Enhancing the Quality of U.S. Grain for International Trade

February 1989

NTIS order #PB89-187199 ———

Recommended Citation: U.S. Congress, Office of Technology Assessment, Enhancing the Quality of U.S. Grain for International Trade, OTA-F-399 (Washington, DC: U.S. Government Printing Office, February 1989).

Library of Congress Catalog Card Number 88-600592

For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, DC 20402-9325 (order form can be found in the back of this report) American agriculture, long the sector of the economy considered the most productive and competitive in the world, began to show signs of declining international competitiveness in the early 1980s. Many reasons have been given for this, including the problems of the quality of U.S. grain. The quality issue is receiving renewed attention in the current world buyers’ market for grain, Some are concerned that as the influence of important economic variables such as the strength of the dollar and the extent of agricultural price support cause U.S. exports to become more price-competitive, opportunities to increase exports may be hampered by buyers’ qualms about U.S. grain quality. Complaints of overseas buyers about low-quality U.S. grain receive widespread attention. Buyers protest that they receive dirty, molded, or infested grain, or that characteristics contracted for, such as a certain protein level, were not met. Ex- porters argue that foreign buyers are using quality complaints to bargain for lower prices. Farmers and many Members of Congress point to loss of market share to prove the importance of quality. The problems—real or perceived—have persisted for many years, and neither industry response nor congressional actions to date provide a satisfactory answer or reassure U.S. customers. During debate on the Food Security Act of 1985, the issue of the quality of U.S. grain was again raised, It became apparent that insufficient information was available to make wise decisions. Congress then amended the act and directed the Of- fice of Technology Assessment to conduct a comprehensive study of the technologies, institutions, and policies that affect U.S. grain quality and to prepare a comparative analysis of the grain quality systems of major export competitors of the United States. The study was also requested by the House Committee on Agri- culture and the Joint Economic Committee. This report is one of two in that assessment, It focuses on the U.S. grain system and possible changes within that system to enhance grain quality. A second report, Grain Quality in International Trade: A Comparison of Major U.S. Competitors, provides OTA’s analysis of the grain quality systems of other major exporters. OTA greatly appreciates the contribution of the advisory panel, authors of technical background papers, the many industry associations, and other advisors and reviewers who assisted OTA from the public and private sector. Their guidance and comments helped develop a comprehensive study. As with all OTA studies, however, the content of this report is the sole responsibility of OTA.

///. . . Advisory Panel Enhancing the Quality of U.S. Grain for International Trade

Donald E. Anderson Richard L. McConnell General Partner Director of Corn Research The Andersons Pioneer I-Ii-Bred International, Inc. Maumee, OH Johnston, IA Roger Asendorf Paul B. Mulhollem American Soybean Association Group President St. James, MN World Oilseeds Group Continental Grain Co. G. (Jerry) W. Becker New York, NY Vice President and General Manager Caldwell Manufacturing Co. Seiichi Nagao Kearney, NE General Manager Cereal and Food Research Laboratory James B. Buchanan Nisshin Flour Milling Co., Ltd. Vice President and Manager of Tokyo, Japan Grain & Feed Illinois Cereal Mills, Inc. Grayce “Susie” Pepper Paris, IL purchasing and Office Manager Zip Feed Mills, Inc. William J. Cotter Sioux Falls, SD Director of Operations Port of Corpus Christi Authority Harold E. Reese Corpus Christi, TX Vice President and Assistant Division Manager James F. Frahm Bunge Corp. Director of Planning Destrehan, LA U.S. Wheat Associates Washington, DC Thomas C. Roberts Executive Vice President Maurice A. Gordon Wheat Quality Council U.S. Feed Grains Council Manhattan, KS Rantoul, IL Ronald E. Swanson William W. Hay National Corn Growers Association Millers National Federation Gait, IA Minneapolis, MN D. Leslie Tindal Jerry P. Krueger Commissioner National Association of Wheat Growers South Carolina Department of Agriculture Warren, MN Columbia, SC Roald H. Lund Dean, College of Agriculture North Dakota State University Fargo, ND

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory .panel members. The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and the accuracy of its contents.

iv OTA Project Staff Enhancing the Quality of U.S. Grain for International Trade

Roger C. Herdman, Assistant Director, OTA Health and Life Sciences Division

Walter E. Parham, Food and Renewable Resources Program Manager

Michael J. Phillips, Project Director

David M. Orr, Senior Analyst Lowell D. Hill, Contractor William W. Wilson, Contractor Julie A. King,’ Analyst Linda Starke, Editor

Administrative and Support Staff Sally Shafroth2 and Nathaniel Lewis,’ Administrative Assistants Nellie Hammond, Secretary Carolyn Swarm, Secretary

‘Through March 1987. ‘Through April 1987. ‘From May 1987. Major Contractors Enhancing the Quality of U.S. Grain for

Stephen P. Baenziger Hagen B. Gillenwater University of Nebraska U.S. Department of Agriculture Savannah, GA Fred W. Bakker-Arkema Michigan State University Charles R. Hurburgh Iowa State University C. Phillip Baumel Iowa State University Howard L. Lafever Ohio State University Joe W. Burton U.S. Department of Agriculture Karl A. Lucken Raleigh, NC North Dakota State University Roy G. Cantrell Paul J. Mattern North Dakota State University University of Nebraska Jack F. Carter Marvin R. Paulsen North Dakota State University University of Illinois Harry H. Converse Tilden W. Perry U.S. Department of Agriculture Purdue University Manhattan, KS David B. Sauer Bert L. D’Appolonia U.S. Department of Agriculture North Dakota State University Manhattan, KS Robert Davis Mark D. Schrock U.S. Department of Agriculture Kansas State University Savannah, GA Rollin G. Sears Joel W. Dick Kansas State University North Dakota State University Thomas L. Sporleder Patrick L. Finney Texas A&M University U.S. Department of Agriculture A. Forrest Troyer Wooster, OH DeKalb-Pfizer Genetics Richard C. Frohberg North Dakota State University Paul Gallagher Kansas State University Contents

Page Chapter 1. Summary ...... , ...... 3 Chapter 2. An Overview of the U.S. Grain System ...... 29 Chapter 3. Basic Grain Processing Industries...... 47 Chapter 4. Quality Attributes Important to Domestic and Overseas Industries ...... , , . . . , , . . 61 Chapter 5. The Changing Role of Quality in Grain Markets ...... 89 Chapter 6. The Genetics of Grain Quality ...... ,,.103 Chapter 7. Technologies Affecting Quality ...... 137 Chapter 8. Analysis of U.S. Grain Standards ...... ,,...,..,,.189 Chapter 9. Government Farm Policy and Economic Incentives Affecting Quality ...... 219 Chapter 10. Comparison of Technologies and Policies Affecting Grain Quality in Major Grain-Exporting Countries ...... 237 Chapter 11. Policy Options for Enhancing Grain Quality ...... 251 Appendix A Glossary of Acronyms ...... 273 Appendix B Glossary of Terms ...... 274 Appendix C Commissioned Papers and Authors, ...... 280 Appendix D Acknowledgments ., ...... 282 Index, . . . . ,...... , 285

vii Chapter 1 .——

CONTENTS

Page Major Findings ...... 4 Fundamental Advantages of the U.S. Grain System...... 4 Competitors’ Policies ...... 5 Problem Areas ...... 5 Quality in the Marketplace...... 14 policy options ...... 16 Variety Controls ...... 17 Market Intervention...... 19 Grain Standards ...... 23 Interaction Between Standards, Variety Control, and Market Intervention ...... 24 Conclusions ...... 25 Figures Figure Page l-1. Moisture, Temperature, and Relative Humidity Interactions ...... 8 I-Z. Importance of Uniformity Between Shipments ...... 15 l-3. Components of the Interdependent Grain System ...... 17

Tables Table Page l-1. Comparison of Institutions and Policies Affecting Grain Quality of Major Grain-Exporting Countries ..,...... 6 l-2. Fundamental Policy Alternative s...... 18 Chapter 1 Summary

More competitors exist in the international developing varieties of grain, grain market now than ever before, and grain producing grain, quality has become an extremely important harvesting grain, competitive factor. In a mere decade, growth storing grain, in grain suppliers has been phenomenal. In the handling grain, and 1970s, one-third of the world supplied grain to testing grain, two-thirds of the world’s people. Today, the reverse is true: two-thirds of the world supplies Understanding these relationships is the main grain to the other third. This competitive envi- goal of this assessment. ronment has made foreign buyers increasingly First, it is important to clarify what is meant sensitive about the quality of grain they receive. by grain quality. Webster defines quality as an During the debate on the Food Security Act essential character, a degree of excellence, or of 1985, many Members of Congress expressed a distinguishing attribute. In grain, such a def- concern about the quality of U.S. grain exports, inition has come to mean a variety of things— Grain elevator operators and export traders being free of foreign material, not cracked or were accused of adultering loads of grain spoiled, or having the proper characteristics shipped to foreign buyers; these allegations for a particular end use, No one definition of were supported by a sharp increase in foreign quality as it relates to grain has been accepted. complaints about quality. Grain traders and For the purpose of this assessment, quality handlers maintained that they have been ship- is defined in terms of physical, sanitary, and ping grain according to specifications, and that intrinsic characteristics. most complaints were motivated by buyers’ desires to obtain a higher grade of grain at a ● Physical quality characteristics are asso- lower price. ciated with outward visible appearance of the kernel or measurement of the kernel. The debate often focused on the adequacy of Included are kernel size, shape and color, today’s grain standards, developed over 70 moisture, damage, and density. years ago. Critics argue that the standards them- ● Sanitary quality characteristics refer to the selves are to blame for customer complaints. cleanliness of the grain. They include the They claim that standards have not kept pace presence of foreign material, dust, broken with the changing world marketplace and are grain, rodent excreta, insects, residues, frequently misunderstood by foreign buyers. fungal infection, and nonmillable materi- By focusing on standards, those debating als. These are essentially characteristics about U.S. grain quality are seeing only part that detract from overall grain value, of the picture. Improving quality—or even the ● Intrinsic quality characteristics are criti- perception of quality—will be much more com- cal to the end use of the grain. They are plicated than tinkering with the criteria for nonvisual and can only be determined by standards. Grain is vulnerable to quality dete- analytical tests. In wheat, for example, rioration at virtually every stage of production such characteristics refer to protein, ash, and marketing. Before changes can be contem- and gluten content. The characteristics de- plated, full understanding is needed of the com- pend on the grain and the end use within plex, interrelated system of: a grade, 4

MAJOR FINDINGS

The U.S. grain marketing system has a num- port system exceeds that of nearly all other ber of important characteristics. Handling (in- countries, assuring lower marketing margins cluding exporting) and transport industries are and higher prices to producers. highly competitive and there is relatively limited government intervention in the system. Productivity Growth One key principle throughout the U.S. system is that of self-selection. producers plant vari- Plant breeding in the United States is rela- eties perceived to be in their best interest; users tively unfettered, compared with other coun- (domestic and importers) specify and purchase tries, in terms of regulations over variety de- certain qualities that are in their interest, given velopment and release. Ultimate success of a range of alternatives and prices; handlers and varieties is determined by the market for seed exporters condition and move grain in their stocks. Producers make choices in response to own interest. Each decision is based on the sov- market incentives. Where comparisons are ap- ereignty of the individual decisionmaker, and propriate (i.e., in wheat), productivity growth takes into account incentives and disincentives as measured by yield exceeds that of most other reflected in market premiums and discounts exporters, with the exception of France. Pro- for quality characteristics, ductivity differences are affected by a multitude of factors including environment, soils, other inputs, relative prices, institutions, and Fundamental Advantages of the policies. Thus, it is impossible to attribute yield U.S. Grain System differences to the institutional environment affecting varieties, but growth rates are influ- An important component of this study was enced by variety release procedures. a comparison of the U.S. grain system with the systems in other exporting countries. OTA col- A Wide Range of Qualities lected information on production and distribution in Canada and sent study teams to Ar- No other country can offer such a wide range gentina, Brazil, France, and Australia to of intrinsic differences in grains to customers. document their systems. Five fundamental ad- This is obvious given the class differences in vantages of the U.S. marketing system are wheat, which is facilitated by production re- apparent: efficiency, productivity growth, wide gions of differing environments and soils. Also, range of qualities, the grading and inspection a wider range of physical and sanitary quali- system, and market-determined premiums and ties exists in the United States than elsewhere. discounts. This is an advantage in the sense that more alternatives are available to buyers, some at efficiency lower costs, but it may be viewed as an exter- nality in the sense that reputation is affected. The U.S. marketing system performs a num- The uniformity problem (discussed later) is a ber of complex functions—it assembles, han- direct result of the multitude of qualities avail- dles, conditions, and allocates different quali- able. In addition, given such an unfettered sys- ties to domestic buyers in many locations and tem, importers need a certain amount of ex- for export from a multitude of ports. Indeed, pertise to benefit fully from the wide range of given the quantity produced, the many differ- qualities. ences in qualities at different locations, and numerous locations of end-users and ports, the Grading and Inspection System U.S. marketing system is more complex and performs more challenging functions than the The U.S. grading and inspection system pro- marketing system of any other exporter. Yet the vides grade determination by an independent efficiency of the U.S. grain handling and trans- agency (i. e., one not having financial stakes in 5 the transaction), Factors and limits in factors countries is probably preferred over compar- in the grade standards are relatively stable ably priced U.S. wheats due to these mech- across crop years (i.e., the definition of No. 2 anisms. corn does not change from year to year). Simi- The policy and institutional structure of the larly, the definition of No. 2 Hard Red Winter U.S. grain system provides the framework for wheat does not change, although intrinsic dif- various grain-handling practices. Technologies ferences not measured in the standards may for producing and handling grain are quite sim- change. This is not necessarily the case in other ilar among competing countries. The main countries. Major changes to the U.S. system difference is that the United States is slightly cannot be implemented in less than a year af- more efficient in using these technologies. But ter they are promulgated. Some other exporters points in the marketing channel at which they adjust factor limits with each crop year. are used differ.

Market-Determined Premiums A case in point is cleaning. Outside the United and Discounts States, most exporters clean grain at the first point of receipt. Canada and Australia are two Premiums and discounts and/or regulations exceptions, although for different reasons. Can- in all countries are used to provide quality in- ada, however, is studying the economic feasi- centives to market participants. Those estab- bility of cleaning grain in the country versus lished in the United States are via the interac- at export and will probably change. Australian tion of supply and demand for measurable quality farmers deliver grain that does not need to be characteristics, i.e., the market for quality char- cleaned, unlike the situation in the United acteristics. Consequently, U.S. values perhaps States. Basically, no economic incentive exists reflect true values better than do premiums and to clean grain at the first point of receipt in the discounts administered in several other export- United States. ing countries. A notable exception is France, Efficient determination of price differentials The other major handling practice in which is important because they essentially allocate the United States differs from other exporters grain across end-users and provide signals is blending. Blending U.S. grain over wide throughout the production and marketing sys- ranges of quality to create a uniform product tem. Through these differentials the system for sale is necessitated by the lack of any mini- responds to market needs. mum receival standard. Blending exists outside the United States but not to the same extent. In other countries it is done over very narrow Competitors’ Policies ranges in quality. These exporters basically have grain of uniform quality moving through- The institutions, policies, and trading practices in the marketing system of the major grain out the system. The U.S. system lacks uniformity in quality throughout the market channel. exporting countries differ considerably. The extent of market intervention varies from highly At export, grain is blended in an attempt to pro- regulated throughout (e. g., Australia and Can- duce a uniform quality that meets buyers’ speci- ada), to partial, or no regulation. Differences fications. The OTA survey of foreign and do- exist in procedures for seed variety develop- mestic buyers of U.S. grain clearly indicated ment and release, the use of variety identifica- that lack of uniformity between shipments is tion in the marketing system, and the use of the buyers’ biggest complaint. grain receival standards (table l-l). In addition, a number of other countries address grain qual- Problem Areas ity problems as part of an integrated agricul- Genetics and Variety Release tural policy. Major foreign wheat exporters have more extensive controls at first point of Genetically, yield and important intrinsic sale than U.S. exporters. Wheat from other quality characteristics are often inversely re- 0)

Table 1-1.—Comparison of Institutions and Policies Affecting Grain Quality of Major Grain. Exporting Countries

Activity/Policv, , United States Argentina Brazil France Canada Australia Seed variety control. . . No State or Federal Committee of govern- Committee with broad Formal mechanism ex- Formal mechanism Formal mechanism fol- control. Release of vari- ment and industry must representation directs ists that regulates re- used to license new lowed as a prerequisite eties influenced to approve agronomic research and approves lease of varieties based varieties. Agronomic for release Of varieties. some extent by land- properties. Quality fac- varieties. Quality is on agronomic and qual- and quality criteria Quality and agronomic grant universities. tors of minor influence. potential criterion but ity criteria. given equal weight in criteria are used. Largely the market de- not currently effective. testing new varieties. termines adoption of varieties. Grain receival standards ...... None. All types of qual- Grain not meeting a Soybeans not meeting Grain not meeting ex- Developed eight grades Wheat must meet mini- ity are accepted with specified minimum a minimum quality are port contract specifica- for CWRS to differenti- mum quality standards. appropriate discounts quality (Condition Ca- rejected at first point of tions can be rejected by ate quality. Lowest If not it is allocated to for low-quality grain. mara) is rejected at first sale. surveying company or grade goes to feed mar- feed market. point of sale. receiving elevator. ket. Marketing by variety . No mechanism exists Variety is not identified Variety is not identified Very common. Variety Licensed grain must Very common-use vari- for variety identifica- in marketing channel. in marketing channel. often specified in be visually distin- ety control scheme to tion. wheat contracts. guishable. facilitate segregation by classes. Price ...... Loan rate is principal Government establish- Government establish- Key policy is European Initial producer price is Guaranteed minimum price policy. Includes es minimum prices for es a minimum price pri- Community interven - the principal price poli- price (GMP) is key price premiums and d is- farmers and exporters. or to planting. it is tion price, which in- cy. Separate prices es- policy. It is established counts for major grains Government also estab- adjusted during the eludes premiums and tablished for each by class and provides but has not been Iishes premiums for crop year to account for discounts for quality grade of grain. Lower differentials for quality. responsive to market high-quality grain. inflation and political factors. Lower qualities qualities of wheat Lower qualities of conditions. pressure. of wheat equated to equated to feed values. wheat equated to feed feed values. values. Farm Storage ...... Farm policy in past de- Government policy No incentive for farm- Farm policy through Producer deliveries are Use of GMP provides cade has encouraged through pricing does ers to store on farm. the Common Agricul- regulated to primary no incentive for delivery extensive on-farm not encourage on-farm tural Policy (CAP) has elevators via quotas. in post-harvest period, storage and inter-year or inter-year storage. not encouraged de- On-farm storage is sub- leading to minimal use storage. velopment of extensive stantial. of on-farm storage. on-farm storage. Also relatively limited inter- year storage due to CAP. SOURCE Office of Technology Assessment, 1989 7 lated in each of the major grains. In the case ticed are not applied uniformly across States of wheat, it is well recognized that yield and (or firms, in the case of private breeding) or over protein quantity are inversely related. In corn, time. the trade-off is between protein, starch, and yield; in soybeans, it is between protein and No effective national policy exists on variety yield. Breeding programs generally aim to im- release that would assure uniformity in appli- prove yield and disease resistance and to satisfy cation of release criteria. In the case of wheat, apparently desirable intrinsic quality goals. in which public breeding is more important, the State Agricultural Experiment Stations In the case of corn, most breeders have al- maintain variety release procedures. These are ways sought to increase yield and improve har- in turn guided by the Experiment Station Com- vestability, with intrinsic quality not being a mittee on Organization and Policy. However, priority. The potential for improving quality since no legally binding procedures for control- through genetics is quite high. However, many ling the release of varieties exist, individual quality factors are traits known to be influenced States can and do vary from this policy. Thus by many genes, This makes enhancing quality the criteria for variety release may not be uni- more difficult than altering a trait influenced form across States or consistent over time, Ulti- by a small number of genes, The task is further mately a particular class of wheat, corn, or soy- complicated by the fact that genetic alteration beans produced in different States may differ of one trait frequently leads to undesirable in intrinsic quality. changes in other plant traits. New crop varieties require approximately 9 Technologies Affecting Quality to 12 years for development and release. If there Grain is a living organism and as such is a were a change in plant breeding program ob- perishable commodity with a finite shelf life. jectives in 1989, such as development of new Drying, storing, handling, and transporting varieties with enhanced quality factors, it could technologies cannot increase quality once the be the end of the century before these new va- grain is harvested. Each technology is a self- rieties were commercially available. sustaining operation, but the way each is used The emphasis on yield in many cases is due has an impact on the ability of the others to to the fact that though intrinsic quality charac- maintain quality, For example, if grain is har- teristics may be important, they are not meas- vested wet, not only will this lead to increased ured in the market. Incentives to improve in- breakage during harvesting, but it means the trinsic quality characteristics therefore are not grain must be dried. Improper drying can lead transmitted through the market as readily as to more breakage and to nonuniform moisture those associated with agronomic characteris- content. Moisture content, moisture uniform- tics, such as yield, disease resistance, and har- ity, and the amount of broken grain and fine vestability. material affects storability and can have an impact on the technologies used to maintain qual- Individual breeders or their institutions can ity during storage. Therefore, decisions made exercise tremendous discretion regarding re- at harvest, as well as at each step thereafter, lease of varieties. This is tempered, however, affect the system’s ability to maintain and de- by the market system, which determines the liver a quality product. success of any release. Market efficiency requires measurement of relevant intrinsic qual- Moisture.—Moisture at harvest directly af- ity characteristics, which is absent in many fects the amount of kernel damage produced cases. For example, a variety with lower yield through combining. Since cereal grains and oil- but an improved intrinsic characteristic (e.g., seeds are harvested in the United States at mois- bake test) not measurable in the marketing sys- ture levels too high for long-term storage or even tem would fail to survive in the seed market, short-term storage and transportation, these Variety release procedures as currently prac- commodities must be dried to acceptable mois- 8 ture levels. Corn, which is harvested at 20 to 30 percent moisture, must be dried to 14 to 15 percent for safe storage. Wheat and soybean harvest moistures are substantially lower than corn, with safe storage levels marginally lower than harvest moisture. In certain regions of the United States, wheat and in some cases corn and soybeans dry naturally in the field. The process of drying has a greater influence on grain quality than all other grain handling I operations combined. If superior grain quality is to be produced, it is imperative to optimize the dryer type and its operation since half the corn crop is dried in continuous-flow, portable batch, and batch-in-bin dryers. Of particular concern is the increase in breakage of corn and soybeans and the decrease in milling quality of wheat from improper drying. Artificial drying of wheat and soybeans, however, is not frequently required. The main dryer operating factors affecting grain quality are air temperature, grain velocity, and airflow rate. A dryer operator is able to adjust the first two on every dryer and, on SOURCE: Office of Technology Assessment, 1989 some units, can adjust all three. Collectively, the three conditions determine the drying rate temperature units. Crossflow models are the and maximum temperature of the grain being most prevalent type used in the United States; dried, and thus establish the quality of the dried they dry the grain nonuniformly and cause ex- lot. cessive stress-cracking of the kernels. Mixed- At least 80 percent of the U.S. corn crop is flow dryers are common in other major grain- dried on-farm. On-farm dryers fall into three producing countries; the grain is dried more categories—bin, non-bin, and combination dry- uniformly in these dryers and is usually of ers. Bin dryers generally are low-capacity, low- higher quality than that dried in crossflow temperature systems, able to produce excellent models. Concurrent-flow dryers produce the quality grain. Non-bin dryers, the most popu- highest quality grain; their main disadvantage lar type in this country, are high-capacity, high- is the relatively high initial cost. A change from temperature systems that frequently overheat crossflow to mixed-flow or concurrent-flow and overdry the grain, and thereby cause seri- dryers would benefit U.S. grain quality. ous grain-quality deterioration. Combination drying reaps the advantages of both systems Moisture content and uniformity within a (i.e., high capacity and high quality) but requires storage facility is critical to maintaining grain The interaction between moisture, tem- additional investment, and is logistically more quality. perature, and relative humidity may spur mold complicated. A switch by farmers from non-bin growth, increase insect activity, and cause other drying to combination drying would signifi- quality losses (figure l-l). Basically, grain mois- cantly improve U.S. corn quality. ture in equilibrium with 65 percent relative Three classes of off-farm dryers are used— humidity will support mold activity, but differ- crossflow, concurrent-flow, and mixed-flow ent grains will create the equilibrium with rela- dryers. Off-farm dryers are high-capacity, high- tive humidity at different moisture levels. That 9 is why wheat and soybeans cannot be stored through warm waters to foreign buyers. A barge at the same moisture content as corn. When or ocean vessel is basically a storage bin and controlling insects, high moisture content in- will experience the same migration phenomena creases absorption of fumigants such as methyl as land-based storage facilities. bromide, requires an increase in dosage, and accelerates the breakdown of pesticides such Broken Grain and Fine Materials.—Some as malathion. grain damage or breakage generally occurs Overall, damage The equipment and methods used to fill a stor- whenever grain is harvested. is always much greater in extremely wet or ex- age bin affect the performance of aeration sys- tremely dry grain. When grain is harvested at tems used to control the effects of moisture/tem- high moisture levels, the kernel is soft and plia- perature/humidity. Dropping grain into the ble. Moist kernels deform easily when a force center of a bin causes a cone to develop, with is applied and greater force is needed to thresh the lighter, less dense material concentrating wet kernels than dry ones. Thus, wet kernels in the center (in spoutlines) while the heavier, suffer more damage than drier ones. However, denser material flows to the sides. This impedes drier kernels can break when the same force airflow during aeration, and fosters mold is applied. Different optimal conditions thus growth. exist for each grain, In large horizontal storage areas, loading from the center or from a loader that is grad- In addition to grain breakage, factors such ually moved backward through the center of as weed control and kernel density, especially the building as the pile is formed causes simi- in wheat, also affect a combine’s ability to har- lar problems. If grain is piled over aeration vest and deliver clean grain. Cutting below the ducts on the floor by moving the loading de- lowest pod or wheat head inadvertently intro- vice back and forth, airflow will be greatly in- duces some soil into the combine. Most soil is creased. However, airflow distribution is not aspirated from the rear of the combine unless as uniform as in upright bins. Some methods the soil particles are about the same size as the of filling piles also result in segregation of fine kernel, in which case they pass through the materials. These accumulations are more sub- cleaning sieves with the grain. ject to insect and mold growth, and they divert airflow. But piles are difficult to aerate and the Harvesting technologies normally separate shape of some restricts uniform airflow. and remove material larger than the grain (such as plant parts) and material significantly smaller Nonuniform moisture levels can lead to spoil- (like sand and dirt). Sloping terrain, however, age in localized areas within a storage facility. can affect this process. Side slopes also create Moisture and temperature within a grain mass problems since the tendency is for material to will not remain uniform over time. Moisture congregate on the downhill side of the clean- will migrate in response to temperature differing shoe, entials. If the outside air is warmer than the grain, the circulation reverses, and the area of The main factor affecting the combine’s clean- condensation shifts to several feet below the ing performance is the amount and type of grain surface, although still in the center. weeds present in the field during harvest. Weed The effect of moisture migration on storage control is one of the most serious problems fac- is that grain assumed to be in a storable condi- ing many U.S. wheat producers. This is also tion is not. Cold weather migration primarily true for Southeastern U.S. soybean-producing affects grain in land-based storage, causing de- areas, where a warm, wet climate is conducive terioration as temperatures rise in the spring. to weed growth. The amount of weeds affects Warm weather migration is particularly vex- not only grain yield, but also the amount of for- ing for grain in transit from cold to warm areas eign material present in the harvested grain and of the United States and from the United States the combine’s ability to remove this material. .—

Combines are being modified to improve their The effect of repeated handlings on grain break- performance in weedy fields. In the case of age is cumulative and remains constant each wheat, kernel size has been decreasing, which time grain is handled or dropped. This is true complicates this modification. The trend whether or not the broken material is removed toward smaller kernel size is a concern because before subsequent handlings. the seeds of most grassy weeds are smaller and lighter than wheat. Thus, smaller wheat ker- The impact of grain breakage and fine mate- nel size reduces the margin between wheat and rials on all aspects of the system has resulted weed size and, therefore, increases the diffi- in the need to clean grain. Cleaning wheat in culty of cleaning within the combine. commercial handling facilities is normally limited to removing dockage, insects, and, to Rapidly drying moist grain with heated air a limited degree, shrunken and broken kernels. causes stress cracking. The drying operation For corn, cleaning regulates the amount of bro- itself does not cause grain breakage, but can ken kernels and foreign material; for soybeans, make grain more susceptible to breakage dur- it affects the amount of foreign material and ing handling later. Cleaning grain before it split soybeans, reaches the dryer can improve dryer efficiency. Introducing clean grain to the dryer: Cleaning corn to remove broken kernels and ● results in a more uniform airflow in the foreign material is required at each handling dryer and thus a more uniform moisture in order to meet contract specifications and content of the dried grain; avoid discounts. For wheat, however, most Ž decreases the static pressure (airflow re- dockage is generated during harvest, and nor- sistance) of the grain, thus increasing the mal handling does not cause significant in- airflow rate and dryer capacity; and creases. Therefore, cleaning is not required at ● eliminates the drying of material that each handling. Soybeans, on the other hand, detracts from final grain quality. fall somewhere in between regarding their breakage susceptibility and the amount of clean- Obviously, precleaning also has disadvan- ing required at each handling. tages. It requires additional investments in cleaners; the handling of wet, broken grain and The amount of grain cleaning required prior fine material; and the rapid sale of wet, easily to storage involves the factors of risk to grain molding material; and it results in some dry- deterioration as a result of mold and insect in- matter loss. Although the advantages of pre- vasions and the costs associated with maintain- cleaning wet grain are fairly well understood ing quality. Broken grains, grain dust, and other by dryer operators, most avoid precleaning. The fine materials have the greatest effect on the quality of the U.S. grain crop would improve performance of insect control interventions. substantially if precleaning were adopted. When a protective treatment is applied, grain dust may absorb much of the insecticide, which Mechanical damage during handling results reduces the effectiveness. Likewise when a fu- in grain breakage, which produces broken grain migant is applied, concentrations of dust and and fine materials. This causes a decrease in quality, greater storage problems, and an in- fine material may require increased dosages to penetrate the grain mass. Dust also inhibits crease in the rate at which mold and insects penetration of fumigant gases causing nonuni- tend to invade stored grain. form penetration. Research shows that breakage in handling is more significant for corn than for wheat and Ability of System to Maintain Quality.— soybeans. Higher moisture content and higher Technologies are in place to harvest, maintain, temperatures prove to be the best conditions and deliver high-quality grain. Each technol- to minimize breakage but are opposite of the ogy must be used, however, in a manner that optimal safe storage moisture and temperature. is conducive to maintaining quality. Although the data indicate that nearly any The most common problem is not running the combine can deliver acceptable grain quality, fans long enough to bring the entire grain mass farmer-operated combines tend to record more to a uniform temperature level. If a cooling front damage than the combine should deliver. From is moved through only part of the grain, a mois- a technology standpoint two areas need em- ture condensation problem is likely at the sur- phasis: face where the warm and cold grain meet. 1. increased education to help operators bet- In addition to aeration, the turning and trans- ter understand the interactions of cylinder/ fer process mixes grain and contributes to a rotor speed, concave openings, fan speed, more uniform moisture and temperature. In fa- and sieve openings with grain quality and cilities not equipped with aeration, turning has losses; and been the traditional means of grain cooling. 2. more monitoring devices and possibly This approach requires much more energy than automatic controls on combines to help aeration does, however, and it can contribute operators adjust or fine-tune the combine. to physical damage by breaking the kernel. Weed control and its relationship to kernel Grain in horizontal or pile storages cannot size and density are critical to optimum com- be turned because of the difficulty in unload- bine performance. Unless new technologies ad- ing and moving it. In order to turn grain, a han- dressing this area are developed or improved dling system must have empty bins that are con- weed control measures are forthcoming, the nected by a conveying system. This is not the combine’s ability to harvest and clean grain will case on most farms. continue to present problems. Most grain storage facilities provide a natu- A significant improvement in grain quality ral habitat for certain harmful insects even can be obtained by optimizing the dryer oper- when the facility is empty. Grain residue ating conditions of existing crossflow dryers, trapped in floor cracks and crevices, in wall by precleaning wet grain, by selecting the best and ceiling voids, and on ledges provides an grain genotypes, and by installing automatic ample supply of food to sustain several insect dryer controllers. species. Thorough cleaning is the first and most effective step toward preventing insect infesta- Molds will grow on any kernel or group of tion of freshly harvested grain. Because insects kernels that provide the right conditions. There- live from season to season, cleaning and remov- fore, moisture content and uniformity within ing trash and litter is important, Also, a thor- storage facilities are critical to maintaining ough cleaning should precede any insecticidal grain quality. Maintaining low temperatures treatment of storage facilities if the full value and moisture levels in grain is the principal way of the treatment is to be gained. to preserve grain quality and prevent damage from molds and insects. Aeration is also a very For several reasons, such as remoteness of fa- effective tool. The rate of development of both cilities, small amounts of grain to be treated, molds and insects is greatly reduced as tem- and lack of information, farm storage facilities perature is lowered. are often the inappropriate site for insect control treatment. Grain that has not received a Many storage bins, especially on the farm, properly applied treatment can become mixed are equipped with aeration systems but often with noninfested grain when marketed, mag- are not used effectively. Farm storage bins, nifying the problem and creating greater loss especially smaller and older ones, generally are and the need for more expensive and time- not aerated. Small bins will cool or warm consuming remedies later. quickly enough with the changing season that moisture condensation may not be a serious The high-speed, low-cost U.S. grain system problem. A majority of farm aeration systems does not readily accommodate special quality are either not operated at all or not used enough. needs. While these needs can be met by slow- 12 ing belt speed, installing and using cleaning one part of the problem. Quality must be evalu- equipment, eliminating unneeded handlings, ated in the context of technology, competition, and preserving the identity of grain, most of foreign demand, and processing requirements. these actions increase costs. Current grain standards are limited in four All factors affecting quality just discussed— important ways: nonuniform moisture, moisture migration, tem- 1. They create incentives for practices in- perature and humidity, insect invasion, and consistent with good management and effi- mold development—have an impact on grain ciency. mode of transpor- quality during shipment. No 2. They fail to identify many of the charac- tation is equipped with aeration, nor can grain teristics related to value in use. temperatures and corrective actions be taken 3. They fail to reward producers and handlers during shipment. Moisture migration can be for improved drying, harvesting, handling, more dramatic since grain may undergo sev- and variety selection. eral outside air temperature and humidity 4. Grade limitations on many factors are arbi- changes. This is especially true when grain is trary, sometimes not reflecting real differ- loaded in a cold climate and transported ences in value, and in some cases are not through warm waters rather quickly to a warm, consistent with statistical principles. humid climate. Therefore, moisture uniformity is critical to maintaining quality during No ideal standard will be found, and any re- shipments. visions would have to consider trade-offs. To move toward an ideal system, grain standards The interactions between technologies re- should be changed to include: garding moisture content and breakage on grain quality are evident. Each technology is capa- ● grade-determining factors; ble of preserving grain quality. Once inert ma- ● non-grade-determining factors; and terial such as weed seeds, dirt, stems, cobs, and ● definition and measurement technology for so on are removed from the grain, no further official criteria. cleaning is required. But grain, especially corn, Grade-determining factors should relate to must be cleaned to overcome breakage that is sanitary quality, purity, and soundness (absence inevitable due to handling in the system. Once of imperfections). Grade would be based on fac- grain quality deteriorates at any step in the proc- tors such as impurities, foreign material, total ess, it cannot be recovered. damage, and heat damage. The lower the values of any of those defects, the greater the value Grain Standards of the product. Standards should reward positive actions, Non-grade-determining factors would address such as genetic improvement and sound har- properties such as broken kernels, moisture, oil vesting, drying, and marketing practices. They and protein content, and other intrinsic char- should also incorporate descriptive terminol- acteristics or physical properties that influence ogy that provides the best information avail- values for major processing uses. Higher or able on the value of each shipment. All changes lower percentages for those do not necessarily must be evaluated against the criterion of pro- mean higher end-use value. Many chemical and viding information that is worth the cost of ob- physical properties that influence the quantity taining it. Optimum information, not maximum and quality of products derived from grain information, is the goal. Proposals for change probably are yet to be identified. More research must be tempered by current capabilities of the may add to the list of properties. The criteria industry, the cost of adjustments versus poten- for inclusion should be that the cost of obtain- tial benefits, the realities of international trading the information is less than the value of that ing rules, and history of the grain industry. information to users who need it. By starting Measurement and description of quality is only with the major products generated from each 13

grain, a list of physical and chemical proper- with standardization, traceability to standard ties can be developed that are correlated with reference methods, and calibration. In addition, the value in use. New rapid testing technology rapid tests must be evaluated in terms of speed, is also a requirement prior to inclusion. cost, accuracy, durability, and capability of handling wide ranges in quality. Official criteria factors would be those requested by buyers and sellers. These would be developed only after evidence of sufficient de- Buyers’ Attitudes mand to cover the cost. An extensive survey of domestic and over- Grain can be inspected many times as it seas grain buyers was conducted for this study moves from the farm to its ultimate destination. to determine their attitudes toward quality, Normally it is tested for one or more impor- grain standards, and merchandising practices. tant characteristics each time it is loaded into Several general points of importance were and out of a grain elevator. The number and clear. type of tests varies, from those provided for in the grain standards to measures of intrinsic First, to determine what is considered qual- characteristics not covered by the regulations. ity for any given grain, the ultimate use must first be known. Each domestic and overseas in- The U.S. Grain Standards Act (USGSA) re- dustry has defined quality in terms of the areas quires that standards be developed and used important to its markets. when marketing grain, Even though the tests provided for in the grain standards must be Regarding key attributes not currently cov- used, no requirement exists on who will per- ered by grain standards, no one set of quality form the tests and what tests will be performed attributes for wheat meets the demands for all on grain moving domestically in the United wheat products. Differences in what are con- States. In fact, two U.S. Department of Agri- sidered important attributes exist between do- culture agencies are authorized to perform test- mestic and overseas wheat millers and by re- ing services using the grain standards on do- gion of the world. Protein, hidden/dead insects, mestic grain movements. The only mandatory falling number, pesticide residue, mycotoxins, testing is performed by the Federal Grain In- and dough handling tests were considered the spection Service (FGIS) on export grain. most important. Falling number and pesticide residue were identified by both groups as tests Since no single policy on inspecting grain ex- that should be included in the wheat standard. ists, no one group is responsible for developing Hidden or dead insects were also identified by and overseeing the tests and equipment being domestic millers for inclusion. used. Regardless of which tests are performed and who performs them, several factors are im- For corn, the determination of important at- portant to testing. These include instrument tributes is industry-dependent except in areas precision, instrument standardization, the regarding wholesomeness, health, and safety. choice of reference methods and traceability Items such as stress cracking, breakage suscep- to standard reference methods when develop- tibility, and hardness are more important to wet ing rapid objective tests, calibration, and natu- and dry millers than to the feed industry. How- ral error resulting from sampling. ever, attributes such as pesticide residue, mold, mycotoxin, and hidden/dead insects are impor- As the relevance of additional tests performed tant to all those surveyed. on an ongoing basis becomes clearer, the need for standardizing equipment and procedures be- Commonality of important attributes is more comes more critical. Also, criteria must be evident in soybeans than in wheat or corn be- established to govern the design of rapid test tween domestic and overseas processors. The equipment. However, development of rapid most important attributes are protein, oil, and tests must meet the basic criteria associated free fatty acid content. 14

