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Spiked wheat - Schuler Grain Co. uses additive to artificially boost the protein content of its wheat

FDA Consumer, Dec, 1990 by Judy Folkenberg, Richard Nelson, Sharon Snider

Spiked Wheat

A tip from a disgruntled former employee of a large Minnesota grain company led to court-ordered heavy fines and probation for the owners last February.

Schuler Grain Co. in Breckenridge, Minn., was using an additive to artificially boost the protein content of its wheat and thereby increases the price it brought on the market. Ultimately, the Schulers' profit came out of the consumer's pocket--for higher-priced baked goods at the grocery store.

In August 1985, the tipster told the U.S. Department of Agriculture about the firm's illegal activities. USDA in turn notified FDA.

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Investigation by FDA's Minneapolis district office confirmed that urea, a chemical used primarily in fertilizer and feed for cattle, was being illegally added to the wheat before being sold to flour companies.

Last February, George M. and Robert V. Schuler, owners of Schuler Grain Co., pleaded guilty in the U.S. District Court for the District of Minnesota to three counts of selling adulterated wheat in 1985.

They were fined $250,000 each and placed on three years' probation. Earlier, they had agreed to to pay more than $400,000 to the Pillsbury Co., which had purchased the adulterated wheat.

"Adding urea to wheat is a blatant effort to make a fast buck by deceiving buyers," said assistant U.S. attorney Douglas R. Peterson, who prosecuted the case. He added that the Schulers "enjoyed artificial profits while grain buyers were bilked."

The price of wheat is determined by the protein content. Buyers test for protein by measuring the amount of nitrogen in the grain. The addition of urea, a high-nitrogen chemical, increases the protein test results.

Wheat typically contains from 11 to 14 percent protein and sells for from $2.50 to $4.50 per bushel, depending on the market. A 1 percent difference in protein can make a 5 to 80 cent difference in price per bushel. (In terms of value, 11 percent protein is considered low and 14 percent is considered high.)

When FDA received the tip about the company, it sent its investigators to inspect the Schulers' operation. When Thomas Nelson and Dirk Mouw arrived at the company's grain elevators, there was no sign of the tanks and pipes needed to treat wheat with urea--just a suspiciously empty steel building smelling strongly of ammonia.

"One thing for sure about inspecting grain elevators," Nelson said. "you always get dirty. This particular building was clean as a whistle. We learned later they had dismantled all their treating equipment. Someone apparently had warned them we were coming."

The investigators spent a day and a half on the premises. During that time, they collected wheat scrapings from one of the grain dryers that FDA lab analysis later revealed contained as much as 33 percent urea. During the next 10 days, FDA investigators took wheat samples from local farm bins where Schuler wheat was stored. One percent of urea was found in some of the wheat.

As a result of FDA's investigation, during October and November 1985, U.S. marshals seized three bins and 26 railroad cars of wheat in the St. Paul-Minneapolis area and three barges of wheat--two in New Orleans and one in Chattanooga--bound for foreign ports.

What the Schulers did, said Walter Stauffacher, FDA compliance officer for the Minneapolis district, was to wait for a period when the nitrogen content of local wheat was about 11 percent, buy it from farmers at the low market price, boost the nitrogen content with urea, then sell it to companies such as Pillsbury for a higher price per bushel. Higher nitrogen wheat is believed to produce superior baked goods.

Pillsbury passed the higher cost on to bakeries, which in turn passed the cost on to consumers. "It was the consumer who ultimately got shortchanged," Stauffacher said.

In 1985, the Schulers made an estimated $750,000 on adulterated wheat. During FDA's investigation, evidence was found that suggested the Schulers also sold adulterated wheat in 1975 and 1981, Stauffacher said.

The urea did not pose a health hazard, he said, because there is no known toxic effect of 1 percent levels of urea in food. Urea is currently approved by FDA as an additive in yeast used for baked goods and alcoholic beverages.

During sentencing, the brothers had difficulty admitting they had done anything wrong, Nelson said.

"They maintained they were just trying to enhance the protein content of wheat to increase their profit margin. To them, increasing the profit margin with an illegal additive and cheating were not the same thing."

Spiked wheat - Schuler Grain Co. uses additive to artificially boost the protein content of its wheat

FDA Consumer, Dec, 1990 by Judy Folkenberg, Richard Nelson, Sharon Snider

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