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Facilitating the Marketing of America’s Grain Grain Inspection, Packers and Stockyards Administration : 

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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Federal Grain Inspection Service U.S. Grain Standards Act Agricultural Marketing Act U.S. Department of Agriculture Grain Inspection, Packers and Stockyards Administration

Mission: 

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.

Core Business Practices: 

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

Service Provision: 

Service Provision Terms (i.e., grades/standards) Maintain grading standards for grains, rice, beans, peas, and lentils Analytical Methods 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 Variety Specific Absence of Attribute Organic Pharmaceuticals $ $ Value of product differentiation 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. E E Market efficiency

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Commodity Easily Measured Attributes Variety Specific Absence of Attribute Organic Pharmaceuticals Commodity Market High volume Low margins U.S. Grain Standards Grain type Class Subclass Quality 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 Practical Market Driven Thresholds/Tolerances Mixed Grain > 10% Lower Grade WOCL U.S. # 1 < 2% U.S. # 2 < 5% Testing: rapid (minutes), accurate (USDA reference), reliable, inexpensive. Grain & Oilseed Marketing Channels Multiple commodities coexist in current market

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Commodity Easily Measured Attributes Variety Specific Absence of Attribute Organic Pharmaceuticals Grain & Oilseed Marketing Channels Protein Oil Starch 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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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 May specify agronomic practice Seed verification (tag, invoice, etc.) Testing unlikely (too costly and slow) U.S. standards and quality requirements Specified delivery time and location Trend: Quality of protein Composition of oil Starch attributes Grain & Oilseed Marketing Channels

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Market/Customer Defined Documentation Testing Process-based Commodity Easily Measured Attributes Variety Specific Absence of Attribute Organic Pharmaceuticals New evolving market Small volume High risk Premiums Grain & Oilseed Marketing Channels

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Commodity Easily Measured Attributes Variety Specific Absence of Attribute Organic Pharmaceuticals High value specialty market U.S. Standards Processed-based Audit and certification Grain & Oilseed Marketing Channels

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Commodity Easily Measured Attributes Variety Specific Absence of Attribute Organic Small very high value market Produced and processed under government permit and oversight Grain & Oilseed Marketing Channels Pharmaceuticals

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Commodity Easily Measured Attributes Variety Specific Absence of Attribute Organic Grain & Oilseed Marketing Channels Pharmaceuticals Facilitate marketing beyond the traditional commodity markets Quality Standards Testing Technology Process-based systems Harmonization

Quality Standards: 

Quality Standards Maintain standards that reflect the evolving market needs 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

Testing Technology: 

Testing Technology Improve the ability to differentiate end-use quality 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: Extractable and fermentable starch Protein quality Amino acid profile Wheat baking quality

Process-based Systems: 

Process-based Systems Support marketing systems based on quality management processes 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”

Harmonization: 

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

Conclusion: 

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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