Second, the grain system’s ability to deliver tries. On the other hand, the quality required important quality attributes consistently is as by one corn industry is not necessarily impor- important as the attributes themselves. Prob- tant to others. This creates a situation whereby lems with uniformity are especially acute in decisions regarding corn quality must be as- wheat and corn. As processing technologies be- sessed in terms of major usage. Quality con- come more sophisticated, the demand for uni- cerns of different industries using wheat are formity will become more critical. somewhat overcome by the fact that different types of wheat exhibit different properties. Soy- U.S. Farm Policy bean quality is the least complex issue because the vast majority of soybeans are used to pro- Two important features of U.S. farm policies duce oil and meal. have an impact on several aspects of quality. The inverse relationship between yield and in- The varying quality requirements exhibited trinsic quality (e.g., protein in wheat) means the by these industries highlight the need for the target price program) has a negative long-term United States to become more aware of individ- impact on intrinsic quality. This is because the ual industry requirements if the goal is to pro- target price typically exceeds the market price, duce and deliver high-quality grain. The United creating an incentive to expand yields. Impacts States has developed the reputation as a con- vary by grain and region, depending on the ex- sistent supplier for any type and quality of grain tent of the inverse relationship. When target desired. To become a supplier of high-quality prices, which are based on yield, exceed mar- grains, it must become more quality-conscious ket prices and if the premiums associated with and develop a reputation as a high-quality sup- the measure of intrinsic quality are unchanged, plier. The Nation must understand the specific there are incentives to increase yield at the ex- quality requirements of its customers in order pense of intrinsic quality. This effect has been to match them with the quality delivered, and exacerbated in previous farm bills, which used must become more aware of the dynamic issues different methods of determining yield. The to- surrounding the qualities required by the mar- tal impact in the case of wheat has been to force ketplace. Areas such as technological advance- market premiums for wheat protein to relatively ments in processing technologies, government high levels in order to neutralize producers’ de- policies, customer preference, development of cisions. new finished products, and consumption pat- Administration of the loan rate program also terns all affect customers’ purchasing decisions has an impact on intrinsic quality, as well as and their definition of quality at any one point in time, on physical and sanitary quality. In particular, the market for measurable quality characteristics is distorted due to the fact that premiums Quality in the Marketplace and discounts on forfeited grains, especially wheat, are less than those determined in the Quality attributes required by individual in- market. Poorer quality grain is put under stor- dustries directly relate to the processing tech- age, and market differentials are depressed. nology used and the needs of the various finished products. In the case of corn, what may be considered high quality to feed manufac- Changing Role of Demand turers is not necessarily high quality for the wet Wheat, by its very nature, is the most com- and dry milling industries. Wheat, used in a plex of the three grains for defining quality be- multitude of products, has quality requirements cause of the vast array of products and proc- that differ not only by type and individual prod- essing technologies used to produce the uct, but between mills using the same type of products. Corn is somewhat less complex in wheat to produce flour for the same type of that fewer products are produced and quality product. Baking technologies for wheat flour concerns can be traced to the individual indus- vary not only in the United States, but also 15

within and between countries using wheat pur- Figure 1-2. - Importance of Uniformity chased from the United States; so defining one Between Shipments set of wheat quality characteristics for even one type of wheat or flour is not useful, High quality, as defined by the specific attributes required by each industry, is constantly changing. However, the ability to produce and deliver high-quality grain can mean more than just providing grain that meets specific test results. What constitutes high quality from the customer’s point of view can range from special handling (low-temperature drying of corn) to the uniformity of specific attributes within and between shipments. The OTA survey specifically asked respondents to rank the importance of uniform quality between shipments (figure I-2). Domestic and overseas respondents considered uniformity between shipments as being important even though they differed on which attributes were more critical. The results from the question regarding overseas millers’ preference for U.S. wheat compared to that of other exporters further demonstrates the importance of uniform- WET SOY WHT-D WHT-O ity. Canada and Australia stress uniformity be- Industries tween shipments and this fact generally ABBREVIATIONS: FEED = Feed manufacturers WHT-D = Wheat millers accounts for wheats from these countries be- DRY = Dry millers (domestic) ing ranked as first choice. WET = Wet millers WHT-O = Wheat millers SOY = Soybean processors (overseas) To further complicate the task of identifying a4 O Neutral 60 Moderately important important quality attributes for specific indus- 50 Slightly Important 70 Extremely important tries, some traditional measuring technologies SOURCE. Office of Technology Assessment, 1989 are not accepted by certain industries producing the same product. This fact stood out in significantly. While bread can be made by hand OTA survey results for domestic and overseas using low-protein wheat, large dough-mixers wheat millers. Tests for theological properties and other equipment found in large automated (extensograph, alveograph, and mixograph) bakeries place too much stress on low-protein were considered more important by overseas flour, resulting in unacceptable finished prod- wheat millers than by domestic millers, And ucts. The differences in how flour will be baked even though overseas millers considered these plays a very important role in determining the tests important, their importance varies by re- specific values for the various attributes region of the world. quired of the flour. As processing technologies become more so- In addition to advances in processing tech- phisticated through automation or as more nologies, technological advances in other areas demanding qualities are required for finished can have an impact on the quality required by products, the need for specific attributes within different industries. For many years, high- well-defined ranges becomes more critical. protein wheats have been blended with low- Technologies for baking bread, rolls, and sim- protein wheats to strengthen flour, More re- ilar products in large bakeries have advanced cently, vital wheat gluten, a product contain- 16 ing 75 to 80 percent protein, has been used as ency in delivering these attributes is taking on a flour fortifier. The recent expansion of vital increased importance. In other cases, individ- wheat gluten production is the result of tech- ual corn dry and wet milling companies are nological improvements in breadmaking, rapid placing more stringent demands on the qual- population growth, and increasing trend ity of corn they purchase. Companies are con- toward urbanization in some countries. tracting with farmers to grow certain varieties and perform special handling, such as low- Many countries striving to become self-suf- temperature drying. ficient in wheat Production are producing vital wheat gluten to fortify locally produced low- Traditional quality attributes, even though protein wheat. Some European processors are varied, may be influenced by technological ad- also producing isoglucose, a sweetener and vances, economic concerns, and government sugar substitute, from wheat starch (that por- policies here and abroad. For the United States tion of the wheat kernel remaining after the glu- to produce and deliver high-quality grain, it ten is extracted) to produce something similar must not only become increasingly aware of to corn sweetener in the United States. concerns over quality expressed by domestic and overseas industries and match quality to Corn, which has always been considered their wishes, but it must understand the reasons mainly as an animal feed, is beginning to ex- why countries purchase grain in the first place. perience pressures in areas similar to those Knowledge of customer preference, consump- affecting wheat. As feed manufacturing be- tion patterns, and the role of government pol- comes more sophisticated and automated, and icies is critical when considering steps the as customers (especially in the poultry indus- United States should take to enhance the qual- try) need strictly controlled and balanced diets, ity of grain in international trade. the demand for quality attributes and consist-

POLICY OPTIONS

The overall purpose of any policy change re- buyers and sellers interact. producers make lated to this grain issue must be to create an varietal and agronomic decisions in response environment that enhances grain quality. In to incentives. These, however, are also influ- general, the important features of the U.S. grain enced by farm programs. The demand for char- system are breeding, handling, grain standards, acteristics is influenced by end-use needs and and the market for quality characteristics. Each foreign competition. Merchants and handlers has an effect on grain quality. Institutions, pol- procure, handle, condition, and blend grain to icies, and trade practices have an impact on meet contract specifications. In addition, they these sectors, and therefore on quality. Policy make offers on what they can sell, and at what discussion in this country has traditionally fo- price differentials, based on the availability of cused on only one component of the system— quality characteristics and their conditioning grain standards. Yet given that it is the opera- capabilities. Each activity is influenced by the tion of the overall system that influences grain incentives established in the market, by trad- quality, a far greater number of policy options ing rules, and by grain standards, which pro- exist than are normally discussed. vide a description that is useful for transactions and which therefore facilitate trade. Relevant The notion of interdependence in the produc- end-use characteristics generally are not in- tion and marketing system with respect to qual- cluded in grain standards, however. ity is illustrated in figure 1-3. This triad could be viewed as a three-legged stool; each leg has The objectives of public and private plant an impact on quality as well as on the system. breeders in variety development include yield, Premiums and discounts for quality charac- disease resistance, harvestability, and quality. teristics are determined in the market, where In addition, participants have procedures and 17

Figure 1-3.—Components of the Interdependent no effort to coordinate or integrate policies Grain System affecting these activities. Any policy on grain standards will affect varietal development and Variety development I the efficiency of the market for quality charac- ● Plant breeders’ objectives teristics. Similarly, any policy affecting the market (e.g., incentives) will have an impact on va- ● Release criteria and procedures riety development and grain standards. The inability to measure intrinsic characteristics in I grain standards has implications for policies affecting the market and variety development.

Grain standards Policy changes could be focused on any system component, but the effectiveness must in- . Grade-determining factors clude impacts elsewhere. A number of phenom- ● Non-grade-determining ena that influence quality (e.g., weather) cannot factors be affected by policy and a number of policies ● Official criteria are short-run and only treat symptoms. Policies developed here aim to affect underlying causes of the problem, which over the long term would result in improved quality. Thus the policy op- w- tions are limited to three general categories— Market for quality characteristics variety controls, market intervention, and grain ● Producers standards (table 1-2). Within each are a multi- – Variety selection — Cultural practices, harvesting, handling tude of alternatives, and only selected ones are – Farm programs presented. Policies available are a continuum ● Handlers and merchants within each category rather than discrete – Condition and handle choices, as implied by the table. The emphasis – Contract/trade here is that policy should take the long view, ● End-users and it should have the objective of coordinat- – Foreign competition ing policies across the three sectors. – Domestic production – Products produced

Variety Controls SOURCE: Office of Technology Assessment, 1989 Three important considerations lead to the policy options listed under variety controls. criteria for variety release, Ultimately, the mar- First, with few exceptions grain standards do ket for seed determines the success of varieties. not measure important intrinsic characteristics. Some characteristics, e.g., yield, are more eas- Second, intrinsic quality characteristics differ ily measured than others by market partici- significantly across some grain varieties. Third, pants. Breeders also have some control over varieties are not visually distinguishable, thus intrinsic quality characteristics that are not eas- segregation in the market system is precluded, ily measured in today’s marketing system. resulting in increased uncertainty in end-use quality. These three points apply to some ex- The interdependence of the system’s compo- tent to each of the grains. The classic case is nents must be recognized in the evaluation of that of wheat, in which performance varies policy options with the objective of establish- across varieties, and increasingly it is becoming a more integrated relationship among them. ing difficult to differentiate wheat in the mar- In a number of other grain exporting countries, keting system. In some of these cases it may the policies are more integrated and better co- be easier to identify variety, or groups of vari- ordinated. In fact, the United States has made eties, than intrinsic characteristics. Further, ——

Table 1-2.—Fundamental Policy Alternatives

Variety controls Market intervention Grain standards No change Marketing board Mandatory USGSA inspection Variety identification/ Export bonus Single agency to approve testing categorization No change in loan policy Mandatory USGSA inspection in conjunction Variety licensing Increased differentials in government with NIST equipment approval policies Minimum quality specifications for farmer loans SOURCE: Office of Technology Assessment, 1989

identity of a variety provides more comprehen- If there is no change from the current system sive quality information than any subset of of administering variety release, the pressure measured quality characteristics. on grain standards to introduce measures of intrinsic quality will increase. Other countries Domestic processors attempt to resolve prob- use variety identification and release proce- lems of varietal differences, to some extent, by dures in part to reduce the pressure on grain purchasing by location or region. Foreign buy- standards to measure intrinsic quality. Alter- ers, however, or in general any buyers using natively, by incorporating intrinsic quality into purely grade specifications are precluded from farm program policies (discussed later), at least this alternative. some incentive could be built into the system to improve intrinsic quality. No Change Maintaining the status quo has four main im- Variety Identification Categorization plications. First, intrinsic quality characteristics will continue to lack uniformity among Any sort of variety identification or control States/regions/shipments. In the current sys- scheme would pose administrative challenges. tem, with only informal, uncoordinated vari- One alternative would be to provide a mecha- ety release criteria, many basic characteristics nism in which varieties can be identified in the differ among varieties. These characteristics market system. Such mechanisms currently ex- lose their identity in a market incapable of ist and are used in other exporting countries. measuring end-use characteristics. Conse- These consist of an affidavit system, random quently, important intrinsic quality differences testing using electrophoresis, and categoriza- existing regionally are not detected in the mar- tion. Producers would declare the variety at the keting system. point of first sale or loan application. This would provide information to handlers on seg- Second, problems will be created elsewhere regation based on grain categories or groups in the system due to the inability to measure of varieties. Categories would be developed intrinsic quality. In particular, increased pres- according to end-use similarity and could be- sure would be placed on grain standards to come part of the grain standards. measure intrinsic quality within the marketing system. Alternatively, variety or groups of varieties could become part of the contract governing Third, the current lack of information on in- the transaction, as is the case in the French sys- trinsic quality in some grains will continue, re- tem. The number of categories established inforcing current inefficiencies in the market. would vary by grain, depending on the three Fourth, productivity growth would be facili- considerations just discussed and on end-use tated to a greater extent given complete free- specificity. Thus, for example, if only one end dom on variety release and selection. use existed and the varieties did not differ suffi- 19 ciently with respect to intrinsic quality, only would be subjected to criteria administered at one category would be necessary. On the other a national level for release into the market sys- hand, for wheat, in which there are intrinsic tem, Licensing of varieties takes various forms differences across varieties and a multitude of in different exporting countries—from quite re- end uses, there would be a larger number of strictive, such as in Canada and Australia, to categories. The intent here would be to formal- fairly neutral, as in France. The intent of each, ize a mechanism not dissimilar from the cur- however, is to provide some mechanism that rent system of classification for wheat. The assures certain intrinsic characteristics, given difference, however, is that the current system that they cannot be easily detected in the mar- for classification relies on visual distinguish- ket system, and to apply uniform criteria ability, and categorization is based on fairly throughout the country, i.e., to reduce uncer- imprecise criteria. tainty of intrinsic characteristics through uniform application of release criteria. Adminis- A variety control scheme would increase in- tration would require procedures similar to formation (by category of varieties), thus in- those of the variety identification system just creasing the efficiency of the market in its al- described. In addition, some criteria would locative role. For most grains, variety is a better have to be established for categorization (i.e., indicator of quality than are selected tests for to license varieties by end use), and for admin- quality. Thus, buyers’ information regarding istration. quality would be improved. The increase in information would raise the efficiency of the mar- Licensing varieties would increase uniform- ket, resulting in improved signals being trans- ity and raise the ability to control intrinsic qual- mitted to producers, breeders, and end-users. ity, A formal mechanism could be provided for categorization relative to a simple variety iden- Such a program would pose a challenge for tification scheme. Due to locational differences administration in the United States, especially in quality, varieties would have to be licensed given the numerous varieties currently grown. by location and by end use. It would be further complicated by the fact that intrinsic quality depends not only on variety Depending on administration, this scheme but also on where it is grown and on local cli- could be viewed as restrictive, i.e., of produc- matic factors. tivity growth. However, this is not necessarily the case, as the situation in France indicates, Contract specifications would increase in This approach would be difficult to implement, complexity. The informational requirements complex to enforce, and likely to create a for contract specification would increase, par- bureaucracy. ticularly of foreign buyers. Depending on the extent of categorization, however, this complex- A stricter variety licensing system would have ity could be reduced. similar effects on other parts of the system as just discussed under variety identification. In Introduction of a variety identification particular, licenses could act as surrogate grain scheme would result in incentives and disin- standards for intrinsic characteristics. centives being readily associated with varieties with desired/undesired intrinsic characteristics. In addition, using a variety identification Market Intervention scheme would reduce pressure on the grain standards to measure intrinsic performance in Marketing Board the marketing system. Categorization of varieties would serve that function. Central to the U.S. system is the market in which prices are established. Embedded in this market, and all prices, are premiums and dis- Variety Licensing counts for measurable characteristics, which A more restrictive approach would be to in- allocate grain across different users. In addi- stitute a variety licensing scheme. Varieties tion, these quality characteristics provide in- 20 centives and disincentives for participants problems, thereby reducing the importance of throughout the marketing system. Several other quality measurement at the point of export. In countries accomplish this by some form of addition, variety release procedures could be board control. Thus, one option would be to in- easily administered in a board system. Incen- troduce a marketing board system in the United tives could be administered rather than hav- States to resolve quality problems. The empha- ing to rely on market determination. sis of the discussion here is on the implications of a board for quality, in particular, and the co- Export Bonus ordination of policies on quality. Other aspects of a board operation are more far-reaching (e.g., An alternative policy would be to establish bargaining power, resource allocation, impacts a bonus payable to exporters who deliver grain on non-board grains, impacts on physical co- having quality superior to that specified in the ordination) and are not discussed here. contract. Conceptually, this addresses the system’s merchant-handler component, This pol- A primary benefit of a marketing board would icy is discussed in the context of being applied be to coordinate the many aspects of the pro- at the point of export, but in general it could duction and marketing system that have an im- be applied elsewhere in the marketing system. pact on quality. Quality would be improved to the extent that only two transactions—one be- An export bonus program could have imme- tween producer and board, and another be- diate results, especially if tied to a physical or tween board and buyer—would take place. This sanitary quality characteristic. It would result is in contrast to the multitude of current trans- in an increase in quality perception, or in at- actions, all requiring measurement of quality. tention to the issue, Longevity should be a concern, however, in that if terminated, the effects Administration of price differentials would likely would not last. be more subjective and judgmental in such a Several im- system since transactions would take place Administration would be costly. without an active market. Indeed, market de- portant administrative points would need to be termination of price differentials is an impor- considered, First, which quality characteris- tant advantage and role of the U.S. marketing tic(s) would be tied to the bonus—physical, sani- system. tary, or intrinsic? Quality would improve on whatever characteristic received a bonus. De- Operating a grain marketing board in the pending on longevity, however, the bonus United States would be costly, given the com- would likely not influence intrinsic quality, Sec- plexity and breadth of the system. Countries ond, should the bonus be applied at the point with boards operate in relatively simple logisti- of export or origin? One risk is that importers cal systems, and with few grains. When either may manipulate the system by specifying a of these increases, as would be the case in the lower grade in order to receive the same grade United States, the problems associated with bu- they traditionally purchase, but at a lower price, reaucratic allocation decisions intensifies, The highly efficient U.S. grain handling and distri- An export bonus program, by definition, bution system, due in part to the competitive would be oriented to the merchants and han- environment, would be lost in a board-type sys- dlers in the system. It would provide incentives tem. Thus, it is likely the costs of imposing a for them to improve the quality on particular board system in the United States would out- attributes and for particular shipments to which weigh the benefits of quality improvements. the bonus was applied, Due to competition within the industry, any benefits would be dis- Imposition of a board system could reduce the tributed to appropriate decisionmakers so as emphasis on grain standards at the point of ex- to provide incentives. More information would port, and for that matter throughout the system. not be provided to the market, however, nor This is presuming that sufficient earlier con- would there be a reduction in information un- trols were imposed to resolve grain quality certainty, so the efficiency of the market would .—

21 not be improved. Breeders’ objectives and re- tives by using regulations and substantial lease criteria would be affected only to the ex- premiums and discounts for quality deviations. tent that the bonuses were applied to intrinsic Realigning the incentive system via farm pol- characteristics, and over very extended time icy addresses one component of the system, i.e., periods. the market for quality characteristics, That market already exists and develops premiums and No Change in Loan Policy discounts. But it is distorted somewhat by administration of the farm program. This pol- Another option is to leave unchanged the cur- icy option would thus be eliminating a distor- rent administration of the policy on loan for- tion, which would allow the market to func- feitures and grain stored for the Commodity tion more efficiently. Alternatively, farm policy Credit Corporation (CCC). The fundamental could take the lead by providing price differen- problem is that price differentials for loan for- tials at least equal to market differentials, to pro- feitures and transactions on CCC-owned grain vide incentives throughout the system. are substantially less than those in the market. The market for quality characteristics is there- CCC administers programs for handling and fore distorted. The loan and CCC storage prac- storing CCC-owned grain. Different rules are tices would continue to support the price of applied to country and terminal elevators. CCC lower quality grains. In addition, there would requires that terminal elevators deliver the qual- be essentially no change in intrinsic, physical, ity represented by the warehouse receipts and or sanitary quality from that of the current it discounts individual railcars. CCC does not system. pay terminal elevators for overdeliveries in Lower quality grain under extended storage quality. This is not the case for country eleva- could deteriorate more than if it were of superior tors, which are not subject to the same rejec- (physical and sanitary) quality. Growers would tion rules if the quality delivered is inferior to remain isolated from the market and therefore the warehouse receipts and which receive pay- incentives for improving quality would be ment for overdeliveries. masked. One of the few ways to legislate incentives The market is distorted in general in the al- into the system, particularly for intrinsic qual- location between storage and commercial sales, ity, is via the price differentials in the loan pro- with superior quality grain going to the latter. gram. This alternative consists of differentials Since the program does not effectively distin- associated with loans to be greater than or, al- guish intrinsic quality, loan rate disincentives ternatively, equal to the market. They could be are not effective at transmitting signals to pro- applied as currently done, on grades, or on spe- ducers. Thus, a major impact of not changing cific physical and sanitary quality criteria. A the policy would be to increase the role and func- very simple example would be a 4-cents/bushel tion of grain standards in measuring quality. price differential for clean wheat (i.e., less than 0.5 percent dockage). In addition, measures of Increased DifferentiaIs in intrinsic quality (e. g., falling number in wheat, Government Policies oil content in soybeans, or protein content in corn) could be incorporated, as in other The administration of premiums and dis- countries. counts for loan forfeitures and transactions involving CCC-owned grain could be revised to Because the relationship between market provide incentives to maintain or enhance qual- prices and loan values varies across grains, and ity. These could be attached to intrinsic as well because the participation rates vary, this pol- as other physical and sanitary quality charac- icy would have a greater impact on wheat than teristics. In a number of other countries, qual- on other grains. In addition, its impact would ity problems are addressed as a matter of agri- only be periodic due to the loan not being ef- cultural policy, These take the form of incen- fective all the time. 22

If the loan supported prices of higher quality Minimum Quality Specifications grain, lower value grain would be forced into for Loans the market, as opposed to into the loan program, An alternative used in many countries is that as currently happens. Thus, there would be an of minimal receival standards on grain enter- increase in the amount of grain going into altering the marketing system. Normally grain mar- native uses, with lower end value. The most keting is integrally related to prices and pol- vivid example is the use of wheat as animal feed. icies (e.g., initial payments) and therefore it is Incentives for intrinsic quality could be rela- difficult to isolate physical marketing from pric- tively easily incorporated into the loan program ing. (i.e., relative to measuring them in the market- As developed here, minimum quality speci- ing system). fications would be applied to grain entering the loan program as opposed to grain entering the Some type of mechanism for quality meas- marketing system. The global application of urement would have to be developed for grain minimum quality specifications to the U.S. mar- going under loan, e.g., through farmers submit- keting system would be next to impossible to ting samples. Establishment of the optimum implement since a majority of grain under loan price differentials would be difficult to adminis stored on farms. ister. This is especially true given the large number of U.S. markets and given that—at least in The concept of setting minimum quality spec- the past—loans have to be announced long be- ifications for loans is similar to the option just fore crop quality is determined. discussed, except that a constraint, rather than a price incentive, is used for entry into the loan. Country elevators would be forced to become Minimum quality specifications could be applied more concerned with maintaining quality, and to physical characteristics (e.g., minimal dock- CCC would be guaranteed that the quality of age) or intrinsic characteristics (e.g., variety, grain received into the country elevator would protein, falling number, oil, or meal protein). be delivered out of the elevator. This change If these were integrated into the loan program, in policy would also relieve the pressure of the potential exists for grain not meeting those maintaining discount schedules that reflect the specifications to be diverted to the export mar- market, in that CCC would not accept quality ket. One way to help minimize this would be below that specified in the warehouse receipts. to use whatever quality specification has been established for government programs as a ba- This particular alternative addresses the mar- sis for rejecting grain going into an export ele- ket for quality characteristics, and provides vator. This would have the added benefit of re- incentives in an important market for some ducing the spread of qualities available for grains. Changing the current system would have blending within the export elevator. a number of system benefits. First, to the extent that intrinsic characteristics are used, va- This policy option would have many of the riety development would be favorably affected. same advantages as increased differentials in Signals from this important market would be government policies. But the minimums would transmitted directly to breeders and would af- be difficult to establish and maintain in today’s fect their breeding objectives and release cri- political environment. The desirable quality teria. Thus, this provides somewhat of a sur- characteristics to be incorporated in the loan rogate for variety control. Second, there would program could also be those not easily meas- be somewhat reduced pressure to measure in- ured in the marketing system. Depending on trinsic quality in grain standards. In the ex- the minimum quality specifications (physical, treme of a proactive farm policy, together with sanitary, intrinsic, or variety), farmers could variety identification/licensing, the role and be required to certify the variety planted or to function of grain standards could be reduced submit samples of the grain being stored for to some extent toward measuring physical and testing as directed by the U.S. Department of sanitary quality characteristics. Agriculture. 23

Use of minimum quality specifications could ment on one government agency. The basic also solve, or contribute to, the resolution of framework is in place through the delegated problems elsewhere in the system. Desirable and designated agencies, which already own varieties or intrinsic characteristics, if used, approved equipment and have trained employ- would transmit signals to breeders. These ees who use FGIS-published procedures. Even would influence their objectives and release cri- though these agencies are in place, their abil- teria. In addition, the role and function of grain ity to cover the wide areas required to meet the standards in the marketing system as they per- needs of country elevators receiving trucks is tain to measuring intrinsic quality could be re- severely limited. This fact, coupled with past duced to some extent. problems of regulating truck movement, makes this policy option only applicable to railcar and Grain Standards barge shipments. The U.S. Grain Standards Act states that it Imposing this requirement on the market will is Congress’ intent to promote the marketing increase costs associated with obtaining inspec- of high-quality grain to both domestic and for- tion of grain that would not normally have to eign buyers, and that the primary objective for be inspected (i.e., grain moving from one facil- grain standards is to certify grain quality as ac- ity to another owned by the same company). curately as practicable. Approval of Testing by Mandatory USGSA Inspection a Single Agency The Federal Grain Inspection Service es- The National Institute of Standards and tablishes grain standards, which includes de- Technology* (NIST), through the National Con- veloping technology to measure the factors ference of Weights and Measures, standardizes contained in the standard. The agency also de- weights and measures by developing specifica- velops and publishes sampling and inspection tions for instrument precision and accuracy procedures, evaluates and approves inspection along with scale tolerances. Currently, NIST equipment for use during inspection, monitors addresses neither grain measures other than the inspection accuracy of its employees and weights nor sampling equipment. In some in- licensed inspectors, and periodically tests sam- stances, individual States have developed cri- pling and inspection equipment for accuracy. teria for approving inspection equipment and Mandatory export inspection is required and monitored equipment accuracy. (Moisture a system of delegated and designated agencies, meters and mechanical truck probes are prime along with FGIS oversight, is in place to per- examples.) form domestic inspections upon request. There- NIST, in consultation with FGIS, could take fore, a basic structure is in place for approving the lead in developing and maintaining equip- and overseeing all equipment and procedures ment specifications and maintenance toler- used for measuring grain quality character- ances. These actions could be in conjunction istics. with developing new tests that would be in- Having mandatory inspection on interstate cluded in the standards by FGIS. All equipment grain shipments would ensure that the factors used to measure grain quality attributes would covered by the standards are tested using ap- then be standardized and traceable to national proved equipment and procedures. It would pro- standards. Variations in testing results intro- vide consistency in test results in that the iden- duced by a wide range of equipment accura- tical procedures are used for each inspection cies would be minimized. Only approved equip- in the marketplace and are performed by independent, government-sponsored agencies. *The National Bureau of Standards was recently renamed the National Institute of Standards and Technology (NIST) with the Mandatory inspection would focus the pri- passage of the Omnibus Trade and Competitiveness Act of 1988 mary responsibility y for grain quality measure- (Public Law 100-418) as of August 1988. 24 ment could be used to provide testing results, grain testing area. Even though USGSA inspec- and NIST oversight would ensure accurate tion would not be performed, those groups that testing. do perform testing would be required to use approved equipment and to follow user require- The basic framework is in place for this pol- ments spelled out in the NIST approval. This icy option in that NIST already has established would be the same equipment and user require- approval procedures, publishes user requirements that USGSA inspectors use. ments, and enforces its provisions through State organizations. Having NIST be ultimately re- This policy option would allow country ele- sponsible for approving grain testing equipment vators to continue to perform their own testing that serves as the basis for the grain standards services on grain received from the farmer, thus has the advantage of placing responsibility in reducing the potential increase in costs associ- an agency that does not have a vested interest ated with mandatory USGSA inspection. How- in the equipment’s use. Yet, NIST does not ever, it would create more uniform testing since cover tests that are subjective in nature, such anyone performing grain quality testing will as odor, wheat classing, and the determination be required to use NIST-approved equipment of damaged kernels. Nor does the bureau have and to follow published user requirements. Cou- any experience in basing a national standard- pled with the NIST State support systems al- ization program on reference methods that are ready in place to oversee equipment accuracy defined rather than proven. and ensure that user requirements are followed, Other than equipment approved by FGIS or NIST involvement would provide oversight in individual States, no other equipment is ap- previously uncovered areas. proved. Converting to approved equipment would result in increased costs for those hav- Interaction Between Standards, ing to dispose of unapproved equipment and Variety Control, and Market purchase other equipment. This policy option does not address who will use the equipment Intervention and when it will be used. The interdependence between variety control, market intervention, and grain standards is Mandatory USGSA Inspection in complex. The debate over grain quality has fo- Conjunction With NIST Equipment cused primarily on grain standards, but physi- Approval cal, sanitary, and intrinsic grain qualities are A policy that requires mandatory USGSA a function of the variety planted, farmer prac- inspection on grain moving in interstate tices, environment and geographic location, commerce and a broadening of NIST involve- handling practices, end-user preferences, mar- ment into grain sampling and testing equipment keting, government policies, and the system’s captures the advantages of both these options ability to measure these factors accurately. while minimizing many of the disadvantages Therefore, policy options have an impact on of either. many areas, not just on grain standards. The advantages of mandatory inspection Policy alternatives outlined in the variety con- on railcars and barges moving in interstate trol section address intrinsic quality character- commerce ensures that consistent sampling istics, since physical and sanitary quality can- and testing are performed on both subjective not be addressed through such programs. Policy as well as objective factors and that one agency choices discussed in the market intervention is responsible for grain testing as well as stand- section can address the easily measurable fac- ards development. The inability to perform tors for physical and sanitary quality, and can USGSA testing on trucks and at country eleva- be expanded to deal with intrinsic quality at- tors can be offset to some extent by involving tributes once technology is developed to meas- NIST and its related support systems in the ure them in the marketplace. 25

In both the variety control and market inter- ing the United States in terms of grain quality— vention sections, an option for no change in whether physical, sanitary, or intrinsic—is that present policies has been provided. Such an ap- all grain, no matter the quality, is accepted into proach places the responsibility for physical, the system and marketed. This places enormous sanitary, and intrinsic quality solely on grain strain on the system’s handling and inspection standards. For the physical and many sanitary capabilities and is the cause of most of the quality concerns, relying on the grain stand- blending controversies. ards is a relatively simple matter that does not involve adoption of new technology. It involves Conclusions taking existing factors and applying appropri- The production and marketing of grain in the ate criteria. Several factors could be combined United States is a highly interdependent sys- (as is the case of foreign material and dockage tem of activities. Any policy designed to en- in wheat, as many have suggested, as either hance grain quality—physical, sanitary, or grade-determining or non-grade-determining) intrinsic—must address this interdependence. or factors could be separated (as is the case with Traditional policy discussions, however, have broken kernels and foreign material in corn) focused on only one component—grain stand- to describe quality more accurately. In addi- ards. But a properly functioning market can tion to rearranging existing factors into grade- solve many grain quality problems. Therefore, determining, non-grade-determining, or official a fundamental policy alternative would be one criteria, fixed percentages could be established that creates an environment that would im- for certain factors that transcend all grades (e.g., prove market efficiency. In addition, appropri- maximum level of dockage in wheat or maxi- ate quality information must be provided so that mum moisture levels in corn and soybeans). relevant incentives and disincentives can be Limits for current factors (e.g., stones or live established to improve market efficiency. insects) could also be tightened. Evaluating policy options in terms of their Making no change to variety control systems strengths and weaknesses as well as their in- or market intervention has a dramatic impact terdependence is a complex task. One possible on grain standards, however, in that they must policy path that maximizes the strengths of the be able to address the buyer’s desire for infor- various options as well as minimizes their weak- mation on important intrinsic characteristics nesses is to adopt variety identification/ and take the lead in establishing signals regard- categorization, increase the differentials in loan ing quality for the entire system. At the moment, policy and specify minimum quality for farm technology to measure intrinsic attributes eas- loans, and introduce mandatory USGSA inspec- ily in the marketplace is not available. If stand- tion in conjunction with NIST equipment ap- ards are to be the vehicle for providing infor- proval. mation on intrinsic and many new sanitary Introducing a variety identification scheme quality characteristics (e.g., pesticide residue), would improve information on intrinsic qual- resources must be provided to develop the tech- ity characteristics, thus reducing the pressure nologies needed to measure them accurately and on grain standards to measure intrinsic per- easily before the market can respond. It will take formance in the market. For most grains, vari- many years to research and develop new tests ety indicates quality better than selected tests that could be put on-line before signals begin do. The increased information resulting from to be transmitted back through the system. variety identification would raise the efficiency In addition to identifying what factors the of the market, resulting in incentives/disincen- standards should measure and whether factors tives being transmitted to producers, breeders, are grade-determining, non-grade-determining, handlers, and end users. Variety identification or official criteria, the way the standards are alone, however, does not address physical or implemented can also have a dramatic impact sanitary quality concerns, which must be tack- on grain quality. One of the major problems fac- led in other areas.

