NGFA's Jess McCluer on FGIS Activities

U.S. Grain Standards Act

Over the past year, NGFA has worked with its colleagues at the North American Export Grain Association (NAEGA) and in Congress to craft policies pursuant to the U.S. Grain Standards Act (USGSA). The policies are based on several NGFA and NAEGA recommendations that will help strengthen and improve the effectiveness of the official inspection and weighing system, enhance the competitive position of U.S. grains and oilseeds in world markets, and retain the integrity of U.S. inspection results.

During a June 24 business meeting, the Senate Agriculture Committee favorably reported the U.S. Grain Standards Reauthorization Act of 2020 (USGSRA 2020), which includes the following improvements advocated by NGFA and NAEGA:

• Requiring Delegated States to notify users of official inspection or weighing services at least 72 hours in advance of any intent to discontinue service. The 2015 reauthorization of the USGSA required the delegated states to provide such pre-notification to the Secretary of Agriculture, and USGSRA 2020 extends this same requirement to the direct users of Official services that would be most affected by such actions so they can make appropriate plans.
• Ensuring FGIS user fees are directed solely to inspection and weighing services. The user fees that grain handlers pay for inspection and weighing services should be directed only toward those activities. We appreciate Congress consistently appropriating funds for establishing and maintaining the U.S Grain Standards, as well as for internal monitoring of FGIS’ grain quality-assessment methods and compliance activities – all of which have broad societal benefits.
• Reporting requests for waivers, exceptions, and other specific services received and granted by FGIS. This information-sharing will increase transparency and help users better understand the demands on the official system, which will be beneficial especially for those who pay the user fees that finance the system.
• Reauthorizing the USDA Grain Inspection Advisory Committee. This advisory committee provides expert advice to FGIS in helping the agency fulfill its core mission of ensuring that official inspections are performed in a reliable and uninterrupted manner to facilitate U.S. grain exports.
• Directing FGIS to complete a comprehensive review of the current boundaries for the officially designated grain inspection agencies in the domestic marketplace. Such a review has not occurred since FGIS was established in 1976, and the resulting data will inform the agency and stakeholders about potential efficiencies and improvements to the system.
• Reauthorizing all expiring provisions of the current law for another five years. These include the ability for Congress to collect appropriations for standardization and compliance activities, authorization for the USDA Grain Inspection Advisory Committee to operate, as well as the current statutory limitation on administrative costs.

NGFA will continue to work with both the Senate and the House of Representatives with the goal of passing the USGSRA before the law expires on Sept. 30, 2020.

Service During COVID-19

NGFA is unaware of any significant changes to the operations of FGIS, delegated state agencies, or officially designated agencies in performing official inspection and weighing services due to COVID-19. In fact, FGIS has worked diligently to continue providing mandatory sampling, inspection, and weighing duties at export port locations. To the best of our knowledge, the industry is unaware of any slowdowns in official services due to COVID-19, to this point. We continue to stay connected with FGIS leadership to ensure resources are available so the grain supply chain can continue functioning through this unique and difficult time.

Grading Standards

The Agricultural Marketing Service (AMS) published a notice in the Federal Register in June 2018 requesting comments on the current official U.S. grade standards for soybeans, corn, and canola. NGFA and NAEGA submitted comments stating that the current official U.S. corn, soybean, and canola standards should be retained without change.

On September 25, 2019 AMS published a Federal Register notice announcing that they will no longer pursue making changes to the U.S. corn and soybean standards. AMS received just six comments on the U.S. soybean standards and two comments on the U.S. corn standards. The agency plans to complete review of comments on the canola standard and issue a final rule, if there are changes, by the end of FY 2020. AMS also plans to complete review of the beans (blackeye) and lentils standards by the end of FY 2020.

Regulatory Activities

FGIS published advance notice of proposed rulemaking on April 1, 2020 regarding a grain handling facility’s ability to obtain grain inspection services from an official agency (OA) other than the designated OA for the facility’s geographic area – if the facility has not been receiving services from the designated OA – and criteria to evaluate requests submitted under the ‘‘timely service” provision of the USGSA.

NGFA believes that the official grain inspection and weighing system continually must improve if it is to remain relevant and provide the service needed by the grain industry in the ultra-competitive marketplace in which the industry operates. The official inspection and weighing system is designed to provide uniform service regardless of the provider. This uniformity should extend beyond inspection results to include all aspects of customer service. Responsiveness is more than being on-site when service is needed. It also includes providing all the services that the officially designated agencies are authorized to perform whenever possible, working with the industry to meet new and changing circumstances, and providing results in a timely manner to grain handling facilities.

FY 2021 Budget

Earlier this year, the Trump administration in its FY 2021 budget request called for additional user fees to replace the appropriated portion of the FGIS budget, approximately $20 million annually, on top of the existing official inspection and weighing fees already paid for by the industry. Users of these official services already pay for the direct costs incurred by FGIS in providing them, plus administrative overhead for these services, which typically comprises 70% of FGIS’ total annual budget.

The only portion of FGIS’s budget not funded by user fees is its standardization activities, such as developing the U.S. grain standards and monitoring activities to ensure that grading is done consistently across different market regions. Assessing additional user fees to finance these non-inspection-related functions of FGIS would increase business costs and likely be passed back to farmers in the form of reduced farmgate prices for their commodities, given the highly competitive global market in which U.S. agriculture operates. FGIS should not be financed through additional user fees.

In addition, the FY 20 budget agreement retains the $55 million cap on user fees for official grain inspection and weighing services that NGFA supports.

Reprinted from Grain Journal July/August 2020 Issue