not change fromyear to year. Similarly, the definition of No. 2Hard Red Winter wheat does not change in thegrain standards, although intrinsic differencesnot measured in the standards may change.

This is not necessarily the case in exports fromother countries. Major changes cannot be im-plemented in less than a year after they are man-dated. Some other exporting countries adjustfactor limits with each crop year.

5. Market-Determined Premiumsand Discounts

In all countries, premiums and discountsand/or regulations are used to provide qualityincentives to market participants. Those in theUnited States act through the interaction of thesupply and demand for measurable quality char-acteristics, i.e., the market for quality charac-teristics. Consequently, values of quality char-acteristics in the United States perhaps reflectthe true values better than do the premiums anddiscounts administered by government agen-cies of several other exporters, with the nota-ble exception of France. Efficient determina-tion of these price differentials is importantbecause these essentially allocate grain acrossend-users and provide signals throughout theproduction and marketing system. Throughthese differentials the system responds to needsof the market.

This assessment identified a number of im-portant general problem areas that must be con-sidered when discussing policy alternatives.

Genetics and Variety Release

An inverse genetic relation often exists be-tween yield and important intrinsic qualitycharacteristics in each of the major grains. Inthe case of wheat, this relationship is well rec-ognized between yields and protein quantity,and a similar situation exists in corn and soy-beans. Breeding programs generally aim to im-prove yield and disease resistance and satisfyapparently desirable intrinsic quality goals. Inthe case of corn, breeders have always soughtto increase yield and improve harvestability,with intrinsic quality not being a priority. Inmany cases yield is emphasized because intrin-sic quality characteristics, though important,

253

are not measured in the market. Incentivestherefore are not transmitted through the mar-ket as readily as those associated with agro-nomic characteristics such as yield, disease re-sistance, and harvestability.

Individual breeders or their institutions ex-ercise tremendous discretion regarding releaseof varieties, However, this discretion is tem-pered by the market system, which determinesthe success of any release. Market efficiencyrequires measurement of relevant intrinsicquality characteristics, which is absent in manycases. For example, a variety with lower yieldbut an improved intrinsic characteristic (e.g.,bake test) that cannot be measured in the mar-keting system would fail to survive in the seedmarket. Current variety release procedures arenot applied uniformly across States (or firms,in the case of private breeding) or over time.No effective national policy on variety releaseassures uniformity in application of release cri-teria. In the case of wheat, in which publicbreeding is more important, the State Agricul-tural Experiment Stations maintain variety re-lease procedures that are in turn guided by theExperiment Station Committee on Organiza-tion and Policy. Individual States may and dovary from this policy. Ultimately a particularclass of wheat, corn, or soybeans produced indifferent parts of the Nation may differ in in-trinsic quality.

Grain Standards

The current U.S. grain standards have fourimportant limitations:

1. they create incentives for practices incon-sistent with good management and effi-ciency;

2. they fail to identify many of the character-istics related to value in use;

3. they fail to reward producers and handlersfor improved drying, harvesting, handling,and variety selection; and

4. grade limitations on many factors are arbi-trary, do not always reflect real differencesin value, and in some cases are not con-sistent with statistical principles.

No standard can be perfect, and any revisionsmust consider trade-offs. To move toward anideal system, changes in grain standards shouldfocus on grade-determining factors, non-grade-determining factors, and definition and meas-urement technology for official criteria. (Eachof these, as well as their interrelationship, isdescribed inch. 8.) Such a system would entailminimal interference yet allow for improvedefficiency in the market.

Buyers’ Attitudes Toward Quality

As part of this assessment an extensive sur-vey was conducted of grain buyers’ attitudestoward quality, grain standards, and merchan-dising practices. Several general findings areimportant. First, all buyers, but particularlythose outside the United States, indicated thatuniformity between shipments was a problem(i.e., uniformity in intrinsic quality). As proc-essing technologies become more sophisticated,uniformity will become more important. Sec-ond, in the case of wheat, nearly half the for-eign buyers relied on imports because of theinadequate quality of domestically producedwheat; wheat from all other exporters was pre-ferred at equal prices to similar types of U.S.wheat. Third, buyers thought that the standardsfor wheat, corn, and soybeans were inadequateand did not accurately describe the underlyingshipment. Fourth, no one set of quality attrib-utes meets the demands for each product of thegrain system.

U.S. Farm Policy

Two important features of U.S. farm policieshave an impact on several aspects of quality.Because of the inverse relation between yieldand intrinsic quality, the target price programin wheat (and to a lesser, or less identifiable,extent in feed grains) has a negative long-termimpact on intrinsic quality in conjunction withprice differentials less than those of the mar-ket. As the target price typically exceeds themarket price, farmers have an incentive to ex-pand yields. Impacts vary by grain and region,depending on the extent of the inverse relationbetween yield and intrinsic quality. The effecthad been exacerbated by previous farm bills

.

254

that used different methods of determiningyield. The total impact in the case of wheat hasbeen to force market premiums for wheat pro-tein to relatively high levels in order to neu-tralize producers’ decisions.

Administration of the loan rate program alsohas an impact on intrinsic quality, as well ason physical and sanitary quality. In particular,the market for measurable quality characteris-tics is distorted because premiums and dis-counts on forfeited grains, particularly wheat,are less than those determined in the market.Poorer quality grain is put under storage, andmarket differentials are depressed.

Changing Role of Demand

The international wheat market is more dif-ferentiated today than at any time in the past25 years, a reflection of the divergent natureof end use and the intensity of exporter com-petition. Unique preferences were identifiedin the OTA survey across types of wheat, sug-gesting homogenization would be counterpro-ductive. In general, demand has shifted towardhigher protein and soft wheats. An importantrelated problem in international wheat compe-tition is that the market premium for protein

has increased substantially in recent years. Thishas caused a number of difficulties in the mar-keting system (due to measurement and uni-formity problems), and has affected inter-national competition. Specialization andsophistication in corn and soybean processinghave also opened new markets with more ex-acting quality requirements.

Competitors’ Policies

Major differences exist in the institutions, pol-icies, and trading practices in other grain ex-porters marketing systems. The extent of mar-ket intervention varies from highly regulatedthroughout (e.g., Australia and Canada) to par-tial or no regulation. Differences also exist inprocedures for variety development and re-lease, the use of variety identification in themarketing system, and the use of grain receivalstandards. In addition, a number of countriesaddress grain quality problems as part of theireffective agricultural policy variables. At leastfor wheat exporters, the quality at first pointof sale is more extensively controlled than inthe United States. The wheat from these coun-tries is now probably preferred over U.S.wheats at the same price due to these mech-anisms.

POLICY OPTIONS

A number of policy alternatives are availableto address these problems. Their overall pur-pose is to create a policy environment that en-hances grain quality. As discussed, the U.S.grain production and marketing system ishighly interdependent, and policies focused onany one sector affect other sectors to differingextents. This section analyzes a number of spe-cific policy alternatives in the context of theinterdependence of the system. Alternativescan range from regulation to reliance on themarket.

Market Solutions and Regulations

A properly functioning market system cansolve many of the apparent problems in qual-

ity. To do so, however, appropriate informationmust be provided so that relevant incentivesand disincentives can develop. A fundamen-tal policy alternative is to create an environ-ment that would improve the ability of the mar-ket to identify and allocate grains of differingqualities to the highest value use.

The market for different quality characteris-tics drives the multitude of individual decisionsthat affect quality from seed to end use.Through the market for quality characteristics,price differentials develop that provide incen-tives and disincentives for participants through-out the system. An important aspect of this mar-ket is that premiums and discounts, andtherefore incentives and disincentives, develop

255

for important measured characteristics. Bar-gaining and contracting for quality specifica-tions occurs throughout the system, explicitlyor implicitly, between buyers and sellers.Premiums and discounts are built into con-tracts, reflecting marginal valuations of the par-ticipants, and limits are frequently includedbeyond which the shipment would be unaccept-able. Thus, fairly fluid implicit markets (i.e.,premiums and discounts) exist for character-istics such as protein quantity in wheat;damaged kernels, dockage, moisture and bro-ken corn/foreign material in corn; and damagedkernels in soybeans. These reflect market-determined values of these characteristics. Lessis known about other unmeasured quality char-acteristics (intrinsic or otherwise), and the mar-ket is not necessarily capable of reflecting endvalues in underlying prices.

The important point is how the market works,through premiums and discounts, and that itworks efficiently only for easily “measurable”(and verifiable) characteristics. This poses thefundamental problem in that not all items ofimportance in end use are easily measurablein the marketing system. In fact, as discussed,few intrinsic characteristics are included in thestandards. Instead, proxies are often used thatare less than precise. Domestic buyers can makepurchases by location, or by region, an alter-native not easily exercised by foreign buyers.The problem is lessened somewhat to the ex-tent that variety release procedures use qual-ity tests that are important but that are not usedin the marketing system.

An alternative to market solutions would beto impose regulations, which could very wellsolve many of the perceived quality problems.But regulations impose costs on the system,which due to the competitiveness of the mar-keting system are passed back to producers inthe form of lower prices and/or to users in theform of higher prices. Higher costs associatedwith regulation would not be absorbed by thehandling system. In other words, regulationsimpose costs on the system that buyers maybeunwilling or unable to pay for in the form ofhigher prices. Wheat cleaning provides a clas-sic example: To impose regulations across all

participants in a marketing system such as thatin the United States would violate the impor-tant principle that market participants canspecify the cleanliness they want. Regulationstherefore control the process and limit the rangeof qualities available, in contrast to a marketwhere “anything goes” if buyer and seller agree.

Although all buyers may prefer a particularcharacteristic, all may not value it sufficientlyto absorb the higher cost. Consider wheat dock-age, for example. On the supply side, cleanerwheat can be produced and exported, as inother countries, by imposing regulations. End-users all prefer cleaner wheat but their res-ervation values—or willingness to pay—differ.Wheat millers in the United Kingdom, for in-stance, may have a high reservation value forclean wheat because they have to pay a Varia-ble Import Levy on dockage equal to that ofwheat. Or buyers with high per-ton transportcosts or the need for extended storage (the costsof which increase with dockage levels) wouldhave high reservation values for clean wheat.On the other hand, wheat importers with lowtransport costs and/or high resale prices for in-ternal feed grains (an alternative use for wheatcleanings) would have low reservation valuesfor clean wheat. In a competitive market, thedistribution and allocation of the measuredcharacteristic can easily be illustrated. Eachbuyer would have alternative contract speci-fications reflecting individual marginal reser-vation values. Buyers would specify contractlimits by appropriately evaluating their valueswith the price differentials in the market.

Imposing a regulation on a quality level forall shipments has two general implications,First, the limit would have to be imposed onall shipments to preclude buyers with low res-ervation values from downgrading their speci-fications. Second, the result would be a higheroverall price level, unless the cost were ab-sorbed by lower producer prices, and somebuyers with low reservation values would beexcluded from the market.

One of the overall purposes of quality cer-tification is to facilitate trade and to assurebuyers of quality. Indeed, U.S. grain standards

- -.

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provide measures of physical quality and tosome extent information to facilitate trade onthose dimensions of quality. But, as noted, thequality of some grains regarding some intrin-sic and sanitary characteristics is not neces-sarily resolved in the grain standards. Buyers’true preferences are for intrinsic characteris-tics such as loaf volume (bake test), farinographmeasures in wheat, and oil and meal contentin soybeans. None of these is measured in themarketing system for technical and institutionalreasons. True performance cannot be assesseduntil after the purchase, and in many cases un-til use. As a result, buyers make purchases basedon expectations of intrinsic quality that reflectreputation. Thus, it would be desirable to havea low variance with respect to these immeas-urable intrinsic characteristics—resulting inmore reliable expectations.

Information with respect to these qualitycharacteristics is one-sided: Typically the sellerhas more information about quality than thebuyer does at the point of negotiation. As anexample, producers know the variety at the timeof sale, but it is not revealed. Handlers knowthe extent or components of the blend, or theextent of conditioning, and this information isnot revealed either.

This level of informational uncertainty pro-vides an economic justification in general forsellers to provide certificates of quality. The roleof certification is to reduce uncertainty forbuyers, and therefore to facilitate trade. Tradi-tionally certification via the grain standards islargely on physical, and somewhat on sanitary,characteristics. However, this is not the casewith respect to important intrinsic character-istics. Thus one of the purposes of certificationis elimination of uncertainty about quality, notonly physical, but also sanitary and intrinsic.Accurate and relevant information thereforeallows buyers to make purchases without con-ducting extensive testing, which would reduceliquidity of the market. As a result trade is facili-tated, and transaction costs are reduced. Oneof the mechanisms to reduce this informationaluncertainty is the grain standards. Others in-clude controls earlier in the grain productionsystem, such as variety release criteria. The

impetus of these controls in a number of othercountries is to reduce quality uncertainty indimensions not easily measured by standards.

Interdependence of theGrain System

The interdependence in the production andmarketing system with respect to quality is il-lustrated in figure 11-1. This triad could beviewed as a three-legged stool, with each leghaving an impact on quality as well as on theoverall system. Producers make varietal andagronomic decisions in response to incentives.These, as noted, are also influenced by farm

Figure 11-1.-Components of the InterdependentGrain System

I . Plant breeders’ objectives I● Release criteria and

procedures

Market for quality characteristics

● Producers– Variety selection– Cultural practices, harvesting, handling– Farm programs

● Handlers and merchants– Condition and handle– Contract/trade

● End-users– Foreign competition– Domestic production– Products produced

SOURCE: Office of Technology Assessment, 19S9

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programs. The demand for characteristics isinfluenced by end-use needs and foreign com-petition. Merchants and handlers procure, han-dle, condition, and blend to meet contract speci-fications. In addition, they make offers on whatthey can sell, and at what price differentials,based on the availability of quality character-istics and their conditioning capabilities. Eachof these activities are influenced by the incen-tives established in the market, by trading rules,and by grain standards. Blending to the factorlimits specified in the standards is one exam-ple of this interaction.