88-378 - 89 - 2 Removing the distortion created by the cur- The need for accurate measurement of im- rent administration of premiums and discounts portant characteristics—whether physical, sani- for loan forfeitures and applying the same rules tary, or intrinsic—is crucial to providing infor- to country and terminal elevators storing gov- mation for the market to function properly. The ernment grain would allow the market—which vehicle by which quality information is trans- has already established premiums and dis- mitted throughout the system is grain stand- counts—to function properly. Grain of lower ards. Incentives and disincentives cannot be value would be forced onto the market as op- established unless accurate, consistent, and posed to entering government programs. To the timely information is provided in the market. extent that intrinsic quality characteristics are This can be accomplished by continued efforts included, variety development would be af- to incorporate the four objectives of grain stand- fected. Signals from government programs ards, by implementing mandatory inspection, would be directly transmitted to farmers that and by increasing NIST involvement in approv- would affect their decisions on varieties ing grain sampling and testing equipment. planted, thus influencing breeders’ objectives Mandatory inspection of railcars and barges and release criteria. would ensure that consistent sampling and test- Setting minimum quality specifications for ing were performed. Used in conjunction with loans places an additional constraint on entry minimum quality specifications on grain en- into the loan program. These could easily be tering export elevators, this would ensure that applied to physical and sanitary quality char- one government agency was responsible for acteristics as well as measurable intrinsic char- testing quality. The increased presence of NIST acteristics and, along with the variety identifi- in approving grain sampling and testing equip- cation scheme, would reinforce signals being ment would ensure that all parties testing grain transmitted throughout the system. Farmers quality used approved equipment and followed would be required to obtain testing of grain that basic user requirements. was going into the loan program and being Grain quality is a function of the variety stored on farm, rather that self-certifying qual- planted, farmer practices, environment and geo- ity as is presently the case. graphic location, handling practices, end-user Implementing such policies on government preferences, marketing, government policies, programs and minimum quality specifications and the ability of grain standards to provide could force lower quality grain into the export information on important quality characteris- market. Therefore, minimum quality specifica- tics. Present policy does not recognize the in- tions established for entry into government pro- terrelatedness of these factors. Policy changes, grams could be applied to grain entering export therefore, must create an integrated policy for elevators. This would transmit signals for im- enhancing grain quality. proved quality throughout the system and would reduce the spread of qualities available for blending at export locations. Chapter 2 An Overview of the U.S. Grain System —

CONTENTS

Grain Production...... ● ☛✎✌✎✎✎ ✎✎✌✎✌✎☛✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎✎✌☛ Wheat ...... ✎✎✎✎✌✌ ● ✎✎✌✎☛☛ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ Corn ...... ✎☛☛✎✎✎✎ ✎✎✎✎☛☛✎☛ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✌✌✌✎ Soybeans ...... ✎ ✎ ✎ ✎ ✎ ✎ ✎✎☛✌✎✎✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ Utilization ...... ✎ ✎ ✎ ✎ ✎ ✎ ✎ Wheat...... ● ...,,.0 Corn ...... ,...,. .*..*.., ...,.,...... Soybeans ...... *..,.* ..,.*...... ,,* Export Markets...... ,...,. ● ,,*.*. ....,** .**.... Grain Flow...... *...., .*..,.,, ...... ,0 Storage and Handling...... ,...,. ● ...... ,**,., ......

Marketing of Grain ...... ,..,...... ● **...... ● Government Farm Policy ...... Loan Program...... ● O Deficiency Payment/Target Price Program ...... *,*. ....,.., ● *.. Quality Control...... ~...... ,...., . . . .,...** ...... ● ,*...... Quality as an Issue ...... ● ☛ ,,...... *.,*.*...... ,.,.

Chapter preferences ...... ✎✎✌✌✌✎✎ .0 ...*,, ,,,...... *,*..

Figures Figure Page 2-1. U.S. Share of World Wheat, Corn, and Soybean Production,

2-2. U.S. Export Market Shares in Wheat, Corn, and Soybeans, 1970-88, ...... 2-3. Wheat-Producing Areas of the United States ...... 2-4. Grain Flow From Farm to Final Destination...... 37 2-5. Flow of Grain Through the Country Elevator ...... 39 2-6. Flow of Grain Through the Export Elevator ...... 40

Table Page 2-1. U.S. Wheat, Corn, and Soybean Production, 2-2. U.S. Utilization of Wheat by Type of Use, 1971.88 ...... 2-3. U.S. Utilization of Corn by Type of Use, 1971-88 ...... 2-4. U.S. Utilization of Soybeans by Type of Use, 1971-88 ...... 2-5. Distribution of U.S. Wheat Exports by Destination, 1970-86, ...... 2-6. Distribution of U.S. Corn Exports by Destination, 1970-86 ...... 2-7. Distribution of U.S. Soybean Exports by Destination, 1970-86 ...... 2-8. Quantity of Grain Hauled by Rail and Barges, 1974-85 ...... Chapter 2 An Overview of the U.S. Grain System

The United States grain industry has many ducer of wheat (figure 2-I). Third, a buyer can characteristics that make it a formidable com- purchase nearly any type of grain at any time petitor in world markets. First, it has the capa- of the year from the United States. For many bility to meet almost any demand. During the other countries this is not possible. Fourth, the 1970s, when conditions caused a dramatic in- Nation has the capability to move grain from crease in demand, the Nation showed it had farm to terminal to overseas buyer very effi- the productive and distributional capability to ciently. This is because of the extensive inter- meet that demand. Second, the United States state highway system, rail system, and water- can produce almost any type of grain. Of the ways. In addition, its high-volume, high-speed major grains, it is the world’s largest producer elevator facilities—both inland and export— of corn and soybeans and the fourth largest pro- are as efficient as any in the world.

Figure 2-1. -U.S. Share of World Wheat, Corn, and Soybean Production, 1970-88 (percentage)

SOURCES: 1 197&s3: s Evans, “wheat: Background for 1965 Farm Legislation,” Agriculture Information Bulletin No 467, U S Department of Agriculture (USDA), Economic Research service (ERS), Washington, DC, 1964, 1984-88: USDA, Foreign Agricultural service (FAS), “World Gram Sltuatlon and Outlook,” Circular series FG 10-88, Washington, DC, October 1966 2 197H1: USDA, ERS, ‘mm, Background for 1965 Farm Le?yslatlon,” Information Bulletln No 471, Washington, DC 1964, 1982-88: USDA, FAS, ‘World Grain Situation and Outlook,” Circular Series FG 10 66, Washington, DC, October 1966 3 lg70_81: USDA, ERS, ‘Soytxans, Background for 1965 Farm Lewlahon,’” Agriculture Information Bulletin No 472, Washington, DC, 1964, 1982-88: USDA, FAS, “World OIlseed Sltuatlon and Market Hlghltghts,” Circular Series FOP 10-66, Washington, DC, October 1966 4 As of October 1966

29 30

Notwithstanding all these strengths, the abil- continued unabated. By 1986, the Nation’s ex- ity of the United States to compete in world port and net trade position had almost returned markets has been called into question recently. to 1970 levels. The U.S. agriculture industry Such a question would have seemed absurd 10 confronted the possibility that it might face the years ago when the value and volume of U.S. kind of trade problems that had plagued the grain and oilseed exports increased enor- steel, automobile, and semiconductor indus- mously. The U.S. share of world markets tries. One congressional attempt to respond to seemed secure (figure 2-2); the value of agri- this situation was the Grain Quality Improve- cultural exports more than doubled in real ment Act of 1986. terms between 1970 and 1980, with the real value of U.S. grain exports more than tripling. A number of factors have been listed by trade Agricultural exports were considered the bright experts as causing the decline in agricultural spot in the generally poor U.S. trade perform- exports, including global recession, the strong ance across all economic sectors. In 1981, how- U.S. dollar, high price-support levels, European ever, wheat, corn, and soybean exports fell Economic Community restrictions, and in- sharply while slow but consistent growth in im- creased world productive capacity. However, ports of a large variety of agricultural products another factor emerging is grain quality and

Figure 2-2. -U.S. Export Market Shares In Wheat, Corn, and Soybeans, 1970-88 (percentage)

SOURCES:

1 t97~: s Evans, wheat: ~ckgmund for lg&j Farm Lagislati~n,” A9rI~u~um Information Bulletin No 467, IJ S @pafiment of Agriculture (USDA), Economic Research ServIca (ERS), Washington, DC, 1964; 1984-U: USDA, Foretgn Agricultural Service (FAS), “World Gram Situation and Outlook,” Cwcular series FG 10-66, Washington, DC, October 1966 2 197H1: USDA, ERS, “corn, ~ckgmund for 1= Farm Legislation,” information 8ulletin NO 471, Washington, ~ 19S4; 1942-U: USDA, FAS, “World Grain Situation and Outlook,” Circular Series FG 10-66, Washington, DC, October 1966

3 197~1: USDA, ERS, ,-~y~an~, ~ckgfound for l= Farm Legi$Jat~n,” Agricu~ure Information Bulletin NO 472, Washington, m, 1964; 1SS248: USDA, FAS, “World Oilsead Situation and Market Highlights,” Cwcular Series FOP 10-66, Washington, DC, October 1966 4 As of October 1966 31 its use as a competitive tool in international specific complaints include: excessive amounts markets. The factors listed above are consid- of material other than grain in the shipment; ered the major contributors to the decline in quality attributes, such as wheat protein, not world market share. But as the dollar weakens meeting contract specifications; grain (mainly and lower price-support levels take effect, al- corn and soybeans) arriving out of condition, lowing U.S. exports to become more price-com- e.g., moldy or infested; and grain arriving in petitive, opportunities to increase exports may a broken or cracked condition. be hampered by foreign buyers’ concerns about This report focuses on the enhancement of U.S. grain quality. grain quality, To put that issue in perspective, Importers of U.S. grain have become more it is important to understand how the U.S. grain vocal in their concern about quality. Formal system operates. The following sections pro- complaints made by buyers to the U.S. Depart- vide an overview of grain production, end uses, ment of Agriculture (USDA) have increased export markets, grain flow, Government pro- yearly. In 1987 over 60 complaints concerning grams, and quality control, which are described quality were received at USDA. This number in the rest of this assessment. The chapter ends is a conservative estimate of the true concern with a discussion of the quality issue and a def- since the amount of paperwork involved dis- inition of quality. courages the filing of complaints. Examples of

GRAIN PRODUCTION

Production trends in the United States from Table 2-1.—U.S. Wheat, Corn, and Soybean 1971 to 1986 are shown in table 2-1. Annual Production, 1971-88 (millions of bushels) wheat production averaged 1.7 billion bushels Year Wheat Soybeans Corn during the first 4 years of this period. By 1979, 1971 ...... 1,618.6 1,176.1 5,641.0 yearly production had increased to 2.1 billion 1972 ...... 1,546.2 1,270.6 5,573.0 bushels, and it peaked at 2.8 billion bushels by 1973 ...... 1,170.8 1,547.5 5,647.0 1974 ...... 1,781.9 1,216.3 4,701.4 1981. Overall, wheat production has increased 1975 ...... 2,126.9 1,547.4 5,829.0 29 percent since 1971. 1976 ...... 2,148.8 1,287.6 6,266.4 1977 ...... 2,045.0 1,767.0 6,425.5 From 1971 to 1975, corn production averaged 1978 ...... 1,775.5 1,869.0 7,081.8 5.5 billion bushels per year. Production in- 1979 ...... 2,134.1 2,268,0 7,938.8 1980 ...... 2,380.9 1,798.0 6,644.8 creased to 7.9 billion bushels by 1979. In 1983, 1981 ...... 2,785.4 1,989.0 8,201.6 corn production was drastically reduced as a 1982 ...... 2,765.0 2,190.0 8,235.1 result of the payment-in-kind program. But in 1983 ...... 2,419.8 1,636.0 4,174.7 1984 ...... 2,594.8 1,861.0 7,674.0 1985, it peaked at 8.9 billion bushels. However, 1985 ...... 2,425.1 2,099.0 8,876.7 in 1988 corn production dropped to only 4.5 1986 ...... 2,086.8 1,940.0 8,252.8 billion bushels because of the severe drought. 1987 ...... 2,105.0 1,905.0 7,064.0 1988* ...... 1,821 .0 1,472.0 4,462.0 Corn production overall has increased 46 per- ‘Preliminary cent since 1971. SOURCE U S. Department of Agriculture, “CropProducflon, ” Agricultural SIatlstlcs Board, National Agricultural Statistics Serv!ce CrPr 2-2, Yearly soybean production averaged 1.3 bil- Washington, DC, various issues. lion bushels per year during the years 1971 to 1976; output peaked at 2.3 billion bushels in 1979, and stayed around 2.0 billion bushels by 1986. But it was reduced to 1.5 billion bushels Figure 2-3 shows the general areas where in 1988 because of the drought. Overall, soy- various wheat types are grown. Forty-two States bean production has increased 71 percent since produce various wheat types. However, almost 1971. 42 percent is produced in just five States: —

Figure 2-3. --Wheat-Producing Areas of the United States

Soft Red Winter Hard Red Winter

Where different kinds of wheat are grown in the United States

The map indicates the general areas in which the various kinds of wheat are grown. The classes of wheat grown in an area are determined by climate, soil, rainfall, and irrigation. White

Durum

SOURCE: Wheat Flour Institute, “From Wheat to Flour,” revised cd., WaShln@On, DC, 19S1. Kansas, Oklahoma, Texas, Nebraska, and Col- is grown mainly in North Dakota and Montana, orado. These five produce Hard Red Winter White wheat is grown mainly in the Pacific wheat—the major type grown in the United Northwest, and Soft Red Winter wheat is grown States. from Missouri to Ohio and in the Atlantic States. About one-fourth of the wheat produced in the United States is grown in North and South Dakota, Minnesota, and Montana. These States produce Hard Red Spring wheat. Of the sev- Corn is produced in 47 States. The six Corn eral other wheat types produced, Durum wheat Belt States—Iowa, Illinois, Indiana, Nebraska, —

Minnesota, and Ohio—produced about 70 per- Soybeans cent of the 1985 corn crop. Historically these six have been the dominant corn-producing Soybeans are produced in 29 States. Six ac- States. Corn production in recent years, how- count for almost two-thirds of the output: Il- linois, Iowa, Indiana, Missouri, Ohio, and Min- ever, has increased in other parts of the country. This has been the result of new, short- nesota. In fact, Illinois and Iowa accounted for 33 percent of the total 1985 crop and were the season hybrid seed corn that has increased yields in Northern States like North Dakota and dominant producers. New York, and of Government programs that have made corn production profitable in States with relatively high production costs.

UTILIZATION

Each grain has multiple uses and is impor- 68 percent of U.S. wheat was exported. The ex- tant in world markets. In this section the vari- port market share has declined since then to ous uses of each will be discussed as well as less than 50 percent of total wheat use. the magnitude of the dependence on export Almost all wheat, other than that fed directly markets. to livestock, is milled into flour for producing a variety of bakery products for human consumption. Wheat is unique in that it is the only cereal grain with sufficient gluten content to Wheat is used for domestic food consump- make a loaf of bread without being mixed with tion, export, animal feed, and seed (table 2-2). another grain. The proportion used for domestic purposes has fluctuated between 32 and 53 percent over the Corn past 15 years. Wheat is very dependent on the export market. The export market has grown The major use for corn is domestic animal since 1971, and by the early 1980s as much as feed, accounting for well over half the corn con-

a Table 2-2.— U.S. Utilization of Wheat by Type of Use, 1971-88 (million bushels and percentage)

Domestic Export Animal Total share share Year Food Seed feed domestic (percent) Exports (percent) 1971-72 ...... 523.7 63.2 262.4 849.3 58.2 609.8 41.8 1972 -73 ...... 531.8 67.4 199.8 799.0 41.3 1,135.0 58.7 1973 -74 ...... 544.3 84.1 125.1 753.5 56.1 1,217.0 43.9 1974 -75 ...... 545.0 92.0 34.9 671.9 39.7 1,018,5 60.3 1975 -76...., ...... 588.6 99.0 38.3 725.9 38.2 1,172.9 61.8 1976 -77 ...... 588.0 92.0 74.4 754.4 44.2 949.5 55.8 1977 -78 ...... 586.5 80.0 192.5 859.0 43.3 1,123,9 56.7 1978-79 ...... 592.4 87.0 157.6 837.0 41.2 1,194,1 58.8 1979-80 ...... 596.1 101.0 86.0 783.1 36.2 1,375,2 63.8 1980 -81 ...... 610.5 113.0 59.0 782.5 34.1 1,513,8 65.9 1981 -82 ...... 602.4 110.0 134.8 847.2 32.4 1,770.7 67.6 1982 -83 ...... 616.4 97.0 194.8 908.2 37.6 1,508,7 62.4 1983-84 ...... 642.6 100.0 369.1 1,111.7 43.8 1,428.6 56.2 1984 -85 ...... 651.0 98.0 404.5 1,153.5 44.7 1,424.1 55.3 1985-86 ...... 678.1 93.0 273.5 1,044,6 53.3 915.4 46.7 1986 -87...., ...... 696.0 84.0 413.3 1,193,3 54.3 1,003,5 45.7 1987-88 b ...... 719.0 85.0 280.1 1,084.2 40.5 1,592.1 59.5 ~Differences between utilization and production are attributable to imports Preliminary SOURCE U S Department of Agriculture, “Wheat Sltuatlon and Outlook Report, ” Economic Research Service, Washington, DC various Issues —. ———

34 sumed in the United States (table 2-3). Feed use More than half the corn starch manufactured has fluctuated with prices and livestock inven- from the wet milling process is converted into tory. Other domestic uses include food/indus- corn syrups and corn sugar. Corn starches and trial use and seed. Industrial use has shown sugars are used for human foods, beverages, steady growth since 1971. Total domestic corn industrial products, and livestock feeds. Corn usage has accounted for 70 to 85 percent of syrup is used in human foods, beverages, and usage over the past 15 years. Corn is not as de- industrial products. Crude corn oil, which is pendent as wheat on world markets, but as extracted during starch recovery, is used for much as 30 percent of total usage is exported human food, industrial products, and animal in some years. feed. The water used to soak the corn, commonly referred to as steepwater, is used in phar- Feed grains, which include corn, are char- maceuticals and liquid animal feed. acterized as high-energy grains due to their relatively high levels of nitrogen-free extract (principally starch) and low levels of crude fiber (4). Soybeans Nearly all feed grains are highly palatable to livestock. Corn is the leader in the amount of Soybeans are processed for domestic food energy contained. However, several byproducts and feed consumption, used for seed, and ex- from corn used by food manufacturers are also ported. Domestic processing is the most impor- available for animal feed. These include such tant use of soybeans and has increased stead- products as corn gluten feed and meal, Brewer’s ily over the past 15 years (table 2-4). Domestic dried grains, and distiller’s dried grains. soybean utilization has accounted for approximately 60 percent of total usage, while the ex- Corn is prepared for human consumption and port market has accounted for about percent. industrial use by dry and wet mill processing. Dry milling is the process by which corn is sep- Soybeans are primarily used for oil extrac- arated into components of hulls, germs, and tion. The residuals from this process are toasted endosperm. Two processes are used: temper- and ground into a high-protein meal for use as ing-degerming and alkaline dry milling. These a supplement in animal feed. Other soybean produce flaking grits for breakfast cereals, bak- uses include lecithin, soy flour, and soy grits. ing, and the snack food industries. Soybean meal usage, like corn, has increased

Table 2-3.—U.S. Utilization of Corn by Type of Use, 1971-88 (million bushels and percentage)a

Food, Domestic Export alcohol, and Animal Total share share Year industrial Seed feed domestic (percent) Exports (percent) 1971 -72 ...... 394.0 15.0 3,978.0 4,387 84.8 786.0 15.2 1972-73 ...... 407.0 16.0 4,310.0 4,733 79.2 1,243.0 20.8 1973-74 ...... 417.0 18.0 4,265.0 4,700 79.8 1,188.0 20,2 1974 -75 ...... 432.6 18.8 3,225.6 3,677 76.2 1,148.5 23.8 1975-76 ...... 469.9 20.2 3,591.6 4,081.7 70.5 1,711.4 29.5 1976-77 ...... 493.3 19.8 3,586.6 4,099.7 70.9 1,684.2 29.1 1977 -78...... 532.9 18.0 3,709.5 4,260.4 68.6 1,947.8 31.4 1978-79 ...... 557.0 18.0 4,198.1 4,773.1 69.1 2,133.1 30.9 1979-80 ...... 655.1 20.0 4,518.6 5,193.7 68.1 2,432.6 31.9 1980-81 ...... 715.1 20.2 4,139.0 4,874.3 67.4 2,355.2 32.6 1981 -82 ...... 792.1 19.4 4,276.0 5,087.5 72.1 1,966.9 27.9 1982-83 ...... 880.3 14.5 4,520.7 5,415.5 74.7 1,833.8 25.3 1983-84 ...... 956.0 19,1 3,817.6 4,792.7 71.6 1,901.5 28.4 1984 -85...... 1,070.0 21.2 4,079.0 5,170.2 73.5 1,865.4 26.5 1985-86 ...... 1,140.0 19.5 4,095.3 5,254.8 80.9 1,241.2 19.1 1986-87 ...... 1,175.0 16.7 4,713.7 5,905.4 79.7 1,504.4 20.3 1987 -88 ...... 1,207.0 17.0 4,649.7 5,873.7 77.3 1,725.0 22.7 aDifferences between utilization and production are attributable to imports. SOURCE: U.S. Department of Agriculture, “Feed Situation and Outlook, ” Economic Research Service, Washington, DC, various issues 35

Table 2-4.—U.S. Utilization of Soybeans by Type of Use, 1971-88 (million bushels and percentage)a

Seed, Domestic Export Domestic feed, and Total share share Year processing residual domestic (percent) Exports (percent) 1971 ...... 720 65 785 65.3 417 34.7 1972 ...... 722 82 804 62.7 479 37,3 1973 ...... 821 75 896 62.4 539 37.6 1974 ...... 701 79 780 64.9 421 35.1 1975 ...... 865 71 936 62.8 555 37.2 1976 ...... 790 76 866 60.6 564 39.4 1977 ...... 927 82 1,009 59.0 700 41.0 1978 ...... 1,018 99 1,117 60.2 739 39.8 1979 ...... 1,123 85 1,208 58.0 875 42.0 1980 ...... 1,020 99 1,119 60.7 724 39.3 1981 ...... 1,030 89 1,119 54.6 929 45.4 1982 ...... 1,108 86 1,194 56.9 905 43.1 1983 ...... 983 79 1,062 58.8 743 41.2 1984 ...... 1,030 93 1,123 65.3 598 34.7 1985 ...... 1,053 86 1,139 60.6 740 39.4 1986 ...... 1,179 104 1,283 62.9 757 37.1 1987 ...... 1,170 96 1,266 61.7 785 38.3 1988 b ...... 1,075 95 1,170 65.2 625 34.8 aDifferences between uttllzation and production are attributable to imports ‘Prellmlnary SOURCE US Department of Agriculture, “Ofl Crops Situation and Outlook Report,” Economic Research Service, Washington, DC, various Issues

relative to livestock inventory. Overall, soybean creased by 200 percent, but since then they have meal usage has increased 49 percent since 1970. declined by 47 percent. In 1970, the largest importers of U.S. corn were the EC and Japan (ta- Export Markets ble 2-6). By 1985, the EC share had dropped to 10 percent and the largest importers were Ja- The United States is quite dependent on pan and the U.S.S.R. Other areas that had world markets, which are constantly changing steady growth during this time were theWest- in response to new relationships between ern Hemisphere, the Middle East countries, and buyers and sellers. South Korea. Wheat exports increased dramatically in 1972 The growth of soybean export markets fol- and from 1976 to 1982. Overall, wheat exports lowed the same path as wheat and corn. Dur- increased about 190 percent during the decade ing the 1971-81 period, U.S. soybean exports from 1971 to 1981 and have declined by almost increased 123 percent. Since then exports have 50 percent since then, declined by 25 percent. Compared with wheat The markets for U.S. wheat have shifted over and corn, the decline in soybeans was the time. The major importers in 1970 were India, smallest. Western Hemisphere countries, Japan, the The major soybean markets have not changed European Community (EC), and South Korea since 1970 (table 2-7). The largest importers (table 2-5) By 1985, exports to India and the have been the EC and Japan, accounting for EC had declined sharply. The major importers approximately 65 percent of the U.S. soybean were Western Hemisphere countries and Japan export market. Taiwan, Eastern Europe, Israel, (same markets) and the African countries (new and Western Hemisphere countries have been markets). During this time the Soviet Union steady importers, but imports by other West (U.S.S.R) was a sporadic buyer–but a large European countries have been declining one. throughout the period. Corn exports increased dramatically from 1971 to 1981, During that time exports in- . .

Table 2-5.—Distribution of U.S. Wheat Exports by Destination, 1970.86 (in percent)

Middle Western East oil- Hemi- exporting South Years sphere Europe countries USSR Japan Korea Pakistan India Africa China Other Total 1970 -71 ...... 17.4 11.3 0.1 0 14.0 10.0 6.1 15.6 7.0 0 18.5 100 1971 -72 ...... 13.7 23.7 2.0 0 15.6 9.0 3.5 7.4 8.0 0 17.1 100 1972-73 ...... 19.1 12.7 4.6 0 13.4 9.2 5.9 5.8 11.7 0.5 17.1 100 1973-74 ...... 14.5 13.1 2.1 30.6 10.9 5.2 3.6 1.2 5.6 7.9 5.3 100 1974 -75 ..,...... 19.3 10.9 4.4 9.2 10.3 5.5 1.8 5.5 11.5 9.0 12,6 100 1975-76 ...... 14.9 10,4 7.6 3.6 12.0 5.9 3.3 14.3 10.7 0.5 16,8 100 1976-77 ...... 17.4 16.0 1.7 12.3 10.2 4.5 2.1 15.5 10.7 0 9.6 100 1977 -78 ...... 13.2 12.8 8.4 10.8 11.4 7.4 0.7 9.1 16.4 0 9.8 100 1978-79 ...... 19.6 15.0 6.7 10.7 11.6 5.7 2.0 1.0 17.4 3.0 7.3 100 1979-80 ...... 17.3 14.4 5.2 9.0 10.2 5.0 3.8 0.1 14.9 7.7 12.4 100 1980 -81 ...... 20.0 19.3 1.8 6.2 9.5 5.0 0.6 0.8 13.0 11.2 12.6 100 1981 -82 ...... 20.2 10.2 3.3 5.0 8.5 4.9 0.4 1.2 13.1 18.4 14.8 100 1982-83 ...... 18.1 9.1 1.6 13.2 7.4 4,2 0.5 2.7 13.5 18.3 11.4 100 1983-84 ...... 17.6 4.4 2.7 8.7 9.5 5.4 0.5 9.6 14.8 10.2 16.6 100 1984-85 ...... ,. 17.5 5.6 2.7 18.1 8.2 4.8 0.3 2.7 16.2 10.6 13.3 100 1985-86 ...... 23.7 5.9 2.0 9.6 11.2— 6.4 1.4 0.1 18.9 4.6 16.2 100 SOURCE: U.S. Department of Agriculture, “Grain and Feed Market News,” Agricultural Marketing Service, Washington, DC, various issues

Table 2-6.—Distribution of U.S. Corn Exports by Destination, 1970.86 (in percent)

Middle Western Other East oil Hemi- European Western Eastern exporting South Year sphere Community Europe Europe countries USSR Japan Korea China Other Total 1970-71 ...... 4.7 58.6 - 0 7.4 0 10 26.0 2.0 0 1.2 100 1971-72 ...... 2.9 42.3 3.4 6.9 0.1 11.8 13.8 2.7 0 16.1 100 1972-73 ...... 6.5 33.8 7.0 6.3 0.1 12.9 18.0 1.4 4.0 10.0 100 1973-74 ...... 9.9 31.8 7.5 5.4 0.1 13.2 20.0 1.2 4.2 6.7 100 1974-75 ...... 10.1 40.7 10.3 10.9 0.5 4.1 17.5 1.4 0 4.7 100 1975-76 ...... 5.8 30.0 7.6 11.1 0.2 24.8 13.6 1.4 0 5.5 100 1976-77 ...... 5.0 43.3 5.9 11.5 0.5 10.0 16,5 2.2 0 5.1 100 1977-78 ...... 6.9 27.3 8.1 10.1 0.6 20.5 17.2 3.6 0 5.7 100 1978-79 ...... 7.9 24.7 6.3 11.0 0.6 16.1 16.8 5.9 5.4 5.3 100 1979-80 ...... 13.3 21.3 8.8 12.0 0.4 9.5 18.3 3.5 2.9 10.0 100 1980-81 ...... 16.9 18.0 9.6 11.8 0.2 8.0 22.2 3.9 1.2 8.2 100 1981-82 ...... 10.3 15.7 13.0 6.5 0.1 14.5 21.5 5.1 2.6 10.7 100 1982-83 ...... 13.6 20.1 0.2 2.9 0.3 7.0 28.5 8.9 4.6 13.9 100 1983-84 ...... 11.0 17.5 0.1 1.3 0.9 13.8 30.1 6.2 0 19.1 100 1984-85 ...... 6.3 13.1 0.1 1.6 1.2 32.7 23.1 2.8 0 19.2 100 1985-86 ...... 11.2 10.1 0 3.1 1.8 21.4 29.9 4.4 0 18.1 100 SOURCE’ US. Department of Agriculture, “Grain and Feed Market News:’ Agricultural Marketing Service, Washington, DC, various issues

GRAIN FLOW The major tasks of the United States grain vators, subterminal or terminal elevators, ex- industry are to assemble grain from farmers, port elevators, or domestic processors (figure combine it in their facilities according to qual- 2-4). From some locations, farmers can deliver ity differentiations, store it until it is sold, and grain directly to Canada from the farm by truck, transport it by the most cost-effective means Domestic processors and export elevators can to the final market destination. receive grain straight from farmers who are lo- Farmers transport grain from the farm in cated within the general vicinity. When suffi- farm-tractor wagons or trucks to country ele- cient quantities cannot be supplied by local 37

Table 2.7.–Distribution of U.S. Soybean Exports by Destination, 1970.86 (in percent)

Other Western European Western Eastern Years Hemisphere Community Europe Europe Japan Israel Taiwan Other Total 1970-71 ...... 10.3 43.4 11.8 1.4 24.2 2.8 4.7 1.4 100 1971-72 ...... 8.0 42.1 11.9 0.6 23.8 2.9 5.4 5.3 100 1972-73 ...... 5.8 44.8 8.6 1.3 25.3 2.5 4.1 7.6 100 1973-74 ...... 10.1 46.9 10.4 0.9 20,9 2.6 3.8 4.4 100 1974-75 ...... 7.5 44.1 13.2 1.2 22.7 3.5 6.6 1.2 100 1975-76 ...... 5.5 47.8 7.9 0.3 21.5 2.5 5.2 9.3 100 1976-77 ...... 7.8 46.1 6.1 0.4 20.2 2.6 4.8 12.0 100 1977-78 ...... 7.3 47.1 3.9 4.0 20.1 2.1 4.9 10.6 100 1978-79 ...... 5.8 42.2 6.6 0.4 19.2 1.9 5.8 18.1 100 1979-80 ...... 5.5 46.0 10.3 5.7 17.0 1.8 3.1 10.6 100 1980-81 ...... 9.3 43.6 9.1 4.1 19.7 1.8 5.2 7,2 100 1981-82 ...... 6.2 46.8 14.1 1.7 16.2 1.7 4,6 8.7 100 1982-83 ...... 8.2 56.0 1.2 2.4 20.5 1.8 4.9 5.0 100 1983-84 ...... 9.0 46.5 1.1 3.3 22.8 2.8 6.5 8.0 100 1984-85 ...... 10.5 44.1 0.9 2.3 24.8 2.5 7.8 7.1 100 1985-86 ...... 6.7 44.1 0.6 2.5 21.8 1.9 7.5 14.9 100 SOURCE: US Department of Agriculture, “Grain and Feed Market News,” Agricultural Marketing Service, Washington, DC, various issues

Figure 2-4. –Grain Flow From Farm to Final Destination

Processor Farm

Overseas processor 1

elevator

River Port elevator elevator

SOURCE: US Department of Agriculture, “The Phywcal Dcstnbutlon System for Gram,” Office of Transportation, Agriculture Information Bulletin No 457, Washington, DC, October 1983 38 farmers, domestic processors and export ele- roads and barges is shown in table 2-8. The vators obtain grain from other sources. This share by rail ranged from a high of 80.3 per- is accomplished by a system of country, sub- cent in 1974 to a low of 66 percent in 1982. terminal, and terminal elevators used to col- Barge shares tend to rise and fall as exports in- lect, store, and move grain through the system crease or decrease, primarily because almost to its ultimate destination. all grain moving by barge is destined for export ports in the New Orleans area. The rail In many cases, grain destined for export is share of grain moving to export ports declined delivered by the farmer to the country eleva- from 62 percent in 1974 to 38 percent in 1983 tor, unloaded and stored, loaded, and delivered (l). Except for the relatively small amount of to a subterminal elevator. Here again the grain grain moving into Canada by truck and into is unloaded and stored. At subterminal eleva- Mexico by rail, ocean vessels carry almost all tors, it can be loaded and shipped to export ele- exported grain. vators or terminal elevators. If subterminal elevators do not deliver the grain to its final destination, then it is delivered to a terminal Table 2.8.–Quantity of Grain Hauled by elevator, unloaded, stored, and reloaded for Rail and Barges, 1974.85 shipment to a port. Once grain is received at Quantity moved Share moved an export elevator, it is unloaded and loaded (billion bushels) (percent) onto the vessel for shipment to the importing Year Rail Barges Rail Barges country within a very short period of time. At 1974...... 4.21 1.03 80.3 19.7 1975...... 4.06 1.20 77.3 22.7 export elevators the emphasis is on through- 1976...... 4.10 1.61 71.8 28.2 put capacity with minimal storage. At interior 1977...... 3.91 1.52 72.0 28.0 elevators the reverse is true, with the empha- 1978...... 4.12 1.63 71.7 28.3 1979...... 4.41 1.62 73.1 26.9 sis being on increased storage capacity and re- 1980...... 5.00 1.91 72.4 27.6 duced handling capacity. 1981...... 4.38 1.99 68.8 31.2 1982...... 4.22 2.18 66.0 34.0 Grain moves by truck, railroad, barge, or ship 1983...... 4.72 2.11 69.1 30.9 or any combination of these modes as it makes 1984...... 4.81 1.97 70.9 29.1 its way from the farm to its final destination. 1985...... 3.99 1.67 70.5 29.5 SOURCE Association of American Railroads, The Grain Book 1986 (Washington, The reported quantities of grain moved by rail- DC: 1987)

STORAGE AND HANDLING

Grain handling and storage systems have types of equipment, size, capacity, and config- developed over the years to provide an eco- uration. nomical means of moving grain into storage, preserving its quality while in storage, and un- The basic storage types can be categorized loading it from storage. The total U.S. grain storage capacity in 1987 was 23 billion bushels (5), as upright metal bins or concrete silos, flat of which 14 billion bushels was on-farm stor- warehouses (buildings), and on-ground (piles), age and 9 billion was considered off farm, Upright bins and concrete silos are the most easily managed type and can be found on farms Regardless of whether storage and handling as well as in commercial facilities. They range systems are constructed on farm or off, basic in size from farm bins as small as 3,000 bushels types of equipment are being used. The only to over 500,000 bushels in commercial facilities. differences are in the choice of the number and These storage types are loaded from the top and 39 easily unloaded from the bottom. In most in- Considerable interactions occur between stances, they can be equipped with aeration to handling and storage technologies based on the maintain cool grain temperatures, easily sealed size and type of storage structures in use. Cer- for fumigation when required, and, depending tain kinds of handling equipment are well suited on the number of bins available, unloaded and to high-speed, high-volume upright elevators; turned if needed, others, to flat storage or to on-farm storage. Various types of handling equipment are used The recent demand for additional storage to move grain horizontally or vertically within space has increased the use of flat warehouses, farm or commercial facilities. Figures 2-5 and of on-ground piles placed on hard surfaces con- 2-6 show basic flow diagrams of terminal and fined by movable sloping walls or circular rings, export elevators. Country elevators could have and of several other forms of on-ground piling. less equipment than shown in figure 2-5, and These storage types are more difficult to load, export elevators may have cleaners on the out- unload, fumigate, and aerate than upright bins. bound side. Therefore, these figures only pro- In the fall of 1986, approximately 300 million vide basic configurations and should not be bushels of grain were stored in piles, By the taken as being representative of all grain ele- summer of 1987 this volume had doubled, to vators, over 600 million. Most was corn and, to a lesser extent, wheat (5).

