SB 2365 Senate Testimony

TESTIMONY OF NORTH DAKOTA GRAIN DEALERS ASSOCIATION

SB 2365 – PSC STUDY OF GRAIN GRADING

SENATE AG COMMITTEE – FEBRUARY 2, 2007

Good morning Mr. Chairman and members of the committee.  My name is Steve Strege and I represent the North Dakota Grain Dealers Association.  We are here in opposition to SB 2365.  We believe it is unnecessary, intrusive, expensive, and deals with matters already addressed in state law.

I asked the Public Service Commission how many complaints they have received on grain grading in the last several years.  Here’s the tally:

   2002: 2 complaints;      2003: 3;       2004: 11;       2005: 9;       2006: 3.

That’s 28 in five years.  Without the abnormal 2004 growing season, which produced frost damaged and light test weight corn, a typical year is 2-3 complaints.  This does not indicate the need for a study. 

          Studying requires time from both the studier and the studied.  Our elevators have customers to take care of, spring planting inputs to get out the door, grain trucks to dump, blending and other conditioning challenges, marketing to do, and trains to load.  Responding to surveys or questionnaires as a part of this study should not interfere with these legitimate and critical business transactions.  And for what?

          The PSC has put a $125,000 fiscal note on this bill.  Are 2 or 3 complaints in a typical year sufficient to spend that kind of money?  We emphatically think not.

          North Dakota grain elevators typically handle around 550 million bushels of grain per year.  At an average of 700 bushels per truckload that is 786,000 truckloads.  Having only 2 or 3 grain grading complaints per year is a record to be envious of, not one to question. 

          North Dakota law already provides a procedure to resolve grain grading disputes.  It is in North Dakota Century Code 60-02-05 and 60-02.1-05.  I have copies for you.  A sample is sent to a federal lab or other agreed-upon third party for a determination, and that determination stands.  I think the process is seldom used. 

          North Dakota elevators are bound by law to use federal grade standards.  I have for each of you a copy of those standards as of February 2006.  As noted on the cover, the distribution of these is a project of the North Dakota , California , Minnesota , Oklahoma and Nebraska Grain and Feed Associations.  The 2007 book will have a couple changes in soybeans.  Other than that the standards in this booklet are still effective.  This is part of our education effort.  A couple years ago, in cooperation with the Northern Crops Institute, we had a couple grain grading schools.  The local inspection agencies are usually willing to work with employees of their customer elevators.

          Grain value, premiums and discounts are not set by the local elevator.  If the market is paying a nickel a fifth up on protein to 15 and then another 25 cent kicker, that is what the elevator will be paying.  Scarcity of protein means higher premiums.  If there is plenty of protein around the premiums will be less. 

          Maltsters determine how much vomitoxin they will accept, and I’m quite sure that is a function of how much the brewers will accept.  The premiums or discounts for hard count in durum or spring wheat are also a function of what’s in the market.

          Upon hearing of this study, one North Dakota elevator manager made the observation that if farmers want to go to federal grades on each truckload that can be done.  But with the understanding that the farmer will pay the cost on each load and that the grade will stick.  There will be no opportunity to overlook some deficiencies that might not be prevalent that crop year and so might possibly be blended off. 

          North Dakota farmers usually raise good to excellent quality crops.  Usually, but not everywhere always.  And when everyone has high quality there isn’t as much premium for high quality.  Markets might not always seem rational or fair.  But that is the market.  We urge the committee to give a Do Not Pass recommendation to this bill.  I will try to answer any questions.