Fundamental Policy Alternatives

The interdependence of variety development,the market for quality characteristics, and grainstandards must be recognized in the evaluationof policy alternatives with the objective of amore integrated relationship between policies.A number of other exporting countries havemore integrated and better coordinated policiesthan those of the United States. In fact, theUnited States has made no effort to coordinateand/or integrate policies affecting these activi-ties. Policy interventions could be focused onany of the components of the system, but assess-ment of their effectiveness must include im-pacts elsewhere in the system. Any policy ongrain standards, for example, will affect vari-ety development and the efficiency of the mar-ket for quality characteristics. Similarly, anypolicy affecting the market (e.g., incentives) willhave an impact on variety development andgrain standards. The inability to measure in-trinsic characteristics in grain standards hasimplications for policies affecting the marketand variety development.

Policy cannot affect numerous phenomenathat influence quality, such as weather, and anumber of policies are short-run and only treatsymptoms of the problem. The policies devel-oped here aim to affect underlying causes ofthe problem, which over the long term will re-sult in improved quality. They are limited tothe three general categories of variety controls,market intervention, and grain standards (seetable 11-1). The policy alternatives have beennarrowed to these three to focus on those thatappear to be most logical and likely to be effec-tive in the long run. Only selected alternativesare presented in each category; in reality, a con-tinuum of alternatives is likely, rather than hav-ing discrete choices as shown in the table.

Just as there is an interdependence in the sys-tem, the policy alternatives must interact. Con-trols over variety identification and release im-prove the efficiency of the market, and havethe potential to act as a surrogate for intrinsicmeasures in grain standards. If variety releasewere controlled, there would be less of a needto measure intrinsic performance in the grainstandards. Instituting incentives can also actas a surrogate for control of both intrinsicand/or physical and sanitary quality character-istics. In addition, depending on application,instituting incentives can indirectly spur vari-ety development. By the same token, policiesapplied to grain standards affect both the mar-ket and variety development. Should intrinsicquality characteristics be measured in the grainstandards, the market would establish incen-tives, which would be transmitted to produc-ers and to variety development. If such char-acteristics are not measured, alternativemechanisms should be used. As mentioned, in

Table 11-1 .—Fundamental Policy Alternatives

Variety controls Market intervention Grain standards

No change Marketing board Mandatory USGSA inspection

Variety identification) Export bonus Single agency to approve testingcategorization No change in loan policy Mandatory USGSA inspection in conjunction

Variety licensing Increased differentials in government with NIST equipment approval

policies

Minimum quality specifications forfarmer loans

SOURCE: Office of Technology Assessment, 1989

258

most other exporting countries, the policiesacross these three sectors are coordinated andviewed systematically.

Variety Controls

Three important considerations lead to thepolicy alternatives listed under variety controls.First, with few exceptions grain standards donot measure important intrinsic characteristics.Second, intrinsic quality differs significantlyacross some varieties. Third, varieties are notvisually distinguishable, thus segregation in themarket system is precluded, resulting in in-creased uncertainty about quality. These threepoints apply to some extent to each of thegrains, though their relevance—and thus theattractiveness of each alternative—varies. Theclassic case is that of wheat, in which perform-ance varies across varieties and increasinglyit is becoming difficult to differentiate wheatsin the marketing system. In some of these casesit may be easier to identify variety, or groupsof varieties, than intrinsic characteristics. Fur-ther, identity of a variety provides more com-prehensive quality information than any sub-set of measured quality characteristics. To someextent, domestic processors attempt to resolveproblems of varietal differences by purchasingby location or region. But foreign buyers, orany buyers using purely grade specifications,are precluded from this option.

No Change.—Five main effects of leaving thevariety control system unchanged can be iden-tified:

●

●

Continued lack of uniformity in intrinsicquality characteristics among States/re-gions/shipments. In the current systemwith only informal, uncoordinated varietyrelease criteria, many basic characteristicsvary among varieties, These characteris-tics lose their identity in a market incapa-ble of measuring end-use characteristics.As a result there are important intrinsicquality differences across regions of thecountry that are not detected in the mar-keting system.Problems elsewhere in the system due tothe inability to measure intrinsic quality.

●

●

●

In particular, greater pressure would beplaced on grain standards to measure in-trinsic quality within the marketing system.Continued lack of information on intrin-sic quality in some grains, and thus of cur-rent inefficiencies in the market.Productivity growth facilitated to a greaterextent by having complete freedom on va-riety release and selection.Buyers seeking consistent intrinsic prop-erties purchasing from exporters with lessdiversity.

With no change from the current system ofadministering variety release, the pressure ongrain standards to introduce measures of in-trinsic quality would increase. Other countriesuse variety identification and release proce-dures in part to reduce pressure on the grainstandards to measure intrinsic quality. Alter-natively, by incorporating intrinsic quality intofarm program policies (discussed later in thischapter), at least some incentive to improve in-trinsic quality could be built into the system.

Variety Identification and Categorization.—Any sort of variety identification or controlscheme would pose administrative challenges.One alternative would be to provide a mecha-nism (which does not currently exist) in whichvarieties can be identified in the market sys-tem, as done in other exporting countries. Theseconsist of affidavit systems, random testingusing electrophoresis, and categorization. Pro-ducers would declare the variety at the pointof first sale or loan application. This would pro-vide information to handlers on segregationbased on categories of the grain, or groups ofvarieties. Categories would be developed ac-cording to end-use similarity, and could becomepart of the grain standards.

Alternatively, variety or groups of varietiescould become part of the contract governingthe transaction, as in France. The number ofcategories established would vary by grain, de-pending on the three considerations discussedearlier, and the end-use specificity. Thus, forexample, if there were only one end use andthe varieties did not vary sufficiently with re-spect to intrinsic quality, only one category

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would be necessary. On the other hand, forwheat with intrinsic differences across varietiesand a multitude of end uses, there would bea larger number of categories. The intent herewould be to formalize a mechanism not dissimi-lar from the current system of classification forwheat. The difference, however, is that the cur-rent system relies on visual distinguishability,and categorization is based on fairly imprecisecriteria.

The implications of such a categorization sys-tem include:

●

●

●

●

An increase in information (by category ofvarieties), thus increasing the efficiency ofthe market in its allocative role. For mostgrains, variety is a better indicator of qual-ity than are selected tests for quality. Thusbuyers’ information regarding quality wouldbe improved.Improved signals transmitted to produc-ers, breeders, and end-users through amore efficient market.A complex administrative program, espe-cially given the large number of varietiescurrently grown in the United States.Administration would be further compli-cated by the fact that intrinsic quality de-pends not only on variety, but also on loca-tion and climatic factors.More complex contract specifications. Theinformational requirements, particularlyof foreign buyers, for contract specifica-tion would increase. Depending on the ex-tent of categorization, however, this com-plexity could be reduced.

Introduction of a variety identificationscheme would result in incentives and disin-centives being readily associated with varietieshaving desired/undesired intrinsic character-istics. In addition, it would reduce pressure onthe grain standards to measure intrinsic per-formance in the marketing system, as categori-zation of varieties would serve that function.

Variety Licensing.—A more restrictive ap-proach would be to institute a variety licens-ing scheme. Varieties would be subjected to cri-teria administered at a national level for releaseinto the market system. Licensing takes vari-

ous forms in different exporting countries, fromquite restrictive, as in Canada and Australia,to fairly neutral, such as the system in France.The intent of each though is to provide somemechanism that assures certain intrinsic char-acteristics (given that they cannot be easily de-tected in the market system) and to apply uni-form criteria throughout the country, i.e., toreduce uncertainty of intrinsic characteristicsthrough uniform application of release criteria.The program would require procedures simi-lar to those of the variety identification systemjust described above. In addition, some criteriawould have to be established for categorization(i.e., to license varieties by end use), and foradministration.

Five effects of such a system can be identified:

1.

2.

3.

4.

5.

increased uniformity, and an increase inthe ability to control intrinsic quality;a formal mechanism for categorizationrelative to a simple variety identificationscheme;depending on administration, a feeling ofrestrictions on productivity growth, al-though this is not necessarily the case, e.g.,in France;difficulty in administration, with complexenforcement, bureaucracy, and cumber-some implementation; andlicenses by location, due to differences inquality, and by end use.

A stricter variety licensing system would havesimilar impacts on interdependence discussedunder the preceding alternative policy. In par-ticular, licenses could act as surrogate grainstandards for intrinsic characteristics.

Market Intervention

Marketing Board.—Central to the U.S. sys-tem is the market in which prices are estab-lished. Embedded in this market, and all prices,are premiums and discounts for measurablecharacteristics that serve to allocate grainacross different users. In addition, these qual-ity characteristics provide the incentives anddisincentives for participants throughout themarketing system. Several other countries ac-complish this by some form of board control.

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Thus, one alternative in the United States wouldbe to establish a marketing board system to re-solve quality problems. The emphasis of the dis-cussion here is on the implications of such asystem for quality and the coordination of pol-icies on quality. Other effects of a marketingboard are more far-reaching (e.g., bargainingpower, resource allocation, impacts on non-board grains, and impacts on physical coordi-nation) and are not discussed. The major im-plications of a board with respect to quality are:

● Coordination of the many aspects of theproduction and marketing system that havean impact on quality.

● Improved quality to the extent that onlytwo transactions—one between producerand board, and another between board andbuyer–would take place in the marketingsystem. This is in contrast to the multitudeof current transactions, all requiring meas-urement of quality.

• More subjective and judgmental adminis-tration of price differentials, since trans-actions would take place without an activemarket. Market determination of pricedifferentials is an important advantage ofthe current U.S. system.

● High cost, given the complexity andbreadth of the U.S. marketing system.Countries that already have boards oper-ate in relatively simple logistical systems,and cover few grains. As either of theseincrease, as they do in the United States,the problems associated with bureaucraticallocation of decisions intensifies.

● Loss of the highly efficient U.S. grain han-dling and distribution system that stems,in part, from the competitive environment.

A board system could reduce the emphasison grain standards at the point of export, andfor that matter throughout the system, if suffi-cient controls were imposed early in the sys-tem to resolve grain quality problems, therebyreducing the importance of quality measure-ment at the point of export. In addition, vari-ety release procedures could be easily admin-istered in a board system. Incentives could beadministered rather than relying on market de-termination.

Overall, however, the costs of introducing aboard system in the United States would likelyoutweigh the benefits of quality improvements.

Export Bonus.—An alternative policy wouldbe to establish a bonus payable to exporters whodeliver quality superior to contract specifica-tions. This policy is discussed as being appliedat the point of export, but it could be appliedelsewhere in the marketing system. The majorimplications of this approach are:

●

●

●

●

●

Immediate results, especially if the pro-gram were tied to a physical or sanitaryquality characteristic. However, longevityshould be a concern, in that if terminated,the effects would not likely last.Administrative questions. First, whichquality characteristic(s) should be tied tothe bonus—physical, sanitary, or intrinsic?Quality would improve on whatever char-acteristic the bonus were applied to. De-pending on the length of the program, how-ever, the bonus would likely not influenceintrinsic quality. Second, should the bonusbe applied at the point of export, or thepoint of origin?The cost of administration, and/or a directoutlay, to finance the program.A risk that importers may manipulate thesystem by specifying a lower grade, in or-der to receive the same grade they tradi-tionally purchase, but at a lower price.An increase in perception of quality, or ofattention to the issue.

An export bonus program, by definition,would be oriented to the merchants and han-dlers in the system. It would provide incentivesfor them to improve the quality of particularattributes or particular shipments to which thebonus were applied. Due to competition withinthe industry, any benefits would be distributedto appropriate decisionmakers so as to provideincentives. Given that more information wouldnot be provided to the market, and that infor-mation uncertainty would not be reduced, theefficiency of the market would not be improved.Breeders’ objectives and release criteria wouldbe affected only to the extent that the bonuseswere applied to intrinsic characteristics, and

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to the extent they were applied over very ex-tended time periods.

No Change in Loan Policy.—The currentadministration of the policy on loan forfeituresand Commodity Credit Corporation (CCC) grainstorage policies could remain the same (see ch.9). The fundamental problem is that price dif-ferentials for loan forfeitures and transactionson CCC-owned grain are substantially less thanthose in the market. Implications of no changefrom the current status are:

● A distorted market for quality character-istics. The loan and CCC storage practiceswould continue to support the price oflower quality grains. In addition, the in-trinsic, physical, and sanitary quality ofU.S. grain would be unchanged.

● Grain under extended storage, whichwould potentially deteriorate more than ifgrain of superior physical and sanitaryquality were stored.

● Growers isolated from the market, whichmasks the incentives for improving qual-ity.

In general, the market today is distorted inthe allocation between storage and commercialsales, with superior-quality grain going to thelatter. Since the program does not effectivelydistinguish intrinsic quality, loan rate disincen-tives do not transmit signals to producers. Thus,a major impact of not changing the policywould be to increase the role and function ofgrain standards in measuring quality.

natively, farm policy could take the lead byproviding price differentials at least equal tomarket differentials, to provide incentivesthroughout the system.

As discussed in chapter 9, CCC administersprograms for handling and storing CCC-ownedgrain. Different rules are applied to country andterminal elevators. CCC requires that terminalelevators deliver the quality that is representedby the warehouse receipts, and it discounts in-dividual railcars. CCC does not pay terminalelevators for overdeliveries in quality. This isnot the case for country elevators, which arenot subject to the same rejection rules if thequality delivered is inferior to the warehousereceipts and which receive payment for over-deliveries.