Figure 2-5.— Flow of Grain Through the Country Elevator

Probe sampler

conveyor

SOURCE. U.S. Department of Agriculture,“The Physical Distribution System for Grain, Office” of Transportation, Agriculture Information Bulletin No 457, Washington DC, October 1983 40

I 9

SOURCE: U S Department of Agriculture, “The Physical Distribution System for Grain, ” Office of Transportation, Agriculture Information Bulletin No. 457, Washington, DC, October 1983.

MARKETING OF GRAIN

A fundamental principle of the U.S. grain out the system. An important aspect of this marketing system is that of self-selection. Pro- process is that premiums and discounts, and ducers, handlers, and users all act in their own therefore incentives and disincentives, develop best interests. Producers select varieties and for quality characteristics. Bargaining and con- make other agronomic decisions with the ob- tracting for quality specifications occurs jective of maximizing profit. Handlers assem- throughout the system, explicitly and implicitly, ble, condition, and deliver grain subject to ne- between buyers and sellers. The premiums and gotiated contract terms with the objective of discounts built into contracts reflect value to maximizing profit. And users select among dif- the participants. ferent qualities available, each with a different From an operational perspective, farmers end-use characteristic, also with the objective typically sell and deliver grain to local country of maximizing profit. elevators for a cash price. Farmers’ decisions The market for quality characteristics is cen- on whereto sell their grain are sometimes based tral to these decisions. Through this market, simply on selling to the closest elevator or the price differentials develop that provide incen- one they have always sold to before. Since the tives and disincentives for participants through- middle 1960s, however, farmers have increasingly searched for bids at competing elevators chandiser typically specifies the terms of the located as far as 40 or more miles away. They sale. Unless otherwise specified in the contract, subtract the cost of delivery from the bid price title and risk of loss or damage on domestic at each elevator and then deliver to the one from sales pass to the buyer as follows: which they receive the highest net bid, ● on f.o.b. (free on board) contracts, at the After buying from farmers, the country ele- moment of acceptance of the appropriate vator manager, like many farmers, also decides shipping document by the courier, and when and where to sell the grain to processors ● on delivered contracts, when the shipment or exporters based almost entirely on the high- is constructively placed or otherwise made est available net bid. Typically, elevators will available at the buyer’s original destination switch shipments from one destination to another (2). for a fraction of a cent per bushel. In this highly competitive setting, participants are almost cer- Thus, the buyer is responsible for loss or dam- tain to adopt innovations in technology, serv- age during transit on f.o.b. sales and the seller ices, and transportation quickly. Gains that ac- is responsible for loss and damage during tran- crue to an innovator through cost-reducing sit on delivered contracts. procedures soon become apparent to compet- Export sales are typically made directly being firms through changing prices and a shift tween exporting firms and importing country of grain away from their firm. This, in turn, buyers. In centrally planned countries, the forces neighboring firms to adopt the innova- buyer is a government agency; in most other tion or accept a declining volume of business, countries, the buyer is typically a merchandiser Country elevators typically hedge their grain or buying agency who buys grain and resells purchases from farmers by selling a futures con- it to end users in the importing country. tract for a similar quantity on the Chicago Board Most U.S. export sales are made under terms of Trade. When country elevators sell their specified in North American Export Grain grain directly or through a broker to grain proc- Association, Inc. (NAEGA) contract forms. In- essors, exporters, or cash merchandisers, the dustry sources indicate that at least half of U.S. country elevator “lifts” the hedge by buying grain export sales are made under terms speci- back a futures contract for a similar quantity fied in the NAEGA f.o.b. contract, This con- from the Chicago Board of Trade, The hedge tract specifies that: protects the elevator from the large price risks associated with changes in international grain the quality and condition to be final at port supplies and demands. In exchange, the eleva- of loading in accordance with official in- tor receives the smaller price risk from the spection certificates, “basis’ ’-that is, the difference between the 2. seller shall retain title to the commodity appropriate Board of Trade futures contract until seller has been paid in full, it being price and the local price of grain. Almost all understood that risk of loss shall pass to participants in the grain trade—except specu- buyer at discharge end of loading spout (3). lators at the Chicago Board—hedge their pur- Therefore, the seller retains title of the grain chases and sales in a similar manner. until paid, but the buyer assumes all risk once The sales contract between the country ele- the grain leaves the discharge end of the load- vator and the processor, exporter, or cash mer- ing spout at the export elevator. .- -- .

G0VERNMENT FARM POLICY

The main purpose of government farm pol- ing CCC stocks when prices are high and with- icy is to support farm incomes. Several differ- drawing them when prices are low. A second ent policies and program mechanisms have objective is to encourage orderly marketing of been used over time to achieve this. The two commodities throughout the year by prevent- main programs are the loan rate and deficiency ing a glut at harvest. payment/target price. Deficiency Payment/Target Price Loan Program Program The Commodity Credit Corporation (CCC) In the United States, deficiency payments are makes nonrecourse loans to farmers at estab- paid to farmers to make up the difference be- lished loan rates for a variety of crops, includ- tween a price determined to be a politically ing corn, wheat, and soybeans. The loan, plus acceptable income level (target price) and the interest and storage, can be repaid within 9 to higher of the average market price or the loan 12 months and the commodity sold on the cash rate. Deficiency payments are made on each market. If it is not profitable for the farmer to farm’s actual planted acres and farm program repay the loan, CCC has no recourse but to ac- yield. The farm program yield is based on each cept the commodity in full payment of the loan. farm’s yield history. Deficiency payments were Commodity loans are frequently referred to as initiated to raise and stabilize farmer incomes, a price support, since national season-average while allowing farm prices to be competitive prices generally do not fall below set loan levels. in the export market. The major objective of the loan program is to add price stability to the market by releas-

QUALITY CONTROL The United States Grain Standards Act suits determined during the course of an in- (USGSA), administered by the Federal Grain spection. Inspection Service (FGIS), is the statutory au- Section 6 of the USGSA states: thority for developing grain standards. The Declaration of Policy contained in Section 2 Whenever standards relating to kind, class, of the USGSA states that it is Congress’ intent quality, or condition are effective . . . no per- that uniform standards for promoting and pro- son shall in any sale, offer for sale, or consign- tecting grain moving in interstate and foreign ment for sale, which involves the shipment of commerce be developed so that grain can be such grain in interstate of foreign commerce ... describe such grain as being of any grade marketed in an orderly and timely manner and . . . other than by an official grade desig- that trading in grain may be facilitated. nation. Standards for wheat, corn, barley, oats, rye, In other words, the grain standards must be sorghum, flaxseed, soybeans, triticale, sun- used to describe grain being marketed and sub- flower seed, and mixed grain have been promul- sequently used as the basis for all inspections. gated under the USGSA by FGIS. Each standard consists of numerical grades, i.e., 1, 2, 3, Grain is usually inspected each time it is han- and Sample Grade. Factors are included in each dled, i.e., into and out of grain elevators. As standard and maximum limits for each factor demonstrated in figure 2-4, this could result in have been set for each grade. The grade for any many inspections if grain moves through each given parcel of grain is based on the factor re- step in the marketing chain. Two separate 43

USDA agencies provide and/or license individ- and Conservation Service (ASCS) under the uals to perform inspection services. Private United States Warehouse Act, by private com- companies not affiliated with either of these panies, or by grain elevator employees. Three Government agencies also provide inspection main forces determine when inspection is re- services. quired: warehouse licensing requirements under the Warehouse Act or individual State ware- Several authorities regulate inspection re- house authorities, the Grain Trade Rules quirements by specifying who will perform published by the National Grain and Feed Asso- these services and where. In other instances, ciation, and the Uniform Grain Storage Agree- sales contracts and individual market policies ment administered by ASCS. dictate inspection requirements. In all cases, settlement is based on inspection requirements Inspection of export grain is mandatory and as required by individual sales contracts or must be provided by FGIS or an FGIS-licensed agreements. inspector. Even though inspection by FGIS is mandatory, private companies are retained in No single national policy exists on inspec- some cases by the importing country to inspect tion requirements on domestic grain. Inspec- grain and represent their interests during tion can be performed by FGIS or an FGIS- loading. licensed inspector, by a private individual licensed by USDA’s Agricultural Stabilization

QUALITY AS AN ISSUE Today more competitors exist in the inter- ago. Critics argue that the grain standards them- national grain market than just 10 years ago. selves are partly to blame for customer com- In the 1970s one-third of the world supplied plaints. They claim that the grain standards grain to two-thirds of the world’s people. have not kept pace with the changing world Growth in farm trade was dynamic. Today, two- marketplace and are frequently misunderstood thirds of the world supplies grain to the other by foreign buyers. third. Trade growth is relatively stagnant. In such a competitive atmosphere, foreign buyers Improving U.S. grain quality—or even the have become increasingly sensitive about the perception of quality—will be much more com- quality of grain they receive. plicated than tinkering with the criteria for determining grain grades. Grain is vulnerable to During the debate of the Food Security Act quality deterioration at virtually every stage of of 1985, several Members of Congress ex- the production and marketing process. Many pressed growing concern over the quality of aspects of the interrelatedness of producing, U.S. grain exports. Accusations were made that harvesting, storing, handling, and testing grain grain elevator operators and export traders need to be understood before any changes in were adultering loads of grain shipped to for- the system can be contemplated. Understand- eign buyers; these allegations were supported ing these relationships is the main goal of this by a sharp increase in foreign complaints over report, quality. On the other hand, traders and handlers indicated that they have been shipping First, it is important to clarify what is meant grain according to specifications, and that most by grain quality. Webster defines quality as an of the buyers’ complaints were motivated by essential character; a degree of excellence; or their desire to obtain a higher grade of grain a distinguishing attribute. In grain, such a def- at a lower price. Much of the focus of the de- inition has come to mean a variety of things. bate concerned the adequacy of present grain Quality grain could be grain free of material standards, which were developed over 70 years other than grain, or grain not cracked or 44 spoiled, or grain with the proper characteris- Intrinsic quality characteristics are criti- tics for its ultimate use. Therefore no one defi- cal to the specific use of the grain and can nition of quality applies as it relates to grain. only be determined by analytical tests. In wheat, for example, such characteristics For the purpose of this assessment, grain refer to protein, ash, and gluten content. quality will be defined in terms of sanitary, For corn they could include starch, pro- physical, and intrinsic characteristics. tein, and oil content, and for soybeans, protein and oil content. These characteristics, ● Sanitary quality characteristics refer to the along with the specific values, will differ, cleanliness of the grain. They include the depending on the grain and its final use. presence of material other than grain, dust, broken kernels, rodent excreta, insects, Using these grain quality definitions, the fol- residues, fungal infection, and other non- lowing chapters will consider various aspects millable materials. They are essentially of the quality issue. Chapters 3 through 5 look characteristics that detract from the over- at which quality attributes are considered im- all value and appearance of the grain. portant by buyers of U.S. grain and how views ● Physical quality characteristics are asso- on what is important change. Chapters 6 ciated with the outward visible appearance through 10 analyze the U.S. grain system’s abil- of the kernal or measurement of the ker- ity to produce and deliver quality grain, and nel. These characteristics could include compares the system with that of other major kernel size, shape, and color; kernel mois- grain exporters. Chapter 11 identifies policy op- ture; kernel damage; and kernel density, tions to enhance the quality of U.S. grain.

CHAPTER 2 REFERENCES

1. Association of American Railroads, The Grah fice of Technology Assessment, U.S. Congress, Book 1986 (Washington, DC: 1987). Washington, DC, 1988. 2. National Grain and Feed Association, “Trade 5. Sauer, D. B., and Converse, H., “Handling and Rules and Arbitration Rules,” Washington, DC, Storage of Wheat: An Assessment of Current 1985. Technologies,” background paper prepared for 3. North American Export Grain Association, Inc., the Office of Technology Assessment, U.S. Con- “Free on Board Export Contract—USA/Can- gress, Washington, DC, 1988. ada,” Washington, DC, 1985. 6 Wheat Flour Institute, “From Wheat to Flour,”

4. Perry, T. W., “Grain Attributes for the Feed In- revised cd., Washington, DC, 1981. ● dustry,” background paper prepared for the Of- Chapter 3 Bask Grain Processing Industries — . . . ---- -

CONTENTS

Page Grain Processing Industries ...... 47 Milling Industries ...... 47 Feed Manufacturing ...... 49 Soybean Processing ...... 50 Basic Processes Used To Produce Grain Products ...... 50 Dry Milling Wheat and Corn ...... 50 Wet Milling Corn ...... 54 Soybean Processing ...... 57 Chapter 3 References ...... 57 Figures Figure Page 3-1. Flour Grades Obtained in the processor Milling ...... 48 3-2. How Flour is Milled ...... + ...... 52 3-3. Production Flow Chart for a Typical Corn Tempering-Degerming System ...... 53 3-4. Block Flow Sheet ...... 54 3-5. Wet-Milling Process Flow Diagram...... 55 3-6. Typical Soybean Extraction Process Flow ...... 56

Tables Table ‘ Page 3-1. Active Wheat Flour Capacity by Size Group ...... 48 3-2. Amount of Corn Used Annually for Dry Milled and Alkaline Cooked Products in the United States ...... 49 3-3. Estimated Dry Milling Product Quantities Classified According to End Use, 1977 ...... 49 3-4. Typical Proportion of Corn Products From a Degerming Dry Mill . . . . . 49 3-5. Shipment of Products of the Corn Refining Industry in the United States, 1983-85 ...... 50 Chapter 3 Basic Grain Processing Industries

Wheat, corn, and soybeans can be used in The basic uses for wheat, corn, and soybeans a variety of ways. They can be used directly in the United States are very similar to those in food for human consumption, as in the case in countries that import these grains. The basic of wheat flour and soybean oil. Products from processes used to produce wheat flour, corn these grains can also be mixed with other in- starch, soybean oil, and so on are similar every- gredients, as is the case with corn starch and where. Yet, differences in processing technol- corn sugars, to produce a multitude of prod- ogies exist, as do cultural preferences for cer- ucts for human consumption. Wheat and corn tain types of products. The specific physical are fed directly to animals or mixed with other and intrinsic attributes required of finished ingredients to produce balanced diets. Meal products for U.S. consumption may therefore produced during soybean oil extraction is used differ from those required for a specific prod- as a feed supplement to increase the protein uct in an importing country, even though the content of mixed feed. Byproducts from the basic processing technology is similar. various processes, such as millfeed produced When identifying the basic sanitary, physi- from wheat milling and steep-water concen- cal, and intrinsic requirements for wheat, corn, trates from corn wet milling, are used by the and soybeans, it is important that the technol- feed industry or for industrial use. In addition, ogy involved with producing the intermediate new uses for these grains are constantly being product and the quality required of the finished developed–for example, ethanol and biode- product be understood. This chapter thus pro- gradable plastics produced from corn. There- vides basic information on grain processing in- fore, the physical and intrinsic characteristics dustries and technologies. required of each grain vary; more important, they must be assessed in terms of their various commercial uses.

GRAIN PROCESSING INDUSTRIES

Three basic industries–milling (wheat and for the various byproducts. Thus each milling corn), feed manufacturing, and soybean proc- process entails almost complete utilization of essing—process wheat, corn, and soybeans. all the grain.

Wheat Milling Milling Industries Wheat is milled to remove the bran and germ Milling is a process by which kernel compo- and reduce the wheat kernel to flour to be used nents are separated physically or chemically. in various baked and nonbaked goods. Other Each milling process yields products indica- products of the process, e.g., vital gluten, can tive of the grain being milled. Wheat is milled supplement other edible products. Millfeed, the to produce various types of flour. In the case material remaining after all the usable flour is of corn, dry or wet processes are used, and each extracted, is used by the feed industry either results in different products and byproducts. directly or as a feed supplement. The many products of milling can be used In general, 100 pounds of wheat will produce directly as food or as ingredients in another type 72 pounds of flour. The remaining 28 pounds of food product. Specialty uses of milling prod- is classified as millfeed (figure 3-1). In large flour ucts have also been developed, along with uses mills, 30 or more flour streams of varying com-

47 48

Figure 3-1. - Flour Grades Obtained In the Process In 1988, a total of 211 flour mills and 18 Du- of Milling rum mills were operating in the United States (5). The basic flour types produced and the daily production capacities from these mills are hard wheat flour (843,606 cwt), soft wheat flour (247,931 cwt), whole wheat flour (40,205 cwt), 14% 14% bran shorts and Durum flour (96,540 cwt). Table 3-1 provides a breakdown of the 211 hard, soft, and whole wheat flour mills by size and capacity. Twenty-four percent of mills in the United States produce 84 percent of all flour.

Short patent flour Dry Milling Corn so% The dry milling process requires the miller to remove the corn hull and germ without reducing the endosperm. The dry milling and alkaline cooking industries processed about 161 million bushels of corn in 1986. Total corn SOURCE: Wheat Flour Institute, “From Wheat to Flour,” revised ed., Washington, usage has ranged from a low of 154 million DC* 1981 bushels in 1975 to a high of 170 million bushels in 1982 (table 3-2). position and purity may be collected, grouped, and merchandised. Combining all the streams This process produces flaking grits, meals, results in a straight grade flour. The more highly flours, oil, and other products. Low-fat flaking refined flour streams are taken off separately grits are the highest valued grit product and and sold as patent grade flours. The remain- are used primarily in breakfast foods. General ing streams contain more bran and germ and food use accounted for 1,125 million pounds are considered clear flour. Raising the propor- of dry milling product in 1977, with breakfast tion of this that is included in the patent flour cereals using the most (table 3-3). lowers the quality of the remaining clear flour Table 3-4 shows the yield of primary and alter- (8). nate products produced by dry milling. Break- Flour is used in a variety of U.S. products. fast cereal is produced from large flaking grits. Fancy patent flour from soft wheats is used in Coarse and regular grits are used by the brew- cake products. In the case of hard wheats, short ing industry, while corn meal is made from ma- patent is used in premium breads, standard pat- terial too small to make grits. Corn meal and ent in featured breads, medium and long pat- flour are made from finely ground starchy en- ent and straight in bread and rolls, and high dosperm and used in various baked goods, gluten flour in hearth breads and Kaiser rolls. snack foods, and mixes, but they also have in- Flour types and grades produced in non-U.S. Table 3-1.-Active Wheat Flour Capacity by Size Group mills vary by mill and by the type of flour (wheat, soft wheat and whole wheat flour) product. Hundredweights Number of Active Inactive The Association of American Feed Control per day mills capacity capacity Officials has defined eight different types of Under 200 ...... 21 2,371 — 200-399 ...... 22 6,415 — millfeeds: wheat bran, wheat feed flour, wheat 400-999 ...... 17 10,330 — germ meal, wheat mill run, wheat middlings, 1,000-4,999 ...... 61 168,670 — wheat shorts, wheat red dog, and defatted 5,000-9,999 ...... 48 317,200 – wheat germ meal (9). These products are used 10,000 & over ...... 42 615,750 – Total 211 1,120,736 — to feed cattle, poultry, and other small animals SOURCE: &fi//irrg and Baking News, Milling Directory/Buyers Guide” (Mer- as part of a formulated ration. riam, KS: Sosland Publishing Co., 19SS). 49

Table 3-2.—Amount of Corn Used Annually for Table 3-4.—Typical Proportion of Corn Products Dry Milled and Alkaline Cooked Products From a Degerming Dry Mill (percent) in the United States Product Yield Dry-milled Flaking grits ...... 12 and alkaline Total U.S. Coarse grits ...... 15 cooked products corn production Dry-mill share Regular grits...... 23 a Year (million bushels) (million bushels) (in percent) Coarse meal ...... 3 1975 . . . 154 5,841 2.6 Dusted meal ...... 3 1976 . . . 155 6,289 2.5 Flour ...... 4 1977 . . . 158 6,505 2.4 Oil ...... 1 1978 . . . 155 7,268 2.1 Hominy feed ...... 35 1979 . . . 158 7,928 2.0 Shrinkage ...... 4 1980 . . . 160 6,639 2.4 SOURCE: O.L. Brekke, “Corn Dry Milling Industry,” Corn” Culture, Processing, 1981 . . . 162 8,119 2.0 Products, G.E. Inglett (cd.) (West port, CT: AVI Publishing Co , Inc , 1970). 1982 . . . 170 8,235 2.1 1983 . . . 164 4,175 3.9 68 in 1986. Of these, 55 had daily capacities 1984 . . . 160 7,674 2.1 of under 12,000 bushels, 8 could handle be- 1985 . . . 161 8,865 1.8 tween 12,000 and 36,000 bushels, and 5 could 1986 . . . 161 8,253 2.0 ‘Year begins Sept. 1, process 36,000 bushels a day (4). The majority SOURCE: U.S Department of Agriculture (USDA), Economic Research Service, of corn dry mills are located in the midwest- “Feed Situation and Outlook Report,” FdS-302, Washington, DC, May 1987; USDA, Agricu/tura/ Statistics, 1986 (Washington, DC: U S Govern- ern and southeastern part of the United States. ment Printtng Office, 1986). The 13 largest mills have a combined estimated Table 3-3.—Estimated Dry Milling Product Quantities daily capacity of 445,000” bushels, about 69 per- Classified According to End Use, 1977 cent of the total corn usage for dry milling,

Quantity Wet Milling Corn Use (million Ibs) Brewing ... , , ...... 1,850 The amount of corn processed by the wet Food, general ...... 1,125 milling industry has increased from 155 mil- Breakfast cereals ...... 800 Mixes (pancake, cookie, muffins, etc.) . . . 100 lion bushels in 1960 to 645 million bushels in Baking ...... 50 1985, accounting for some 12 percent of domes- Snack foods...... 100 tic corn use (3). Breadings, batters, baby foods, etc...... 75 Fortified Public Law 480 foods ...... 485 Wet milling corn produces starch, oil, and Nonfood ...... 530 Gypsum board ...... 100 sweeteners (table 3-5). Corn starch is used in Particle, fiber board, plywood...... 40 food and nonfood products by the brewing and Pharmaceuticals, fermentation...... 200 baking industries; in the production of chemi- Foundry binders ...... 90 Charcoal binders...... 75 cals, drugs, and pharmaceuticals; by the paper Other (paper, corrugating, oil well industries; and in the production of ethanol. drilling fluids ...... 25 Sweeteners are used by the baking, beverage, Animal feed ...... 2,200 canning, and feed industries. Byproducts from Total ...... 6,190 the wet milling process, including the water SOURCE: R.J. Alexander, “Corn Dry Milling” Processes, Products and Applica- tions,” Corn Chernfstry and Technology, S.A. Watson and P.E. Ram. used to steep the corn prior to milling, are used stad (eds ) (St. Paul, MN American Association of Cereal Chemists, 1987), by the feed industry. dustrial uses. Corn oil obtained from dry milling is used in food products and in industrial Feed Manufacturing uses. Hominy feed consists of all the byproducts Livestock and poultry consumed 85 percent such as hull fractions, inseparable mixtures of of domestic corn during the 1980s. Over the hull, endosperm, germ, germ meal, and corn past 5 years, swine consumed 34 percent of the cleanings. It is the single largest product sold corn; beef, 22.3 percent; dairy, 18.2 percent; by dry millers (6). poultry, 21.3 percent; and other classes of ani- The number of corn dry mills in the United mals, 5.1 percent. Wheat use in feed, on the States has dropped from 152 in 1965 to only other hand, is significantly lower. In 1985 wheat 50

Table 3-5.—Shipment of Products of the Corn Refining Industry in the United States, 1983-85 (thousand pounds)

Product 1983 1984 1985 Starch products (includes corn starch, modified starch, and dextrin)...... 4,018,905 4,182,866 4,225,171 Refinery products (includes glucose syrup, high-fructose corn syrup dextrose, corn syrup solids, and maltodextrins) ...... 16,005,529 17,921,126 20,341,535 High-fructose corn syrup ...... 9,707,041 11,502,324 13,920,406 Other products: Corn oil crude ...... 72,612 116,142 164,382 Corn oil refined ...... 399,919 407,456 382,234 Corn gluten feed ...... 7,391,069 8,739,730 8,811,476 Corn gluten meal 41% protein 19,115 20,272 18,503 60% protein ...... 1,383,129 1,635,228 1,609,112 Corn oil meal ...... 28,728 29,465 48,585 Steepwater ...... 211,937 300,770 282,333 Hydrol ...... 208,807 216,558 228,742 Ethanol (thousand gallons, 100%) ...... 325,000 375,000 425,000 SOURCE: Stanley A. Watson and Paul E. Ramstad (eds), CornChemistry and Teclrno/ogy (St Paul, MN: American Association of Cereal Chemists, 1987) and rye combined accounted for 16.9 percent Soybean Processing of total feed grain consumption by livestock. Soybean processing separates oil by solvent- Wheat and corn can be ground and fed to ani- extraction from the nonoil portion of the bean. mals or ground and mixed with other ingre- The soybeans are cleaned prior to being dients to produce a balanced diet for a particu- cracked, hulls are removed, and the cracked lar species. Each animal species has specific dehulled pieces are heated and rolled into dietary requirements; when corn and wheat are flakes. Crude oil is then extracted from the used, ingredients must be added to overcome flakes. After extracting the oil, the flakes can certain deficiencies in these grains (7). Feed be toasted and ground into meal products. concentrates, byproducts from wheat and corn milling processes, soybean meal, animal pro- The two major products from soybean proc- tein, and other byproducts are mixed with other essing are high-protein meal and oil. Food uses feeds or fed directly to livestock. of oil include shortening, margarine, and cooking and salad oils; nonfood uses include paint, The modern feed manufacturer blends ingre- varnish, resins, and plastics. Soybean meal, dients using a computer program designed to which is the largest product produced from this select the lowest priced ingredient that is a sig- process, is used by the feed industry as a pro- nificant source of the desired nutrients. For tein supplement unmanufactured feeds. most nutrients, published average values are used and any deviation from these values will render the feed deficient and affect animal performance.

BASIC PROCESSES USED TO PRODUCE GRAIN PRODUCTS

To fully understand the quality requirements company within the United States and among of each industry, a general knowledge of the countries around the world. basic technologies used to process the various grains is important. Since such technologies Dry Milling Wheat and Corn are similar worldwide, general descriptions are provided in this section. Modifications of and The basic process used to mill wheat and corn improvements to these will vary by individual involves cleaning, conditioning, grinding, and 51

sifting. In the case of dry milling corn, degerm- Wheat Milling Process ing also takes place. After tempering, wheat is moved to an entoleter, which consists of discs revolving at high Samples are taken from each incoming ship- speed that crack unsound wheat kernels and ment of wheat and corn and tested. The char- separate them from the grain stream. Wheat acteristics of the wheat determine how it will flows from the entoleter to the grinding bin, be handled, since different types are usually where it is held and metered into the mill itself. blended before milling to meet various flour requirements. Figure 3-2 provides a simplified wheat milling flowchart, and figure 3-3 is a dry Corrugated rolls are used to break the wheat corn milling flowchart. The sequence, number, into coarse particles. The initial set of these (re- and complexity of different operations will vary ferred to as the “first break” rolls) break the somewhat between mills. kernel into very coarse pieces. These rolls can be adjusted for spacing as well as speed to The first step in milling involves cleaning the achieve the exact milling surface desired, de- grain to remove weed seeds, other grains, and pending on the type of wheat and its condition. material such as sticks, stones, dirt, and other As many as four to six break rolls, with succes- debris. This involves the use of scalpers to re- sively smoother surfaces, can be used to fur- move large material, aspiration to remove fine ther reduce the kernel into flour. material, and screens. Magnetic separators can also be used to remove any metal from the grain. The coarse pieces of wheat and bran produced from the first break are sifted over a ser- Disc separators are used to catch individual ies of bolting cloths or screens to separate larger kernels and reject larger or smaller ones, thus from smaller particles. Sifters consist of as creating a uniform kernel size for milling. In many as 27 frames of bolting cloth with meshes the case of wheat, the grain passes through a that grow progressively smaller from top to bot- scourer that throws the kernels against a sur- tom. Larger material is shaken off at each step face, buffing each one and breaking off the and the finer flour sifts to the bottom. The beard. Air currents remove the dust and 1oo- coarse pieces are sized and carried to the sec- sened particles of the bran coat. ond set of break rolls. The second break rolls are spaced closer together, producing a finer Wheat and corn are conditioned prior to mill- material, This material is then sent to a sifter ing. This process, called tempering, involves and the process repeats itself. adding moisture. Tempering is done to aid in removing the bran from the endosperm dur- Flour is obtained from each break roll and ing grinding, since the outer bran layers are sifting operation. However, fragments of en- brittle and must be toughened. Wheat is held dosperm, bran, and germs called middlings re- in tempering bins for usually 8 to 24 hours, de- main after each sifting. These are sent to puri- pending on the type of wheat. The percent of fiers, where air removes bran particles and moisture added, the amount of soaking time, bolting cloth is again used to separate coarser and the temperature differ for soft, medium, fractions by size and quality. The coarse mate- and hard wheats. Corn is injected with steam rial is then sent to reduction rolls and again or sprayed with warm water in a tempering sifted (8). chamber. This may occur in one to three stages before the corn finally reaches 18- to 24-percent The process of grinding, sifting, purifying, moisture. The moist corn is then held in the and reducing is repeated many times until the tempering bin for up to 6 hours, Corn moisture, maximum amount of flour is obtained. Each holding time, and the temperature during con- process results in a separate flour stream. For ditioning are critical for obtaining correct mois- example, flour is produced from each break and ture gradients in the kernel. middlings reduction (first, second, third, etc.). . -. . . - - -

52 By rail flour flour Germ Clear Patent and purifiers, ~flli!w~i~ i!liilt~trf~j of rolls kill

series \ a -.. Is sifters. , Flour m __ ~reducing L- 4io. '" Purifier ...... ___ f===~~==~-- bakery sifted sieves I home _____ is and Enriching-:::': thiamine,' for Sacked the use. ,and and ' increasing purifiers, rolls· ~ of rolls:!.- successive rolls, wheat of ized repeat is flour. color currents diagram) series BleaChing-(p flour reduce matured Reducing middlings into smooth and Broken fineness. through screens Air ~eiiii!~~~;~~~I~~d reducing A sifters Shorts x ) simplified storage . ....,r--_.....;,~,neutral (a Purifier Bulk __ r---Sifter- \ x L.. . ( Milled

is [ to rolls - Flour easier wheat high wheat. wheat stay or machine are steel and rotors wheat for toughens of specific bran break 1981. coarse or water blended DC, First into break corrugated particles. Blending- iron mellows Magnetic water Washer types separation softens speed separator articles stoner- endosperm. coats here. make flours. Tempering- outer stones and are circulate removed. impact Entoleter breaks removes unsound 3·2.-How tIn bins bin ~ ~ Washington, - • ~ Figure b.~nMs ed., ~ Grinding :; Tempering zs'A (g ) I revised Flour," fine at and are to is wheat, remove in and lighter sticks, and cylinder and oats, off done foreign wheat. point. other Wheat !Currents of impurities scn~en scour impurities. bea,ters rou,ghage. Product air Scourer remove blending inspect Aspirator this oftE!n chemists classify control reciprocating scmens stones, Separator materials. Disc and separator coarse barley, cockle, materials removed. othl~r r11ll "From care Elevator-storage and Institute, \ Jillillw.u Flour e Here Wheat ~ 8"g Starts klbllllllJl It SOURCE 53

SOURCE: Richard J Alexander, “Corn Dry Mdling: Processes, Products, and Applcatlons” m Corn ChemLsiYY and Technology (St Paul, MN: American Asaoaatlon of Cereal Chemists, 1987)

Figure 3-4 shows an example of a milling proc- large mills, there can be 30 or more separate ess with four breaks. In this case, 12 different streams. flours are produced–four from each break and Some mills, in addition to producing flour, eight from each reduction (2). produce vital wheat gluten, essentially a pow- Flour from each point in the process has dif- dery product containing 75 to 80 percent pro- ferent characteristics and baking properties and tein with a bland flavor that is able to absorb can be combined in many different ways. Flour water 2.5 times its dry weight. This product is from the first few middlings separations is the relatively simple to produce in that flour is most highly refined. After each additional proc- washed with water and then dried. Vital wheat ess the flour contains more bran and germ. In gluten is used as a supplemental ingredient in 54

a 5 mesh/inch sieve is considered large flaking grits. Material that will not pass through the 3,5 mesh/inch sieve is recycled for retemper-

Breaking Purified ing and degermination. Whatever passed through the 5 mesh/inch sieve is then sieved

1BK using 6 and 10 mesh/inch sieves. Anything pass- rolls ing through the 6 but not the 10 mesh/inch sieve 2BK is considered brewers and coarse grits. If there rolls are any attached germs or pericarps, the mate- 3BK rolls rial will be roller-milled.

4BK Several sets of corrugated rollers are used in rolls a manner similar to that described in the wheat milling section. Smaller numbers of corrugations are used for the first break to produce coarse grits. Second and third break rolls use more corrugations, resulting in more finely SOURCE: Canadian International Grams institute, “Gram& Oil seeds, Handling, Mar- keting, Processing,- 3rd ad, rewed, Winnipeg, MB, Canada, 1982 ground products. After grinding, the material is sifted and then aspirated to remove free pericarps. breadmaking especially by commercial bakers. Through-stock containing germs is aspirated It is added to a dough that requires additional to remove loose pericarps and then sent to grav- protein to develop properly. ity tables for separation. The germ fractions can then be dried and sent to an oil expeller or sol- Corn Dry Milling Process vent oil extraction process to recover the crude Determination is the process by which the oil. The germ meal remaining after the crude corn kernel is broken apart into endosperm, oil has been extracted is used in hominy feed. germ, and pericarps (6). Although a few com- The material other than the germ separated panies use impact mills or granulators, about with the gravity table is recycled back to the 90 percent of the dry mills producing flaking first break rolls to be processed with the grits use the Bean degermer almost exclusively. tail-stock. This is a cone-shaped mill with rows of small conical protrusions that rotate within an outer Wet Milling Corn conical surface that also has protrusions. This process causes corn-on-corn rubbing to remove Corn is first cleaned by screening and aspi- germs, pericarps, fines, and a few small grits ration to remove dust, chaff, cobs, stones, and called through-stock. Tail-stock consists primar- so on, similar to the processes described for ily of grits that are free of attached germs and dry milling (figure 3-5). After cleaning, the corn pericarps. is moved on to the refining process (3). After degerming, through-stock is normally As in dry milling, corn must be tempered. wetter than the tail-stock and must be dried. This is accomplished by placing the grain in This is accomplished by rotary steam-tube steeping tanks and adding water containing sul- dryers that quickly heat the products to 140 to furous acid that has been heated to 125 ‘F. Corn 160 ‘F. After drying, the stock is cooled to 90 is held in steeping tanks for 22 to 50 hours. Dur- to 100 ‘F. ing this time the water is recirculated and re- heated. Tail-stocks consisting of large pieces of endosperm are aspirated to remove loose peri- Water is used to transport the corn from the carps. The material is then sieved. Material steeping tanks to holding bins. It is screened passing through a 3.5 mesh/inch sieve but not off prior to the wet corn being placed in the 55

Figure 3-5. - Wet-Milling Process Flow Diagram (showing equipment arrangement for the separation of the major components --steepwater, germ, fiber, gluten, and cornstarch)

Multiple-stage fiber wash system

I I I

Multiple-stage starch washing system

SOURCE: James B Mag, “Wet MWng: Process and Products” In Corn Chamisby and Technology (St bin, From the holding bin the corn moves into The material remaining in the flotation tanks grinders that break up the kernel. Water is again is screened to separate fiber from starch and added and the material is transported to flota- gluten. About 30 to 40 percent of all the starch tion tanks, where the germ floats to the top. The is separated at this stage. The remaining mate- germs are recovered, washed, and screened. rial is further processed, washed, and screened The recovered germs are then dried and fur- to separate more starch and gluten. Starch is ther processed to remove the oil, purified by washing and can be dried, treated 56

Figure 3-6.—Typical Soybean Extraction Process Flow n

Seed Preparation

Meal grinder

Meal to-storage

*Alternative - A crown desolventizer toaster dryer cooler may be furnished in Ileu of desolventizer toaster and dryer cooler

SOURCE’ Crown Iron Works, 1987. 57 with chemicals to modify the starch to meet The moisture content of the soybeans being various requirements, and then processed for processed must be between 9.5 and 10 percent. its various uses. The gluten is also washed and The cracked soybeans are first heated to about then dried, forming corn gluten meal. 140 ‘F and then proceed through a series of rollers, where they are flaked, Following a cool- Corn steepwater is processed to remove the ing period, the flakes are exposed to continu- corn solubles by evaporation. The corn solu- ous extraction with hexane to reduce the oil bles removed during this process are used remaining in the soybean flakes to 0.5 percent directly by the feed industry or in the produc- or less. The extracted flakes are then trans- tion of corn gluten feed. The corn germ meal ported to dryers and held at 208 ‘F for approx- remaining after the oil is extracted is also used imately 10 minutes to drive off any residual hex- in the feed industry, ane. From the dryer, the flakes are moved to a toaster for a 90-minute toasting at 220 ‘F. Soybean Processing Then the flakes are cooled and moved to the Soybeans are first cleaned to remove dust, grinder for reduction into the ultimate soybean- weed seeds, stones, and so on. Then they are meal-sized product. cracked by means of corrugated rolls and Crude soybean oil extracted from the meal moved to the dehuller (l). The hulls are drawn contains impurities that can affect its quality off between the first and second cracking rolls and must be removed. The various processes by dehulling equipment, using air suction (fig- used to remove objectionable impurities are de- ure 3-6). Screens remove any portions of the signed to minimize the effect on the finished seeds that have been removed with the hulls. oil and the loss of oil. Seed hulls are transported to a grinder, where they can be kept separate or recombined with the extracted meal.

