Grain shippers support GIPSA reauthorization with changes
American grain shippers support congressional reauthorization of the 1976 U.S. Grain Standards Act, but seek certain changes to improve the competitiveness of the country’s grain business in international markets.
Currently proposed reauthorization of the Grain Standards Act, set to expire Sept. 30, would allow the Grain Inspection, Packers and Stockyards Administration’s (GIPSA’s) Federal Grain Inspection Service to increase inspection and other fees to cover its operations costs.
Gary Niemeyer, representing the National Corn Growers Association, warned the Senate Agriculture Committee on Capitol Hill Wednesday that increasing federal inspection fees have contributed to the “gradual erosion of the competitive position of U.S. grain and oilseed exports.”
According to the association, GIPSA inspection costs in recent years have increased at more than 7 percent annually compared to other costs in the 1 to 3 percent range.
Niemeyer said due to the highly competitive nature of the world bulk grain market, there is slim opportunity to pass on inspection fees to overseas customers. He pointed out that a GIPSA study found Brazilian and Argentine grain exporters enjoyed about 20 to 25 cents per ton advantage over U.S. exporters in the cost of obtaining export inspections for quality. Brazilian and Argentine exporters rely on private third-party surveyors to perform official export inspections for quality, the association said.
“The U.S. must better manage the cost of export inspections, take advantage of modern technologies to enhance efficiency and be flexible enough to respond to changing industry structure and an increasingly competitive world market,” Niemeyer said.
Other grain industry groups testifying before the committee agreed. “Shifting GIPSA’s standardization activities to user fees represents a thinly disguised new tax that would drive up costs and undermine the cost-competitiveness of U.S. grain and oilseed exports,” said Jerry D. Gibson, regional manager for Bunge North America in Destrehan, La., on behalf of the National Grain and Feed Association and North American Export Grain Association.
The associations generally support GIPSA’s services in the grain trade. “It’s strict federal standards that help maintain the accuracy and consistency that the grain industry has come to expect from the nation’s official grain inspection system,” said Tom Dahl, president of the American Association of Grain Inspection and Weighing Agencies.
However, the associations believe that reauthorization of GIPSA’s operating authority should include an amendment for the agency to determine and approve independent, third-party agencies to perform official inspections at time of export. GIPSA would retain 100-percent oversight of the export grain inspection process and reserve the right to suspend or revoke the authority of any third-party agency for wrongdoing.
The associations prescribed a phased-in approach for picking third-party agencies and support starting it in the smaller export ports. “The proposed amendment provides that flexibility to GIPSA, and would allow for the program to be fine-tuned, if needed, before it is implemented at the higher-volume grain export ports,” Gibson said.