One of the few ways to legislate incentivesinto the system, particularly for intrinsic qual-ity, is via the price differentials for loan forfei-tures and transactions involving CCC-ownedgrain. This alternative consists of loan-associ-ated price differentials greater than or, alter-natively, equal to the market. They could be ap-plied as currently done, on grades, or could usespecific physical and sanitary quality criteria.A simple example would be a 4 cents/bushelprice differential for clean wheat (i.e., less than0.5 percent dockage). In addition, measures ofintrinsic quality (e.g., falling number in wheat,oil content in soybeans, protein content in corn)could be incorporated, as they are in othercountries.

Increased Differentials in Government Pol-icies.—In a number of other countries quality The implications would be as follows:

problems are addressed as a matter of agricul- ●

tural policy. These take the form of incentivesby using regulations and substantial premiumsand discounts for quality deviations. Realign-ing the incentive system via farm policy ad-dresses one component of the system, i.e., themarket for quality characteristics. That mar-ket already exists and develops premiums and ●

discounts. But it is distorted somewhat byadministration of the farm program. Thus, thispolicy alternative could be seen as merely elim-inating a distortion, which would allow themarket to function more efficiently. Alter- ●

A greater impact on wheat than othergrains, because the relationship betweenmarket prices and loan values varies acrossgrains and because participation ratesvary. In addition, the impact itself wouldvary, due to the loan being effective onlyperiodically.Grain of lower value being forced onto themarket, as opposed to going into the loanprogram, as it currently does. This impliesalso that the loan program would supportprices of higher quality grains.An increase in the amount of grain going

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●

●

●

●

into alternative uses, with lower end value.The most vivid example is wheat feeding.Incentives for intrinsic quality relativelyeasily incorporated into the loan program(more easily, that is, than measuring themin the marketing system).The development of a mechanism formeasuring quality of grain going underloan, perhaps through samples submittedby farmers.Difficult administration of optimum pricedifferentials. This is especially true giventhe large number of markets in the UnitedStates, and given that—at least in the past—loans have to be announced long beforecrop quality is realized.Country elevators forced to become moreconcerned with maintaining quality. Also,CCC would be guaranteed that the qualityof grain received into the country elevatorwould be delivered out of the elevator. Thischange in policy would relieve the pres-sure of maintaining discount schedulesthat reflect the market in that CCC wouldnot accept quality below that called for bywarehouse receipts.

This particular alternative addresses the mar-ket for quality characteristics and provides in-centives in an important market for somegrains. Such a change could have a number ofsystemwide benefits. First, to the extent thatintrinsic characteristics are used, variety de-velopment would be favorably affected. Signalsfrom this important market would be directlytransmitted to breeders and would affect theirobjectives and release criteria. Thus it wouldprovide somewhat of a surrogate for varietycontrol. Second, there would be somewhat re-duced pressure to measure intrinsic quality ingrain standards. In the extreme of a proactivefarm policy, together with variety identifica-tion/licensing, the role and function of grainstandards could to some extent become one ofmeasuring only physical and sanitary qualitycharacteristics.

Minimum Quality Specifications for Loans. —Many countries have minimal receival stand-ards on grain entering the marketing system.

Normally grain marketing is integrally relatedto prices and policies (e.g., initial payments) andtherefore it is difficult to isolate physical mar-keting from pricing. As developed here, mini-mum quality specifications would be appliedto grain entering the loan program as opposedto when it entered the marketing system. Theglobal application of minimum quality speci-fications to the U.S. marketing system wouldbe next to impossible to implement since amajority of grain under loan is stored on farms.

The concept of setting minimum quality spec-ifications for loans is similar to the option justdiscussed except that a constraint, rather thana price incentive, is being used for entry intothe loan program. Minimum quality specifica-tions could be applied to physical characteris-tics (e.g., minimal dockage) or intrinsic char-acteristics (e.g., variety, protein, falling number,oil, or meal protein).

Under this policy alternative, the potentialexists that grain not meeting specificationswould be diverted to the export market or alower valued market. One way to help mini-mize diversion to the export market would beto use whatever quality specification has beenestablished for government programs as a ba-sis for rejecting grain going into an export ele-vator. This would have the added benefit of re-ducing the spread of qualities available forblending within the export elevator; however,blending of wide ranges in quality would stilloccur in country/terminal facilities. As dis-cussed in the next section of this chapter, man-datory inbound inspection into export eleva-tors could serve as the basis for rejecting oraccepting grain.

The first five implications of increased dif-ferentials in government policies would alsoapply to this alternative. Other implications are:

●

●

Minimum quality specifications, whichwould be difficult to establish and main-tain in the current political environment.Desirable quality characteristics incorpo-rated in the loan program. These could alsobe characteristics not easily measured inthe marketing system.

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● Depending on the minimum quality speci-fications (physical, sanitary, intrinsic, orvariety), a requirement for farmers to cer-tify the variety planted or take samples ofstored grain for testing as directed by theU.S. Department of Agriculture (USDA).

Use of minimum quality specifications couldalso solve or contribute to the resolution of prob-lems elsewhere in the system. Desirable vari-eties or intrinsic characteristics, if used, wouldtransmit signals to breeders, influencing theirobjectives and release criteria. In addition, tosome extent, the role and function of grainstandards in measuring intrinsic quality in themarketing system could be reduced.

Grain Standards

The United States Grain Standards Act(USGSA), states that it is Congress’ intent topromote the marketing of high-quality grain toboth domestic and foreign buyers and that theprimary objective for grain standards is to cer-tify grain quality as accurately as practicable.Embedded in this policy are four basic objec-tives for grain standards:

1. to define uniform and accepted descrip-tive terms to facilitate trade,

2. to provide information to aid in determin-ing grain storability,

3. to offer users of such standards the bestpossible information from which to deter-mine end-product yield and quality, and

4. to provide the framework necessary formarkets to establish grain quality improve-ment incentives.

Chapter 8 assessed the ability of the grainstandards to meet these objectives. In severalareas the current standards fall short. However,an ideal grain standard that encompasses allfour objectives may be difficult to achieve, andtrade-offs between objectives may be necessary.The criteria for standards laid out in chapter8 in terms of the number of grades and whatshould constitute grade-determining, non-grade-determining, and official criteria providea framework for incorporating the four objec-tives into grain standards.

The grain standards, if modified along theselines, would facilitate trade by providing alimited number of grades and grade-determin-ing factors. Incorporating some factors as non-grade-determining or even official criteria al-lows the market to set values for these factorsthat will send signals throughout the system forquality improvement, if warranted. To a limiteddegree, this structure will provide informationimportant to end-users, who will establish thelimits that best suit their needs. Until new tech-nology is developed for measuring intrinsicquality and several sanitary quality attributes,however, the standards cannot begin to reflectmany of the objectives.

To comply with the objective of certifyinggrain quality as accurately as practicable, theUSGSA provided several legislated mandates.First, it authorizes the Federal Grain Inspec-tion Service (FGIS) Administrator to establish,amend, or revoke standards whenever theirusage by the trade may warrant or permit. Sec-ond, whenever standards are in effect, thestandard must be used to describe the grain be-ing sold in interstate or foreign commerce.Third, the FGIS Administrator is authorized toprovide for a national inspection system. Fi-nally, whenever standards are in effect, thegrain must be inspected by FGIS as it is beingexported from the United States. As pointedout in chapter 8, even though the standardsmust be used to describe grain being sold over-seas, no requirement exists for inspecting grainmoving in domestic markets. Therefore graincan move domestically without inspection and,when inspected, can be checked by FGIS or aFGIS-licensed inspector, private inspectioncompanies, individuals employed by a grain-handling facility, or individuals licensed by theWarehouse Division of USDA’s AgriculturalStabilization and Conservation Service.

Several important ramifications for grainquality result from this policy. Since no singleagency is responsible for testing grain accord-ing to the standards or any other set of speci-fications, no agency is responsible for devel-oping the equipment and procedures used tosample and measure these factors or for over-

264

seeing the equipment, methods, and accuracyof results. For the market to properly assesspremiums and discounts for quality character-istics, testing results for these attributes mustbe measured as accurately and consistently asmeasurement technology will allow. End-usersrely on accurate measurement of importantquality characteristics in purchasing and pro-duction decisions, and inaccurate results canlead to quality complaints and product yieldand quality below expectations. (Ch. 8 describesthe integral components for developing, main-taining, and standardizing testing procedures,and discusses testing accuracy and sources fortesting errors.)

Since the grain standards serve as the basisfor marketing grain and providing informationon important quality characteristics to all users,the factors selected for measurement by thestandards are important. Even more importantis the way they are measured and the consis-tency of measurement. As new tests are addedto the standards, there is no requirement thatthe testing technology developed and approvedby FGIS as the basis for the standard must beused to measure the attribute.

In other instances, no requirement exists forhow samples will be obtained, who will per-form the tests, or even whether any test con-tained in the standard will be performed. Chap-ter 8 identifies problems associated with ob-taining samples and the impact on accuracyof the type of equipment and amounts obtained.With regard to obtaining inspection, the recentinclusion in the wheat standard of the Food andDrug Administration (FDA) defect action limitof 32 insect-damaged kernels per 100 grams ofwheat restricts the amount of insect-damagedkernels in the various grades to a level that coin-cides with the FDA limits. This change hascaused a decrease in the number of requestsfor inspection under the USGSA because manyshipments exceed the FDA defect action limitand FGIS must report any such cases to FDA.Therefore, the change has not provided FDAwith the information it requires to act on suchshipments, and wheat that exceeds the limitsis still handled to some degree as it was beforethe change.

In addition, the USGSA allows FGIS to usedelegated and designated agencies to performinspections on its behalf. Designated agenciesare independent businesses that rely on feesgenerated by performing inspections. Sincedesignated agencies perform inspection serv-ices on request, the potential exists for theseagencies to perform less than accurate inspec-tions because of the need to keep their custom-ers satisfied. This places USDA-approved agen-cies in the same position as independent,nongovernment businesses whose sole aim isto satisfy the paying customer.

Other potential conflicts arise from not speci-fying how the standards will be implemented.Since inspections on domestic grain shipmentsare performed on request, they can also be dis-missed. The potential impact on grain qualityis that a request can be dismissed and the grainshipped if it is discovered during the courseof the inspection that the quality is not up tospecification. For example, if sour grain isfound and reported to the elevator manager dur-ing the sampling of a barge being loaded, theelevator manager can dismiss the inspectionrequest. If the sales contract calls for an “offi-cial grade, ” the manager can call for the bargeto be sampled at rest. In this instance, the por-tion of sour grain that was previously discov-ered during loading will be commingled in thebarge and probably not found during sampling.

Several policy alternatives exist for develop-ing a program to reduce the potential for test-ing inaccuracies and provide consistently ac-curate results—mandatory USGSA inspectionon domestic grain moving in interstate com-merce, the creation of a single agency to ap-prove and oversee testing equipment and pro-cedures, or a combination of these twoapproaches.

Mandatory USGSA Inspection.—As noted,FGIS establishes standards, which includes de-veloping technology to measure the factors con-tained in the standard. The agency also de-velops and publishes sampling and inspectionprocedures, evaluates and approves equipmentfor use during inspection, monitors inspectionaccuracy of its employees and licensed inspec-

-. . .

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tors, and periodically tests sampling and inspec-tion equipment for accuracy. Therefore, a basicstructure is in place for approving and over-seeing all equipment and procedures used formeasuring grain quality characteristics.

. .At one time mandatory inspection was re-

quired on all grain moving in interstatecommerce. This provision was deleted from theUSGSA by Congress in the late 1960s becauseof the difficulties in enforcing it on truck ship-ments. It was at that time that the provisionrequiring the use of the standards for merchan-dising grain was included in the USGSA.

The implications of requiring mandatory in-spection on interstate grain shipments, includ-ing adoption of the best possible sampling tech-nology, are as follows:

●

●

●

●

●

●

a reinforcement of the policy that stand-ards must be used to describe grain beingbought and sold and that the factors cov-ered by standards are tested using ap-proved equipment and procedures as thebasis for the test;consistency in test results in that identicalprocedures are used for each inspectionin the marketplace and are performed byindependent government-sponsoredagencies;primary responsibility for grain qualitymeasurement focused on one governmentagency;use of the existing basic frameworkthrough the delegated and designated agen-cies who already own approved equipmentand have trained employees that use FGIS-published procedures;applicability to railcar and barge shipmentsonly, as the ability of delegated and desig-nated agencies to cover the wide areas re-quired to meet the needs of country eleva-tors receiving trucks is severely limited;andincreased costs associated with obtaininginspection on grain that would otherwisenot need to be inspected (i.e., grain mov-ing from one facility to another owned bythe same company).

Single Agency to Approve Testing.—As dis-cussed in chapter 8, the National Bureau ofStandards (renamed the National Institute ofStandards and Technology* (NIST)), throughthe National Conference of Weights and Meas-ures, standardizes weights and measures by de-veloping specifications for instrument preci-sion and accuracy along with scale tolerances,and maintains national standards. Currently,NIST addresses neither grain measures otherthan weights nor sampling equipment. In someinstances, individual States have taken it uponthemselves to develop criteria for approving in-spection equipment and monitor the equipmentaccuracy. (Moisture meters and mechanicaltruck probes are prime examples.) In addition,the grain-industry-sponsored Grain QualityWorkshops recommended that NIST take thelead in developing and overseeing moisture me-ter calibrations.