CHAPTER 3 REFERENCES

1. Brekke, O. L., “Edible Oil Processing-Introduc- 5. Milling and Baking News, “1988 Milling Direc- tion,” Handbook of Soy Oil Processing and Uti- tory/Buyers Guide” (Merriam, KS: Sosland Pub- lization, D.R. Erickson, et al. (eds.) (St. Louis, lishing Co., 1988). MO, and Champaign, IL: American Soybean As- 6. Paulsen, M. R., “Grain Quality Attributes for sociation and the American Oil Chemists’ Soci- Corn Dry Milling,” background paper prepared ety, 1980). for the Office of Technology Assessment, U.S. 2, Canadian International Grains Institute, Congress, Washington, DC, 1988. “Grains & Oilseeds Handling, Marketing, Proc- 7. Perry, T. W., “Grain Attributes for the Feed In- essing,” Zrd cd., revised, Winnipeg, MB, Can- dustry,” background paper prepared for the Of- ada, 1982. fice of Technology Assessment, U.S. Congress, 3. May, J. B., “Wet Milling: Process and Products,” Washington, DC, 1988, Corn Chemistry and Technology, S.A. Watson 8. Pomeranz, Y., and Schellenberger, J. A., Bread and P.E. Ramstad (eds.) (St. Paul, MN: Amer- Science and Technology (Westport, CT: AVI ican Association of Cereal Chemists, 1986). Publishing Co., Inc., 1971). 4. h4iZling and Baking News, “1987 Milling Direc- 9, wheat Flour Institute, “From Wheat to Flour, ” tory/Buyers Guide” (Merriam, KS: Sosland Pub- revised cd., Washington, DC, 1981. lishing Co., 1987).

88-378 - 89 - 3 Chapter 4 Quality Attributes Important to Domestic and Overseas Industries -- .— — —— ——. . . . — -—.

CONTENTS

Page Survey Description ...... 62 Quality Measurement as Evidenced by Official Standards...... 62 Wheat Standard ...... 63 Corn Standard ...... 64 Soybean Standard ...... 66 Important Attributes for Wheat, Corn, and Soybeans ...... 67 Wheat ...... 68 Corn ...... 72 Soybean Processing ...... 78 Uniformity Between Shipments ...... 79 Decrease In Quality ...... 81 Findings and Conclusions ...... 82 Standards ...... 82 Important Attributes Not in Standards...... 84 Uniformity Between Shipments ...... 84 Chapter preferences ...... 85

Figures Figure Page 4-1. Adequacy of Grain Standards ...... 63 4-2. Importance of Wheat Standard Factors ...... 65 4-3. Use of Wheat Standard Factors in Contracts ...... 66 Importance of Corn Standard Factors ...... 67 Use of Corn Standard Factors in Contracts ...... 68 Importance of Soybean Standard Factors ...... 69 Use of Soybean Standard Factors in Contracts,...... 69 Protein Range and Flour Uses of Major Wheat Classes ...... 70 Importance of Wheat Attributes and/or Tests—Domestic Millers . . . . . 73 Importance of Wheat Attributes and/or Tests—Overseas Millers ...... 74 Additional Tests for Inclusion in the Wheat Standards...... 75 Importance of Corn Attributes and/or Tests ...... 77 Importance of Soybean Attributes and/or Tests ...... 78 Importance of Uniformity Between Shipments ...... 79 Importance of Uniformity on Wheat Standard Factors ...... 80 Importance of Uniformity on Corn Standard Factors ...... 81 Importance of Uniformity on Soybean Standard Factors ...... 82

Tables Table Page 4-1. Countries Included in OTA Wheat Survey, by Region ...... 62 4-2. Regional Tastes and Preferences for Wheat-Based End Products and Their Requirements ...... 70 4-3. Importers Preference for Wheat by Type and Source ...... 71 4-4. Quality Characteristics of U.S. No. 2 or Better DNS, 15 Percent Protein, 1975-86 Shipments to Thailand ...... 83 4-5. Quality Characteristics of U.S. No. 2 or Better HRW, 11 Percent Protein, 1981-86 Shipments to Thailand ...... 83 Chapter 4 Quality Attributes Important to Domestic and Overseas Industries

Grain quality, or more importantly the attri- consistent quality within and between ship- butes that constitute it, is as varied as the num- ments can also influence buyers’ perceptions ber of grains and commercial processes used of quality, The ultimate test for quality is how to produce finished products. Quality attributes well the grain performs in actual use. can vary from perfect kernels used for seed to highly damaged corn kernels used in fuel pro- As processing technologies, increased num- duction, and may entail cleanliness, health, and bers of uses, and more sophisticated methods safety concerns, Add to this cultural differences of using grain become available, specialization and consumer preferences, and what may be in specific quality attributes becomes more crit- considered high quality for one use may be conical. This is especially true in the case of wheat. sidered poor quality for the next. Flour quality is more narrowly defined for milling than for baking because milling is more Other than concerns for conditions affecting standardized around the world, even though sanitary quality, no one set of physical or in- it varies by level of development within a coun- trinsic characteristics fully describes quality for try. A multitude of baking technologies exists any one particular grain. Physical and chemi- that are becoming more sophisticated, thus re- cal differences exist between varieties as a requiring flour quality to be more closely regu- sult of heredity, soil, and climatic conditions. lated. This places increased importance on the Further, in the case of wheat, intrinsic quality attributes required of wheat, in addition to their characteristics vary from one type to the next. consistency within and between shipments. Even in the case of flour, however, the way the flour will ultimately be used has an impact on Since what constitutes physical and intrin- the intrinsic wheat attributes required for high sic quality varies according to processor (wheat quality. miller, corn dry and wet miller, soybean proc- Quality attributes (sanitary, physical, and in- essor, and feed manufacturer), the important trinsic) are measured using a multitude of spe- attributes of each were examined for this assess- cific tests designed to provide information on ment. OTA identified the quality attributes im- the various characteristics of grain. The most portant to each industry as they relate to either commonly used tests for sanitary and physical the attribute itself or the test used to measure quality are those contained in the Official the attribute. The important attributes are out- United States Standards for Grain, These in- lined later in this chapter, The levels at which clude measurements for conditions such as ker- these attributes affect the quality of a finished nel density; moisture; damaged, broken, or split product are not discussed since the values kernels; impurities; and other visual defects, placed on the attribute by an individual indus- In addition to tests provided for in the grain try have an impact on ideal quality, For exam- standards, each industry, along with individ- ple, protein quantity and gluten strength are ual companies within each industry, has either important attributes in wheat. However, high developed or uses internationally accepted test- protein and strong gluten are required by milling procedures. These determine values for in- ers to produce a high-protein, strong flour for trinsic characteristics that ultimately influence bread, whereas low-protein and weak gluten decisions on the grain’s suitability for a par- are required for low protein, weak flour used ticular process and product. Even the use of to produce cakes and pastries, To aid further any one of these tests varies by industry and in this evaluation, surveys of domestic and over- is influenced by the type of product produced. seas processors were conducted to identify the Beyond tests for quality attributes, uniform or important attributes and/or tests. 61 OTA developed questionnaires for each do- Table 4-1.—Countries Included in mestic industry. The 1987 Milling Directory OTA Wheat Survey, by Region was used to identify wheat milling and corn Far East Europe dry and wet milling companies. Additional in- China Soviet Union put was provided by their trade associations. Japan Norway Indonesia The Netherlands Questionnaires then were sent to 119 wheat Taiwan Italy millers, 64 corn dry millers, and 6 corn wet Republic of Korea France millers—all the companies in each industry. Philippines United Kingdom Since there are thousands of feed manufac- Middle East Switzerland Egypt turers in the United States, the American Feed India Manufacturers Association assisted in identify- South America ing 190 major companies to be surveyed. The Venezuela Soybean Processing Directory, along with help Brazil from the National Soybean Processor Associa- Chile SOURCE: Office of Technology Assessment, 1989, tion, was used to identify 19 major soybean processing companies. 3. whether quality has decreased as evi- Responses were received from 57 out of 117 denced by any of the tests, wheat milling companies (48 percent), 24 out 4. whether grain standards adequately reflect of 64 corn dry milling companies (38 percent), conditions important to their operations 4 out of 6 corn wet milling companies (75 per- and if more tests are needed, and cent), 83 out of 190 feed manufacturing com- 5. the test’s importance as it pertains to uni- panies (44 percent), and 10 out of 19 soybean formity between shipments. processing companies (53 percent). Respondents were asked in several questions An overseas wheat questionnaire was also de- to rank each attribute and/or test using a scale veloped by OTA and administered in 18 import- of 1 to 7. Four was defined as being neither im- ing countries (table 4-I) by the U.S. Wheat Asso- portant nor unimportant, 5 as slightly impor- ciates. All but one country responded. Corn and tant, 6 as moderately important, and 7 as ex- soybean overseas questionnaires were not de- tremely important. Yes and no questions were veloped since work was already being done in also used and respondents were asked to iden- this area by other research groups, which pro- tify the attributes and/or tests of particular con- vided data to OTA for use in this analysis. cern when answering yes. The information collected in this survey only represents the In order to gather information on the impor- respondents’ concerns at the time it was admin- tance of the specific attributes and/or tests iden- istered, a point worth noting given the fluctua- tified, five basic areas were examined: tions in perceptions about important quality is- 1. the attribute’s and/or test’s importance, sues in these industries. 2. how the attribute and/or testis used when purchasing grain,

QUALITY MEASUREMENT AS EVIDENCED OFFICIAL STANDARDS

Official grain standards developed for wheat, standards and the ways they are implemented corn, and soybeans establish certain factors are discussed in ch. 8.) Each standard covers used to describe a level of quality and provide areas such as grain type; bulk density; degree a basis for marketing grain. (The need for grain of cleanliness; amounts of broken, shriveled, 63 or split grains; moisture content; amounts of Figure 4-1. -Adequacy of Grain Standards impurities including damaged kernels; and other areas relating to the sanitary and physical condition of grain. The levels for each factor used to define a grade, as well as their impact on the finished product, have caused considerable debate regarding the usefulness of the factors and the limits established by the grades themselves. This assessment does not address the specific limits used to define grades, but merely focuses on the factor’s importance. Much research has been done on determining the impact that physical properties such as type, color, kernel hardness and size, and degree of kernel damage have on various products. For example, kernel damage resulting from heating, storage and field fungi, frost, and immaturity have been shown to affect flour and oil quality. Factors such as excessive moisture content, the presence of molds or mycotoxins, the amount of material other than grain, live insects, and rodent excreta are not desired in any product. — FEED DRY WET SOY WHT-D WHT-O All industries desire grain with good bulk Industries density and safe moisture levels that is clean Standards :,:, and free from impurities and otherwise fit for adequate processing. These factors in various ways are covered by the grain standards. Domestic in- ABBREVIATIONS: FEED = Feed manufacturers WHT-D = Wheat millers dustries as well as overseas wheat millers were DRY = Dry millers (domestic) asked if the factors contained in the standards WET = Wet millers WHT-O = Wheat millers adequately reflect conditions important to their SOY = Soybean processors (overseas) operation and whether additional tests are needed (figure 4-I). SOURCE: Office of Technology Assessment, 19S9 For the three corn industries (wet millers, dry though they consider the wheat standards more millers, and feed manufacturers), the degree to adequate. This section discusses each grain which the factors contained in the corn stand- standard along with information gathered from ard reflects conditions important to their oper- the survey on the importance of the specific ations varies; only the dry millers see a need factors covered by each standard. for additional tests. Only half the domestic soybean processors considered the soybean stand- Wheat Standard ard adequate, but few respondents indicated Wheat is grouped according to growing habit, the need for additional tests. color, and kernel texture. The major distinc- Domestic wheat millers generally felt the tion, however, is its growing season. Winter wheat standard does not adequately reflect con- wheats are planted in the fall and harvested in ditions important to their operations. The need the summer; spring wheats are planted in the for additional tests is evident from responses spring and harvested in the fall. Both winter from domestic and overseas respondents, but and spring wheats produce grain that is red, is slightly higher for overseas millers even white, or yellowish amber in color. Wheat is .

also grouped according to whether it is hard milling capacities, with the highest ranking be- or soft. Spring and winter types tend to be ing for live insects. Overseas millers also ranked higher in protein and are principally used in all factors as 5 or higher. They were slightly bread flour, Softer wheats, white and red types, less concerned than domestic millers about live contain lower protein and are milled into flour insects, contrasting classes, and wheat of other for cakes, cookies, pastries, and crackers. Du- classes. For the remaining factors, overseas rum wheat, which is very hard, is milled into millers generally regarded the factors as being semolina for pasta products (9). These general slightly more important, especially in the case groupings have resulted in the establishment of dockage (figure 4-2). of seven basic classes: Hard Red Spring, Hard Information was collected on whether the Red Winter, Soft Red Winter, White, Durum, wheat standard is used when purchasing wheat Unclassed, and Mixed. and if contracts are based on grade only, grade The wheat standard, in addition to establish- and factor, or only factors (figure 4-3). Even ing classes based on the above criteria using though specific factors included in contracts visual examination, provides information on: vary, 79 percent of the domestic respondents indicated they use the wheat standard and in- • test weight, clude limits for one or more of the factors in ● moisture, their contracts. This compares with 34 percent ● heat-damaged kernels, for overseas respondents, Significant differ- ● damaged kernels total, ences were found between milling capacities ● foreign material, for domestic respondents regarding using the ● shrunken and broken kernels, wheat standard for contracting, Those with ● total defects, 5,600 cwt and over capacity indicated that ● contrasting classes, and limits for some or all factors are always in- . wheat of other classes. cluded in contracts,

Also measured are the number of live insects; Corn Standard the amount of dockage (material other than wheat that can be removed by scalping, aspir- Corn is classed based on color without regard ation, and screens); special conditions such as to growing habit. With color serving as the ba- the presence of garlic and ergot; and the amount sis for classing, three classes have been estab- of stones, metal, glass, and toxic weed seeds. lished: Yellow, White, and Mixed. In addition to visually classing based on color, the corn Respondents were asked in the domestic sur- standard provides information on: vey to rank the importance of each factor as it pertains to producing four major flour types: ● test weight, hard wheat flour, whole wheat flour, soft wheat ● moisture, flour, and semolina. In addition to evaluating ● heat-damaged kernels, whether flour type has a bearing on a factor’s ● damaged kernels total, and importance, the company’s daily production ca- ● broken corn and foreign material, pacity was also factored in. The cutoff point The number of live insects, along with stones for capacity was set at 5,600 daily hundred and toxic weeds, are also included, weight (cwt) capacity. The number of responses in the 5,600-cwt-and-over range accounted for Unlike the wheat standard, the corn stand- approximately 83 percent of the total U.S. daily ard is used by several different industries, milling capacity. Therefore, domestic questionnaires where sent to dry millers, wet millers, and feed manufac- All factors currently contained in the wheat turers, standard were ranked as 5 (slightly important) or higher by domestic millers, Each factor’s im- All industries ranked the factors as 5 (slightly portance was similar across flour types and important) or higher except for class in the wet 65

Figure 4-2.-importance of Wheat Standard Factors

M HT DKT FM SHBN DEF CCL WOCL DKG INS Factors

Domestic Overseas millers millers

ABBREVIATIONS: M = Moisture FM = Foreign material WOCL = Wheat of other classes TW = Test weight SHBN = Shrunken and broken kernels DKG = Dockage HT = Heat damage DEF = Total defects INS = Live insects DKT = Damaged kernels (total) CCL = Contrasting classes

SOURCE. Office of Technology Assessment, 1989 milling and feed manufacturer responses (fig- tioned the most often by feed manufacturers, ure 4-4), Differences exist across all industries whereas heat-damaged kernels was contracted regarding the importance of certain factors, but for the most often by dry millers and damaged wet millers consistently ranked factors as more kernels total was included by wet millers. important than the other two, The data on the importance to overseas in- Industries differ on which factors have limits dustries of factors contained in the corn stand- included in contracts. All wet millers indicated ard were obtained from surveys not conducted they use the corn standard and include limits by OTA. This resulted in only one common in their contracts for one or more of the fac- area—contracting—between the OTA domes- tors. This compares with 75 percent for the dry tic questionnaire and overseas responses. Re- milling and feed manufacturers. Except for bro- sponses by the three overseas industries indi- ken corn and foreign material, the frequency cated that limits for moisture, test weight, with which individual factors are included in damaged kernels total, and broken corn and contracts varies (figure 4-5), Moisture was men- foreign material are included in contracts by . . .

Figure 4-3. - Use of Wheat Standard Factors in Contracts.

—

J M TW HT DKT FM SHBN DEF WOCL DKG INS Factors I Domestic Overseas millers millers

ABBREVIATIONS: M= Moisture FM = Foreign material WOCL = Wheat of other classes TW = Test weight SHBN = Shrunken and broken kernels DKG = Dockage HT = Heat damage DEF = Total defects INS = Live insects DKT = Damaged kernels (total) CCL = Contrasting classes

~ Percentages are based onnumber of responses that use standards for contracting SOURCE. Office of Technology Assessment, 1989

wet millers and feed manufacturers. Moisture, ● damaged kernels total, damaged kernels total, and live insects are in- ● foreign material, and cluded in contracts by dry millers. ● splits. The number of live insects, garlic, stones, and Soybean Standard toxic weeds are also included. Soybeans are classed based on color, and two Several factors were ranked below 5 (slightly classes have been established: Yellow and important) by domestic soybean processors Mixed. In addition to visually classing based class, test weight, and splits (figure 4-6), The on color, the soybean standard provides infor- test for live insects did not rank as the most mation on: important test, as it did for wheat and corn, ● test weight, since live insects are not normally a problem ● moisture, in soybeans. Heat-damaged kernels received the ● heat-damaged kernels, highest ranking for soybeans. 67

Figure 4-4.--Importance of Corn Standard Factors

CL M TW HT DKT INS Factors

ABBREVIATIONS: CL = Class DKT = Damaged kernels (total) M = Moisture BCFM = Broken corn and foreign material TW = Test weight INS = Live insects HT = Heat damage

SOURCE: Office of TechnologyAssessment, 1989

All soybean processors indicate that they use tained in the soybean standard was obtained the soybean standard and set limits in their con- from another survey. Moisture and foreign ma- tracts for one or more factors. Moisture and terial were ranked as most important by overheat-damaged kernels were identified as being seas soybean processors, while moisture, test contracted for the most often (figure 4-7). weight, and damaged kernels total were identified as having limits included in contracts. As with the corn standard, information on the importance to importers of factors con-

IMPORTANT ATTRIBUTES FOR WHEAT, CORN, AND SOYBEANS Many factors influence grain value and what seeds, insect fragments, and soon affect a prod- is considered quality either by affecting whole- uct’s wholesomeness. Yield and quality can be someness or by affecting the yield and quality affected by variety; kernel size, shape, color, of the finished product. Factors such as pesti- and hardness; foreign material, dust, and stems; cide residue, molds, mycotoxins, toxic weed and intrinsic properties such as protein, oil, and 68

Figure 4-5. -Use of Corn Standard Factors in Contracts ●

—

CL M TW HT DKT BCFM IN Factors

ABBREVIATIONS: CL = Class HT = Heat damage INS = Live insects M = Moisture DKT = Damaged kernels (total) TW = Test weight BCFM = Broken corn and foreign material

a percentage are based on number of responses that use standards for contracting SOURCE: Office of Technology Assessment, 1989

starch. This section examines wheat, corn, and veal the inability of any one wheat class to be soybeans for these type of factors. perfectly suited-for any one finished product (figure 4-8). This is also true for wheats pro- Wheat duced in various regions of the world. This forces millers to blend different wheat types The ultimate test for wheat quality is whether in order to produce the flour quality desired. it will bake an acceptable product. Protein Not only can different types be blended, but quantity and quality, the amount of alpha amy- importers blend different U.S. wheat classes lase, and dough handling properties (water ab- with wheats imported from other countries (ta- sorption, mixing time, and extensibility) along ble 4-2). with other tests are used as indicators of quality and impact on baking quality. Except for Millers blend wheats in order to produce Durum, the differences between the amount of flour that can meet the variety of demands of protein required to produce certain products various finished products. In many instances and the range of protein between classes re- flour produced from the various flour streams 69

Figure 4-6. - Importance of Soybean Figure 4-7.-Use of Soybean Standard Factors Standard Factors in Contractsa 7.0

6.5

4.5

4.0 CL M TW HT DKT FM SPL INS CL M Factors Factors

ABBREVIATIONS: ABBREVIATIONS: CL = Class DKT = Damaged kernels (total) CL = Class DKT = Damaged kernels (total) M = Moisture FM = Foreign material M = Moisture FM = Foreign material TW = Test weight SPL = Splits TW = Test weight SPL = Splits HT = Heat damage INS = Live insects HT = Heat damage INS = Live insects

SOURCE: Office of Technology Assessment, 1989 a Percentages are M on number of respaw.esthat use standards forcontractmg (see ch. 3) is also blended to meet the specific SOURCE: Office of Technology Assessment, 1989 quality demands placed on flour. Information protein winter, and blends of other wheat types. on protein quantity and quality along with other In addition, U.S. winter wheats with various important quality characteristics such as the attributes from various regions may be blended amount of alpha amylase (as measured by the with spring wheats. Blending wheats from vari- falling number test), dough handling proper- ous origins, types, and intrinsic characteristics ties (as measured by farinograph, mixograph, allows millers to produce flour to meet vari- extensograph, and alveograph tests), and bake ous flour specifications, maximize the milling test results are all used to determine the quan- operation, and produce uniform, consistent tities of each wheat type that will go into the flour quality. blend. To illustrate this point further, the OTA over- To produce a hearth bread, spring and win- seas questionnaire collected information on the ter/spring mixes maybe required. Spring, win- primary reason for importing wheat. Five basic ter/spring mixes, and winter wheats are used reasons were suggested: for buns and rolls. Pan bread uses winter, winter/spring mixes, and spring wheat. Cakes and 1. to supplement the volume of domestic pastries may use red and white soft wheat, low- wheat, 70

Figure 4-8.-Protein Range and Flour Uses of Major Wheat Classes

Flour uses

● Used to blend With weaker wheats for bread flour Whole wheat bread, hearth breads ● Egg noodles (U.S.), macaroni, and other alimentary pastes White bakers’ bread, bakers’ rolls Waffles, muffins, quick yeast breads, all-purpose flour Noodles (Oriental), kitchen —— cakes and crackers, pie crust, doughnuts and cookies, foam cakes, very rich layer cakes

SOURCE: U S Oepariment of Agriculture, Economk Reaaarc h Service, Wheat Background for 19S5Farm LeglalatlM,. A@cu)tural lnfomuUion Bulletin No 4S7, September 19S4

Table 4-2.—Regional Tastes and Preferences for Wheat= Based End Products and Their Requirements

Averaged required Major products protein level Types of Region consumed (in percent) wheat used Fast East Asia Pan bread 12-14 Hard red Steamed products 10-11 Medium-hard Noodles 9-11.5 Medium-hard white Chappatis 9-1o Soft to medium- hard white MiddIe East and Bread Durum, medium- North Africa hard white and red Couscous, pasta, 9-11 Durum bulgur, fereek Europe White pan bread 10-12 Hard red, domestic soft Rolls 9.5 Pasta Durum Latin America Breads 10-14 Hard red, domestic soft Pasta Durum SOURCE: Canada Grains Council, Wheats of the World (Winnipeg, MB, 1979).

to supplement quality for blending with As more than one reason may apply to a par- domestic wheat, ticular country, respondents were asked to in- equalities are not available in domestic dicate all that applied, The results indicate that wheat, 51 percent import wheat to supplement volume, as feed, and 32 percent to supplement quality, 47 percent local wheat is not available. because quality is not available in domestic —

71 wheat, 6 percent for feed, and 13 percent be- Weak flour, on the other hand, has relatively cause local wheat is not available. low protein, weak gluten, and low water absorption; it yields dough of inferior handling Importers’ preferences for bread, soft, and quality for bread baking, and mixing and fer- Durum wheats from all countries exporting mentation requirements are critical. Weak these types were also evaluated. Each respond- flours, therefore, require less mixing and ferent was asked to rank their preference assum- mentation than strong flours and can be used ing that price, transportation, and other related to bake biscuits, crackers, and pastry. Inter- costs were equal. Overall the United States did mediate flour strengths can be considered all- not rank as first choice, even though some re- purpose flours for use in traditional household spondents did identify it as first choice, The applications. average for all responses is shown in table 4-3. Baking technologies also influence flour When identifying important wheat attributes, attributes, Chemical and mechanical dough de- the demands placed on flour quality must be velopment processes require lower flour pro- considered. Flour is used to produce a large tein and weaker gluten than straight (tradi- number of products under various baking con- tional) dough processes. Since flour can be used ditions. Advances in milling technology have for home use, in small bakeries, and in highly enabled millers to increase the water absorp- mechanized plants, knowledge of intrinsic tion of flour so bread yield can be increased. wheat attributes along with how the flour will Flour protein levels can also be modified by air be baked are required in order to produce a classification. This process separates low- quality flour. protein flour for use in cakes and pastries from high-protein flour that can be used to blend with Since no one set of values—high v. low pro- other flours (2). In addition to traditional lea- tein or strong v. weak flour-meets the needs vened bread, many countries produce a vari- of all products, the survey questionnaire was ety of unleavened products using weaker flour used to determine which attributes and/or tests and chemical leavening. are important to wheat millers here and abroad, No effort was made to determine levels since Flour is classified according to strength, rang- they vary by product, country, and baking tech- ing from strong to weak (7). Strong flours have nology. relatively high protein and elastic gluten and can be baked into loaves that have good crumb, Traditionally, wheat class has been used as grain, and texture. They require considerable a quality indicator. Spring wheats have tradi- water to make a dough that produces a high- tionally been high-protein, strong gluten wheats yield bread. Doughs from strong flours have used to make products requiring strong flours excellent handling properties. They are not crit- and for blending with other wheat types. Soft ical in their mixing and fermentation proper- wheats, which are lower in protein, are used ties, and yield good bread over a wide range in products requiring weak flour. Domestic and of baking conditions. overseas millers were asked if “wheat class is

Table 4“3.—lmporters Preference for Wheat by Type and Source

Bread-type wheats Soft-type wheats Durum wheats 1. Canadian spring 1. Australian standard white 1. Canadian 2. Australian prime hard 2. U.S. white 2. Us. 3. U.S. spring 3. U.S. soft red 3. Argentinean 4. U.S. hard red winter 4. Australian soft white 4. EC 5. Australian hard 5. EC soft 6. Argentinean hard 7. EC soft 8. U.S. soft red SOURCE OTA Overseas Wheat Survey, 1988 72

a good indicator of wheat quality”; both groups den/dead insects, pesticide residue, falling num- indicated that wheat class alone is not a satis- ber, and farinograph) were identified as being factory indicator of quality. contracted for most frequently. In an effort to identify the importance of vari- Only 14 of the 22 attributes and/or tests listed ous attributes and/or tests to domestic millers, in the overseas questionnaire are included in the survey listed 28 attributes and/or tests not contracts. Sixty-two percent of those respond- currently found in the wheat standard. As in ing indicated that protein is specified in each the wheat standard analysis, the 28 items were contract. Of the remaining 13 items, 23 percent evaluated by flour type and an analysis was indicated they specify limits for one or more. made between capacities for domestic millers. The falling number test and radiation ranked first (45 percent) followed by the farinograph Other than attributes and/or tests not nor- test (36 percent), pesticide residue (18 percent), mally used for a particular flour type, no sig- and mycotoxins (18 percent). I nificant differences were found between flour types. Slightly more variability between flour Both groups indicated additional tests are I types was evident in the under-5,600-cwt cate- needed, as demonstrated by their responses on I gory, and overall rankings varied on some items whether the wheat standard adequately ad- I between capacities (figure 4-9). Eight items (pro- dresses their needs. The falling number test and tein, mycotoxins, alpha amylase, falling num- pesticide residue were the main items identi- ber, pesticide residue, hidden/dead insects, fied by both groups (figure 4-11). Domestic flour protein, and bake test) were ranked as 6 millers also marked hidden/dead insects for in- (moderately important) by the over-5,600-cwt clusion. Overseas millers identified tests for I capacity companies. Only mycotoxins, pesti- dough handling properties (farinograph, exten- I I cide residue, and hidden/dead insects were sograph, alveograph, and amylograph) for in- ranked as 6 or higher by the smaller companies. clusion, while domestic millers did not indicate any preference for these tests even though In the overseas questionnaire, only 22 attrib- they often contract for the farinograph. utes and/or tests were included. Most respondents did not rank the items using the 1 to 7 scale but merely checked the important ones. The Corn importance ranking is therefore based on the frequency with which they responded. Three main industries account for the majority of corn usage and each one has different Significant differences exist between items, requirements. The following is a brief discus- but more importantly between regions of the sion of the important attributes for each in- world (figure 4-10). For example, protein and dustry. alpha amylase were considered the most important by Far East countries. This compares Corn Dry Milling with protein, the falling number test, starch damage, and flour yield in the European Com- Several factors affect dry milling perform- munity (EC). Overall, the Far Eastern countries ance, yields, and the quality of products derived ranked the majority of the items as more im- from dry milling. These factors include: portant, followed by EC, South America, and ● corn hardness; then the Middle East. ● drying temperature; The frequency with which the 28 items were ● stress cracks; included in domestic contracts was also exam- ● broken corn and foreign material; ined. Overall, 70 percent of those responding ● kernel size and shape; and (but 88 percent of the 5,600-cwt-and over cate- ● wholesomeness or freedom from molds, gory) indicated that one or more items were aflatoxin, insects, rodent excreta, toxic sub- included in contracts. Five items (protein, hid- stances, odors, and so on. 73

Figure 4-9. --lmportance of Wheat Attributes and/or Tests - Domestic Millers

PRO KWT HD SZ MYCO ASH P/s AMLY FN SED RES

I(H/D) SD GLT F/CL P/FL A/FL FAR ALV MIX BT Attributes/tests

Particle size SD = Starch damage EXT = Extensograph Alpha amylase GLT = Wet/dry gluten ALV = Alveograph Falling number F/CL = Flour color MIX = Mixograph Sedimentation P/FL = Flour protein BT = Baking test Pesticide residue A/FL = Flour ash Insects (hidden/dead) FAR = Farinograph ——

Figure 4-10.—lmportance of Wheat Attributes and/or Tests — Overseas Millers

90 8o

1 1 10

0 PRO KWT HD SZ MYCO ASH P/s AMLY FN SED RES I I

I I

SD GLT F/CL P/FL A/FL YD FAR ALV MIX AMY Attributes/tests

ABBREVIATIONS: PRO = Protein P/S = Particle size GLT = Wet/dry gluten EXT = Extensograph KWT = 1,000 kernel weight AMLY = Alpha amylase F/CL = Flour color ALV = Alveograph HD = Hardness FN = Falling number P/FL = Flour protein MIX = Mixograph SZ = Kernel size SED = Sedimentation A/FL = Flour ash AMY = Amylograph MYCO = Mycotoxins RES = Pesticide residue YD = Flour yield ASH = Wheat ash SD = Starch damage FAR = Farinograph

SOURCE: - of Technology _ment, 1989 -. . -

Figure 4-11 .–Additional Tests for Inclusion in Wheat Standards”

10 0

20 10 0

ABBREVIATIONS: PRO = Protein FN = Falling number ALV = Alveograph HD = Hardness SED = Sedimentation AMY = Amylograph MYCO = Mycotoxins RES = Pesticide residue RAD = Radiation ASH = Wheat ash l(H/D) = Insects (hidden/death) BT = Baking test GLT = Wet/dry gluten EXT = Extensograph ‘ a Percentages a re based on number of responses that indicated additional tests are needed SOURCE: Office of Technology Assessment, 1989 76

Corn hardness can be defined as the quan- kernels are not desired by the wet milling in- tity of vitreous or horny endosperm contained dustry. Broken corn must be removed prior to in a corn kernel relative to the amount of floury processing because it affects steeping. High endosperm. Corn hardness is almost entirely levels of mold-damaged kernels affects germ a result of corn genotype, but to a limited ex- recovery and crude oil quality. Drying temper- tent nitrogen, soil fertility, and drought can ature, as discussed in the dry milling section, cause hardness to increase. Dry millers need causes stress cracking and increases breakage a hard corn in order to produce high yields of susceptibility, which affects starch recovery. large flaking grits and have even developed approved lists of corn hybrids. Feed Manufacturing Excessive drying temperatures can lead to All feed grains are highly palatable to live- corn kernel stress cracking, which has deleteri- stock. Corn has the lowest protein content of ous effects on dry milling yields. The stress all feed grains. However, the protein in all feed crack formation in the horny endosperm is grains has a relatively low biological value for caused by rapidly drying kernels with heated monogastric animals due to a deficiency of one air. Stress-cracked corn not only causes in- or more essential amino acids. When formulat- creased breakage during handling, but also re- ing diets for poultry and swine, therefore, sup- duces flaking grit yields since stress-cracked plemental protein that adds sufficient amino flakes produce smaller grits when undergoing acids to balance this deficiency must be added. cooking and pressing through flaking rolls. Also, feed grains are extremely low in calcium Broken corn and foreign material is detrimen- content and in phosphorus, and deficient in sev- tal to dry milling and no attempt is made to use eral essential vitamins (6). Therefore, these defi- this material in the milling process. It is re- ciencies must also be overcome with supple- moved prior to milling and diverted to hominy ments in various degrees, depending on the type feed. Broken kernels affect the tempering proc- of animal to be fed (3). ess because they absorb moisture faster than Properly balanced diets containing whole- whole kernels. Kernel size, shape, and color also some ingredients are necessary for efficient affects the dry milling process. Round kernels livestock production. In addition, variations in are more difficult to degerm than flat kernels, important intrinsic properties (protein, crude and the same is true of small kernels compared fiber, total digestible nutrients) from published with large ones. Color is important to produc- values are detrimental to efficient feed pro- ing corn chips because the alkali cooking proc- duction. ess modifies the color. In some cases white and yellow kernels are blended to produce the Survey Results desired color (5). The OTA questionnaire sent to dry millers, Corn Wet Milling wet millers, and the feed manufacturers listed 19 attributes and/or tests not currently found Since the wet milling process involves steep- in the corn standard (figure 4-12). With the ex- ing with elevated temperatures and sulfur ception of starch and oil content in the wet dioxide, fungi and other micro-organisms are millers’ rankings, all three industries ranked destroyed (4). Many of the other wholesome- hidden/dead insects, mold, mycotoxins, and ness factors such as insects, mycotoxins, and pesticide residue as the most important items. other debris are not found in the food product Breakage susceptibility, stress cracks, and hard- after processing but can be found in the feed ness, as expected, were ranked higher by wet byproducts if they are present in the corn be- and dry millers than by feed manufacturers. ing processed. Protein is considered more important by wet High levels of broken corn and foreign ma- millers and feed manufacturers. Oil and starch terial, breakage susceptibility, and damaged content were considered very important by wet 77

6.5 I

ABBREVIATIONS: VAR = Variety BSUB = Breakage susceptibility OIL = Oil FIB = Fiber l(H/D) = Insects (hidden/dead) RES = Pesticide residue ST = Starch ASH = Ash MD = Mold ADT = Artificial drying temperature ONUT = Other nutrients STC = Stress cracks MYCO = Mycotoxins FFA = Free fatty acid CL = Color HD = Hardness SZ = Kernel size PRO = Protein AGE = Age

SOURCE: Office of Technology Assessment, 1989 78

Figure 4-13. - Importance of Soybean Attributes millers, but only marginally important by dry - millers and feed manufacturers. ‘and/or Tests Seventy-one percent of the wet and dry millers and 36 percent of feed manufacturers indicated that limits for one or more of the 19 items were being included in contracts. Five items (hidden/dead insects, mold, mycotoxins, pesticide residue, and stress cracks) were found most often in contracts by all industries. Data from the survey of importers only involved the attributes and/or tests that are included in contracts. Stress cracking was the only one identified by dry millers as having limits included in contracts, whereas five items

1 (protein, fiber, starch, oil, and mycotoxins) were I 4 marked by wet millers being included. Over- I I seas feed manufacturers specify limits on four I- I items (protein, fiber, energy, and carbohydrates) IN in contracts.

