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Facilitating the Marketing
of America’s Grain
Grain Inspection, Packers and Stockyards Administration
John B. Pitchford
Director of International Affairs
Grain Inspection, Packers & Stockyards Administration
November 15, 2004
Berkeley, California
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U.S. Department of Agriculture
Grain Inspection, Packers and Stockyards Administration
Federal Grain Inspection Service
U.S.
Grain Standards Act
Agricultural Marketing Act
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Mission
To facilitate the marketing of livestock,
poultry, meat, cereals, oilseeds, and
related agricultural products, and
promote fair and competitive trading
practices for the overall benefit of
consumers and American agriculture.
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Core Business Practices



Provide the market with terms and methods
for quality assessments
Protect the integrity of U.S. grain and
related markets
Provide official grain inspection and weighing
services for American agriculture
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Service Provision

Terms (i.e., grades/standards)


Analytical Methods
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Maintain grading standards for grains,
rice, beans, peas, and lentils
Maintain over 1,400 methods of analyses
Official Inspection System

Annually certify the quality and quantity of 96.5
million metric tons of grain exported to more than
130 countries around the world
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Grain & Oilseed Marketing Channels
$
Commodity Easily
Measured
Attributes
E
$
Value of product differentiation
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
E
Market efficiency
The U.S. grain market ranges from the commodity market
to the very high value added identity preservation system.
Between these two extremes lies an evolving market of
greater product differentiation driven by technology,
consumer demands, and global competition.
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
Commodity Market
High volume
Low margins
U.S. Grain Standards
Grain type
Class
Subclass
Quality
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
Testing: rapid (minutes), accurate (USDA reference),
reliable, inexpensive.
Yellow corn
White corn
Soybeans
Hard Red Winter Wheat
Hard Red Spring Wheat
Soft Red Winter Wheat
Soft White Wheat
Hard White Wheat
Grades 1 - Sample
Multiple commodities coexist in current market
Practical Market Driven
Thresholds/Tolerances
Mixed Grain > 10%
Lower Grade
WOCL
U.S. # 1 < 2%
U.S. # 2 < 5%
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
• Protein
• Oil
• Starch
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
Technology offers the opportunity to
expand the measurement of
attributes. The challenge is to define
the appropriate attributes that reflect
end-use value for the diverse
products made from today’s cereals
and oilseeds.
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
Farmers contract with handler or processor
to produce a specific variety for a specific quality attribute.
• Premiums
Trend:
• May specify agronomic practice
• Quality of protein
• Seed verification (tag, invoice, etc.)
• Composition of oil
- Testing unlikely (too costly and slow)
• Starch attributes
• U.S. standards and quality requirements
• Specified delivery time and location
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
•Market/Customer Defined
•Documentation
• New evolving market
•Testing
• Small volume
•Process-based
• High risk
• Premiums
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
• High value specialty market
• U.S. Standards
• Processed-based
• Audit and certification
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
• Small very high value market
• Produced and processed under
government permit and oversight
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Grain & Oilseed Marketing Channels
Commodity Easily
Measured
Attributes
Variety
Specific
Absence of
Attribute
Organic
Pharmaceuticals
Facilitate marketing beyond
the traditional commodity
markets
•
•
•
•
Quality Standards
Testing Technology
Process-based systems
Harmonization
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Quality Standards
Maintain standards that reflect the evolving
market needs

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New crops – e.g., Hard White Wheat
New agronomic practices – e.g., herbicide resistant
crops
New quality attributes – e.g., low linolenic soybeans
New ways of measuring existing quality attributes –
e.g., wheat protein quality
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Testing Technology
Improve the ability to differentiate end-use
quality


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Identify key quality attributes
Establish consensus on reference methods
Transfer reference method to market-relevant rapid
analytical tool
Establish consensus (national/international) on
reporting quality results
Examples:



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Extractable and fermentable starch
Protein quality
Amino acid profile
Wheat baking quality
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Process-based Systems

Support marketing systems based on quality
management processes

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Company or organization develops Quality Policy,
Quality Objectives, and Quality Procedures to meet
customer demands
USDA verifies adherence to the Quality Management
System through third-party audits based on ISO 9001
requirements
Company or organization may market their process or
product as “USDA Process Verified”
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Harmonization



Provide technical assistance to minimize market
disruption due to quality standards and regulations
Ensure that quality assessments are accurate and
reliable, and that all parties involved understand how
quality is defined and measured
Misunderstandings or disagreements about the meaning
of basic quality terms, or misuse of quality terms, can
result in costly marketing disruptions
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Conclusion





Quality standards must reflect changing market
needs
Testing technology needs to keep pace with new
quality attributes
Process verification of quality management systems
can further facilitate trade
Harmonization of the terms and measurement of
quality promotes efficient trade
Accurate and reliable application of standards and
technology are essential
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