NIST, in consultation with FGIS, could takethe lead in developing and maintaining equip-ment specifications and maintenance toler-ances. These actions could be in conjunctionwith FGIS developing new tests to be includedin the standards. NIST approval could be thebasis for approving equipment (including sam-pling equipment) for use by FGIS when per-forming inspections and could be administeredby the individual States for testing not per-formed under the USGSA. Many States cur-rently have agencies responsible for grain-handling facilities (country as well as terminalelevators) within their jurisdiction. And severalStates have already established procedures forapproving and testing moisture meters andsampling devices. The basic framework is inplace for establishing a central body to approveand oversee the equipment used in conjunctionwith grain quality testing.

The need for standardized testing proceduresfor sampling devices, moisture meters, and nearinfrared reflectance (NIR) equipment is appar-ent. As more uses for NIR and other sophisti-cated tests are found to provide important qual-

*The National Bureau of Standards was recently renamed theNational Institute of Standards and Technology (NIST) with thepassage of the Omnibus Trade and Competitiveness Act of 1988(Public Law 100-418) as of August 1988.

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ity information to buyers and sellers, the needfor standardized testing will become more crit-ical, especially on farmer-owned grain at thecountry elevator level.

The implications of giving NIST responsibil-ity for approving and overseeing inspectionequipment are:

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Standardized equipment to measure grainquality attributes that could be traced backto national standards. Variations in test-ing results introduced by a wide range ofequipment accuracies is reduced.Use of only approved equipment to pro-vide testing results, with NIST oversightto ensure accurate testing.Use of the existing basic framework. NISTalready has established approval proce-dures, publishes user requirements, and en-forces its provisions through State organi-zations.Placing responsibility for approving graintesting equipment in an agency that doesnot have a vested interest in the equip-ment’s use.An inability to cover tests that are subjec-tive in nature, such as odor, wheat class-ing, and determination of damaged kernels.A lack of experience in basing a nationalstandardization program on reference meth-ods that are defined rather than proven.Increased costs for those that have to dis-pose of unapproved testing equipment andpurchase approved equipment.Avoidance of the issues of who will use theequipment and when it will be used.

Mandatory USGSA Inspection in ConjunctionWith NIST Equipment Approval.--A policy thatrequires mandatory USGSA inspection ongrain moving in interstate commerce and abroadening of NIST involvement into grainsampling and testing equipment captures theadvantages of the last two options while mini-mizing many of the disadvantages.

The advantages of mandatory inspection onrailcars and barges moving in interstatecommerce ensures that consistent samplingand testing is performed on both subjective aswell as objective factors and that one agency

is responsible for grain testing as well as stand-ards development. The inability to performUSGSA testing on trucks and at country eleva-tors can be compensated for to some extent byinvolving NIST and its related support systemsin the grain-testing area. Even though USGSA inspection would not be performed, thosegroups that do perform testing would be re-quired to use approved equipment and to fol-low the user requirements spelled out in theNIST approval. This would be the same require-ments that USGSA inspectors follow, sinceFGIS would also be using NIST-approvedequipment and user guidelines.

This policy alternative allows country eleva-tors to continue to perform their own tests ongrain received from the farmer, thus reducingthe potential increase in costs associated withmandatory USGSA inspection. But it wouldcreate more uniform testing since anyone per-forming grain quality testing will be requiredto use NIST-approved equipment and followpublished user requirements. Coupled with theNIST State support systems already in placeto oversee equipment accuracy and ensure thatuser requirements are followed, NIST involve-ment would provide oversight in areas not pre-viously subjected to it.

Interactions Between Standards,Variety Control, and MarketIntervention

The policy alternatives outlined in the vari-ety control section address intrinsic qualitycharacteristics, since physical and sanitaryquality cannot be addressed through such pro-grams. The policy choices discussed in the mar-ket intervention section can address the easilymeasurable factors for physical and sanitaryquality, and can be expanded to deal with in-trinsic quality attributes once technology is de-veloped to measure them in the marketplace.Each section cited examples of the expectedimpacts on grain quality and standards.

In both the variety control and market inter-vention sections, an option for no change inpresent policies has been provided. Such an ap-proach places the responsibility for physical,

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sanitary, and intrinsic quality solely on grainstandards. For the physical and many of thesanitary quality concerns, relying on the grainstandards is a relatively simple matter that doesnot involve the adoption of new technology. Itinvolves taking existing factors and applyingthe criteria developed in chapter 8. Several fac-tors could be combined (as is the case of for-eign material and dockage in wheat, as manyhave suggested, as either grade-determining ornon-grade-determining) or factors could be sep-arated (as is the case with broken kernels andforeign material in corn) to describe qualitymore accurately. In addition to rearrangingexisting factors into grade-determining, non-grade-determining, or official criteria, fixed per-centages could be established for certain fac-tors that transcend all grades (e.g., maximumlevel of dockage in wheat or maximum mois-ture levels in corn and soybeans). Limits forcurrent factors (e.g., live insects or stones) couldalso be tightened.

Making no change to variety control systemsor market intervention has a dramatic impacton the grain standards, however, in that theymust be able to address the buyer’s desire forinformation on important intrinsic character-istics and take the lead in establishing the sig-nals regarding quality for the entire system.Presently, technology to easily measure intrin-sic attributes in the marketplace is not avail-able. If the standards are to be the vehicle forproviding information on intrinsic and manynew sanitary quality characteristics (e.g., pes-ticide residue), resources must be provided todevelop the technologies needed to accuratelyand easily measure them before the market canrespond. It will take years to research and de-velop new tests that could be put on-line be-

fore signals begin to be transmitted backthrough the system.

In addition to identifying what factors thestandards should measure and whether factorsare grade-determining, non-grade-determining,or official criteria, the way the standards areimplemented can also have a dramatic impacton grain quality. One of the major problems fac-ing the United States in terms of grain quality—whether physical, sanitary, or intrinsic—is thatall grain, no matter the quality, is accepted intothe system and marketed. This places enormousstrain on the system’s handling and inspectioncapabilities and is the cause for most of theblending controversies. Adding new tests to thestandards or applying the criteria developedin chapter 8, including limiting the number ofgrades, will not resolve the problems associ-ated with blending extremely high-quality withextremely low-quality grain.

As discussed in chapter 8, limiting the spreadbetween grades will reduce the opportunity forblending. On the surface this appears to be aviable option. But the expected impacts fromsuch a change assume that the grades beingtraded will remain the same. If the spread be-tween grades is reduced and the trading gradesare lowered, the opportunity for blending willremain the same. Even removing factors frombeing considered grade-determining does notin and of itself remove the incentive for blend-ing. An example of this is provided by the re-cent change whereby moisture was removedas a grade-determining factor, forcing limits tobe established in contracts. The change has notremoved the incentive for blending wet and drygrain in order to meet contract specifications.

SUMMARY AND CONCLUSIONS

The U.S. production and marketing systemis a highly interdependent system of activities.Any policy designed to enhance grain quality(physical, sanitary, or intrinsic) must addressthis interdependence. Traditional policy dis-cussions, however, have focused on only one

component—grain standards. But a properlyfunctioning market can solve many of the grainquality problems. Therefore, a fundamental pol-icy alternative would be one that creates anenvironment that would improve market effi-ciency. In addition, appropriate quality infor-

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mation must be provided so that relevant in-centives and disincentives can be establishedto improve market efficiency.

Just as there is system interdependence, thereis interdependence of policy alternatives. Con-trolling variety release, for example, could im-prove market efficiency and act as a surrogatefor intrinsic quality measurement. This reducesthe impact of forcing grain standards to meas-ure intrinsic quality characteristics in order toprovide incentives. Market incentives can reg-ulate physical, sanitary, and easily measurableintrinsic quality characteristics. The market canprovide incentives in variety developmentwhile policies applied to grain standards affectboth the market and variety development.

Given the interdependence of the system, pol-icy could be focused on any one component.However, if grain quality is truly a result of thetotal system, then the success of policy changesto any one component must be assessed interms of this interdependence. If existing pol-icies for variety control and/or market inter-vention remain unchanged, the entire respon-sibility for improving quality will be placed ongrain standards. For contrast, policy changesto variety control will improve the informationfor intrinsic quality characteristics needed bythe market and reduce the need for grain stand-ards to shoulder the entire burden.

Policy alternatives for enhancing grain qual-ity have been divided into three general cate-gories for the purpose of this assessment—variety controls, market intervention, and grainstandards. One possible policy path that max-imizes the strengths of the various options aswell as minimizes their weaknesses is to adoptvariety identification/categorization, increasethe differentials in loan policy and specify min-imum quality for farm loans, and introducemandatory USGSA inspection in conjunctionwith NIST equipment approval.

Introducing a variety identification schemewould improve information on intrinsic qual-ity characteristics, thus reducing the pressureon grain standards to measure intrinsic per-formance in the market. For most grains, vari-ety is a better indicator of quality than are

selected tests. The increased information re-sulting from variety identification would raisethe efficiency of the market, resulting in incen-tives/disincentives being transmitted to produc-ers, breeders, handlers, and end-users. Varietyidentification alone, however, does not addressphysical or sanitary quality concerns, so theseconcerns must be addressed by other areas.

Removing the distortion created by the cur-rent administration of premiums and discountsfor loan forfeitures and applying the same rulesto country and terminal elevators storing gov-ernment grain would allow the market—whichhas already established premiums and dis-counts—to function properly. Grain of lowervalue would be forced onto the market as op-posed to entering government programs. To theextent that intrinsic quality characteristics areincluded, variety development would be af-fected. Signals from government programs,directly transmitted to farmers, would affecttheir decisions on varieties planted, thus influ-encing breeders’ objectives and release criteria.

Setting minimum quality specifications forloans places an additional constraint on entryinto the loan program. These could easily beapplied to physical and sanitary quality char-acteristics as well as measurable intrinsic char-acteristics and, along with the variety identifi-cation scheme, would reinforce signals beingtransmitted throughout the system. Farmerswould be required to obtain testing of grain thatwas in the loan program and being stored onfarm, rather than self-certifying quality as ispresently the case.

Implementing such policies on governmentprograms and minimum quality specificationswill force lower quality grain into the exportmarket. Therefore, minimum quality specifica-tions established for entry into government pro-grams could be applied to grain entering ex-port elevators. This would transmit signals forimproved quality throughout the system andwould reduce the spread of qualities availablefor blending at export locations.

The need for accurate measurement of im-portant characteristics—whether physical, sani-tary, or intrinsic—is crucial to providing infor-

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mation for the market to function properly. Thevehicle by which quality information is trans-mitted throughout the system is grain stand-ards. Incentives and disincentives cannot beestablished unless accurate, consistent, andtimely information is provided in the market.This can be accomplished by continued effortsto incorporate the four objectives of grain stand-ards, by implementing mandatory inspection,and by increasing NIST involvement in approv-ing grain sampling and testing equipment.

Mandatory inspection of railcars and bargeswould ensure that consistent sampling and test-ing is performed. Used in conjunction withminimum quality specifications on grain en-tering export elevators, this would ensure thatone government agency is responsible for qual-ity testing. The increased presence of NIST in

approving grain sampling and testing equip-ment would ensure that all parties testing grainquality use approved equipment and followbasic user requirements.

As discussed throughout this chapter, the in-terdependence between variety control, mar-ket intervention, and grain standards is com-plex. Grain quality is a function of the varietyplanted, farmer practices, environment andgeographic location, handling practices, end-user preferences, marketing, government pol-icies, and the ability of grain standards to pro-vide information on important quality charac-teristics, Policy changes, therefore, must createan integrated policy for enhancing grain qual-ity. Potential conflicts, overlapping benefits,and limitations of certain policy options mustbe recognized and addressed.

Appe.dlxes

— —

Appendix A

Glossary of Acronyms

AMA —Agricultural Marketing ActASCS —Agricultural Stabilization and Conser-

vation Service (USDA)ASW —Australian Standard White wheatBCFM —broken corn and foreign materialCCC —Commodity Credit CorporationCIF —cost, insurance, and freightCSRS —Cooperative State Research ServiceCWRS —Canadian Western Red Spring wheatcwt –hundredweightDNA –deoxyribonucleic acidD/T –diverter-typeEC —European CommunityELISA —enzyme-linked immunosorbent assayESCOP —Experiment Station Committee on

PolicyFAQ –fair average qualityFDA –Food and Drug Administration (PHS,

DHHS)FDCA —Food, Drug and Cosmetic ActFGIS —Federal Grain Inspection Service

(USDA)FOB —free on boardGAFTA —Grain and Feed Trade Association

(UK)

HRS —Hard Red Spring wheatHRW —Hard Red Winter wheatNAEGA—North American Export Grain Associ-

ation Inc.NIRS —near-infrared reflectance spectroscopyNIST —National Institute of Standards and

Technology (Department ofCommerce)

OSHA –Occupational Safety and Health Ad-ministration (Department of Labor)

OTA —Office of Technology Assessment(U.S. Congress)

PVRC —Plant Variety Review Committee(University of Illinois)

SAES —State Agricultural Experiment StationSMV —soybean mosaic virusSRW —Soft Red Winter wheatSWQAC—Spring Wheat Quality Advisory Com-

mitteeUGSA —Uniform Grain Storage AgreementUSDA —U.S. Department of AgricultureUSGSA —U.S. Grain Standards ActU.S.S.R.—Union of Soviet Socialist RepublicsVRC —Variety Release Committee

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Appendix B

Glossary of Terms

Adulterated grain: According to the Food, Drug andCosmetic Act, grain is deemed to be adulteratedif it contains an added or naturally occurring poi-sonous or deleterious substance that may renderit injurious to health (e.g., aflatoxin-contaminatedcorn).

Aeration: The passage of air over or through grainto control the adverse effects of excessive mois-ture, temperature, and humidity. This is usuallydone by moving air with fans or through ducts.

Aflatoxins: Any of several mycotoxins that areproduced, especially in corn or oil seeds, by molds(e.g. aspergillus flavus).

Agronomy: A branch of agriculture dealing withfield crop production and soil management.

