Cash Market Moves
By Mary Kennedy
DTN Cash Grains Analyst
The Federal Grain Inspection Service (FGIS) is the "watchdog" that ensures all grain loaded onto ships or rail to be exported out of the United States grades according to standards established by the United States Grain Standards Act (USGSA) and the Agricultural Marketing Act of 1946 (AMA).
You already know that your grain is graded at the elevator when you deliver it, but from there, when your elevator ships it to an export facility, it is "officially" graded before the export facility dumps it. Then, it faces a mandatory inspection by FGIS as it is loaded out of the export facility before it leaves the country.
The FGIS website said standards for quality assessments and weighing services is established through a network of federal, state and private entities. FGIS is under the governing arm of USDA Grain Inspection, Packers and Stockyards Administration (GIPSA). Recently, Secretary of Agriculture Sonny Perdue, decided to merge GIPSA with the Agricultural Marketing Service (AMS), which administers programs that create domestic and international marketing opportunities for U.S. producers. Currently, GIPSA and AMS both carry out grading activities and "work to ensure fair trade practices," according to the GIPSA website. Basically, the programs complement each other and combining them made perfect sense.
In a news release on Sept. 7, 2017, NGFA President Randy Gordon and NAEGA President and Chief Executive Officer Gary Martin said, "Relocating FGIS within an agency that has a similar mission and function as a service agency is the foundation for its successful future, and we commend Secretary Perdue for recognizing this need and moving expeditiously to bring about this change."
Recently, I attended a session about FGIS at the U.S. Soy Global Trade Exchange and Midwest Specialty Grains Conference in Omaha, Nebraska, in mid-August. Byron Reilly, Director FGIS, Departmental Initiatives and International Affairs gave a presentation on how the soy and grain inspection process works to participants from many of the 58 countries in attendance.
Reilly opened the presentation by informing us of the role FGIS plays in the export market. "FGIS manages the national inspection system and provides the mandatory export inspection and weighing," said Reilly. "They help move our nation's harvest into the marketplace by providing farmers, handlers, processors, exporters, and international buyers with sampling, inspection, process verification, weighing and stowage examination services that accurately and consistently describe the quality and quantity of the commodities being bought and sold."
One of the things Reilly mentioned is that FGIS is required to test all corn leaving the country for aflatoxin, unless the contract stipulates testing is not required and both buyer and seller agree to waive requirements. FGIS has the ability to test for all other toxins at the request of the shipper, but it is not mandatory as the aflatoxin test is.
There are some things that FGIS does not do, added Reilly. FGIS does not market grain, mandate quality, set grain prices, test for GMOs or arbitrate disputes between the parties involved in the export shipments.
Reilly noted that FGIS/GIPSA retains official file samples drawn at the time of the original inspection for 90 days after loading. When an importer reports a discrepancy within that period, samples are sent to their Technology and Science Division (TSD) laboratory for analysis. The field office sends all pertinent documents regarding the shipment to GIPSA for review.
On the GIPSA website it states they analyze data provided from destination, then prepare a report of findings from all available information. The purpose of the review is to verify whether the original quality inspection and certification were in fact correct, and to determine, insofar as possible, what factors may have contributed to a discrepancy in results at destination. "GIPSA does not issue new certificates based on the review, nor is the review intended to replace provisions for claims or arbitration in the contract between the importer and supplier," noted Reilly.
Thanks to the strict grading standards set by USGSA and the AMA, the U.S. is able to retain its reputation of exporting the highest quality of grain. That reputation in turn creates demand and allows competitive markets where farmers can sell their grain and oilseeds.
Here is a link to the full FGIS/GIPSA presentation from the 2017 U.S. SOY Global Trade Exchange/Midwest Specialty Grains conference in Omaha; https://www.grainconference.org/…
Here is a link to the USDA GIPSA website with more specific requirements for exporting grain and oilseeds: https://www.gipsa.usda.gov/…
Mary Kennedy can be reached at email@example.com
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