I 1 I Soybean Processing

, The quantity and quality of soybean protein I and oil are important attributes to processors since the main products are high-protein meals and oil. Crude soybean oil contains oil-insoluble and oil-soluble impurities that must be removed (1). Oil-insoluble impurities include seed fragments, excess moisture, and waxy fractions that make oil cloudy. Oil-soluble impurities such as free fatty acid, phosphatides, and protein fractions are detrimental to the oil’s flavor, odor, color, and stability. Of 16 attributes and/or tests not currently contained in the soybean standard, soybean processors ranked protein, oil, oil stability, and neu- Attributes/tests tral oil loss as most important (figure 4-13). No ABBREVIATIONS: limits for any of the 16 items listed, however, PRO = Protein FAC = Fatty acid content are included in contracts. OIL = Oil PL = Phosphorous level FFA = Free fatty acid PV = Peroxide value For overseas soybean processors the impor- RES = Pesticide residue L = Lipoxygenase l(H/D) = Insects OS = Oil stability tance of items and which items have limits in- (hidden/dead) HP = Hydratable cluded in contracts were evaluated. Protein, oil LN = Lovibond number phosphatides and free fatty acid were considered the most IN = Iodine number NOL = Neutral oil loss IC = Iron content important and the only items for which limits CC = Chlorophyll content are included in contracts. SOURCE. Office of Technology Assessment, 1989 . . . .

UNIFORMITY BETWEEN SHIPMENTS

Delivering uniform, consistent quality be- When identifying important grain quality at- tween shipments has been identified by over- tributes, the system’s ability to consistently de- seas and domestic industries as important. U.S. liver these attributes can be as big a factor as industries have more flexibility in handling a the attribute itself, as evidenced by these im- shipment that is not up to specification, since porters’ statements. The qualities desired are the grain can be resold or blended. Many over- generally available, given the information col- seas industries cannot do this since they have lected from the OTA survey. But quality fluc- little or no inventory and each time a shipment tuations between shipments can affect purchas- arrives they must deal with the quality received. ing decisions and the ultimate use of a particular grain. The need for uniform or consistent quality was documented at the International U.S. As part of the OTA survey, each industry was Wheat End Use Quality Conference in June asked to rank the importance of uniformity be- 1986 by Dr. Seiichi Nagao from the Nisshin tween shipments (figure 4-14). Domestic and Flour Milling Co., Ltd., Japan, and by Emma overseas wheat millers ranked the importance B. Laguio, United Flour Mill Co., Ltd., Bang- of uniformity between shipments as 6 (moder- kok, Thailand. Dr. Nagao stated: ately important) or higher. The wet millers con- The low reliability of U.S. Hard Red Spring Figure 4-14. - Importance of Uniformity wheat is caused by wide fluctuation both in Between Shipments milling and in baking performance, and it seems to me that the quality fluctuation among cargoes is getting larger and more serious, . . . Besides ash content, almost all quality items including test weight, moisture, protein, flour, yield, the analytical data of flour and baking performance vary very widely. As we are afraid of giving our large customers trouble in their automated baking process by blending a large amount of U.S. Hard Red Spring wheat that varies widely in its baking absorption and dough handling property, it is thought to be a supplementary material usable only with No. 1 Canada Western Red Spring wheat which is more stable in quality (8). Emma Laguio echoed Dr. Nagao but added that consistency in quality is foremost in the Asian miller’s mind. Bakers in our region require consistency of quality in flours they use. Flour millers also require consistency of quality in the wheat they will mill. I realize that the attainment of consistent or even near-consistent wheat quality at any given time calls for more than just the FEED DRY WET SOY WHT-D acts of mortals. However, there are factors Industries within the producer’s control which can and ABBREVIATIONS: do contribute to quality consistency in wheat. FEED = Feed manufacturers WHT-D = Wheat millers This, I believe is particularly important to Asian DRY = Dry millers (domestic) millers who are a captive market, so to speak, WET = Wet millers WHT-O = Wheat millers in the sense that we are obligated to mill what- SOY = Soybean processors (overseas) ever wheat we receive (8). SOURCE: Office of Technology Assessment, 1989 80 — sidered uniformity more important than the age, these factors are also considered the most other corn industries did, while the soybean important in terms of uniform it y between ship- processors ranked it as 5 (slightly important). ments to domestic millers. When evaluating future attributes/and or tests Except for moisture, the importance of each for grain, the ability to deliver uniform, con- factor varies by individual corn industry, Mois- sistent quality must be addressed, The impor- ture was considered the most important factor tance of delivering consistent quality is evident overall in terms of uniformity, followed by when examining the factors currently con- damaged kernels total. tained in each standard. Significant concern The importance of uniformity between ship- exists for these factors regarding uniformity ments for attributes and/or tests not currently (figures 4-15, 4-16, and 4-17). found in the grain standards again reflects the For wheat, moisture, test weight, dockage, industries’ concerns, Protein content, in the and live insects stand out as being critical fac- case of wheat, was considered the most impor- tors regarding uniformity between shipments tant by domestic and overseas millers. Over- to overseas buyers. With the exception of dock- seas millers showed more concern for dough Figure 4-15.-lmportance of Uniformity on Wheat Standard Factors 100 ‘

3o1-

— M TW HT FM INS

ABBREVIATIONS: M = Moisture FM = Foreign material DKG = Dockage TW = Test weight SHBN = Shrunken and broken kernels INS = Live insects HT = Heat damage DEF = Total defects DKT = Damaged kernels (total) WOCL = Wheat of other classes

SOURCE: Office of Technology Assessment, 1989 81

Figure 4-16.-lmportance of Uniformity on Corn Standard Factors

— CL M TW HT DKT BCFM INS Factors Wet Dry Feed milling ❑ milling❑

ABBREVIATIONS: CL = Class DKT = Damaged kernels (total) M = Moisture BCFM = Broken corn and foreign material TW = Test weight INS = Live insects HT = Heat damage

SOURCE: Office of Technology Assessment, 1989 handling tests than did domestic millers, but with concerns being evident for the items of domestic millers ranked the bake test second particular interest to each. Soybean processors, in importance. Except for mycotoxins, the three on the other hand, did not identify any item corn industries ranked the items differently, as being overly important.

DECREASE

Each industry was asked in the OTA survey in wheat quality. Five factors (moisture, heat if quality has decreased as evidenced by any damage, foreign material, wheat of other of the factors contained in the grain standards classes, and dockage) were identified as hav- or for the attributes and/or tests listed. The doing gotten worse. Domestic millers also identi- mestic and overseas wheat millers indicated fied these factors, but ranked four others (test that they have perceived a decline in quality. weight, damaged kernels total, shrunken and broken kernels, and live insects) as the areas Sixty-six percent of the overseas respondents showing declines. Both groups indicated that indicated that they have experienced a decrease quality has decreased in terms of protein and 82

Figure 4-17. - Importance of Uniformity on Soybean the falling number test. Overseas millers also ‘Standard Factors identified wet/dry gluten and the farinograph test, whereas domestic millers expressed concerns for the presence of hidden/dead insects. The results from the survey regarding decreases in wheat quality were also reported by Emma Laguio (tables 4-4 and 4-5), who pointed out at the International End Use Quality Con- ference that test weight, kernel size, and kernel hardness have been decreasing over time. Lower water absorption and shorter mixing times of spring wheat, as demonstrated by the farinograph test, have been evident since 1983. Further, it was reported that 1985 and 1986 ar- rivals show significantly lower water absorption and mixing time as compared with the shipments of the 1970s, and that flour doughs are softer and slightly more extensible. These conditions, in his opinion, indicate lower gluten strength.

Factors ABBREVIATIONS: M = Moisture FM = Foreign material TW = Total weight SPL = Splits HT = Heat damage INS = Live insects DKT = Damaged kernels (total)

SOURCE: Office of Technology Assessment, 1989

FINDINGS AND CONCLUSIONS

All processors desire grain that is free from ard important, but indicated a need for addi- pesticide residues, molds, mycotoxins, toxic tional tests. However, overseas millers generally weed seeds, and insects and insect fragments, consider the factors contained in the standard and that otherwise is in a sanitary condition, as slightly more important. Live insects were The importance, however, of physical and in- considered the most important factor by both. trinsic quality characteristics can vary by grain Domestic millers include in their contracts and by processor and are influenced by the limits for the factors contained in the standard grain’s ultimate use. Each industry, domestic more often than overseas millers, who purchase and overseas, defines quality in terms of the on grade only with limits. areas important to its market, as the OTA survey of buyers confirmed. Overall each corn industry considers the factors contained in the standard as important. Standards Differences exist between industries regarding the importance of each factor, but wet millers Domestic and overseas wheat millers con- consistently ranked the factors higher than dry sider the factors contained in the wheat stand- millers and feed manufacturers did, Differences 83

Table 4-4.—Quality Characteristics of U.S. No. 2 or Better DNS, 15 Percent Protein, 1975-86 Shipments to Thailand

1975 1978 1981 1983 1984 1985 1986 Wheat characteristics: 1,000 kernel weight (g) ...... 29.2 31.4 32.4 32,1 31.9 28.3 27.4 Grain hardness (o/o) ...... — 13.2 12.4 11.5 12.3 15.2 15.2 Moisture (o/o) ...... 12.1 12.5 13.0 11.8 11.2 11.6 12.3 Ash ( 0 /0) ...... 1.50 1.52 1.53 1.64 1.63 1.59 1.60 Protein (o/o, as is M. B.) ...... 15.2 15.1 14.7 15.0 15.0 15.0 15.2 Protein (o/o, 12.0°/0 M. B.) ...... 15.2 15.2 14.9 15.0 14.9 14.9 15.2 Flour characteristics (milled in Buhler Mill MLU-2020): Flour extraction (o/o) ...... — 73.0 73,5 73.4 74.1 72.6 70.6 Ash ( 0 /0) ...... , ...... 0.53 0.41 0.42 0.51 0.48 0.46 0.46 Protein (o/o, 13.0°/0 M. B.) ...... 14.5 14.5 13.8 14.2 14.0 14.2 14.2 Wet gluten (%) ...... 40.2 38.5 37.5 38.2 38.0 38.0 39.5 Amylogram peak viscosity (BU) ...... – 620 545 728 869 805 500 Farinogram: Absorption (o/o) ...... 69.3 68.8 67.5 66.0 65.4 64.3 64.9 Peak time (min.) ...... 14.5 11.5 11.5 8.0 9.5 9.5 8.5 Mixing tolerance index (BE) ...... 25 15 15 20 20 25 25 Stability (min. )...... 20 26 26 16 20 25 20 Calorimeter (BU) ...... 87 90 92 77 85 89 89 Extensogram: 45 minutes Extensibility (mm.)...... 232 240 244 262 242 235 236 Resistance ...... 240 265 275 256 324 299 320 Area (sw. cm.) ...... 127 150 161 174 188 186 192 135 minutes Extensibility (mm.)...... 181 214 218 246 255 235 240 Resistance ...... 480 345 320 283 382 386 400 Area (sq. cm.) ...... 176 171 209 218 222 230 217 SOURCE U S Wheat Associates, “U S Wheat End Use Quality Conference,” published proceedings, Washington, DC, June 1986

Table 4-5.—Quality Characteristics of U.S. No. 2 or Better HRW, 11 Percent Protein, 1981-86 Shipments to Thailand

1981 1982 1983 1984 1985 1986 Wheat characteristics: 1,000 Kernel weight (g) ...... 30.5 31.7 31.6 31.7 31.2 28.9 Grain hardness (o/o) ...... 11.4 11.8 12.5 14.2 16.1 16.5 Moisture (o/o) ...... 10.0 10.6 11.2 11.1 11.4 10.9 Ash (0/0) 1.50 ...... 1.53 1.47 1.51 1.55 1.44 1.55 Protein (o/o, as is M. B.) ...... 11.9 12.0 11.8 12.2 12.0 11.8 Protein (o/o, 12,0°/0 M. B.) ...... 11.6 11.8 11.7 12.1 11.9 11.6 Flour characteristics (milled in Buhler Mill MLU-202): Flour extraction (o/o) ...... 72.0 71.0 72.3 75.6 71.9 73.4 Ash (o/o) 0.53 ...... 0.40 0.41 0.46 0.46 0.43 0.44 Protein (o/o, 13.0°/0 M. B.) ...... 10.8 10.7 10.8 11.1 10.9 10.5 Wet gluten (o/o) ...... 28.6 29.6 29.8 31.2 30.0 20.4 Amylogram peak viscosity (BU) ...... 655 790 760 800 600 700 Farinogram: Absorption (o/o) ...... 63.3 63.2 62.0 63.5 62.1 60.1 Peak time (min.) ...... 4.0 6.5 5.25 6.0 6.5 Mixing tolerance index (BU) ... , . . . 20 30 30 25 25 10 Stability (min. )...... 15 13 12 16 15 17 Calorimeter (BU) ...... 71 68 66 74 69 51 Extensogram: 45 minutes Extensibility (mm.)...... 200 207 200 215 219 185 Resistance ...... 265 350 290 320 310 330 Area (sw. cm.) ...... 116 156 146 142 144 122 135 minutes Extensibility (mm.)...... 189 203 207 204 Resistance ...... 318 390 331 382 Area (sq. cm.) ...... 130 178 158 175 SOURCE U S Wheat Associates, “U S Wheat End UseQuallty Con ference,” published proceedings, Washington, DC June 1986 84

also exist between industries concerning which regarding wholesomeness, health, and safety factors are included in contracts. The factors concerns. Quality attributes vary by require- having limits included in contracts by domes- ments of each corn industry, Items such as tic processors are similar to those of their over- stress cracking, breakage susceptibility, and seas counterparts, however. hardness are more important to wet and dry millers than to feed manufacturers. Attributes A number of factors currently in the soybean such as pesticide residue, mold, mycotoxin, and standards are not considered important by hidden/dead insects are important to all in- processors. These include class, test weight, dustries. and splits. Moisture and heat damage are considered the most important factors by domes- Commonality of important quality attributes tic processors, while overseas processors con- is more evident in soybeans than in wheat or sider moisture and foreign material as im- corn between domestic and overseas proces- portant. sors. The most important attributes are protein, oil, and free fatty acid content. Important Attributes Not in Standards Uniformity Between Shipments No one set of quality attributes—e.g. high v. The grain system’s ability to deliver the im- low protein or strong v. weak flour-meets the portant quality attributes consistently is as im- demands for all wheat products. Domestic mil- portant as the attributes themselves. Quality lers do agree, however, that at least eight fac- fluctuations between shipments significantly tors are important no matter what the end-pro- influence purchasing decisions. Problems with duct may be: protein, mycotoxins, alpha amylase, uniformity are especially acute in wheat and falling number, pesticide residue, hidden/dead corn. Uniformity between shipments will be- insects, flour protein, and bake test. Overseas come more important as processing technol- millers differed by region of the world in their ogies become more sophisticated and more end- response to which attributes are important. Nev- uses are found for each grain. ertheless, four factors were common across all In wheat, overseas millers indicate that the regions: protein, pesticide residue, falling num- factors contained in the wheat standard that ber, and dough handling tests. The Far East- are most affected by lack of uniformity are mois- ern countries considered these factors to be of ture, test weight, dockage, and live insects. With greater importance than other regions of the the exception of dockage, uniformity in these world. factors was also considered the most impor- Domestic and overseas wheat millers indi- tant by domestic millers. Protein, dough han- cate that additional tests are needed. Falling dling tests, and the bake test were also identi- number and pesticide residue were the items fied as items of concern. most often identified by both groups. Overseas In corn, moisture was the most important uni- millers also specified dough handling tests such formity concern, followed by damaged kernels, as farinograph and alveograph as important ad- Mycotoxin was considered important by all ditional tests, while domestic millers indicate three corn industries, with other concerns be- a strong preference for a test for hidden/dead ing expressed for items of particular interest insects. to each industry. Determining which attributes are important for corn is industry-dependent except in areas 85

CHAPTER 4 REFERENCES 1. Brekke, O. L., “Edible Oil Processing- Corn Dry Milling,” background paper prepared Introduction,” Handbook of Soy OiZ Processing for the Office of Technology Assessment, U.S. and Utilization, D.R. Erickson et al. (eds,), ch. Congress, Washington, DC, 1988. 5 (St. Louis, MO and Champaign, IL: American 6, Perry, T. W,, “Grain Attributes for the Feed In- Soybean Association and the American Oil dustry,” background paper prepared for the Of- Chemists Society, 1980). fice of Technology Assessment, U.S. Congress, 2. Canada Grains Council, “Wheat Grades for Washington, DC, 1988, Canada—Maintaining Excellence,” Winnipeg, 7. Pomeranz, Y., and Shellenberger, J. A., Bread MB, Canada, 1985. Science and Technology (Westport, CT: Publish- 3. “Feed Marketing and Distribution,” 1987 Refer- ing Co., Inc., 1971). ence Issue, Feedstuffs 69(31):6, 1987. 8, U.S. Wheat Associates, “U.S. Wheat End Use 4. May, J. B., “Wet Milling: Process and Products,” Quality Conference,” published proceedings, Corn Chemistry and Technology, S.A. Watson Washington, DC, June 1986. and P.E, Ramstad (eds.) (St. Paul, MN: Amer- 9. Wheat Flour Institute, “From Wheat to Flour, ” ican Association of Cereal Chemists, 1986). revised cd,, Washington, DC, 1981. 5. Paulsen, M. R,, “Grain Quality Attributes for Chapter 5 The Changing Role of . . . . .

Contents

Page Quality in the Market Place . 89 Changing Nature of Markets–A Case Study in Wheat...... 91 Background 91 Product Consumption and Wheat Importation ...... 91 The Dynamics of the Wheat Market...... 93 Analysis Results ...... 93 Case Study Summary ...... 98 Chapter 5 References ...... 99 Tables Table Page 5-1. Export Classes of Wheat Categorized by Characteristics and

Country of Origin ● ...... ● . ..,..0.. 92 5-2. Required Protein Levels for Wheat-Based End Products and Protein Content of U.S. Wheat Classes...... 92 5-3, Regional Tastes, Preferences, and the Requirements for Wheat-Based End Products ...... 93 5-4, Wheat Consumption in Selected Countries, 1984/85 ...... 94 5-5. Market Shares of Imported Wheat Classes, 1984/85...... 95 5-6. Correlation of Imported Wheat Class Market Shares, Income, and Domestic Wheat Production, 1984/85 ...... 96 5-7. Average Growth Rates of Wheat Class imports by Country, Region,

and World, 1961/62-84/85 ● ****.. .**.*.** ● **..*.. ● ******. ● *,.,..* * 97 5-8. Simulated Changes in Wheat Class Market Shares, 1985/95 ...... 98 Chapter 5

The quality concerns of each industry using The varying quality requirements exhibited wheat, corn, and soybeans are identified in by these industries, especially for wheat, high- chapter 4. Wheat, by its very nature, is the most light the need for the United States to become complex of the three grains in terms of defin- more aware of individual industry require- ing quality because of the vast array of prod- ments if the goal is to produce and deliver high- ucts and processing technologies involved. quality grain, The Nation has developed the Quality requirements differ not only by type reputation as a consistent supplier for any type and individual product, but between mills using and quality of grain desired; to become a sup- the same type wheat to produce flour for the plier of high-quality grains, it must become same type of product. Corn is somewhat less more quality-conscious and develop a reputa- complex in that fewer products are produced tion as a supplier of high quality. The U.S. grain and quality concerns can be traced to the indi- industry must understand the specific require- vidual industries, Nevertheless, the quality re- ments of its customers in order to deliver the quired by one corn industry is not necessarily quality requested and must become more aware important to others, so decisions regarding corn of the dynamic issues surrounding the quali- quality must be assessed in terms of major ties required by the marketplace. Areas such usage. Quality concerns of different industries as technological advancements in processing using wheat are somewhat offset by the fact technologies, Government policies, customer that different types of wheat exhibit different preference, development of new finished prod- properties. Soybean quality is the least complex, ucts, and consumption patterns all affect cus- because the vast majority of soybeans are used tomers’ purchasing decisions and their defini- to produce oil and meal, tion of quality at any one point in time.

QUALITY IN THE MARKETPLACE High quality, as defined by the specific at- spondents considered uniformity as being im- tributes required by each industry, is constantly portant even though they differed on which at- changing. But the ability to produce and de- tributes were more critical. Overseas millers liver high-quality grain can mean more than also indicated the importance of uniformity: just providing grain that meets specific test re- Canada and Australia stress uniformity be- sults. What constitutes high quality from the tween shipments and this often accounts for customer’s point of view can range from spe- wheats from these countries being considered cial handling (low-temperature drying of corn) first choice. to the uniformity of specific attributes within Even identifying the important quality attri- and between shipments. The importance of the latter was evident in the OTA survey results butes for specific industries is not simple. Some traditional measuring technologies are not ac- and in the statements by overseas wheat millers cepted by all industries producing the same (ch. 4). product. In the OTA survey, tests for rheologi- The OTA survey specifically asked respond- cal properties (extensograph, alveograph, and ents to rank the importance of uniform quality mixograph) were considered more important between shipments. Domestic and overseas re- by overseas wheat millers than by domestic

88-378 - 89 - 4 . . ..

ones. Though overseas millers considered these low-protein wheat. Some European processors tests key, their importance varies by region of are also producing isoglucose, a sweetener and the world. Paul Clark, for example, has indi- sugar substitute, from wheat starch (that por- cated that in trying to identify and establish soft tion of the wheat kernel remaining after the glu- wheat flour quality characteristics, Archway ten is extracted), similar to corn sweetener’s Cookies, Inc., found not only that companies use in the United States. had different quality requirements but that Corn, which has always been considered different companies keyed on different analyti- from a feed point of view, is beginning to ex- cal tests for performance parameters (3). perience pressures in areas similar to those ex- As processing technologies become more so- perienced by wheat. As feed manufacturing phisticated through automation or as more becomes more sophisticated and automated, demanding qualities are required for finished along with the need for strictly controlled bal- products, the need for specific attributes within anced diets especially in the poultry industry, well-defined ranges becomes more critical. the demand for quality attributes and con- Technologies for baking bread, rolls, and sim- sistency in delivery is of increased importance. 1 ilar products in large bakeries have advanced In other cases, individual dry and wet corn mill- significantly. While bread can be made by hand ing companies are placing more stringent de- using low-protein wheat, large dough mixers mands on the quality of corn they purchase. I and other equipment found in large automated Companies are contracting with farmers to ! bakeries place too much stress on the low- grow certain varieties and provide special han- 1 protein flour, which results in unacceptable fin- dling, such as low-temperature drying. , ished products and the need for different at- Traditional quality attributes, even though tributes. The way the flour will be baked plays varied, thus may be influenced by technologi- a very important role in determining the spe- cal advances, economic concerns, and Govern- cific values for the various attributes required. , ment policies here and abroad. For the United In addition to advances in processing tech- States to produce and deliver high-quality grain, nologies, technological advances in other areas it must not only become increasingly aware of can have an impact on the quality required by concerns over quality expressed by domestic different industries. For many years, high- and overseas industries and match quality to protein wheats have been blended with low- their wishes, but it must understand why im- protein wheats to strengthen flour. More re- porters purchase grain in the first place. cently, vital wheat gluten, a product contain- The findings in chapter 4 could lead to the ing 75 to 80 percent protein, has been used as conclusion that the United States should stress a flour fortifier. The recent expansion of vital developing high-protein wheats. Yet the ex- wheat gluten production is the result of tech- panded use of vital wheat gluten in some coun- nological improvements in breadmaking, pop- tries to obtain self-sufficiency provides a ulation growth, and increasing urbanization in completely different picture. Knowledge of cus- some countries. Vital wheat gluten in these na- tomer preference, consumption patterns, and tions has become more attractive than higher the role of Government policies is critical when priced, imported wheat. considering what direction the United States Many countries striving to become self-suf- should take. The rest of this chapter examines ficient in wheat production are producing vi- these areas using wheat as an example. tal wheat gluten to fortify their locally produced 91

CHANGING NATURE OF MARKETS-A CASE STUDY IN WHEAT

As the intensity of competition in grain mar- Winter (SRW), in varying arrangements—the kets increases, so does the differentiation of im- second through fourth positions. Durum is con- portant quality characteristics. Because of the sistently the class with the lowest export vol- dynamic nature of wheat markets, OTA ana- ume. Each of the remaining exporter countries lyzed the demand for wheat quality characteris known for one dominant class or, in the case istics in international markets. The analysis had of France, type. Argentina predominantly ex- two specific objectives—to identify the extent ports Trigo Pan whereas Canada has estab- to which market shares are determined by fac- lished a reputation with high bread-making tors such as relative prices, income, prefer- quality Canadian Western Red Spring (CWRS). ences, and other factors, and to analyze prefer- France, a member of the European Community ences for wheat by quality factors and estimate (EC), exports soft wheats. Australian Standard changes in these preferences. * White is by far the dominant class in Australian wheat exports. Background The quantity and quality of protein is the most Various types of wheat are produced around important attribute of wheat in determining the world based on conduciveness of the local end-use suitability. Table 5-2 shows the required climate. For example, the semiarid climate protein levels of typical American wheat prod- found around the Mediterranean Sea is particu- ucts and protein ranges for U.S. wheat classes. larly suitable for production of Durum wheat. The overlapping of class protein ranges por- Environmental factors including rainfall, tem- trays the possibilities of class substitutions. peratures, soils, available nutrients, and topog- Differences between protein ranges and reali- raphy influence and cause wide variety in such zation of protein quality differences between wheat characteristics as protein content, test classes reveal the inability of wheat classes to weight, and kernel size. Genetics is also a ma- be perfectly substitutable or homogeneous from jor factor in wheat characteristics. Plant breed- a technical perspective. ing programs differ greatly from one producing area to the next, resulting in wide variations Product Consumption and Wheat in inherited attributes. Differences in environ- importation ment and genetics among wheat-producing areas of the world or within a country result in wide Consumers generally prefer end products that variations in the characteristics of wheats pro- make good use of the characteristics of wheat duced, even among those of the same general grown in their local or regional area. Tastes type. and preferences thus tend to be regionalized by climate and culture (l). In the Mediterranean Numerous classes of wheat are available from area, for instance, where Durum wheat is the major wheat-exporting countries of Argen- grown, products typically consumed include tina, Australia, Canada, France, and the United bread, couscous, bulgur, and fereek, all of States (see table 5-1). Although each exports one which are made from Durum alone or in a blend or more wheat class, the United States is alone with common wheat. The Far East provides in exporting five classes in significant amounts. another example of this behavior. Vast amounts Hard Red Winter (HRW) has always been the of soft wheat are grown in this region so that dominant class in U.S. wheat exports, followed noodles, chappatis, and steamed breads join by Hard Red Spring (HRS); White and Soft Red rice as common consumer products. Flour millers and other wheat product *The analysis is based on William W. Wilson, Paul Gallagher, providers in importing countries are well aware and Jean Riepe, “Analysis of Demand for Wheat Quality Char- acterist ics, ” prepared for the Office of Technology Assessment, of the tastes and preferences in their markets. U.S. Congress, Washington, DC, 1988. Millers are interested in buying wheats that em- 92

Table 5-1 .—Export Classes of Wheat Categorized by Characteristics and Country of Origin

Characteristics Kernel hardness Bran color Habit Country/wheat class Hard Medium-hard soft Red White Winter Spring Argentina: Trigo Pan...... X x x Fideos and Candaal Taganrock (Durum)a Australia: Prime hard ...... X x x Hard ...... X x x Australian Standard White ...... x x x Australian Standard White—soft varieties...... x x x Australian Soft...... x x x Durum a Canada: Canadian Western Red Spring ...... X x x Canadian Prairie Spring ...... x x x Canadian Utility ...... X x x Canadian Western Red Winter ...... X x x Eastern ...... x x x Western Amber Duruma France: By lot specifications ...... x x x x x United States: Hard Red Spring ...... X x x Hard Red Winter ...... X x x White wheat ...... x x Western White ...... x x x Western Club ...... x x x Soft Red Winter ...... x x x Duruma aDurum lsa highly specialized wheat type generally not classified with others. SOURCE: Canada Grains Council,~heafs offbe Wor/d(Winnipeg, MB: 1979)

Table 5-2.—Required Protein Levels for Wheat-Based End Products and Protein Content of U.S. Wheat Classes

Uses Sources Protein content Protein content Product (percent) Wheat class (percent) Pasta ...... 13 and above Hard Red Spring ...... 12-18 Hearth bread ...... 13-14 Durum ...... 10-16 Hard rolls ...... 13-14 Hard Red Winter ...... 9-14 Pan bread ...... 11.5-13 Soft Red Winter ...... 8-11 Crackers ...... 10-11 White wheat ...... 7-11 Biscuits ...... 9.0-11.0 Cake ...... 9-9.5 Pie crust ...... 8-10 Cookies ...... 8-9 SOURCES: S. Evans, “Wheat: Background for 1985 Farm Legwlation,” Agriculture lnformat!on BuIletln No 467, Economic ResearchServlce, US Department ofAgrlcul fure, Washington, DC, 1984, and J. Halverson and L. Zeleny, ’’Criteria of Wheat Quality,” Wheaf Chemistry and Technology. Y Pomeranz(ed) (St Paul,MN American Association of Cereal Chemists, 1988) body the characteristics suitable for the desired wheat has been the preferred U.S. wheat class end products. Table 5-3 provides a guide to re- imported by Far East Asian countries under gional tastes and preferences for end products Public Law 480, and the region still imports sub- as well as the required flour protein levels and stantial amounts of White wheats from the wheat types to produce them. Western White United States and Australia {41 Besides hav- 93

Table 5-3.—Regional Tastes, Preferences, and the Requirements for Wheat-Based End Products

Major products Average required Types of - - - Region consumed protein level wheat used Far East Asia ...... Pan bread 12-14 Hard Red ‘- Steamed products 10-11 Medium-hard Noodles 9-11.5 Soft to Medium-hard White Chappatis 9-1o Soft to Medium-hard White Middle East and North Africa ...... Bread Durum, medium-hard White and Red Couscous, Pasta, Bulgur, Fereek 9-11 Durum Europe ...... White pan bread 10-12 Hard Red, domestic soft Rolls 9.5 Pasta Durum Latin America...... Breads 10-14 Hard Red, domestic soft Pasta Durum SOURCE Canada Grains Council, Wheats of the Workl (Wtnnlpeg, MB 1979) ing appropriate protein content, White wheats ogy have resulted in lower protein require- are preferred because they produce products ments, while increased sophistication in milling with acceptable color, and baking technology has made knowledge of the specifications of wheat shipments more im- Wheat importers in regions of high bread con- portant. Generally, the required average flour sumption have more than one option for achiev- protein differs by country and end product, as ing protein levels required based on relative indicated in chapter 4. prices and qualities, Government policies, and other factors (4). If there is sufficient domestic Developing countries are rapidly becoming production of soft wheat, high-quality wheats the areas of growth in world market demand can be imported for blending to upgrade the from a total wheat import perspective. Tradi- flour. This is customary in the United Kingdom, tional importers such as Japan and Western which imports CWRS and HRS for this pur- Europe have declined in relative importance. pose. In regions of insufficient or no local pro- This trend is expected to continue as imports duction, flour millers can import either moder- by developing countries account for a greater ately high-quality wheat, all of which is the proportion of world trade. Africa and the Mid- desired protein content, or a combination of dle East have historic wheat consumption hard and soft wheats to blend together to growth rates of 8 percent, compared with 3 per- achieve the required protein level. In the Med- cent for Japan and 4 percent for the world. iterranean region, medium-hard White wheats Related to this is the observation by several from the United States and Australia are im- researchers that wheat product consumption ported to fill the gap between domestic produc- patterns in developing countries differ from the tion and total wheat needs. leavened bread orientation of industrial countries. The demand growth in non-bread-con- The Dynamics of the Wheat Market suming countries has switched the emphasis in world trade away from high bread-making International wheat trade has been charac- quality wheats toward lower priced, lower pro- terized by change. As a result, there has been tein wheats. Technological changes and declin- no consistent indication by the market of ideal ing consumption in industrial countries have wheat quality. Major importers purchase a also aided this shift. variety of classes and grades. Many new importers that have entered the market require Analysis Results different characteristics from the quality bread wheats in high demand during the last two dec- Many factors influence demand for quality ades. Changes in milling and baking technol- characteristics, as indicated. Relative prices, ----- ——

income, domestic production, and preferences Income and Domestic Production all have an effect. With the importance of developing countries in the growth of the world grain trade, it is es- Relative Prices sential to examine the role of income in the qual- One important factor influencing demand for ity of wheat purchased. In addition, the impor- wheats of different qualities is the variability tance of the level of per capita domestic wheat in relative prices. Price differences in interna- production is considered. Countries with tional markets were relatively small prior to higher wheat production may have different 1973, probably reflecting the supply/demand requirements regarding imported wheat qual- situation and the lack of need to distinguish be- ity than those with little or no domestic pro- tween wheat classes, Since then, differentials duction. have increased dramatically in nearly all mar- Countries representative of wheat producers kets, indicating the increased differentiation in and importers with different income levels the international market (2). Notable gaps 1 were selected for analysis (table 5-4). Bread occurred between the prices of stronger wheat prices range from $().4()/kilogram in Pakistan (HRS and CWRS) and all other classes, and the to $1.88/kilogram in Sweden. Per capita con- relative increase in CWRS has exceeded that sumption for food ranges from 47 kilograms of HRS. Embedded in these prices are implicit in Brazil to 164 kilograms in Greece, compared values for quality characteristics. Analysis of with 86 kilograms in the United States. these values indicates that significant premiums exist for Canadian wheats (or dis- Previous studies indicate a tendency for high- ! counts for U.S. wheats), that significant implicit income countries to use relatively more wheat values exist for spring v. winter planted, and for feed (5). The logic is that in times of wheat that the implicit value of protein has been in- surpluses the price differential between wheat 1 creasing throughout the 1980s. and coarse grains may be reduced to the point

Table 5-4.–Wheat Consumption in Selected Countries, 1984/85 —- Bread price Real income Wheat consumption; (cents per (thousand dollars (kilogram per person) Country kilogram) per person) Total Food Importers: Austria...... 61 6.9305 112.848 71.788 Brazil ...... 85 0.0540 47,518 47.518 Denmark ...... 133 7.6354 342.857 92.368 Germany ...... 96 8.7645 157,437 77.738 Greece...... 52 1.5632 185.930 163.819 Ireland ...... 77 3.1068 210.734 112.994 Japan ...... 151 9.6621 52.216 51.033 Jordan ...... 56 0.9351 117.262 117.262 Netherlands ...... 78 7.2426 132.455 83.911 Norway ...... 173 9.2084 91.787 79.710 Pakistan ...... 40 0.2305 133.247 133.247 South Africa ...... 136 1.4330 69.065 64.025 Spain ...... 49 2.6039 149.702 103.815 Sweden ...... 188 8.0802 102,638 66.307 Switzerland ...... 98 11.5979 121.118 91.149 United Kingdom ...... 53 5.7339 184.422 97.681 Exporters: Argentina ...... 41 0.0130 152.824 150.332 Australia ...... 106 7.9079 187.967 146.396 Canada ...... 129 9.7567 207.043 107.561 France ...... 129 6.0351 233.236 113.706 United States ...... 177 12.3430 132.512 85.998 SOURCE: Office of Technology Assessment, 1989 —.-

95 where feeding wheat becomes economical, and require the characteristics of stronger wheats. generally only high-income countries can af- The level of domestic wheat production affects ford to feed large livestock populations. OTA wheat class market shares, likely reflecting analysis indicates that a significant inverse rela- blending v. filler wheat requirements. Thus, the tionship exists between the proportion of wheat tendency is a shift to CWRS by countries with used for food and income. A smaller propor- higher levels of domestic production and a shift tion of wheat is used for food in higher income away from HRW. countries or they use relatively more wheat for feed. Lower income countries, on the other Preferences hand, consume a greater proportion of wheat as food. Considerable variation exists among markets in the wheat classes imported, their relative im- Table 5-5 shows market shares by class of portance, and historic growth rates. Useful in- wheat imported. CWRS, HRS, and EC wheat formation can, therefore, be gained by ana- do relatively well in Western Europe. Correla- lyzing class or quality import demand on a tions between market shares, income, and do- market-by-market basis. Such an analysis, as mestic production were computed (table 5-6). previously noted, shows that relative prices and A number of points are clear. First, market income are significant determinants of market shares for stronger, high-protein wheats are shares. In addition, however, it indicates that positively related with income. Second, mar- a different preference structure exists for indi- ket shares of HRW and SRW are inversely re- vidual wheat classes. lated to per capita income. Third, domestic wheat production is inversely related to HRW The most prominent shifts are away from the and Argentine shares, but positively related to dominant HRW and toward weaker wheats (EC the CWRS market share. These results suggest and SRW) or stronger wheats (HRS, CWRS, and that income level and domestic production in- Durum) (table 5-7). In the overall world trade fluence wheat import patterns. Countries with market, preferences shifted from HRW and relatively large domestic per capita production toward all other classes. Results from most re- have a tendency to import a greater proportion gional markets are similar. Growing nonprice of Canadian wheat and less Argentine and preferences for SRW, HRS, and CWRS exist HRW. Lower income countries tend to pur- in Asia. SRW and Durums are gaining prefer- chase the less expensive wheats, possibly due ence in Africa relative to HRW. In Japan, HRW to reduced ability to pay or because they do not is losing preference to White and HRS. In addi-

Table 5-5.–Market Shares of Imported Wheat Classes, 1984/85

European Argentina Australia Canada Community Us. Country (ARG) (ASW) (CWRS) (EC) HRS HRW SRW White Durum Brazil ...... 0.15 0.00 0.27 0.01 0.00 0.54 0.01 0.00 0,00 Denmark ...... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 France ...... 0.00 0.00 0.73 0.00 0.02 0.00 0.00 0.00 0.23 Germany...... 0.00 0.00 0.66 0,00 0.33 0.00 0.00 0.00 0.00 Greece ...... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Japan ...... 0.00 0.17 0.23 0.00 0.17 0.22 0.00 0.18 0.00 Jordan...... 0.13 0.15 0.00 0.01 0.00 0.69 0.00 0.00 0.00 Netherlands ...... 0.04 0.00 0.10 0.00 0.69 0.00 0.01 0.00 0.14 Norway ...... 0.27 0.00 0.53 0.19 0.00 0,00 0.00 0.00 0.00 Pakistan ...... 0.02 0.60 0.00 0.14 0.00 0.00 0.04 0.17 0.00 South Africa. ., ...... 0.03 0.93 0.00 0.00 0.00 0,02 0.00 0.00 0.00 Spain...... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sweden...... 0.00 0.00 0.60 0.40 0.00 0.00 0.00 0.00 0.00 Switzerland ...... 0.00 0.00 0.36 0.63 0.00 0.00 0.00 0.00 0.00 United Kingdom ...... 0.00 0.00 0.93 0.00 0.06 0.00 0.00 0.00 0.00 SOURCE: Office of Technology Assessment, 1989, 96

I I I I I I I I

I I I I I I I II

I I I I I

I I I I

I I I I I

I I

m I I I

ml I I

al 0 .- 0= 97

I 2.1 r.nnc:.llmntinn coefficient (percent) 2.4 9.5 3.3 5.1 /j.::1 4.0 reported Total imnnrtc:. the and Fr. 0.6 3.2 3.6 ::1./j 6.0 rate 1961/62·84/85 growth jj.l the r.An is B World, and l,;anaaa 7.6 £0::1 2.8 0.20 2.7 and 15.2 r.WRS trend. time 1.1 4.3 2.9 3.3 is Region, ASW T i.