Allele: One of several possible alternate forms ofa given gene.

Amino acid: A group of 20 molecules that bind to-gether to form proteins. Each type of protein ismade up of a specific sequence of amino acidscoded for in the DNA.

Amylase: Any of the enzymes that accelerate thehydrolysis of starch and glycogen.

Amylopectin: A component of starch characterizedby its heavy molecular weight, its branched struc-ture of glucose units, and its tendency not to gelin aqueous solutions. The starch of normal cornis made up of amylopectin and amylose.

Amylose: A component of starch characterized byits straight chains of glucose units and the ten-dency of its aqueous solutions to set to a stiff gel,The starch of normal corn is made up ofamylopectin and amylose.

Backcross: The crossing of a first-generation hybridwith either parent.

Bin-dryers: On-farm dryers that are generally low-capacity, low-temperature systems, capable ofproducing excellent quality grain.

Biochemistry: A branch of chemistry that deals withthe chemical compounds and processes occur-ring in living organisms,

Biotechnology: Techniques that use living organ-isms or substances to make or modify a product.See genetic engineering and recombinant DNA.

Blending: For purposes of this assessment, blend-ing refers to the mixing of two or more grain lotsto establish an overall quality that may or maynot be different from any one individual lot.Blending is done for economic reasons, to achieveuniformity for improved handling, or to meet aparticular quality specification.

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Broken corn and foreign material (BCFM): Any ma-terial passing through a 12/64 inch sieve, plusnon-corn material remaining on top,

Bromus Secalinus (cheat): Any of several grasses,especially the common chess. This weed is a ma-jor problem for winter wheat producers in thecentral Plains.

Callus: Unorganized tissue formed from organizedplant tissue.

Carbohydrate: Any of various neutral compoundsof carbon, hydrogen, and oxygen (such as sugars,starches, and cellulose) most of which are formedby green plants.

Chromosome: A thread-like structure contained inthe nucleus of a cell that carries the genes thatconvey hereditary characteristics.

Cleaning: For purposes of this assessment, clean-ing is the removal of dockage, insects, and to adegree shrunken and broken kernels from grainby means of mechanical screening and scalpingdevices, Cleaning practices vary from country tocountry. See precleaning.

Combination dryers: On-farm dryers, mainly usedfor corn, that combine the best characteristics ofbin and non-bin systems (i.e., high quality andhigh capacity), but are more complicated and ex-pensive.

Combine: A machine that harvests grain. The firstcombine was patented in 1836, since then self-propelled combines of either conventional orrotary design have evolved and come into usethroughout the United States and in othercountries.

Concurrent-flow dryers: Off-farm commercialdryers in which grain and air flow vertically. Thegentle drying and cooling methods used in thesedryers results in grain of superior quality, Theirmain disadvantage is their high initial cost.

Corn: The seed of a cereal grass and the only im-portant cereal plant indigenous to America. Cornis used mainly for animal feed, but it is also usedfor oils, starches, and syrups for human consump-tion, and in some industrial products. It is grownextensively in the United States, the six Corn BeltStates are Iowa, Illinois, Indiana, Nebraska, Min-nesota, and Ohio.

Cotyledon: The seed leaf of an embryo plant thatserves as nourishment for the elementary plant.

Crossflow dryers: The most prevalent type of off-farm commercial grain dryers in the UnitedStates, in which grain and air flow in a perpen-

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dicular direction. This type of dryer tends to drythe grain non-uniformly, causing stress-crackingof the kernels.

Cross-pollination: The transfer of pollen from oneplant to another plant.

Cultivar: An international term denoting certaincultivated plants that are clearly distinguishablefrom others by one or more characteristics, andthat when reproduced retain those distinguish-ing characteristics. In the United States “variety”is considered to be synonymous with cultivar (de-rived from cultivated variety). See variety,

Cytoplasm: The protoplasm of a cell outside the nu-cleus consisting of an aqueous solution, whichis the site of most of the chemical activity of thecell.

Deficiency payments: Payments to farmers basedon actual planted acres, which makeup the differ-ence between a politically acceptable target price,and the average market price or loan rate, which-ever is higher.

Determination: The process whereby the corn ker-nel is broken apart into endosperm, germ, andpericarp.

Deoxyribonucleic acid (DNA): The nucleic acid inchromosomes that codes for genetic information.The molecule is double stranded, with an exter-nal “backbone” formed by a chain of alternatingphosphate and sugar (deoxyribose) units and aninternal ladder-like structure formed by nucleo-tide base-pairs held together by hydrogen bonds.

Dockage: The foreign material in market grain (suchas stems, weeds, and dirt), which is readily remov-able by ordinary cleaning devices.

Drying: For purposes of this assessment, drying isthe removal of moisture from grain by variousmethods in both commercial and on-farm dryers.Air temperature, grain velocity, and airflow rateduring the drying process have a greater influ-ence on grain quality than all the other grain han-dling operations combined.

Dry milling: The basic process used to mill wheatand corn, involving the cleaning, conditioning,grinding, and sifting of the grain.

Electrophoresis: A technique used to separatemolecules (such as DNA fragments or proteins)from a mixture of similar molecules. By passingan electric current through a medium contain-ing the mixture each type of molecule travelsthrough the medium at a rate corresponding toits electric charge and size. Separation is basedon differences in net electrical charge and in sizeor arrangement of the molecule. This techniquecan be used to identify grain varieties.

Elevator leg: Part of the belt-bucket system used incommercial grain facilities. It consists of an end-less vertical belt with buckets spaced evenly alongit. The buckets scoop up the grain at the bottom(boot) of the leg and discharge it at the top.

Endosperm: A nutritive tissue in seed plants con-tained in the inner bulk of the kernel that con-sists primarily of complex carbohydrates. It alsocontains protein, riboflavin, and B vitamins. Incorn, the quantity of vitreous or horny endospermrelative to floury endosperm in the kernel deter-mines the hardness of the grain.

Environment: The complex of climatic, edaphic,and biotic factors that act upon an organism oran ecological community and determine its formand survival. The environment in which it growsgreatly influences the productivity and quality ofgrain.

Enzyme: Any of a group of catalytic proteins thatare produced by living cells and that mediate andprovide the chemical processes of life withoutthemselves being destroyed or altered.

Enzyme-linked immunosorbent assay (ELISA): Atest that is used to identify proteins and plantpathogens by using antibodies to identify proteinsrapidly. A protein-antibody complex is incubatedwith an enzyme-coupled antibody that recognizesand binds to the protein, The reaction is meas-ured spectrophotometrically to identify the pres-ence of the specific protein that is attached to theantibodies.

European Economic Community (EC): A group oftwelve European nations, consisting of Belgium,the Federal Republic of Germany (West Ger-many), France, Italy, Luxembourg, the Nether-lands, the United Kingdom (UK), Ireland, Den-mark, Greece, Spain, and Portugal that havebanded together for economic and politicalreasons.

Federal Grain Inspection Service (FGIS): A branchof the U.S. Department of Agriculture that estab-lishes grain standards and develops the technol-ogy to measure the factors contained in suchstandards. This agency also develops and pub-lishes sampling and inspection procedures, evalu-ates and approves equipment, monitors inspec-tion accuracy, and oversees mandatory exportinspection of grain by FGIS or FGIS-licensed in-spectors.

Feed grains: Grains, especially corn, characterizedas high-energy grains due to their relatively highlevels of nitrogen-free extract and low levels ofcrude fiber.

Flaking grits: A product of dry-milled hard corn.

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Low-fat, large flaking grits are used primarily inthe manufacture of breakfast food, and coarse andregular grits are used in the brewing industry.

Flour: Finely-ground meal derived from wheat.There are four major flour types, hard wheatflour, whole wheat flour, soft wheat flour, andsemolina. Flour is classif ied according tostrength. Strong flours, derived from hard wheatand used mainly for bread-baking, are high in pro-tein and elastic gluten (these include semolina,which is made from Durum wheat and used tomanufacture pasta). Weak flours, derived fromsoft wheat, are used for biscuits and pastries andare low in protein and gluten.

Flour stream: Flour resulting from each separateprocess of dry milling. Flour from each point ofthe process has different characteristics and bak-ing properties. In large flour mills 30 or moreseparate flour streams of varying compositionand purity may be collected, grouped, and mer-chandised.

Fumigation: For purposes of this assessment, fumi-gation is the destruction of pests infesting grainby professional personnel, trained in the appli-cation of fumigants, i.e., chemicals that at re-quired temperature and pressure can exist in agaseous state in sufficient strength and quanti-ties to be lethal to a given pest organism. Fumi-gants are some of the most toxic and unique pes-ticides, methyl bromide and hydrogen phosphideare the fumigants most commonly used on grain.

Fungus: Any of a major group (fungi) of parasiticlower plants that lack chlorophyll. Fungi includemolds, rusts, mildews, and mushrooms. Asper-gillus flavus is a fungus that grows on corn.

Gene: The portion of a DNA molecule that is madeup of an ordered sequence of nucleotide basesand constitutes the basic functional unit ofheredity.

Genetic engineering: Technologies (including re-combinant DNA methods) used by scientists toisolate genes from one organism, manipulatethem in the laboratory, and then insert them sta-bly in another organism. See biotechnology andrecombinant DNA.

Genome: A term used to refer to all the genetic ma-terial carried by a single germ cell.

Genotype: The hereditary makeup of an individualplant or animal, which, with the environment,controls the individual’s characteristics.

Genotypic variability: The range of expression fora specific trait (e.g., the protein percentage inwheat, which can range from 7 to 30 percent).

Germplasm: The living stuff of the cell nucleus thatdetermines the hereditary properties of organ-

isms and that transmits these properties from par-ents to progeny. The expression is also used ina broad sense to refer to the total hereditarymakeup of organisms.

Gliadin: Simple proteins obtained from alcoholicextraction of gluten from wheat or rye.

Glume: Hull or husk.Gluten: A tenacious, elastic protein substance,

found especially in wheat flour, that gives cohe-siveness to dough.

Grade-determining factors: Factors selected as in-dicators of value and quality that help set the nu-merical grade of grain.

Grading: The numerical grading of grain (e.g., Num-ber 2 Hard Red Winter wheat) according to grade-determining factors.

Grain: The seeds or fruits of various food plants,including the cereal grasses (e.g., wheat, corn,barley, oats, and rye) and other plants in commer-cial and statutory use (e.g., soybeans). Grain isa living organism, and as such is a perishablecommodity that can be adversely affected by im-proper harvesting, handling, storage, and trans-portation.

Grain breakage: Mechanical damage to grain thatresults in broken grain and fine material. This iscaused by the harvesting of grain that is too dryand the cumulative damage inflicted on grain dur-ing repeated handling. Grain breakage causes de-creased quality, greater storage problems, and in-creased rates of mold and insect infestation.

Grain quality: There is no single definition of grainquality. For purposes of this assessment grainquality is defined in terms of the physical, sani-tary, and intrinsic characteristics of grain. Seeintrinsic quality, physical quality, and sanitaryquality.

Grain standards: Legislation (the Grain StandardsAct) was passed in 1916 in an attempt to estab-lish official standards for wheat, corn, and soy-beans that would describe a level of quality andprovide a basis for marketing grain. This Act re-mained intact until the passage of the Grain Qual-ity Improvement Act in 1986, which providednew criteria as a basis for grain standards. Meas-uring grain quality is difficult to standardize andthere is a lack of clear objectives, goals, and cri-teria concerning the form and function of suchstandards.

Grain storage: Grain is stored in three basic ways.Vertically, in upright metal bins or concrete silos;horizontally, in flat warehouses; and in on-groundpiles. See vertical storage, horizontal storage, andon-ground pile storage.

Handling technologies: Technologies and equip-

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ment that are used in the receiving, drying, clean-ing, storage, conveying, and transportation ofgrain.

Hard wheat: Wheat varieties that are high in pro-tein (especially hard spring and winter wheatsand Durum wheat),

Harvesting: The process whereby grains and oilseeds are removed from a plant, gathered, andphysically removed from a field.

Hexaploid: Having six times the monoploid chro-mosome number. Wheat is a hexaploid plantspecies.

Homozygous: True breeding for a specific heredi-tary characteristic. A plant that breeds true fora specific characteristic (such as flower color) iscalled homozygous for this characteristic.

Horizontal storage: Grain storage in buildings con-structed of metal, wood, or concrete, which haveflat floors and are filled by means of a portableincline belt or conveyors in the roof. These stor-age facilities are more difficult to load, unload,aerate, and fumigate than vertical storage fa-cilities.

Hybrid: An offspring of a cross between two genet-ically unlike individual plants or animals. Hybridcorn varieties have produced increased yields insome parts of the United States, and progress isbeing made in developing techniques for the com-mercial production of hybrid wheat,

Incline belt: An endless belt, used to convey grain,which is supported by rollers and driven by ashaft-mounted speed reducer motor.

Insecticides: Chemicals used to destroy insect pests,The insecticides most commonly used on grainare pyrethrins, malathion, and the more recentlyintroduced pirimphos-methyl, chlorpyrifos-methyl,and bacillus thuringiensis (BT).

Insects: Insects create numerous problems causingloss and damage in stored grain. Grain is lostwhen consumed by the insects, insect wastes areleft behind in the grain, and insect fragments arefound in finished grain products, increased heatand moisture resulting from insect metabolicprocesses can lead to mold growth, and the useof insecticides can leave pesticide residues in thegrain.

Intrinsic quality: Characteristics critical to the enduse of grain. These are nonvisual and can onlybe determined by analytical tests. For example,the intrinsic quality of wheat is determined bycharacteristics such as protein, ash, and glutencontent; the intrinsic quality of corn by its starch,protein, and oil content; and the intrinsic qualityof soybeans by their protein and oil content,

Isoglucose: A sweetener and sugar substitute de-rived from wheat starch.

