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Industry: Email Alert RSS FeedWheat cleaning practices of U.S. commercial elevators - report derived from survey of grain elevator managers by National Grain and Feed Association - U.S. Dept. of Agriculture, Economic Research Service report
Situation and Outlook Report: Wheat, Nov, 1991 by Brian Just, Kristi McComas, Mark Ash, Bengt Hyberg
Abstract: Results from a National Grain and Feed Association survey indicate
the prevalence of wheat cleaning in the United States. Elevators responding to
the survey cleaned 10 percent of the wheat handled, on average. Nearly all the
elevators in the North and South Dakota cleaned spring wheat. The average
cleaning cost ranged from 4.5 to 7.3 cents per bushel, depending on the amount
of dockage removed. According to the Millers National Federation survey, flour
millers clean wheat regardless of its previous history.
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Keywords: Cleaning, dockage, discounts, elevators. Title XX from the 1990 Food, Agriculture, Conservation, and Trade Act outlines the USDA actions to enhance grain quality. It requires the Administrator of the Federal Grain Inspection Service to establish or amend the grain standards to include economically and commercially practical levels of cleanliness for wheat, corn, barley, sorghum, and soybeans if the changes would: (1) enhance competitiveness of U.S. exports, (2) maintain or increase export market share (3) maintain or increase producer income, and (4) be in the national interest, taking into consideration technical constraints, economic benefits and costs to producers and industry, price competitiveness, and importer needs. Data on the extent of grain cleaning in the United States have not been available in the past. This article highlights responses from a nationwide survey of elevator managers conducted by the National Grain and Feed Association (NGFA) in April 1991. Responses from a similar survey of flour millers conducted in May 1991 by the Millers National Federation (MNF) are also summarized. This data might provide substantial insights for the economic implications of changing the grain standards.
Nature of the Surveys
In the NGFA survey, elevator managers were asked questions on grain purchasing, market premiums and discounts, cleaning, handling, and storage. Information on elevator cleaning operations, receiving, and loadout capacities was also requested. Questionnaires were sent to all 6,237 warehouses licensed by the Commodity Credit Corporation (CCC). This mailing produced 895 usable responses, representing about 17.5 percent of the estimated storage capacity of all U.S. elevators registered with the CCC. Of these elevators, 646 handled either winter or spring wheat. Country elevators made up 90.6 percent of the respondents handling wheat, with inland terminals, river, and export elevators accounting for the remainder (6.0, 1.8, and 1.5 percent, respectively). Country elevators from the survey handled around 309 million bushels of wheat. The export elevators from the sample handled 359 million bushels of wheat, or about one-third of the 1990/91 U.S. export volume. The following results represent unweighted data from the survey respondents. Respondents were asked to report the classes of wheat handled. Although further disaggregation of the data into the five major classes is possible, only a breakdown between winter and spring wheat will be analyzed for this article. The Millers National Federation sent a flour millers survey to each of their members. This survey was similar in nature to the NGFA survey, in that information on contract specifications, discounts, and cost of cleaning was requested. The companies that responded to the MNF survey accounted for approximately 40 percent of total U.S. flour milling capacity (4).
Discounts for Dockage and Foreign Material
About three-fourths of the elevators surveyed deducted dockage from the gross weight of wheat. For 93 percent, weight deduction began at no more than 1 percent dockage, while 35 percent began deductions at 0 percent. Regions differed in purchasing practices, however. For instance, about 37 percent of the elevators in winter wheat regions made no weight deduction, but purchased on the basis of gross weight. This custom essentially forgives the dockage content. This practice may be more common for farmers' cooperative elevators, whose members ultimately bear the cost of dockage, anyway. By contrast, 97 percent of elevators handling spring wheat in the North and South Dakota deducted the weight of dockage. Some elevators assessed discounts for dockage beyond the weight deduction. Of the elevators handling winter wheat, 76 percent had no price discount for dockage, even at 3 percent. And 86 percent had no discount for 1 percent dockage. By contrast, only 28 percent of spring wheat elevators had no price discount at 3 percent dockage and 46 percent had none at 1 percent. The proportion of spring wheat elevators that levied price discounts at high dockage levels rises much faster than winter wheat elevators. Foreign material (FM) discounts were more common because it is a grade-determining factor. However, 47 percent of the elevators handling winter wheat and 32 percent handling spring wheat had no price discount for 1 percent FM. The average discount at 1 percent FM for all wheat classes was 0.7 cent per bushel. FM discounts were generally larger for spring wheat than winter wheat (A1-4). However, annual surveys by North Dakota State University indicate that discounts can vary from year to year by more than 1 cent per bushel for 1 percent FM. Only about 1 percent of the elevators sampled paid premiums for wheat with less than 1 percent dockage or foreign material. The elevators that offered premiums paid an average of 1 cent per bushel.
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