In mIn 7j Class 5.9 4.3 of ARG -1.1 Country, by Imports R 2.6 1::1.1 17.2 DL annual IS Imports u. 2.8 2.1 3.0 3.6 WHI 18.1 -0.3 Class tecnnlQues. \:)lales 1.9 5.7 9.2 8.6 Iv.U SRW 34.8 Wheat nil. of unnea a were .:: . autoregression ~ 2.4 6.0 3.6 3.2 3.0 HRW -3.3 Rates imports uSing I • HRS b ts 7.5 1.4 9.2 + 8.5 HRS 24.6 Growth years y 1989. = early . In logu. or Assessment. because 5·7.-Average high regression ...... Technology Table of s,mp,e relatively 0 IS Country/reqion East Office States orum ...... American ...... figure This Latin Middle United bU"TlV"U Millva Asia Japan SOURCE World ......

98 tion, CWRS, though preferred, is losing rela- In general, the world market is experiencing tive to White and HRS. But the Latin American nonprice shifts in preferences away from HRW market has a strong preference for HRW. Sim- and toward soft wheats (SRW and EC) and HRS. ilarly, there are strong and relatively stable preferences for HRW in U.S. domestic markets, Numerous changes in market shares of wheat classes are expected in specific markets, and Simulations of changes in wheat class mar- in some cases these are relatively large, In gen- ket shares that extrapolate historical preference eral, these changes reflect the shifts in prefer- changes identify important changes (table 5-8). ences. However, despite the shift in preferences The important underlying assumption is that toward HRS, growth in this market will be of constant relative prices. The SRW share of stalled due to the current high price for this the Asia market is expected to grow by 14 per- class relative to others. cent by 1995 with losses between 2 and 5 per- In general, the results indicate that quality centage points for most other competitors. In differentials are important in international mar- Japan, the HRS share increases by 5 percent. kets, affecting both relative prices and shares HRW consistently loses between 2 and 4 per- in particular markets. Given the unique de- cent in all regional import markets except Latin mands for different classes of wheat and the America. key underlying shifts in imports, the ability to differentiate wheats of different classes is an Case Study Summary important component of international competition. A particular concern, however, is that The analysis measured and compared under- in many markets the preferences for U.S. lying nonprice shifts in preferences occurring wheats are distinctly different from like wheats through time. Several regional shifts of particu- of competitors. In some markets, imports tend lar interest include: to shift toward stronger wheats as income in- ● increases in SRW, HRS, and CWRS in Asia; creases. This is not generally true, however, and ● increases in SRW and Durum in Africa, in fact in some cases higher incomes through and decreases in HRW; time result in more imports of softer wheats, • decreases in HRW in the Middle East; and Thus, strong wheats are not necessarily a lux- ● decreases in SRW in Latin America and ury, and softer wheats are not necessarily in- increases in HRW and spring wheats. ferior.

Table 5.8.—Simulated Changes in Wheat Class Market Shares, 1985/95 (percent)

Region Class: HRW SRW WHI EC ASW ARG HRS CWRS OUR CDUR Africa: 1984 share ...... 14.5 19.9 . 46.6 — 5.0 9.6 4.4 1985-95 change ...... –3.1 1.6 — –0.8 – –0.8 0.1 3.0 Asia: 1984 share ...... 7.2 18.3 19.3 — — 1985-95 change ... , . . –4.0 14.3 –2.3 — – Japan: 1984 share ...... 22.9 – 17.1 — 18.4 23.4 – – 1985-95 change ...... –2.0 – –0.7 – –0.1 –2.5 – – Latin America: 1984 share ...... 48.0 5.4 1.5 2.4 – 15,5 2.7 — 1985-95 change ...... 0.5 –0.2 –0.1 –0.2 – 1.0 0.8 — Middle East: 1984 share ...... 12.0 3.4 9.3 21.9 42,8 10.7 — – 1985-95 change ...... –2.5 –0.3 0.8 0.6 0.8 0.6 – – United States: 1984 share ...... 48.7 25.0 7.5 – – — 3.8 – 1985-95 change ...... – 1.0 0.0 0.6 – – — 0.1 – World: 1984 share ...... 19.1 7.1 6.0 18.2 15.9 20.2 – – 1985-95 change ...... – 1.3 1.7 –0.1 0.5 –0.4 –0.9 – – SOURCE Office of Technology Assessment, 1989 99

CHAPTER 5 REFERENCES

1. Agriculture Canada, AnaZysis of Strategic Mixes 4. Oleson, B., “Price Determination and Market for Canadian Wheat Exports, Guelph, Ontario, Share Formation in the International Wheat 1980. Market, ” unpublished Ph.D. dissertation, 2, International Wheat Council, VVorZd Wheat Sta- University of Minnesota, St. Paul, MN, 1979. tistics, Annual Issues, London, 1960-1985. 5. Woodhams, R., Wheat to 1991: Adapting to 3. A4i)ling and Baking News, “Programs To Im- Oversupply, Special Report No. 1070 (London: prove Flour Quality Showing Promise, ” 67(5]: The Economist Intelligence Unit, 1986). l&30, 1988. Chapter 6 Genetics ----- T . - . . . . . -. - .-

Contents Page Wheat ...... 103 Objectives of Genetic Selection ...... 103 Genetic Influences on Wheat Quality ...... 104 Role of Public and Private Wheat Breeders...... 106 Variety Release Procedures ...... 106 Wheat Breeding Technology ...... 108 Soybeans ...... 114 Objectives of Genetic Selection ...... 114 Genetic Influences on Soybean Quality ...... 115 Role of Public and Private Soybean Breeders ...... 118 Variety Release ...... 120 Soybean Breeding Technology ...... ,.122 Corn...... 123 Objectives of Genetic Selection ...... 123 Genetic Influences on Kernel Quality ...... 125 Role of Public and Private Corn Breeders ...... 127 Variety Release Procedures ...... 128 Corn Breeding Technology ...... 129 Findings ...... 130 Chapter preferences ...... 131 Figure Figure No. Page I U.S. Corn Yields and Kinds of Corn Over Years ...... 124 Tables Table No. Page 6-1. Grain Yield and End-Use Quality Characteristics of Four Wheat Varieties in North Dakota, 1981-85 ...... 104 6-2. Environmental Influence on Important End-Use Quality Traits in Wheat ...... 105 6-3, Generational Advance in a Typical Pedigree Wheat Breeding Program .108 6-4. Breeding and Seed Increase History for Stoa Hard Red Spring Wheat .110 6-5. Genotypic Correlations in Soybeans ...... 117 6-6. Mean Performance of Check Cultivars and Breeding Lines With Higher Percent Seed Protein ...... 118 6-7. Soybean Cultivars Released by Public Institutions in the United States and Canada Prior to 1976 ...... 121 6-8. Soybean Cultivars Released by Private Companies Under Plant Variety Protection Certificates, April 1973-November 1987 ...... 121 6-9. Summary of Studies on Breeding Gain in Corn ...... 125 —

Chapter 6 The Genetics of Grain Quality

The most fundamental starting point for ef- status through irrigation. Many others, how- forts to improve the United States’ ability to ever, cannot be affected, such as weather and produce, handle, and deliver quality grain is soil type. the seed, The role of plant genetics cannot be Plant breeding can offer a partial solution to overstated, Indeed, if the genes for physical and problems caused by environmental variation, intrinsic quality are not present, little can be through consideration of genotype-environ- done in the rest of the system to improve quality. ment interactions, This chapter considers for Quality is influenced by plant genotype and wheat, soybeans, and corn: the environment in which the plant is grown, ● Genotypes often can be altered using classical the objectives of genetic selection; ● direct genotypic influences on physical and plant breeding methods so that changes in qual- intrinsic quality and the interactions be- ity result, This has not generally been the aim tween genotype and environment that af- of breeders, however, as their focus on infect seed quality; creased yield often means quality factors such ● the procedures, tests, and criteria for re- as protein or oil content remain the same or leasing seed varieties; and even decline unless special incentives are pres- ● emerging plant breeding technologies to ent for the grower. Likewise, some environ- improve quality. mental factors can be changed, such as soil fertility through fertilizer application or water

The wheat plant and the grain it bears have tant differences by class will be highlighted in evolved over many centuries into the plants the discussion. ’ grown today. Early humans over thousands of years selected types of wheat with the largest Objectives of Genetic Selection seeds, leading to the wheat grown in crop agriculture in Europe and Asia prior to migration Wheat breeders have two major objectives: of people to North America in the early 17th to raise yield and to increase end-use quality. century. Early North American immigrants A secondary objective is to improve resistance brought wheat seed with them that had been to diseases, pest, and environmental stress. selected from variable native species with Reaching these goals is difficult. High yields different characteristics that were used to make are an important attribute that farmers demand different foods. This led to the different classes in a new variety, On the other hand, millers of wheat with different end uses now grown desire wheat with good end-use characteristics, in the United States. such as high protein content, Yet an inverse genetic relationship exists between yield and Differentiation of end-use characteristics of protein content in wheat. these different wheats is important. Because the science of wheat breeding has many com- ‘This section is based on Jack F. Carter et al., “wheat Ilreed- mon points across wheat classes, however, this ing Issues Related to Grain Quality, ” prepared for the Office of section is organized by topic area, Any impor- Technology Assessment, U.S. Congress, Washington, Il(;, 1988.

103 104

The primary goal of wheat breeders is usu- ble traits. Those whose expressions are largely ally increased yield, with protein and other end- influenced by the environment have low herita- use quality factors maintained at acceptable bilities, i.e., the majority of the variability for levels. Table 6-1 illustrates this point with new that specific trait is due primarily to the envi- Hard Red Spring (HRS) varieties produced in ronment and not to the genotype. North Dakota and tested from 1981 to 1985. Functional quality is the interaction of all the Waldron is the check or control variety, and traits in table 6-2 plus others. It is impossible each new variety exceeded Waldron in yield to select one trait individually and interpret end- by 6 to 15 percent. To achieve higher yield, how- use quality. Final bread-making quality is the ever, protein percentage decreased by as much total interaction of all these traits (23). Cereal as 0.5 percent on average. Other selected end- chemists and wheat breeders use these traits use quality factors stayed about the same or de- to estimate end use. If all the traits fall into iden- clined compared with the check variety. tified accepted categories, the final product is This is not to suggest that improvements in usually satisfactory. certain quality have not been made. In Hard Red Winter (HRW) wheat, traits that have sig- Yield-Quality-Resistance Interactions nificantly improved include test weight, flour yield, mixing time, loaf volume, and crumb Grain yield, grain quality, and disease resis- grain. But protein percentage has remained es- tance cannot be separated in a wheat breeding sentially constant (16). In HRS and Durum, the program. Each fits into a package that is re- same characteristics have improved. leased as a new variety. Wheat lines are not developed that feature improvements in some Genetic Influences on Wheat Quality traits and the loss of others. Wheat diseases, lodging, and environmental stress produce Table 6-2 lists important end-use quality shriveled grain that reduces grain yield, lowers traits, the estimated number of genes thought test weight, and decreases flour milling yield. to control a trait, and the degree a trait is influ- However, the best bread-quality wheat is not enced by the environment. Environmental var- grown by farmers unless it yields competitively. iation influences the expression of all herita- As noted, yield and quality if evaluated sep-

Table 6-1 .—Grain Yield and End-Use Quality Characteristics of Four Wheat Varieties in North Dakota, 1981.85 Average

Location Cultivar Dickinson Williston Minot Barrington Langdon Fargo Mean

SOURCE: Richard Frohberg, “Wheat Breeding at North Dakota State University,” presented at U.S Wheat End-Use Quality Conference, Fargo, ND, 1986 105

Table 6-2.—Environmental Influence on Important quality, it may be more efficient to allow the End-Use Quality Traits in Wheat Hard Red Winter wheat plant produce primar- No. Environmental ily starch, and then to blend in protein to in- Trait of genes influence crease its percentage in wheat flour. The pri- Physical quality: mary use of the genetic variability in wheat in Hardness ...... 3 genes moderate the short term (especially in HRW programs) Color ...... 3 genes moderate Kernel size ...... many large is to introduce new genes to protect plant Test weight ...... many large health. Flour yield ...... many large Biochemical quality: Protein percentage . . . . . few-many large Absorption ...... many moderate Genotype v. Environment Mixing tolerance ...... many large Loaf volume ...... many large Genetic variations, environment, and the in- Crumb grain ...... many large teraction of these components affect the final Crumb color...... many moderate expression of a trait. Genetic-environmental in- Loaf symmetry...... many moderate Gluten strength ...... few moderate teraction is produced when different genotypes Pasta quality ...... many large respond differently to different environments, SOURCE: Office of Technology Assessment, 1989 The HRW variety Newton, for example, produces acceptable quality in western Kansas, but is poorer in eastern Kansas due to disease, in arately as unique entities are usually negatively Oklahoma because of late maturity, and in east- correlated, primarily due to the negative asso- ern Colorado because of susceptibility to root ciation between protein percentage and grain rot. Environment can be more responsible, in yield (35). This negative correlation in soft many cases, than the varietal reactions for in- wheats is extremely beneficial as it allows for creased fluctuations in quality (34,41). Geno- concurrent progress in these traits. Low pro- type-environment interaction is of crucial im- tein percentage is a requirement for produc- portance because most HRW wheat varieties ing high-quality end products from soft wheat, are grown across a diversity of environments, and stable quality performance is desired, In addition, more extensive testing programs are Genotypic variability is generally interpreted required to identify stable genotypes, as the range of expression for a specific trait, Interactions between physical and biochem- i.e., protein percentage can range from 7 to 30 ical characters are frequent, and usually nega- in wheat, Wheat has not been investigated ade- tive, The most noted association involves pro- quately to determine the range of available ge- tein, as discussed earlier. This makes it difficult netic variation and to identify the appropriate to improve both traits. However, protein per- breeding procedure for each of the characters centage and protein quality are not correlated controlling quality. Wheat germplasm collec- (23), It is possible to have extremely high pro- tions have been evaluated primarily for agro- tein and very low protein quality. The HRW nomic characters, not for those controlling wheat variety Atlas is a good example. Other quality. interactions that affect progress in a breeding Wheat is a hexaploid species and has a large program include kernel size and flour yield, amount of genetic variability. Protein percent- high temperatures at grain filling, and weaker age is probably the most frequent quality com- mixing tolerance. Susceptibility to diseases and ponent measured, and it can be improved by preharvest sprouting have negative effects on crossing with distant relatives of wheat. A prac- quality. Associations between chromosomes tical limit exists, however, because twice as themselves affect quality. For example, at- much energy is required to produce a gram of tempts to breed resistance for wheat streak protein as a gram of carbohydrate (42), In the mosaic virus have been unsuccessful because future, as more is understood about protein the resistant genes for the disease are closely ------—- . .— — -—

106 linked to genes that have a negative effect on may be more generous relative to public fund- quality (38). ing, but they can be decreased or terminated quickly if return on investment is inadequate. For example, many large and small seed com- Role of Public and Private panies initiated breeding programs soon after Wheat Breeders the passage of the Plant Variety Protection Act in 1970. Wheat breeding did not produce high Public and private wheat breeders develop rates of return for most, however; and today and prepare release of new wheat varieties. One only a few large firms have programs on con- main difference is that public breeders gener- ventional wheat varieties and/or hybrid wheat. ally work with wheat only for the State or re- Thus most new wheat varieties are developed gions within it where they are employed, by the public sector. whereas private breeders develop wheat varieties for one or more States plus foreign coun- Variety Release Procedures tries where the company may have a subsidi- ary. Another difference is that private breeders Public and private wheat breeders attempt can respond more quickly to sudden needs or to create varieties excelling in both agronomic perceived opportunities for research and de- and end-use characteristics. The public breeder, velopment. who produces most of the new varieties, re- One point currently under debate is whether ceives guidance on criteria for release from the public breeders should only develop basic germ- individual State Agricultural Experiment Sta- plasm and let private breeders use the germ- tions. In turn, the SAES bases its recommen- plasm to develop the varieties for commercial dations on the national policy on release of seed- sale—a system more or less followed in Eur- propagated plants adopted by the Experiment ope. An argument can be made for such a role Station Committee on Policy. However, the pol- differentiation. As the next section points out, icy is guidance only and States may and do vary however, currently the return on investment from it. Private wheat breeders are influenced in developing new wheat varieties has resulted by the principles of this policy as well and by in many seed firms eliminating wheat breed- the demands or needs of farmers. ing from their research activities. The principles used to determine whether to release superior experimental genotypes are Public funding of wheat plant breeding is de- based on whether the candidate for release is rived (in order of importance) from State legis- better in one or more agronomic or quality char- latures, Congress, farm commodity organiza- acteristics as compared with “check” or “con- tions, and foundation seed royalties. Funding trol” commercial varieties. But market incen- is often closely related to the economic health tives to farmers and in turn to the wheat breeder of the State. Overall, funding was relatively sta- signal advancement and release of experi- ble from 1950 to 1980, but it has declined in mental progenies having unusually high grain real terms since then. State Agricultural Exper- yield and not necessarily meeting minimum iment Station (SAES) funding for wheat breed- standards of other agronomic and end-use char- ing programs can vary from 35 to 75 percent acteristics. The market seldom rewards farmers of the total SAES budget. Some States have be- who produce wheat varieties with excellent gun charging royalties on seed of new varieties end-use characteristics. in order to help fund plant breeding research as competition increases for use of limited pub- Public Breeder lic funds. The general procedures used to select a vari- Private funding for wheat improvement re- ety for release are as follows: search is corporate funding to produce a product for sale and, it is hoped, a high return on ● The plant breeder makes crosses of desired investment. The financial support and resources parents and progenies and evaluates them . . .

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over 5 to 8 years for agronomic and end- ently superior wheat progeny lines at sev- use characteristics. Those characteristics eral locations, for 1 year, and each entry are compared with a “standard check” or is evaluated for agronomic and end-use “control” variety, usually a commercial va- characteristics. Many wheat lines are dis- riety under production over a significant carded as not worthy of further testing, acreage in the target geographic area. ● An advanced test is conducted at addi- ● The breeder evaluates and justifies the tional locations, again for 1 year, with con- release and name of the experimental tinued evaluation and further discard of progeny. some lines and retention of the most su- ● A Variety Release Committee (VRC) of sci- perior ones. entists of the wheat breeding team, appro- ● Elite testing is conducted at even more priate extension specialists, representa- locations for 2 years with continued agro- tives from appropriate commodity and nomic and end-use quality evaluation at the regulatory agencies, and the Experiment private company quality laboratory and at Station Director recommends release or re- independent quality laboratories. The lat- jection of the experimental line proposed ter might include Class end-use quality lab- for release. oratories, private or public agencies, or a ● If the VRC cannot agree, the final decision cooperative facility with the milling indus- is made by the Director of the Experiment try (e.g., flour and bread evaluation by the Station. Spring Wheat Quality Advisory Commit- ● The agricultural experiment station is usu- tee (SWQAC)). ally considered the “breeder of record” for ● Wheat progenies (lines) excelling in the purpose of Plant Variety Protection and elite testing receive Precommercial Nomi- royalties. nation based on 2 years of testing and satis- ● Basic seed stocks of the new variety are factory end-use quality scores. A Commit- increased to Foundation seed by SAES or tee or Director of Research, Crop Director, a quasi-nonprofit agency for the public Cereal Chemist, Breeder(s), and Crop Mar- variety. keting Analyst accepts the variety as pre- ● Elite growers increase the new variety to commercial if all agronomic, disease, and Registered and Certified seed for use by quality end-use data are satisfactory, commercial growers. ● A third year of elite testing is conducted, ● The breeder deposits a small amount of including evaluation by an independent breeders’ seed in the Germplasm Bank at agency such as SWQAC, Breeders seed is the National Seed Storage Laboratory. produced to continue seed increase advancement, if approved. Private Breeder ● The same Committee that considered precommercial status evaluates again and, if Based on mail inquiries to private breeders, approved, Foundation seed is produced the policies and procedures on variety devel- and sales divisions are notified. The Plant opment and release seem to be as follows: Breeding Division retains control of the . The wheat breeder makes hybrids of de- prospective variety. If release is approved, sired parents and progenies are evaluated seed is distributed to sales divisions for reg- for various agronomic and end-use char- istered and certified seed production. The acteristics. Most of the hundreds of proge- Director of Plant Breeding and the Crop nies from the original “cross” of the two Director sign the official release announce- parents are discarded at each testing stage, ment. but a few superior ones are selected and ● A Commercial Number (equivalent to va- advanced after several generations as riety name) is assigned. Seed is conditioned worthy of further evaluation. at company plants and allocated to District • A preliminary test is conducted of appar- Sales Managers who establish sales goals . . ..

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for each sales area. Farmer-dealers sell the The Breeding Program seed. The company provides advertising Generalizing about procedures is difficult be- support. cause there are as many permutations and combinations of managing the logistics of selection and testing as there are programs. Neverthe- Wheat Breeding Technology less, some primary features of wheat breeding U.S. public and private wheat breeding pro- can be described by considering the basic grams annually release several dozen wheat va- framework of generational advance and test- rieties, each representing 8 to 15 years of re- ing (table 6-3). search. The principal wheat-producing States The genetic variation to begin the breeding have had wheat improvement programs for at cycle is obtained through sexual recombination least 60 years, and their accomplishments have in F1 plants from 200 to 700 crosses per year. been impressive. U.S. wheat yields since 1958 Segregated populations of tens of thousands of rose from 25.1 to 33.1 bushels/acre, a 32-percent F2 plants, each one a new and distinctive geno- increase. Comparisons from regional nurseries type, are grown each year. Genetic segregation indicate a 17-percent genetic gain, accounting continues in the F3, F4, and successive self- for about half the total yield or 0.2 bushels/year pollinating generations, diminishing by half genetic gain (46). Production technologies—- each generation as the genotypes of lines be- including use of fertilizers, herbicides, pesti- come fixed, cides, and machinery—accounted for the other half of the yield increases. In early generations, selection is based on traits that are recognized visually or otherwise This section provides a general perspective evaluated easily, such as plant maturity, plant of wheat breeding by describing some of the height, stem and leaf rust resistance, and gen- capabilities, methodologies, and limitations of eral plant appearance. Such selection is concurrent and future technologies. sidered fairly subjective.

Table 6-3.—Generational Advance in a Typical Pedigree Wheat Breeding Program

a Season Generation Breeding population size Selection/evaluation activities ——. ——

1 Initial crosses 200 to 700 new crosses per year Some selection among F1s based on additional data or

2 F1 200 to 700 phenotype

3 F2 500 to 2,000 plants per F2 Grown as spaced plants, sometimes as bulk populations. population Strong selection between populations and for plants within populations, visual selection for easily classified traits

4 F3 5,000 to 50,000 total plant or Begin line selection, visual selection, visual selection for head rows easily classified traits, e.g., height, rust resistance

5 F4 1,000 to 5,000 observation rows Continue visual selection with additional traits, possibly or head rows begin protein, few quality evaluations

6 F5 400 to 1,000 lines in preliminary Testing becomes more quantitative, replicated, multi- yield trials or observation Iocation, initial yield data, quality evaluations rows

7 F6 150 to 400 lines in yield trials Similar to F5

8 F7 20 to 50 lines in advanced yield Yield trials at several locations, complete quality and disease trials resistance testing

9-11 F8 5 to 10 elite lines Extensive yield testing in State and regional trials, complete disease and quality comparisons to standard varieties, identification of candidate varieties Finally, seed increase decisions are made during final evaluation stages and at the time of varietal release. aFlllal ., generation SOURCE Office of Technology Assessment, 1989. 109

Selection for each trait further depends on stantially increasing the proportion of later gen- the time required to measure the trait, the num- eration lines that have the desired protein level. ber of plots that must be evaluated to obtain Replicated yield trials are expensive to con- a reliable estimate of the line’s performance, duct. A breeding program must grow several the amount of seed required for the test, and the effect of environment on other traits being thousand yield plots each year at several locations. In recent years, small-plot combines have selected. been developed in which one to two yield plots Selection for quality in early generations and per minute can be harvested while maintain- during preliminary testing is accomplished ing seed integrity of each plot. mainly by using micro-evaluation procedures. Cereal chemists and breeders have devised an Other Quality Considerations array of such tests that correlate with functional Wheat breeders encounter several breeding processing quality. Mixograms, cookie tests, situations in which quality can become a prob- and micro-loaves are examples of tests that can lem. The most common one occurs when selec- be done using small samples of wheat kernels, tion for one trait causes changes in another trait or traits, The correlated response can be posi- Improving the Efficiency of Wheat Breeding tive or negative, and the degree can vary from slight to very strong. For example, the gene in Each breeding program strives to improve the Durum wheat for white glumes and the gene efficiency of its selection and testing proce- for strong gluten strength are located near one dures and to understand the available genetic another on the same chromosome. Durum variation, The dynamics involve a steady flow breeders have used this fortuitous association of information and data from many sources, effectively to identify strong gluten Durum Crossing, selection, and testing decisions are lines. In bread wheats, the negative correlation revised as agronomic, disease, and quality data between grain yield and protein percentage that from the current season’s nurseries, and area exists in many breeding populations challenges wheat crop are evaluated. the breeder to find genes that increase protein percentage or improve the quality of the pro- Experimental design, statistical analyses of tein without losing yield potential. data, and plot and testing equipment are refined continually. Breeding programs collect enor- Other situations in which quality can be af- mous amounts of data each year. Much of the fected adversely involve the introduction of analysis that formerly was done with main- genes from related species. The best known frame computers now is being done with micro- example is the IB/IR wheat-rye chromosome computers. Also, computer programs are be- translocation. The rye chromosome introduced ing written that greatly facilitate various into wheat carries valuable genes for disease organization and data collection activities of resistance, but it also can cause problems with the breeding program. stickiness of bread dough, Problems with test weight, flour color, and other traits have been The impact that a new analytical technique associated with an alien chromosome segment can have on selection strategy is shown vividly introduced for disease resistance in several by the application of near-infrared reflectance other cases, spectroscopy (NIRS) to measure protein and moisture percentages. NIRS, developed in the Timetable of Wheat Breeding and 1970s, is rapid, practical, and inexpensive. Pro- Varietal Seed Increase tein percentage can be determined on about 200 wheat or flour samples per day with a single Evaluating past progress in wheat breeding, NIRS machine. For a wheat breeding program, planning future research, and having some idea this means that early generation selection for about the possible rates of progress of future protein percentage can become routine, sub- research requires an appreciation of the time —. — -— . . ------——

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required for varietal development, testing, and chase hybrid seed each year—unlike varietal seed increase. The breeding and seed increase seed, which can be grown from the previous schedule for Stoa, an HRS wheat variety re- year’s seed—the successful development of hy- cently released by the North Dakota Agricul- brid wheats also would be the basis for a large tural Experiment Station, provides an exam- commercial seed industry in the United States. ple (table 6-4). Greenhouses, off-season winter Several commercial seed and agricultural nurseries, and early, coordinated increases of chemical companies have hybrid wheat re- seed can accelerate this schedule. But it is im- search efforts. portant to remember that crosses for wheat va- Two technologies are being used for hybrid rieties for the year 2000 are being made now, wheat development: 12 years before they will be released. 1. genetic systems that use a cytoplasmic Some future technologies may shorten the male-sterile female parent and a fertility period for varietal development far less than restorer male parent for hybrid seed pro- intuitively might be expected. Much of the duction, and schedule for Stoa is devoted to the initial build- 2. chemical systems that use chemical hybrid- up of seed, to multiyear testing, and to increas- izing agents to treat and sterilize the female ing the varietal seed. This process must be done parent for production of hybrid seed by regardless of how a line was produced initially. cross-pollination with the male parent, Commercial hybrids have been produced and Hybrid Wheat marketed using both types of systems. Much progress has been made during the past Current hybrid wheat research aims to im- 25 years to develop germplasm and techniques prove hybrid performance and to reduce the for commercial production of hybrid wheats. costs of producing hybrid seed commercially. A hybrid advantage for grain yield and other The economic success of hybrid wheat will be traits similar to those found in corn, sorghum, determined by the hybrid breeder’s and seed rice, and other crops is the impetus for hybrid producer’s success in accomplishing these wheat research. Because the farmer must pur- goals.