Micro-organisms: Minute, microscopic, or sub-microscopic living organisms Examples are bac-teria, mycoplasma, and viruses, They are para-sites that gain their sustenance from the mate-rial that they grow on, such as grain.

Millfeed: The material remaining after all the usa-ble flour is extracted from grain. The material isused by the feed industry to make animal feedand feed supplements.

Milling: A process by which grain kernel compo-nents are separated either physically or chemi-cally, and grain is ground into flour or meal.

Mixed-flow dryers: The most prevalent type of large,continuous-flow, off-farm dryer used in countriesoutside the United States. In these dryers, grainis dried by a mixture of crossflow, concurrentflow, and counterflow drying processes, whichdry grain more uniformly and produce a higherquality grain. These dryers are expensive to man-ufacture and require extensive air-pollutionequipment,

Moisture: Moisture content and uniformity is a crit-ical factor in grain quality. If grain is too wet ortoo dry at harvest damage occurs. Moisture alsointeracts with temperature and relative humid-ity in grain storage centers and during shipping,when too much moisture can spur mold growth,increase insect activity, and cause other qualitylosses.

Mold: A superficial growth produced on damp ordecaying matter. Molds draw their sustenancefrom the material they grow on. Mold growth ongrain creates damaged kernels, deposits toxic sub-stances in the grain, and results in a loss of drymatter. As they grow, molds produce heat andmoisture, which encourages their further prolif-eration.

Monogastric: An animal that has one digestivecavity (for example, swine, poultry, humans).

Near-infrared reflectance spectroscopy (NIRS): Anew analytical technique that can determine thestructure of compounds and the composition ofsubstances by examining them with a spectro-scope that is designed to operate in the infra-redregion of the spectrum, One application of thistechnique is the measurement of moisture andprotein percentages in wheat. See spectropho-tometer.

Non-bin dryers: The most popular on-farm dryers,these are generally high-capacity, high-tempera-ture systems, that frequently overheat and over-dry the grain, causing serious deterioration ingrain quality.

Non-grade-determining factors: Factors that influ-ence the quality of grain, but which are not takeninto account in the grading of grain, and which

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278

must be reported as information whenever anofficial inspection is made.

Off-farm dryers: High-capacity, high-temperature,commercial grain dryers that are used away fromthe farm. These fall into three categories, cross-flow, concurrent-flow, and mixed-flow dryers.

On-farm dryers: Grain dryers used by farmers todry grain. At least 80 percent of the United Statescorn crop is dried on-farm. On-farm dryers fallinto three categories, bin-dryers, non-bin dryers,and combination dryers.

On-ground pile storage: Storage of grain placed inpiles directly on the ground or on pads, eithercovered by a tarp or left uncovered. Piles can becontained by fixed or movable sloping walls orcircular rings. Grain stored by this method is dif-ficult to load, unload, aerate, and fumigate.

Pericarp: The covering of a seed that is derived fromthe ovary wall.

Physical quality: Grain characteristics associatedwith the outward appearance of the grain kernel,including kernel size, shape, color, moisture,damage, and density.

Plant breeding: The development of plants with cer-tain desirable characteristics. Grain breeding pro-grams generally aim to improve yield and har-vestability, increase disease resistance, andsatisfy apparently desirable intrinsic qualitygoals.

Precleaning: The removal of foreign material suchas weeds, seeds, dirt, stems, and cobs from thegrain before it is dried. This results in a more uni-form moisture content in the dried grain and elim-inates the drying of material that detracts fromgrain quality. Precleaning is not generally prac-ticed by dryer operators in the United States. Seecleaning.

Protein: The total nitrogenous material in plant oranimal substances. Proteins occur naturally andare complex combinations of amino acids.

Recombinant DNA: Techniques involving the incor-poration of DNA fragments, generated with theuse of restriction enzymes, into a suitable hostorganism. The host is then grown in a culture toproduce clones with multiple copies of the incor-porated DNA fragment. This and other geneticengineering techniques hold future promise foraltering the genetic makeup of plants to enhancevarious desirable characteristics, but they are notyet widely used. See biotechnology and geneticengineering.

Rheology: The study of the flow of materials, par-ticularly the plastic flow of solids.

Sanitary quality: Grain characteristics associatedwith cleanliness. They include the presence of

foreign material that detracts from the overallvalue and appearance of the grain, including thepresence of dust, broken grain, rodent excreta,insects, residues, fungal infection, and nonmilla-ble matter.

Screw augur conveyor: A round tube with a contin-uous screw on a spiral inside. The principalmeans of moving grain on farms where inexpen-sive portable equipment is needed.

Sedimentation test: A test that measures the qual-ity of protein content in wheat. Ground wheat issuspended in water and treated with lactic acid.The portion that settles to the bottom of a gradu-ated cylinder within 5 minutes is the sedimen-tary value.

Shrink: The loss of weight in grain due to theremoval of water.

Single-cross hybrid: A first generation hybrid be-tween two selected and usually inbred lines.

Soft wheat: Varieties of wheat that contain lowamounts of protein.

Sorghum: A cultivated plant derived from a genusof Old World tropical grasses, similar to Indiancorn.

Soybeans: A hairy annual Asiatic legume, widelygrown for its oil rich proteinaceous seeds and forforage and soil improvement. Soybeans are usedmainly for oil and for high-protein meal for ani-mal feed. The principal soybean-producing statesare Illinois, Indiana, Iowa, Missouri, Mississippi,and Ohio. The United States produces 60 percentof the world supply of soybeans.

Spectrophotometer: An instrument that measuresthe relative intensities of light in different partsof the spectrum. See near-infrared spectroscopy.

Steepwater: Water used to soak corn during the wetmilling process.

Stress-cracks: Cracks in the horny endosperm ofcorn caused by the rapid drying of kernels withheated air. Stress-cracking causes increasedbreakage during handling and reduces flaking grityields.

Tempering: The addition of moisture to wheat andcorn during the dry milling process to aid theremoval of bran from the endosperm.

Tissue culture: A technique in which portions ofa plant or an animal are grown on artificial cul-ture medium in an organized state (e.g., as plant-lets) or in an unorganized state (e.g., as callus).

Triticale: A hybrid between wheat and rye that hasa high yield and a rich protein content.

Unit trains: A train of 50 or more railcars depart-ing from the same point for the same destinationwith one bill of lading. This is an efficient wayof transporting grain.

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279

U.S. Grain Standards Act: This Act, administeredby the FGIS, requires that uniform standards bedeveloped and used when marketing grain. Test-ing is provided for, but no requirement exists asto what tests should be performed on grain mov-ing domestically within the United States. Man-datory testing of grain for export is required.

Variety: Any of various groups of plants of less thanspecific rank. See cultivar.

Vertical Storage: The storage of grain in upright con-crete silos or metal bins that can range in sizefrom as little as 3,000 bushel farm bins to 500,000bushel commercial bins, They are easy to load,unload, aerate, and fumigate.

Vital wheat gluten: A wheat product containing 75to 80 percent protein, used as a flour fortifier, theproduct of new advances in wheat processingtechnologies.

Wet milling: Processes using water in which cornis tempered and steeped and converted intostarches. More than half of these starches are con-verted into corn syrups and corn sugars. Cornoil is also extracted during starch recovery.

Wheat: Any of various grasses high in gluten thatare cultivated in various temperate areas for thegrain that they yield, which is used in a vast ar-ray of products. In the United States the mainwheat-producing states are Kansas, Oklahoma,Texas, Nebraska, and Colorado. Hard Red Win-ter wheat is the main wheat variety grown in theUnited States,

Wheat starch: The portion of the wheat kernel re-maining after the gluten has been extracted.

—

Appendix

cCommissioned Papers and Authors

This report was possible in part because of the valuable information and analyses contained in thebackground reports commissioned by OTA. These papers were reviewed and critiqued by the advisorypanel, workgroups, and outside reviewers. The papers are available through the National Technical Infor-mation Service. *

The Genetics of Grain Quality Technologies Affecting Quality

Editor/CompilerJack F. Carter

Marvin R. PaulsenUniversity of Illinois

‘North Dakota State University

Hard Red Winter WheatRollin G. Sears Mark D. SchrockKansas State University Kansas State UniversityPaul J. MatternUniversity of Nebraska

Hard Red Spring WheatBert L. D’AppoloniaNorth Dakota State University

Hard Red Spring WheatRichard C. FrohbergNorth Dakota State University

Durum WheatRoy G. CantrellNorth Dakota State University

David B. SauerHarry H. ConverseU.S. Department of AgricultureManhattan, KS

Charles R. HurburghIowa State University

Durum WheatJoel W. Dick Charles R. Hurburgh

North Dakota State University Iowa State UniversitySoft Red Wheat and White Wheat

Patrick L. FinneyU.S. Department of AgricultureWooster, OH

Fred W. Bakker-ArkemaMichigan State University

Howard L. LafeverOhio State University

Molecular Biology Hagen B. GillenwaterKarl A. Lucken Robert DavisNorth Dakota State University U.S. Department of Agriculture

Stephen P. Baenziger Savannah, GA

University of Nebraska

Joe W. BurtonU.S. Department of Agriculture C. Phillip BaumelRaleigh, NC Iowa State University

A. Forrest Troyer Marvin R. PaulsenDeKalb-Pfizer Genetics University of Illinois

280

281

Tilden W. PerryPurdue University

Charles R. HurburghIowa State University

Economic and Institutional Analysis

Quality William W. WilsonJean RiepeNorth Dakota State University

Paul GallagherKansas State University

William W. WilsonCraig AndersonNorth Dakota State University

Paul GallagherKansas State University

Rhond Rudolph RothWashington, DC

Lowell D. HillUniversity of Illinois

Major U.S. Grain Competitors

A

Lowell D. HillUniversity of Illinois

Thomas E. WeidnerConsultant

Robert A. ZortmanU.S. Department of AgricultureMichael J. PhillipsOffice of Technology Assessment

James G. McGrannTexas A&M University

Lowell D. HillUniversity of IllinoisThomas E. WeidnerConsultant

Robert A. ZortmanU.S. Department of AgricultureMary J. SchultzMichigan State University

William W. WilsonNorth Dakota State UniversityLowell D. HillUniversity of Illinois

Robert A. ZortmanU.S. Department of Agriculture

Michael J. PhillipsOffice of Technology AssessmentE. Wesley PetersonTexas A&M University

Colin A. CarterUniversity of California-DavisAndrew SchmitzUniversity of California-BerkeleyDavid M. OrrOffice of Technology AssessmentRobert A. ZortmanU.S. Department of Agriculture

William W. WilsonNorth Dakota State University

David M. OrrOffice of Technology AssessmentRobert A. ZortmanU.S. Department of Agriculture

Michael J. PhillipsOffice of Technology Assessment

*These commissioned papers will be available in spring of 1989 from the National Technical Information Service, Springfield, VA 22161, tele-phone (703) 487-4650.Volume 2: Commissioned PapersPart A: The Genetics of Grain QualityPart B: Technologies Affecting QualityPart C: Economic and Institutional Factors of Grain QualityPart D: Major U.S. Grain Competitors

- —. --- . . . .

Appendix D

AcknowledgmentsOTA would like to thank the members of the advisory panel who helped guide the direction of this

study and who reviewed drafts of this report. OTA also acknowledges the cooperation of the Federal GrainInspection Service of the U.S. Department of Agriculture in providing staff support and data for this study.In addition, OTA thanks the following individuals for reviewing background papers, reviewing individualreport chapters, or providing information to the project staff:

James AllenResearch Products Company

Jim BairU.S. Department of Agriculture

Fred Bakker-ArkemaMichigan State University

Roy BarrettU.S. Department of Agriculture

Ted BownikADM Milling

Lee BoydAmerican Feed Manufacturers

Dean BrownAmerican Farm Bureau Federation

William BullardNational Council of Farmer Cooperatives

Colin CarterUniversity of California-Davis

Jim FrahmU.S. Wheat Associates

David FultonNational Council of Farmer Cooperatives

David GalliartU.S. Department of Agriculture

Kenneth GillesU.S. Department of Agriculture

Kerry GoforthNational Grain and Feed Association

James GuinnAmerican Soybean Association

R.J. GustafsonOhio State University

Larry W. GutekunstDeutz-Allis Corporation

Phil HareinUniversity of Minnesota

Marion HartmanNational Corn Growers Association

Arvid HawkCargill, Inc.

Doris HoenerMoorman Manufacturing Company

James HouckUniversity of Minnesota

Harold HudginsAlabama State Docks Department

T.L. “Sam” IrmenThe Andersons

Gail JacksonU.S. Department of Agriculture

Jack JohnstonCargill, Inc.

Kendall KeithNational Grain and Feed Association

Allen KirleisPurdue University

Tom KlevayMillers National Federation

Rodman KoberContinental Grain Company

George KornstadPestcon Systems, Inc.

David KrejciGrain Elevator and Processing Society

Gerry KruegerNorth American Export Grain Association

John MarshallU.S. Department of Agriculture

Wilda MartinezU.S. Department of Agriculture

Steve McCoyNorth American Exporters Grain Association

Gary W. McKinneyNational Grain Trade Council

Richard McWardBunge Corporation

282

283

Kirk Miller Larry SchultzU.S. Department of Agriculture Peavey Grain Companies

John BarringtonContinental, Inc.

Robert PetersenNational Grain Trade Council

Dale PhillipsUnion Equity

John PitchfordU.S. Department of Agriculture

Adrian J. PolanskyU.S. Wheat Associates

Wilson PondU.S. Department of Agriculture

M.A. PothovenMoorman Manufacturing Company

Dan RagsdaleNational Corn Growers Association

Cletus E. SchertzUniversity of Minnesota

Willard SevernsAmerican Farm Bureau Federation

Henry ShandsU.S. DepartmentBeltsville, MD

of Agriculture

of AgricultureDavid ShipmanU.S. Department

Virgil SmailNational Association of Wheat Growers

James SnitzlerU.S. Department of Agriculture

Max R. SpencerContinental, Inc.

Lyle StephensDeere & Company Technical Center

Winston WilsonU.S. Wheat Associates

Index

Index

Aflatoxin, testing technologies for, 194, 195-196Africa

U.S. wheat exports to, 35wheat consumption and import trends in, 93wheat preference shifts in, 95, 98see also Middle East, individual countries in

Agricultural Market Act (AMA), 197Agricultural Research Service (ARS)–USDA, 119, 127Agricultural Stabilization and Conservation Service

(ASCS)–USDA, 43Allowable Storage Time Table for corn, 180, 183American Association of Cereal Chemists, 191American Feed Manufacturers Association, 62American Oil Chemists’ Society, 191American Seed Trade Association, 127Archway Cookies, Inc., 90Argentina

dominant class of wheat exported by, 91drying practices in, 239, 241export standards used in, 207grain storage practices in, 239, 241pricing policy of, 244seed variety control in, 244

Asgrow Seed Co., 119Asia

end-product preferences of consumers in, 91wheat preference shifts in, 95, 98wheat types preferred by countries in, 92-93see also Far East; individual countries in

Association Nacional dos Exportadores de Cereais(Brazil), 244

Association of American Feed Control Officials, 48Australia

dominant type of wheat exported by, 91drying practices in, 239, 241FAQ standard use in, 207grain market regulation in, 5, 19, 246grain storage practices in, 239, 241marketing by variety in, 244pricing policy of, 244-245seed variety control in, 241, 247, 259uniformity in grain quality between shipments

from, 15, 89Australian Wheat Board (AWB), 239

Barges. See TransportationBean degermer, 54Biochemical selection, in wheat breeding, 113Biotechnology, use in grain breeding of, 111-112, 113,

122, 123, 129-130Blending

major grain exporting competitors’ use of, 241necessity in the United States caused by lack of

uniformity in marketing process, 189, 248reasons for, 175technology types and performance for, 175-179wheats for various end uses, 15, 68-69, 70, 93, 176

Brazilcleaning practices in, 239domestic wheat production’s relationship to income

in, 94drying practices in, 239export standards used in, 207grain inspection authority and grade standards of,

244grain storage practices in, 239, 241pricing policy of, 244-245seed variety control in, 244

Breakage, interaction between moisture and, 7, 8, 11,141, 144, 146, 154, 179-183

Breeders, role of public and private grain, 106-108,118-122, 127-128

Breeding. See Genetic selectionBroken corn and foreign material (BCFM), 203, 204,

205, 211, 213

Canadacleaning practices in, 239, 241, 247dominant type of wheat exported by, 91FAQ standard use in, 207grain market regulation in, 5, 19grain transport to, 36, 38, 165, 191pricing policy of, 94, 244-245seed variety control in, 241, 259soybean cultivars release in, 120storage incentives in, 246uniformity in grain quality between shipments

from, 15, 89Chicago Board of Trade, hedging grain purchases

and sales through, 41China, People’s Republic of, corn grades in, 206Clark, Paul, 90Cleaning, grain

technologies of major grain exporting competitors,239, 241, 247

technology types and performance for, 9-10,171-175

use in grain processing, 51, 54, 57Colorado, wheat production in, 32, 105Columbia River, 167Combines. See Harvesting, TechnologiesCommodity Credit Corporation (CCC)–USDA

grain storage agreements made by, 228, 261-262inspection policies of, 228-232loan program workings and objectives of, 14, 42,

221-224, 254pilot project on premiums and discounts of, 234policy options regarding loans made by and grains

owned by, 21-22, 254, 261Competition

comparison of U.S. grain quality affectinginstitutions and regulations to major grainexporting, 241-244, 246-247

287

..—. .

grain quality attributes important in processing, 13,14-15, 63, 66, 67-68, 80-82, 84

marketing system principles and characteristics ofU.S. grain, 4, 40-41

production characteristics and trends in U.S. grain,29, 31-33

quality control standards and methods for U.S.grain, 42-43

soybean processing, 50storage and handling practices by U.S. grain, 38-39technologies used in grain processing, 50-57utilization of grains produced by U.S. grain, 33-35,

92-94Insect management, technology types and

performance for, 10, 11, 158-165Inspection. See Regulation; Technologies; TestingInternational U.S. Wheat End Use Quality

Conference (1986), 79, 82Interrelationship

between grain handling and storage technologies,39

between standards, variety, and market, 16, 23,256-257, 266-267

between technologies as related to grain quality, 3,14, 15, 43, 61, 71-72, 84, 90, 182-183

between technologies regarding moisture andbreakage, 7, 10, 12, 141, 144, 146, 154, 179-182

between yield and protein, 232-234of environment and genetic variation in grain

breeding, 105-106, 116-118, 126of field performance criteria for corn, 129of quality, disease resistance, and yield in grain

breeding, 104-105, 116of yield, protein, and oil content in soybean

breeding, 114, 116Iowa

corn production by, 32hybrid seed sales in, 127soybean production in, 33, 114

Israel, U.S. soybean exports to, 35

Japangrain transportation to, 170U.S. grain exports to, 35, 115wheat consumption and import trends in, 93wheat type preference shift in, 95, 98

Kansasfarm programs’ impact on grain marketing in,

227, 233wheat production in, 32, 105

Karl Fisher titration method, 193

Laguio, Emma B., 79, 82Latin America

wheat type preference shifts in, 98see also individual countries in

Legislationevaluation of recent grain quality, 212-213see also individual statutes

Licensing. See RegulationLivestock, production of feed for, 33, 34, 49-50, 94-95Loan rate program, premiums and discounts used in

U.S. farm, 14, 42, 221-224

Marketplaceimportance of supplying quality attributes in, 89-90importance of uniform quality between grain

shipments in, 14, 15, 79-81, 84incentives in the grain, 203-204quality attributes desired by purchasers of U.S.

grain in, 14, 15-16, 67-84, 91-98trends for wheat quality characteristics in the

international, 93-98Merchants Exchange of St. Louis, 168Mexico

export inspection exception for, 191U.S. grain transport to, 38, 165

Michigan, performance trial requirement in, 128-129Middle East

end product preference of consumers in, 91, 98grain attributes considered important by countries

in, 72U.S. grain exports to, 35wheat consumption and import trends in, 93see also individual countries in

Milling, grain, 33, 34, 47-49, 50-51, 54-57Minnesota, grain production in, 32, 33Mississippi, 115Mississippi River System, grain transport on, 167Missouri, soybean production in, 33Moisture

interaction between breakage and, 7, 8, 11, 141,144, 146, 154, 179-183

levels in grain processing, 51, 54-55, 57see also Drying; Grain

Montana, wheat production in, 32

Nagao, Seiichi, 79National Association of State Universities and Land

Grant Colleges, 128National Bureau of Standards. See National Institute

of Standards and TechnologyNational Conference of Weights and Measures, 191National Corn Growers Association, 151National Grain and Feed Association, 43, 154, 209National Grain and Feed Dealers Association, 200National Institute of Standards and Technology

(NIST)–Department of Commercepolicy options involving testing responsibility of,

23-24, 26, 265-266weights and measures program coordination by,

191-192National Seed Storage Laboratory, Germplasm Bank,

107National Soybean Processor Association, 62Near-infrared-reflectance analyzers (NIR), 109, 192,

193, 196, 265Nebraska

corn production in, 32

289

Federal Food, Drug, and Cosmetic Act (FDCA), grainguidelines of, 197

Federal Grain Inspection Service (FGIS)grain standards developed by, 42inspection and related regulation duties of, 13, 43,

189, 190-191, 192, 193, 196-197, 199, 201-202,203, 204, 209, 212, 228

policy options involving standards set by, 23-24,263, 264, 265

Federal Seed Act (1939), 121, 127Feed, animal, grain used for, 33, 34, 49-50, 94-95Flour

production in grain milling, 33, 47-48, 51-53, 68-69quality and baking technologies, 14, 15, 61, 71-72,

90Food and Drug Administration (FDA)

aflatoxin guidelines set by, 194, 197-199defect action limit for wheat of, 264

Food Security Act (1985], 3, 43, 220France

cleaning practices in, 239dominant type of wheat exported by, 91drying practices in, 239grain inspection authority and grade standards of,

244grain market regulation in, 5, 19, 241, 244-245, 247,

259grain storage practices in, 239, 241marketing by variety in, 244pricing policy of, 244-245seed variety control in, 241, 247, 259wheat productivity growth in, 4

Fumigation. See PesticidesFunding. See Economics

Genetic engineering, See BiotechnologyGenetic selection

influence on grain quality characteristics of,104-106, 115-118, 125-127, 130

objectives for grain, 103-104, 114-115, 123-125, 130variability of grain trait expression using, 105-106,

116-118, 125-127, 130see also Technologies

Genotypes. See Environment; Genetic selectionGluten

content of wheat, 33, 61, 71production in grain processing, 47, 48, 53-54, 55, 57

Grading. See Standards; Testing; VarietyGrain

applying economic criteria to standards for U. S.,209-211

blending technologies, 175-179case study in wheat illustrating changing nature of

markets for, 91-98cleaning technologies, 9-10, 171-175drying technologies, 8, 143-151, 239, 241evaluation of standards for U. S., 200-209export trends and markets for the United States,

30-31, 35farm policy programs and objectives for U. S.,

14, 42, 219, 221, 228, 244, 246, 253-254

flow system in the United States, 36-38harvesting technologies, 9-10, 137-143insect management technologies, 10, 158-165inspection and testing procedures in the United

States, 189-199marketing system principles and characteristics in

the United States, 4, 40-41production characteristics and trends in the United

States, 29, 31-33quality measurement and standards for, 12-13,

42-43, 62-67, 84storage and handling technologies, 9-10, 11, 38-39,

151-158, 239, 241, 247-248transportation techniques, 165-171utilization of U.S.-produced, 33-35, 92-94see also Corn; Soybeans; Wheat

Grain and Feed Trade Association (GAFTA), 207Grain Quality Improvement Act (1986), 30, 137, 171

evaluation of, 212-213objectives of grain standards specified by, 202,

209-210, 212Grain Trade Rules, 43Greece, 94Guidelines. See Standards

Handling, graintechnologies of major grain exporting competitors,

239, 241, 247-248U.S. technology types and techniques for,

9-10, 151-152Harvesting, grain, technology types and performance

for, 9-10, 137-143Hatch Act, 119Hedging, use by U.S. grain trade players, 41Hybrids, development and performance of grain,

110-111, 123-126, 129

Illinois, grain production in, 32, 33Illinois, University of, 128Imports. See TradeIncentives

grain standards provision of market, 203-204for on-farm storage, 246provided by the Common Agricultural Policy of the

EC, 237for quality characteristics in U.S. grain marketing

system, 5, 40V. prohibitions as solution to grain standards

problems, 212-213India, U.S. wheat exports to, 35Indiana

corn production in, 32soybean production in, 33, 114

Industryanimal feed manufacturing, 49-50, 94-95export trends and markets of U.S. grain, 30-31, 35farm policy programs and objectives for U.S. grain,

14, 42, 219, 221, 228, 244, 246, 253-254flow system of U.S. grain, 36-38grain milling, 47-49

— — —-.

290

grain quality attributes important in processing, 13,14-15, 63, 66, 67-68, 80-82, 84

marketing system principles and characteristics ofU.S. grain, 4, 40-41

production characteristics and trends in U.S. grain,29, 31-33

quality control standards and methods for U.S.grain, 42-43

soybean processing, 50storage and handling practices by U.S. grain, 38-39technologies used in grain processing, 50-57utilization of grains produced by U.S. grain, 33-35,

92-94Insect management, technology types and

performance for, 10, 11, 158-165Inspection. See Regulation; Technologies; TestingInternational U.S. Wheat End Use Quality

Conference (1986), 79, 82Interrelationship

between grain handling and storage technologies,39

between standards, variety, and market, 16, 23,256-257, 266-267

between technologies as related to grain quality, 3,14, 15, 43, 61, 71-72, 84, 90, 182-183

between technologies regarding moisture andbreakage, 7, 10, 12, 141, 144, 146, 154, 179-182

between yield and protein, 232-234of environment and genetic variation in grain

breeding, 105-106, 116-118, 126of field performance criteria for corn, 129of quality, disease resistance, and yield in grain

breeding, 104-105, 116of yield, protein, and oil content in soybean

breeding, 114, 116Iowa

corn production by, 32hybrid seed sales in, 127soybean production in, 33, 114

Israel, U.S. soybean exports to, 35

Japangrain transportation to, 170U.S. grain exports to, 35, 115wheat consumption and import trends in, 93wheat type preference shift in, 95, 98

Kansasfarm programs’ impact on grain marketing in,

227, 233wheat production in, 32, 105

Karl Fisher titration method, 193

Laguio, Emma B., 79, 82Latin America

wheat type preference shifts in, 98see also individual countries in

Legislationevaluation of recent grain quality, 212-213see also individual statutes

Licensing. See RegulationLivestock, production of feed for, 33, 34, 49-50, 94-95Loan rate program, premiums and discounts used in

U.S. farm, 14, 42, 221-224

Marketplaceimportance of supplying quality attributes in, 89-90importance of uniform quality between grain

shipments in, 14, 15, 79-81, 84incentives in the grain, 203-204quality attributes desired by purchasers of U.S.

grain in, 14, 15-16, 67-84, 91-98trends for wheat quality characteristics in the

international, 93-98Merchants Exchange of St. Louis, 168Mexico

export inspection exception for, 191U.S. grain transport to, 38, 165

Michigan, performance trial requirement in, 128-129Middle East

end product preference of consumers in, 91, 98grain attributes considered important by countries

in, 72U.S. grain exports to, 35wheat consumption and import trends in, 93see also individual countries in

Milling, grain, 33, 34, 47-49, 50-51, 54-57Minnesota, grain production in, 32, 33Mississippi, 115Mississippi River System, grain transport on, 167Missouri, soybean production in, 33Moisture

interaction between breakage and, 7, 8, 11, 141,144, 146, 154, 179-183

levels in grain processing, 51, 54-55, 57see also Drying; Grain

Montana, wheat production in, 32

Nagao, Seiichi, 79National Association of State Universities and Land

Grant Colleges, 128National Bureau of Standards. See National Institute

of Standards and TechnologyNational Conference of Weights and Measures, 191National Corn Growers Association, 151National Grain and Feed Association, 43, 154, 209National Grain and Feed Dealers Association, 200National Institute of Standards and Technology

(NIST)–Department of Commercepolicy options involving testing responsibility of,

23-24, 26, 265-266weights and measures program coordination by,

191-192National Seed Storage Laboratory, Germplasm Bank,

107National Soybean Processor Association, 62Near-infrared-reflectance analyzers (NIR), 109, 192,

193, 196, 265Nebraska

corn production in, 32

291

soybean research funding in, 120wheat production in, 32

New York State, corn production in, 33North America, See individual countries inNorth American Export Grain Association, Inc.

(NAEGA), 41, 201North Carolina

soybean cultivars in, 115variety release in, 120, 121

North Dakotacorn production in, 33farm programs’ impact on grain marketing in, 223,

227, 233wheat breeding in, 104, 110wheat production in, 32

North Dakota State University, 174

Occupational Safety and Health Administration(OSHA), 197

Official United States Standards for Grain, 61, 172,173

Ohiocorn production in, 33soybean breeding research budget in, 120soybean production in, 33

Oklahoma, wheat production in, 32, 105

Paddock, Senator, 200Pakistan, 94Pesticides

used as grain protestants, 159-160used for fumigation, 159, 160-162

Pioneer Hi-Bred International, Inc., Plant BreedingResearch Forum sponsored by, 118-119

Plant Variety Protection Act (1970)breeding stimulus of, 106, 118, 120cultivar release procedures and, 121

Policycomparison of U.S. and competitor grain exporters’

grain quality affecting, 244-246government grain storage, 228-232grain quality affected by U.S. Government farm,

219-233impacts on quality of U.S. farm, 14, 219-234,

253-254of major U.S. competitors, 5, 241-246, 254options for Congress to enhance U.S. grain quality,

14-25, 254-267programs and objectives of U.S. Government farm,

14, 42, 219, 221, 228, 244, 246, 253-254U.S. grain inspection, 4-5, 43, 189-190variety release, 121-122, 128-129

Premiums. See Deficiency payment/target priceprogram; Economics; Incentives; Loan rateprogram

Pricing. See EconomicsProductivity. See YieldProtein

as ultimate test for wheat quality, 68demand shift to wheats with lower content of, 93,

95-98

increase in implicit value of wheat’s content of, 94production trade-off between yield and, 232-234quantity and quality importance in wheat’s end-use

suitability, 15, 91, 92, 93

Quality attributescongressional policy options to enhance grain,

16-26, 254-267debate over U.S. grain, 3, 43factors influencing the demand for differing wheat,

93-98grain processing industries’ perception of decrease

in, 81-82grain processing technologies’ relationship to, 13,

14-15, 61, 71-72, 84, 90, 182-183harvesting technologies’ effects on, 141-143impacts of markets, farm programs, and technology

on, 232-233, 234inverse relationship between yield and, 104-105,

116, 126-127, 130marketing decisions based on the market for, 5, 40required by end users of corn, 13, 16, 72-78required by end users of soybeans, 13, 14, 78required by end users of wheat, 13, 15, 68-72storage technologies’ effects on, 153-158types of grain, 3, 44uniformity of, between shipments of grain, 14, 15,

79-81, 84U.S. awareness of various industries’ requirements

regarding, 13, 14, 89, 90U.S. farm policies’ impacts on, 14, 219-234, 253-254

Railroads. See TransportationRegulation

comparison of U.S. and competitor grain exporters’grain quality affecting institutions and, 5,241-244, 246-247

congressional policy options related to market,19-22, 254-256, 259-263

see also Policy; Standards; TestingResearch

on differing wheat consumption patterns indeveloping and industrial countries, 93

on factors determining grain storability, 202-203on grain breakage, 10, 182grain breeding, 109-110, 111-112, 113, 118-119, 120,

126-128

Ships. See TransportationSnake River, 167South Africa, export standards used in, 207South America

grain attributes considered important by countriesin, 72

see also individual countries inSouth Dakota, wheat production in, 32South Korea

grain transport and, 170U.S. grain exports to, 35

Soybeansadequacy of standards for, 66-67

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292

breeders’ influence on development of, 118-122genetic influences on quality characteristics of,

115-118genetic selection objectives for, 114-115, 130historical development of, 114processing of, 50, 57production areas and trends for the United States,

33quality attributes required by end users for, 13, 14,

78technologies used in breeding, 122-123variety release procedures and development time

for, 120-122, 130see also Grain

Spring Wheat Quality Advisory Committee (SWQAC),107

Standardsadequacy of U.S. grain, 3, 43, 63-67alternatives to present system of U.S. grain, 205-209congressional policy options related to grain, 21-23,

263-266economic criteria applied to U.S. grain, 209-211economic solutions to problems with U.S. grain,

212-213establishing U.S. grain, 196-199evaluating U.S. grain, 200-209FDA grain quality, 194, 197-199FGIS grain, 42history of U.S. grain, 200-201integrating objectives of U.S. grain, 204-205major grain exporting competitors’ inspection

authority and grade, 244major grain exporting competitors’ use of grain

receival, 244, 247objectives of U.S. grain, 201-204Official U.S. Grain, 61, 62, 172, 173see also Quality attributes; Testing

State Agricultural Experimental Stations (SAES)grain breeding by, 110, 120grain breeding programs funding by, 106, 127variety release procedures by, 7, 121

Storagefactors determining quality maintenance for grain

in, 202-203government policies for grain, 228-232technologies of major grain exporting competitors,

239, 241, 247-248U.S. technology types and techniques for, 9-10, 11,

38-39, 151, 152-158Subsidies. See IncentivesSweden, 94

Taiwangrain transportation, 170U.S. soybean exports to, 35

Target price/deficiency payment program, effects ongrain quality of, 42, 219, 220, 225, 228, 232-233,234

Technologiescomparison of U.S. and competitor grain exporters’

handling practices and, 239-241, 247flour quality and baking, 14-15, 61, 71-72, 90

grain breeding, 108-113, 122-123, 129-130grain quality attributes and processing, 13, 14-15,

61, 84, 90, 182-183grain storage, 38-39grain testing, 191-196industry acceptance of traditional quality

measuring, 15, 89-90interaction between moisture and breakage relating

to, 179-183types and performance of blending, 171, 175-179types and performance of cleaning, 9-10, 171-175types and performance of drying, 8, 143-151types and performance of harvesting, 9-10, 137-143types and performance of insect management, 10,

11, 158-165types and performance of transportation, 165-171types and techniques of storage and handling, 9-10,

11, 38-39, 151-158, 239, 241, 247-248used by grain processing industries, 50-57

Tempering, 51, 54Testing

gene identification, 112-113importance to grain processing industries of

various types of quality, 13, 15, 63, 66, 69, 72,76-78, 80-82

industry acceptance of traditional qualitymeasuring, 15, 89-90

and inspection of U.S. grain, 189-199technologies, 191-196see also Quality attributes; Standards

Texassoybean breeding in, 114wheat production in, 32

Tradeconsumer end-product preferences effect on grain,

91-93economics of grain, 41grain inspection in export, 190-191grain standards’ facilitation of, 202importance of uniform quality between shipments

in grain, 14, 15, 79-81, 84quality attributes desired by buyers in U.S. grain,

14, 15, 67-84standards and quality factors specified in contracts

in U.S. grain, 16, 64, 65, 66, 67, 72, 78, 84trends in and dependence on U.S. grain export,

30-31, 33, 34, 35see also Marketplace

Traits. See Breeders; Genetic selectionTransportation

insect management and, 163modes of major grain exporting competitors,

239-241U.S. technology techniques and performance for,

36-38, 165-171, 191Trucks. See Transportation

Uniform Grain Storage Agreement (UGSA), 43, 228,230

Union of Soviet Socialist Republics (U.S.S.R.), U.S.grain exports to, 35

United Kingdom (U. K.)

—

293

Variable Import Levy on dockage imposed in, 255wheat types imported by, 93

United States (U. S.)aspiration cleaning equipment in, 175awareness of quality requirements of various

processing industries by, 13, 14, 89, 90corn dry mills in, 49corn yield, trend in, 124, 129economic criteria applied to grain standards of,

209-211evaluating grain standards of, 200-209export trends and markets, 30-31, 35farm policies’ impact on grain quality, 14, 42,

219-234, 253-254fundamental advantages in grain system of, 4-5,

251-252government grain storage policies in, 228-232grain export capability of, 165grain flow system in, 36-38grain inspection and testing in, 189-199grain quality affecting institutions and regulations

of competitors compared to, 241-244, 246-247grain quality affecting policies of competitors

compared to, 244-246grain quality control standards and methods of,

42-43handling technologies and practices of competitors

compared to, 239-241, 247marketing system principles and characteristics in,

4, 40-41problem areas in grain system of, 5-14, 252-254production characteristics and trends, 29, 31-33soybean cultivars release and lifetime in, 119, 120storage and handling practices in, 38-39utilization of grain produced in, 33-35, 94variety of wheats grown and exported by, 91, 93

United States Grain Standards Act (USGSA)–1916amendment to, 234grain regulation standards and responsibility

established by, 13, 42, 189, 190, 191, 196-197,200, 201, 210

policy options involving inspection under, 24, 25,263, 264-266, 268

United States warehouse Act, 43U.S. Wheat Associates, 62Utilization

quality attributes and local consumer wheat, 89,91-93

of U.S.-grown corn, 33-34of U.S.-grown soybeans, 34-35of U.S.-grown wheat, 33, 92-94

Varietycontrol in major grain exporting competitors, 241,

247

development time for release of new grain, 109-110,122, 130

farm programs’ impact on selection of, 225-228major grain exporting competitors’ marketing by,

244, 247of U.S.-produced wheat, 32, 64

Variety Release Committee (VRC), 107Variety release procedures

congressional policy options related to, 17-19,258-259

for grain, 106-108, 120-122, 128-129, 130Virginia, 115

Western EuropeU.S. grain exports to, 35wheat consumption and import trends in, 93wheat preference shifts in, 95, 98see also Europe; European Community; individual

countries inWestern Hemisphere

U.S. grain exports to countries in, 35see also individual countries

Wheatadequacy of standards for, 63-64breeders’ influence on development of, 106-108case study illustrating the changing nature of grain

markets, 91-98factors causing variations in characteristics of, 91genetic influences on quality characteristics of,

104-106genetic selection objectives for, 103-104, 130historical development of, 103milling processes, 33, 50, 51-54production areas and trends for U. S., 31-32quality attributes required by end users for, 13, 15,

68-72technologies used in breeding, 108-113trends and shifts in preferences for classes of,

95-98variety release procedures for, 106-108, 130see also Grain

Yieldinfluence on wheat class imports of domestic

wheat, 93, 95interactions in grain breeding of quality, disease

resistance and, 104-105, 116, 126-127, 130as number one criteria in corn field performance,

129production trade-off between protein and, 232-234U.S. corn, 124, 129

Other Related OTA Reports

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Grain Quality in International Trade: A Comparison of Major U.S. Com-petitors. Assesses the grain systems of Argentina, Brazil, Canada, France,and Australia includes: overview of each country’s production and markets,technologies for producing and handling grain, quality control programs andincentives, and government policy. OTA-F-402, 2/89; 168 p.GPO stock #052-003-01140-9; $7.50 per copy

Pesticide Residues in Food: Technologies for Detection. Examines exist-ing and emerging techniques for residue analysis of pesticides and their break-down products in food; addresses Federal research and programmatic issuesrelevant to the development and adoption of the technologies. OTA-F-398,10/88; 244 p.GPO stock #052-003-01132-8;$10 .00 per copyNTIS order #PB 89-136 444/AS

Technology, Public Policy, and the Changing Structure of AmericanAgriculture. Focuses on future and emerging technologies in animal, plant,chemical, mechanization, and information areas and their implications foragricultural structure. Also explores linkages between policy and structurefor a clearer understanding of the factors that influence the evolution of theagricultural sector. OTA-F-285, 3/86; 380 p.GPO stock #052-003-01018-6; $13.00 per copyNTIS order #PB 86-184 637/ASContractor documents are also available from NTIS

Technology, Public Policy, and the Changing Structure of AmericanAgriculture: A Special Report for the 1985 Farm Bill. Special reportfocusing on three main policy areas of the reauthorization of theAgriculture and Food Act of 1981: commodity, credit, and research andextension. OTA-F-272, 3/85; 100 p.NTIS order #PB 86-184 637/AS

NOTE: Reports are available through the U.S. Government Printing Office, Superintendent of Docu-ments, Washington, DC 20401-9325, (202) 783-3238; and/or the National Technical Informa-tion Service, 5285 Port Royal Road, Springfield, VA 22161-0001, (703) 487-4650.

U . S . GOVERNMENT PRINTING OFFICE : 1989 - 88-378 : QL 3