Table 6-4.—Breeding and Seed Increase History for Stoa Hard Red Spring Wheat

Year Season Generation Explanation of evaluation state 1973 ...... Fall Cross ND527/Coteau sib//Era 1974 ...... Spring F, Grown in greenhouse

1974 ...... Summer F2 Space-planted populations

1975 ...... Summer F3 Head-row

1976 ...... Summer F3 F2-derived head-row

1977 ...... Summer F5 1 row selected, F4 derived line

1978 ...... Summer F6 Preliminary evaluation

1979 ...... Summer F7 Preliminary yield trial

1980 ...... Summer F8 Elite yield trial 1981-82 ...... Summer ND HRS variety trial (tested as ND582) 1982-83 ...... Summer HRS Uniform Regional Nursery 1983 ...... Summer Spring Wheat Quality Advisory Committee Test 1984 ...... Named and released

Seed increase (concurrent): 1981-82 ...... , ...... Purification head rows near Yuma, Arizona 1982 ...... Increase at North Central Station, Minot, North Dakota, 1½ acres 1982-83 ...... Winter increase near Yuma, Arizona 1983 ...... Increased in North Dakota 1984 ...... Released as a variety 1985 ...... 26,000 acres certified plus noncertified acres 1986 ...... Estimated acreage, 1 ½ to 2 million acres -- SOURCE’ Office of Technology Assessment, 1989 Quality standards and questions for hybrids 3 inability to insert specific genes stably into in general are identical to those for conven- the host genome; and tional varieties. The end-use quality of hybrids 4 and lack of knowledge on how to regulate has tended to be between their two parents for the expression of inserted genes in the tar- most traits. Some quality control can be get tissue. achieved in hybrids by choosing parents that have complementary quality traits. While some of these limitations are likely to have technical solutions in the near future, As wheat hybrids must have a yield advan- others could remain barriers to using these tech- tage to be economical, the breeder must be con- niques in wheat breeding for some time. cerned about grain yield/protein percentage Once specific favorable alleles of genes that relationships in the wheat classes where high code for glutenin or gliadin proteins are iden- protein is desirable. Also, seed produced on a tified, a process that could require a great deal hybrid (F ) plant differs from seed produced on l of research, the isolation of these genes could a variety. The (F ) seeds are segregating, each 2 become fairly routine. Current research indi- genetically different from another. All seed in cates that many wheat seed storage proteins conventional varieties is genetically homozy- actually are “families” of proteins (many simi- gous and is homogeneous. Although these ef- lar but slightly different proteins) coded by fects have not been examined in detail, gener- “families” of genes. ally the maternal F1 plant of uniform genotype seems to have the predominant effect on endo- Genetic engineering also can isolate seed stor- sperm quality and on kernel characteristics. age protein genes from other crops. The potential value of these proteins either to improve wheat quality or to impart additional process- Future Technologies ing attributes to wheat cannot be assessed un- Genetic Engineering. -Advances in several til such genes actually are inserted into wheat technologies for genetic manipulation of plant and expressed in the seed. cells and genes, collectively termed biotechnol- Currently, there are no reports that cultivated ogy, have generated much discussion about wheats have been transformed and a plant re- their application to important plant breeding generated (15). Genes have been inserted into problems. The new technology having the great- the cells of a wild relative of wheat (Triticum est potential for expanding the genetic varia- monococcum L.), but no plant was regenerated tion available to plant breeders is genetic engi- because of an inability to regenerate plants from neering. This term covers the technology or single cells, which requires an effective tissue group of technologies with which scientists can culture system. Although Schell (45) has re- isolate genes from one organism, manipulate ported that DNA is taken up and is expressed them in the laboratory, and then insert them transiently in wheat embryos, he has not deter- stably into another organism. (This stable in- mined if this DNA is transmitted to the off- sertion is known as transformation. ) These spring—i.e., is heritable. complex technologies are the focus of extensive, very active research efforts (15,24,45). A prudent estimate is that appropriate techniques to engineer wheat genes will be devel- The current capabilities of scientists to use oped within the next 5 years, assuming ade- genetic engineering in wheat and most major quate resources for experimentation, How crop plants are limited. These limitations re- effective or efficient these systems will be is garding wheat quality include: difficult to predict. 1. insufficient knowledge of which genes af- An example of a technology that must be defect quality; veloped when wheat plants are transformed 2. great difficulty in isolating such genes, successful y is the regulation of the expression even if they are known; of genes for defined qualities. The genes must 112 be expressed in the seed but not in other tis- lations about the agronomic and quality per- sues. Experience with other crops suggests that formance of transformed wheat. Assuming the the regulatory sequences for wheat seed pro- new transformed wheat has excellent quality teins will have many of the necessary charac- and agronomic performance, another year or teristics of regulating the added new genes (45). two of seed increase would be needed before Genetic engineering allows the addition of rela- sufficient foundation seed could be sold to cer- tively few genes, not a gene family. Because tified growers who, in turn, must grow the seed gene families for quality characteristics are ex- for 1 year before they can sell certified seed to pressed in the seed, the added genes may need the wheat grower. The first genetically engi- to be strongly expressed, assuming they affect neered seed will enter the commercial market quality positively. after the following growing season (an additional year), when the wheat grower harvests If detrimental proteins (e.g., the secalin pro- the crop. Commercial acceptance and use of teins of the IB/IR rye translocation) are oper- the new, genetically transformed variety then ative, these families of genes may need to can be determined. be turned off, requiring techniques not now known. However, germplasm may be found Consequently, at least 7 years will be re- with suitable analytical tools, either through quired, under favorable circumstances, for a natural variation or through chromosomal ma- seed of a genetically transformed variety to nipulation, that lacks the detrimental family of reach the commercial market—plus possibly genes. another 5 years to develop the transformation It must be restated, however, that until use- technology. Although this seems a long time, ful genes can be successfully identified, iso- the total time from identification of beneficial lated, stably integrated into the wheat genome, genes to new plant introduction maybe cut by and sexually transmitted to offspring, genetic 4 to 6 years. engineering of wheat remains a promise and ELISA and DNA-Probe Screening Assays.— a goal rather than a useful tool. After proteins and genes that enhance or lessen If procedures that allow routine genetic trans- wheat quality have been identified, rapid as- formation of wheat should become available says using antibodies or nucleic acids can be within 5 years, how long would it take for the used to identify lines having these genes. An new technologies to have a major effect on example of this technology is the enzyme-linked wheat quality? Research to improve under- immunosorbent assay (ELISA), which uses anti- standing of wheat proteins and the specific bodies to identify proteins rapidly. ELISA tech- genes that code for them, including methods nology employs a “capture” antibody that is to isolate these genes, will proceed concurrently attached to a solid surface and that specifically with research on genetic transformation. Ma- binds to a single protein from a complex pro- nipulating gene regulation fully in seeds will tein mixture. This protein-antibody complex is take many years. Transformed plants must be incubated with an enzyme-coupled antibody grown to maturity to test seed for gene expres- that recognizes and binds to the protein. In the sion. Small-scale baking quality tests to deter- presence of a colorless substrate, the enzyme mine if wheat quality has indeed been improved will convert the substrate to a colored product requires 300 grams (0.7 pounds) of seed. Ad- that can be measured spectrophotometrically. vanced hard wheat quality evaluations can re- The presence of color, therefore, identifies the quire up to 550 kilograms (1,200 pounds) of presence of the (specific) protein that is bound seed. to the capture antibody and to the enzyme- coupled antibody. The first U.S. field tests of transformed plants (mainly tomato and tobacco) were allowed in ELISA tests are used routinely to identify pro- 1987. Hence, little or no previous knowledge teins associated with seed storage proteins and and experience exists on which to base specu- with plant pathogens (as a diagnostic test for 113 diseased plants). Using ELISA techniques to While selecting directly in tissue culture to identify specific seed quality proteins is diffi- improve quality traits that are expressed in the cult because these occur as families of similar seed may be difficult, selection may be possi- proteins. Isolating specific proteins and obtain- ble for overproduction of essential amino acids ing precise antibodies can be difficult. Once that limit nutritional quality (30). Little varia- the technique is optimized, however, selection tion for nutritional quality exists in wheat germ- to save lines with favorable quality proteins and plasm, and unconventional selection tech- to discard those with unfavorable ones will be niques may become an important objective for straightforward. improving nutritional quality (e. g., lysine content) (33). The ELISA technology is not used widely yet because of lack of understanding about which Wheat culture techniques to produce large genes affect a given quality. But basic research quantities of regenerable cells routinely have to study these proteins, using ELISA techniques not been refined. Few plant traits, including and developing antibodies, should, if success- quality traits, can be selected at the cellular ful, make this technology available to breeding level, New biochemical strategies to improve programs. nutritional quality probably will not be developed until tissue culture systems are developed Biochemical Selection and Doubled Haploid fully, probably within the next 5 years. Again, Breeding.—These two new technologies involve as with genetic transformation technology, 7 tissue culture and the ability to form unor- years of testing and seed increase still will be ganized tissue (called callus) from organized plant tissue such as immature embryos and an- necessary before the improved line would enter seed trade channels, thers on a culture medium and then to reform organized tissue that can be induced to regener- Doubled haploid breeding could shorten the ate into plants. time needed to develop inbred lines of wheat that normally are derived by generational ad- With biochemical selection, the unorganized vance following crossing. Most commercial tissues are challenged (exposed) to a chemical that inhibits normal growth, Cells that have un- wheat varieties are relatively homogeneous inbred lines, as are the two parents of hybrid dergone mutations or other genetic changes wheats. The value of this technique is that when that make them resistant to the effects of the the chromosome number is doubled, each of chemical will grow normally and can be iden- its genes is copied identically. tified. The power of this technique is that approximately 2,25 million cells can be grown in The major limitation with doubled haploid 30 milliliters (about 1 fluid ounce) of medium, breeding in wheat is that an efficient system Each of these cells potentially can regenerate for producing doubled haploids has not been into a plant. An acre of wheat by comparison, developed. Using a relatively inefficient anther has from 1 million to 2 million plants, depend- culture system, however, French researchers ing on seeding rate. For selection purposes, an who developed the wheat variety Florin, re- ounce of cells capable of regenerating into leased in 1987, believe they saved 4 years by plants is the numerical equivalent of 1 or 2 acres reducing time needed for inbreeding. of wheat in a wheat nursery. It cannot be considered the functional equivalent, however. ------—- —

114

SOYBEANS

Several thousand soybean strains were intro- Wilcox et al. (62) found a total increase of ap- duced from Asia in the early years of this cen- proximately 30 percent. Boerma (7) found that tury (28). Because soybean is photoperiod-sensi- yields of cultivars in Maturity Groups VI, VII, tive, one of the initial tasks was to identify the and VIII had increased about 42 percent since potential adaptation areas for these accessions. 1914. A maturity group classification system was developed. Those materials adapted to northern- Resistance to insects has been an objective most latitudes were placed in Group 00 and of some soybean breeding projects. Most re- those adapted to southernmost latitudes were search has been conducted in Southeastern placed in Group X. The soybean’s potential States, where insects pose a greater threat to value as an oilseed was recognized and plant production. Although several insect species are breeding was begun for high oil and for adap- pests, the genetic resistance that has been iden- tation to North Central States. The cultivars tified seems to have some effectiveness against Dunfield and Illini, released in the 1920s, re- many of them (37). Improved insect-resistant sulted from this breeding effort and their oil breeding lines have been released as germplasm, and one insect-resistant cultivar (Crock- content became the standard for succeeding cultivars (9). Soybean was also used as a for- ett) has been released in Texas. age during this time, and prior to 1941 more Many studies aim at characterizing the ge- soybeans were grown for forage in the United netic variation for protein and oil content in States than for grain (28). As soybean gained soybean and the genetic correlations between wider usage as a grain, breeding emphasis on oil, protein, and seed yield (11). Yet for most seed yield increased. Early improvements in soybean breeding projects, altering protein and resistance to plant lodging, seed shattering, and oil concentration has been a low or nonexist- foliar diseases increased soybean adaptability ent priority. Rather, the primary breeding goal and helped make this a suitable grain crop for has usually been high yield with maintenance 2 a wide geographical area (9). of protein and oil at acceptable minimum levels, e.g., 41 percent protein and 20 percent oil. The Objectives of Genetic Selection well-documented negative relationship between protein and oil has meant that selection Two major objectives of soybean improve- for either trait alone has resulted in a decline ment programs are to raise seed yield and to in the one not selected (10,13). Likewise, yield increase seed quality. As with wheat breeding and protein are often negatively correlated and programs, a third objective is the protection of it has been difficult to increase both simultane- current levels of yield and quality by increas- ously (10). Soybean producers, the primary cli- ing resistance to diseases, pests, and environ- entele of breeders, do not receive payment for mental stress. Because high yield has always the beans they produce according to chemical been the primary attribute that farmers wanted constituency. As a result, they have shown no in a new cultivar, it is the trait that has received interest in cultivars with high oil or high pro- the most attention. Comparisons of old and new tein and this lack of interest has influenced cultivars have shown that significant improve- plant breeding objectives. ment in soybean yield potential has occurred. In a test of Group I, II, III, and IV cultivars re- Three cultivars have been released that are leased between 1933 and 1971, yield increased 8 to 12 percent higher in protein concentration. by 50 percent. In a similar test of Group II and Protana and Provar were developed in Indiana III cultivars released between 1923 and 1974, and Iowa, respectively, and released in 1969 (57). Because the yielding ability of these culti- ‘This section is based on Joe W. Burton, “Soybean Breeding and Seed Quality, ” prepared for the Office of Technology\’ Assess- vars was below that of other varieties being ment, LT. S. Congress, Washington, DC, 1988. grown at the time, neither gained much accept- 115 ance by farmers. A third cultivar, Tracy, was and disease can be easily manipulated using developed in Mississippi, and because it had standard plant breeding methods if genes for good yielding ability and resistance to Phytoph- disease resistance have been identified in the thora rot and some foliar diseases, it achieved soybean germplasm collection. wide usage in Southeastern States, The cultivar Ransom, developed in North Carolina, has Protein and oil concentration (percentages) a higher than average oil concentration [23 per- in soybean seeds and seed size are quantitative cent). But it achieved wide usage because of traits known to be under the influence of many its high yielding ability and not because of its genes. These can also be changed by classical high oil content. plant breeding methods, but the task is usually more difficult. The challenge to plant breeders While most soybean breeding has been di- is mainly that of incorporating the large num- rected toward increasing or protecting produc- ber of genes affecting the trait into an agronom- tivity, a considerable amount of research has ically acceptable cultivar. This is complicated also been aimed at developing germplasm with by the fact that genetic alteration of one trait novel seed traits that would fit particular end frequently leads to undesirable changes in other uses and markets. These novel types, as usu- plant characteristics. ally visualized, would be sold outside the grain trade (probably on a contract basis) and thus When quantitative inheritance (i.e., con- have an opportunity to bring a premium price. trolled by many genes) is involved, knowing the The development of the cultivar Vance offers heritability of a trait is the key to determining a good example of soybean breeding for a spe- an appropriate plant breeding strategy for cial end use. Vance was derived from a cross changing the trait. The expression of the quan- between the cultivar Essex and a wild soybean titative trait depends on which genes are (Glycine soja) line. It has tiny seeds (8.8/100 present in a given plant. Also, the trait is usu- seeds), which makes it very suitable for use in ally influenced by environmental conditions, natto, a Japanese food product. Currently this which also contribute to the variation in expres- cultivar is being grown in North Carolina and sion. Heritability is a measure that estimates Virginia and is being sold directly to a Japa- the proportion of the total variation in expres- nese importer for more than the soybean grain sion that is due to strictly genetic influences. market price. Thus, as with wheat, a trait with high heritability is subject to less environmental influence, Tofu is another soybean food product that which means that the genetic worth of a par- could be made from a specialty variety. While ticular plant is more easily determined. This tofu can be made from any soybean, high pro- usually means that progress in changing the tein seeds with yellow seedcoats and hila are trait through breeding is more rapid. preferred (22), The variety Vinton, which has 44.9 percent protein, was developed for this Johnson and Bernard (32), Brim (8), and Bur- purpose (5). ton (13) have presented heritability estimates for quantitative traits that are usually measured Genetic Influences on in soybean breeding populations. The estimates Soybean Quality were taken from several independent studies of different populations of soybean lines, Seed coat and cotyledon color are controlled Heritability estimates for seed protein percent- by a relatively small number of genes. Likewise, age ranged from 51 to 92 percent. Seed oil esti- small numbers of genes are usually involved mates of heritability were similar, ranging be- in disease resistance. In cases like these where tween 51 and 93 percent, By comparison, seed traits are simply inherited, genetic alteration yield estimates are lower, between O and 73 per- is not difficult, provided the presence or ab- cent. This suggests that seed composition is less sence of gene expression can be determined. affected than seed yield by environmental fac- Thus, the seed quality traits related to seed color tors. Thus, the genetic worth of a soybean line 116

as it pertains to protein and oil composition is advantages in that percentage oil can be meas- easier to determine than its genetic worth rela- ured rapidly and nondestructively in soybean tive to seed yield. seeds by magnetic resonance imaging spectroscopy. YieId-Quality-Resistance Interactions Increased protein yield can also be accomplished by selection for increased yield, pro- Breeding a cultivar for disease or pest resis- vided percentage protein does not decline sig- tance requires that resistance genes be incor- nificantly. In this respect, recurrent restricted porated into a high-yielding, agronomically index selection could be used to hold protein acceptable genotype. If the resistance genes are constant while increasing yield. In two cycles located in a high-yielding adapted cultivar, then of selection, using such an index, yield in- the transfer of resistance can usually be accom- creased from 32.0 to 32.5 bushels/acre while plished without yield loss. Such would be the protein and oil remained constant at 45.8 per- case with resistance to soybean mosaic virus cent and 17.8 percent, respectively (31). It might (SMV). High-yielding SMV-resistant cultivars be possible to select for protein yield directly, are currently available. On the other hand, although there is the risk that percentage pro- when resistance genes must be acquired from tein would decline. nonadapted plant introductions, transfer of resistance without some yield loss is difficult. Genotypic Variability A major problem in selection for altered seed There is a wide range, approximately 15 per- protein or oil composition in most soybean pop- centage points, in seed protein percentage ulations has been, as mentioned, the negative among lines of the U.S. soybean germplasm col- genetic correlations between protein percent- lection. About 10 percent of these have a pro- age and the two other economically important tein percentage higher than 44.5 percent. Seed traits, yield and oil percentage. Thus, selection oil percentage for lines in the U.S. germplasm for increased protein usually results in de- collection acquired before 1970 range between creases in percentage oil and commonly in de- 13.2 and 23.5 percent. Because most currently creased yield (10,61). Similarly, selection for in- grown cultivars have between 20 and 23 per- creased seed oil percentage results in decreased cent oil, there seems to be more opportunity protein. Percentage protein and percentage oil for increasing protein than oil percentage with were found to be negatively correlated in 12 the germplasm resources currently available. soybean populations investigated in 5 separate studies (table 6-5). Most of these correlations With the breeding methods mentioned in the had absolute values greater than 0.50. Negative previous section, genetic lines have been de- correlations between percentage protein and veloped with higher protein content and simi- yield, though frequent, were usually not great, lar yielding ability compared to standard cul- with only 2 having absolute values greater than tivars. Three examples of such lines have protein percentages between 44.2 and 45.5 and were recently evaluated in the U.S. Department When considering the problems of genetically of Agriculture (USDA) Uniform Soybean Tests increasing the quantity of protein produced by (table 6-6). When protein content was higher a soybean crop, there must be a recognition of than the check cultivars, oil content was lower the producer’s desire for high yield and the soy- in these three lines. bean processor’s desire for high protein percentage and acceptable oil levels. Thus, breed- Genotype v. Environment ing methods have been varied depending on the breeding goals. The negative relationship As discussed in the section on wheat, varia- between protein and oil has led some investi- tion in the expression of a quantitative trait in gators to attempt to increase protein indirectly any plant population is due to genetic and envi- by selection for low oil. This has some economic ronmental influences and an interaction be- I

Table 6-5.—Genotypic Correlations in Soybeans

Johnson et al. Thorne and Fehr Shorter et al. (1955) (1970) (1976) Simpson and Wilce Population 1 2 3 4 5 6 7a 8a 9' Percent oil genotypic .... -0.48 -0.70 NAb NA -0.96 -0.35 -0.15 -0.96 -0. Percent oil phenotypic ... -0.48 -0.69 -0.66c -0.58c -0.79c -0.24 NA NA N, Percent yield aenotyoic .... -0.64 -0.12 NA NA NA NA +0.54 -0.74 -0.- Percent yield phenotypic ... -0.33 -0.08 -0.21 -0.27 NA NA NA NA N, ~Random F. lines from crosses between unadapted high protein lines and adapted average protein lines (UH X AA). NA ~ not applicable CSignificant at < 0.5. SOURCE: Office of Technology Assessment, 1989. .

118

Table 6-6.—Mean Performance of Check Cultivars mental influence is moderated by genetics. The and Breeding Lines With Higher Percent Seed Protein other way is to attempt to tailor a variety for —.. Yield Protein Oil a particular environment. This can be quite Line (bu/acre) (percent) (percent) successful if the environment can be defined. D82-4098 a ...... 45.8 44.2 18.1 Breeding for disease resistance fits this Centennial ...... 43.8 42,9 19.0 category, N84-1256 b ...... 37.0 45.5 18.7 Check cultivarc . . . . . 37.5 41.5 21.0 LN82-4049 d ...... 45.4 44.8 20.2 Role of Public and Private Sparks ...... 44.0 41.2 21.5 aTe.st@ lrl Itle Regional Prel Imlnary VI, The Uniform Soybean Tests—Southern Soybean Breeders Region, 1984 bTeSted {n five North Car~llna envlronmf+!nts CBraXtOn, Ransom, or GasoY 1 T Private industry investment in soybean breed- dTeSted in tfle Flegiorlal Prellmlnary IV A, The Uniform Soybean Tests— Northern ing has been a relatively recent development. States, 1985 Prior to the passage of the Plant Variety Pro- SOURCE Off Ice of Technology Assessment, 1989 tection Act in 1970, only six companies (with one plant breeder each) were engaged in soy- tween the two. In defining issues related to the bean breeding because soybean is a self-pol- interaction of genotype and environment in linated crop and, without the act, research in- plant breeding, it is helpful to consider envi- vestment could not be recovered, Since then, ronmental variation in a continuum from pre- an additional 25 companies and 61 breeders dictable to unpredictable. Predictable variation have been added to the private soybean breed- is due to those conditions that can be controlled ing industry (63). Under the act, certificates of in some way (e. g., irrigation) or those that have plant variety protection can be issued that as- permanent characteristics (e.g., photoperiod sure the “developers of novel varieties of sexu- and soil type). Weather-related conditions gen- ally reproduced plants . . . exclusive rights to erally contribute most to unpredictable var- sell, reproduce, import or export such vari- iation, eties.” It was this guarantee of exclusive rights that enticed private seed companies to invest Most problems in seed quality that arise be- in soybean research. Thus, the role of the pri- cause of weather have no real genetic solutions. vate plant breeder is to develop novel soybean Sometimes, genetics can lessen the impact of varieties that can be sold at a profit., a weather-related problem. For instance, the hard-seed coat genotype develops less seed dis- Public soybean breeders have always been ease when harvest is delayed after maturity. involved in varietal development. Yet they have Other genetic sources of resistance to fungal had and continue to have a large role in basic seed pathogens lessen the problem but do not soybean breeding. The roles or responsibilities eliminate it. Many seed disease problems are of public breeders in general have been identi- related to cultural practices and harvest. Usu- fied as to teach and train students as future ally changes in farming, harvesting, and stor- plant breeders, conduct “basic” research, and ing practices are much more likely than varietal develop cultivars of minor and regionally disease resistance to be effective in controlling adapted crops (52). This latter would obviously seed disease. not apply to soybean breeders. General agreement exists among those concerned with this Most soybean breeding programs have re- issue that training students is an important and gional testing efforts to evaluate genotypes appropriate responsibility of public breeders, across a wide array of environments. A geno- and most agree that public breeders should con- type is selected from these tests on the basis duct basic research. of ability to perform well in most environments. Statistical analyses have been developed to de- The changing role of publicly supported plant termine the relative environmental stability of breeding research was discussed at the 1982 cultivars. Evaluation and selection of stable cul- Plant Breeding Research Forum sponsored by tivars is the most common way that environ- Pioneer Hi-Bred International, Inc., which was 119 attended by both public and private plant University in a typical year makes approxi- breeders and administrators. The joint effort mately 6 crosses aimed at cultivar development between public and private breeders was re- and screens approximately 1,200 lines for agro- ported in the conference proceedings as being nomic performance, mutually beneficial. Furthermore, the compe- Research funds and scientists’ time at most tition in crops such as soybeans was consid- public institutions that conduct soybean breed- ered to be healthy because there is no assuring are spent on a variety of activities not ance that developing varieties of self-pollinated directly related to cultivar development, such species will be profitable enough for private as teaching, evaluating germplasm, devising companies to justify continued research invest- and testing breeding methodologies, and do- ment, because it is not possible to draw a line ing inheritance studies. Without a profit mo- separating basic from applied plant breeding, tive, publicly funded soybean breeders are usu- and because no clear division exists between ally under less pressure than private soybean germplasm enhancement and cultivar develop- breeders to develop and release cultivars. Pub- ment (43). licly funded soybean breeders also are freer to General agreement exists that increased sup- conduct long-term research projects that have port for basic research is needed, particularly a low probability of yielding any immediate eco- that involving the collection, assessment, and nomic return, The “high risk” nature of basic development of germplasm resources (43,52). research means it probably will only be con- This is needed simply to maintain current levels ducted by public institutions (43). of crop productivity. The average lifetime of a soybean cultivar in the United States is 5 to Funding 9 years, in part because of the dynamic nature of the agroecosystem. The sudden appearance Soybean breeding by a private company is of a disease, changes in climate, water, or soil funded by profits from the sale of seeds of’ the conditions, or changing cultural practices can varieties the company produces. If soybean va- necessitate the replacement of a cultivar with rieties are not profitable, then the funds come one more adapted to the new environment, This from some other division of the company that situation is not likely to change. The new is profitable. Funding decisions are based on genetic engineering technologies, such as pro- company managers’ assessment of the market toplast fusion, if successful, will be a useful tool potential for soybean varieties with particular in cultivar development but will not eliminate characteristics—e.g., maturity group, resistance the need for traditional plant breeding research to a disease, and so on. activities. Soybean research has four sources of public funding. These sources and their relative con- Rationale for Differentiation tribution in 1984 were: Private plant breeding programs have basi- State appropriations (37 percent); cally one goal—the development of an improved USDA-Agricultural Research Service (29 cultivar that can be marketed and profitably sold to farmers. This permits a concentrated percent); investment of resources for cultivar develop- Hatch Act formula (10 percent); and funds to land grant universities and con- ment that is usually much greater than a simi- tracts, grants, and cooperative agreements lar investment by a public plant breeding pro- from Federal, State, and farmer check-off gram. For example, in 1983 Asgrow Seed Co. sources (24 percent) (3). made 1,200 crosses combining genetically different material and screened 120,000 lines Farmer check-off in the 1980s has amounted with a professional staff of five Ph.D. plant to between 7.4 and 8.1 percent of the total soy- breeders (4), By comparison, the public soybean bean research funding. Grower funding varies breeding program at North Carolina State a great deal among soybean-producing States. 120

Grower funding in 1984 amounted to 25.7 per- Variety Release cent of the total soybean research budget in Nebraska, whereas in Ohio there was none. Prior to 1946, 194 soybean cultivars were released in the United States and Canada (table Even though studies measuring return to in- 6-7). Nearly all were plant introductions from vestment in agricultural research show rates Asia or plant selections from those introduc- of at least 15 percent, State and Federal sup- tions. Active soybean breeding increased after port (in real dollars) for agricultural research 1945. Between 1946 and 1970, 110 cultivars has remained nearly constant since 1965 (43). were released from public plant breeding proj- In recent years, as plant breeding positions in ects. As noted, private soybean breeding in- public institutions have become vacant, they creased with the passage of the Plant Variety have been converted to genetic engineering po- Protection Act in 1970. Between 1973 and 1987, sitions so that research in biotechnology can a total of 363 soybean cultivars were released be emphasized. This has meant an overall de- under plant variety protection (table 6-8). Most crease in funding of traditional plant breeding of these were developed by private soybean research. This reduction in public support for breeding projects. Sixty-four public cultivars plant breeding is generally viewed with great in maturity groups 00 to IV were released be- concern. tween 1971 and 1981 (5 I), and in maturity groups V to VIII, 93 public cultivars were re- Alternate means of financing public plant leased (29). breeding research are being explored. One suggestion is that private industry become more As the number of public varieties has in- involved. For instance, a private company creased, the number of acres planted with pri- could support graduate student training and vate cultivars also has increased. Currently 57 research. It is also suggested that private in- private cultivars are available to farmers in dustry could support research that benefits the North Carolina v. 23 public cultivars. The North industry itself. Some State universities are con- Carolina acreage planted to public cultivars has sidering patents on products of their plant decreased from 81.4 to 62.7 percent in the past breeding research as a means of generating rev- 4 years (19). The trend toward increased use enue. Increased funding from commodity orga- of private cultivars will probably continue due nizations is another possibility. to the release of improved private cultivars and the ability of private companies to market ef- All these suggestions have been criticized be- fectively. cause funding of this nature is usually unpredictable and tied to particular short-range goals. Procedures for Release It does not provide for the long-term, higher risk research that requires a continual resource Most soybean cultivars are the inbred prog- commitment. A recent suggestion has been the eny from matings between two or three inbred release by State Agricultural Experiment Sta- lines or cultivars, They are usually “pure” lines, tions of soybean varieties eligible for royalties, which means they have a high level of genetic by the brand name Variety Not Stated. This idea homozygosity from having been inbred through has not been viewed favorably by either public at least three generations of self-pollination. A or private soybean breeders. It is believed that soybean breeder selects the “best” inbred lines such a system would tend to shift more re- from among several populations. These lines sources toward short-term basic research, im- are tested in local and regional tests before a pede the free flow of germplasm among exper- decision is made to recommend the line for re- iment stations, and limit a farmer’s ability to lease as a cultivar. This decision is made based know whether or not two varieties are identical. on its yielding ability relative to currently grown . . . .

121

Table 6-7.—Soybean Cultivars Released by Table 6-8—Soybean Cultivars Released by Private Public Institutions in the United States Companies Under Plant Variety Protection and Canada Prior to 1976 Certificates, April 1973-November 1987

Maturity groups Prior to 1946 1946-70 1971-76 Total Number of 00-I, ...... 35 “-29 8 72- PVP cultivars Number of II-IV ...... 98 54 12 164 not under Title V PVP V-Vll . . 43 22 6 71 Company Title V Vlll-X ...... 18 5 4 27 Agratech Seeds ...... Total ...... 194- 110 30 334 Agripro, Inc...... Americana Seeds, Inc ...... SOURCE T Iiymowltz C A Newell, and S G Carmer ‘ Pedtgrees of Soybean Cul. tlvars Released I n the Un!ted States and Canada International Agrtcul Asgrow Seed Co...... tural Publtcatlons, IN TSOY Series No 13 Unwerslty of Illlnols B.B. Collier-Barney A. Smith ., Urbana Champaign IL 1977 Bryco Plant Research Division . BSF/Ag Research ...... Callahan ...... Coker’s Pedigreed Seed Co. ., . cultivars in the same maturity grouping. Deci- Dairyland Seed Co., Inc...... sion to release is also based on other traits that Delta & Pine Land Co...... contribute to agronomic quality and yield sta- Ferry-Morse Seed Co...... FFR Cooperative ...... bility over a range of environments. In approx- Funks Seeds ...... imate order of importance, these traits include Goldkist ...... resistance to plant lodging, disease and pest re- Growmark, Inc...... Helena Chemical Co...... sistance, stress tolerance, rate of emergence, Identity Seed & Grain Co, . . . . . and protein and oil content. Illinois Foundation Seed . . . . Jacob Hartz ...... Every State Agricultural Experiment Station Jacques Seed Co, ...... or private seed company has a committee that J.M. Schuetz Seed Co...... King Grain U. S. A., Inc...... reviews and approves prospective cultivar re- Land O’Lakes, Inc...... leases. A soybean breeder who has selected a Louis Bellatti ...... Lynnville Seed Co...... line that is suitable for release as a cultivar must Midwest Oilseeds, Inc...... prepare a report or “defense” of the line. This Milburn Farms ...... includes a summary of pertinent test data and Nickerson American Plant a statement of the rationale for release. The lat- Breeders ...... Nixon Seed Co. & L...... ter explains the unique characteristics of the North American Plant line that would make it an important addition Breeders ...... to available cultivars. Productivity and use- Northrup King Co...... pioneer Hi-Bred International, fulness to growers are the primary criteria in Inc...... releasing new varieties, For private plant breed- Prarie Seed Co., Inc...... ing companies, stability is also a critical con- Scientific Seed Co., Inc...... Soybean Research Foundation, sideration. Because a company’s name and rep- Inc...... , utation are associated with the cultivars they Stanford Seed Co...... Syler ...... release, the firm cannot afford to release a cul- TerraI-Norris Seed Co., Inc. tivar that performs poorly. Teweles Seed Co...... Voris Seeds, Inc...... Every State has its own cultivar release pol- V.R. Seeds, Inc. ... , ...... icies, although these have all been developed Totals ...... within the guidelines of USDA policy (57) and SOURCE Of ftce of Technology Assessment 1989 Federal law (Federal Seed Act of 1939 and Plant Variety Protection Act of 1970). As an example, the North Carolina Agricultural Research Plant Patent and Plant Variety Protection Pol- Service makes the following statement in its icy and Procedure Statement:

88-378 - 89 - 5 122

New plant cultivars and breeding lines may on the plant breeding objectives and personal be released for public use if judged to be ei- preferences of individual soybean breeders. ther unique or superior to currently available Pedigree selection or modified pedigree selec- germplasm, or equal to presently available cul- tion are the most common methods for system- tivars if the genetic base of a crop is broadened atic inbreeding (22). Backcross breeding is com- so as to reduce disease and other pest hazards a few gene (40). monly used for transferring loci from a low-performing line to a high-perform- The statement encourages release of new cul- ing cultivar. Modification of those standard tivars that enhance yield, but makes no men- practices include population improvement tion of quality. through early generation testing and recurrent selection, bulk breeding, and mass selection. Length Of Time for Development and Release The other important issue that has received considerable attention is the most appropriate In a survey of 64 Plant Variety Protection ap- and efficient way to evaluate lines with respect plications for soybean cultivars, the average to a particular trait. Various field plot and lab- time required from cross to application was 9.2 oratory testing techniques have been developed years (4). This development and release time and used (22). The appropriateness of a particu- is similar for private and public cultivars. The lar technique depends on the trait being evalu- use of a winter nursery in the inbreeding stages ated and the ease with which it is measured. can shorten the time between making a cross Much of the success or failure of a particular and development of a pureline that has variety breeding project can be attributed to the qual- potential. This has already become common of ity of the germplasm and the genotypic evalu- all soybean breeders, however, so the 9.2-year ation program. estimate would include the time savings involved in winter nursery use. These classical methods are adequate for the New biotechnologies are unlikely to reduce transfer and recombination of genes within the significantly the time for development and re- species and have been successfully used to im- lease of a cultivar. They will, however, provide prove soybean cultivars. Higher yielding cultivars with disease and pest resistance have been the opportunity for putting a new trait into a plant in a matter of months where now it can developed and released over the past 40 years. take 5 to 7 years to breed into a variety a spe- Progress, while continuous throughout this cific trait through conventional breeding and period, has been slow. The rate of increase in backcrossing. Field testing and seed manipu- seed yield has been estimated at between 0.6 lation steps are still necessary and will consume and 1.0 percent per year (62). For at least the most of the development and release time. next 10 years, the classical methods, because they are in place and successful, will likely continue to be those most used to produce im- Soybean Breeding Technology proved cultivars. Present Technology It is currently not possible to economically

Soybean cultivars are typically developed by produce the seeds for F1 soybean hybrids. Pat- hybridization of two or more lines followed by ents for two F 1 hybrid seed production meth- self-fertilization to the F4 or later generation. ods have been issued. However, it remains to Homozygous lines (purelines) are isolated and be demonstrated that either can be used to pro- tested to determine those with superior per- duce hybrid seed economically. Strong evi- formance and cultivar potential. With this dence for significant hybrid vigor in the soy- method, the major issue has been how mate- bean species is sparse (13). As a result, little rial in the F2, F3, and F4 segregating generations research is being conducted on F1 hybrid seed should be handled. The method used depends production for soybeans. 123

Future Technology genes, As of now, not many soybean genes have been cloned, sequenced, and had the gene prod- Future technology in the genetic alteration uct isolated. More basic genetic information of soybean will undoubtedly include recombi- is needed about plant traits in order to make nant DNA methods (genetic engineering). Some significant changes in soybean through genetic progress is being made in the regeneration of engineering (26), whole, fertile plants from soybean tissue and cells in culture, But it is impossible to predict Only the seed quality traits that are related how long it will be before regeneration becomes to disease reaction, such as the mottling caused routine. Various methods for transferring genes by soybean mosaic virus, are likely to be af- into plants are being developed, and plant trans- fected by new genetic engineering technologies formations have been successful. For instance, in the near future, Percent seed protein and oil a gene that imparts tolerance to glyphosate her- and seed size, like seed yield, are polygenic. bicide has been introduced into Petunia (48), Many unidentified genes are involved in the determination of these traits. This makes them If methods for foreign gene transfer and re- difficult to evaluate at the cellular level and to generation are developed for soybean, the same work with at a molecular level (27). problems as in wheat will still apply—isolating genes, determining which ones can be benefi- The new molecular genetic technologies hold cially introduced into a plant, and regulating great promise, and much important biological the gene expression once it is introduced. In information will be learned from molecular soybean, the traits most likely to be altered genetic research. This will eventually translate through genetic engineering are seed protein into practical ways to alter plants genetically and oil quality, plant stress tolerance, pest and in a desirable way. In the short term, however, disease resistance, and herbicide tolerance (26). most improvement in soybean seed quality will It is expected that desirable changes in these come through classical plant breeding. traits can be obtained by manipulating a few

CORN

Corn is the only important cereal crop in- brid corn and were the source of the first inbred digenous to the Americas, and more than twice lines used to produce hybrids, { as much corn is produced in the United States as any other crop. Most modern races of corn Objectives of Genetic Selection are derived from prototypes developed in Mex- ico and Central and South America. An excep- Corn breeding is accomplished by selection tion to this is the sole product of North for desired plant traits during both inbred de- America—the yellow dent corn that dominates velopment and hybrid evaluation. Breeders the U.S. Corn Belt, Canada, and much of Eur- have always selected for traits that give higher ope today. The late maturing Virginia Ground- yield and easier harvest in accordance with cur- seed and the early maturity Northeastern Flints rent cultural practices, and harvest method has were crossed in the early 1800s, and the superi- been the most important cultural practice in- ority of the hybrid was recognized. The cross fluencing selection traits for corn. Quality fac- was repeated many times and out of these mix- tors such as protein or starch content have not tures eventually emerged the Corn Belt dents, been a high priority. the most productive race of corn found any- ‘This section is based on A, Forrest Troyer, “Grain Qualit\r where in the world. The highly selected culti- and Corn Breeding, ” prepared for the Office of Technology\’ As- vars of Corn Belt dents formed the basis of hy- sessment, U.S. Congress, Washington, DC, 1988. 124

Since the introduction of hybrid corn, the The other major objective of corn breeding U.S. average corn yield has increased steadily, has been to accommodate harvesting methods. from 16 bushels per acre in 1936 to 110 bushels Hybrid corn made mechanical pickers possi- per acre average for 1981 through 1987. Since ble because of better standability. The corn- single-cross hybrids (circa, 1960), the average picker-harvest period (1940-60) saw many corn yield increase per year is 1.89 bushels (figure production improvements; increased fertilizer 6-l). Most of this yield increase is genetic im- use, higher plant densities, more continuous provement. Three investigations (14,20,44) com- corn, improved herbicides and insecticides, pared yields of hybrids from various eras; the cheaper nitrogen, and earlier planting were gain in hybrid performance due to breeding some of the more important. Cold tests and averaged 64 percent of the total gain in annual other indicators of seed vigor were devised by corn yields (table 6-9). The other 36 percent has breeders to develop corns adapted to earlier been attributed to improved cultural practices planting. Plant and ear height were unaffected such as fertility, weed control, plant density, by use of corn pickers, Most farms were still planting date, row width, etc. Corn breeders diversified, and livestock consumed much of have successfully matched breeding objectives the corn on the farm where it was grown. with improved cultural practices steadily and Breeders selected corns that would not shell rapidly to increase national average yields of too easily on snapping rolls and on husking beds corn and will continue to do so in the future (55). of corn pickers, Continuous corn led to root-

Figure 6-1. -U.S. Corn Yields and Kinds of Corn Over Years (b values show average yield increase per year)

● b = 0.01 ● 9

SOURCE: A Forrest Troyer, “Corn Breeding and Gram Cluahty,” presented to North American Export Gram Assooatlon, May 1986 125

Table 6-9.—Summary of Studies on vest, while those that dried faster in the field Breeding Gain in Corn and in the dryer became more desirable as fuel costs rose (54). Genetic selection for tolerance Hybrids Period Gain Study (number) (years) (percent) to higher plant densities reduced barrenness Duvick, 1977 ..., ...... 19 -‘ - 32 57 and increased frequency of two-eared plants. Duvick, 1977 ...... 50 40 60 Adoption of minimum tillage to cut costs in- Russell, 1974 ...... 25 48 63 creased the incidence of diseases and insects CastIeberry et al.,1984 . . . . 27 60 75 (gray leaf spot, corn borer, etc.), leading to more Average ...... 30 45 64 SOURCE Of ffceof Technology Assessment 1989 — breeding emphasis on these problems. worm buildup and strains of insecticide-resist- Genetic Influences on ant insects, so stronger rooted hybrids were Kernel Quality needed. Farmers preferred hybrids that picked Corn kernels can be altered by genetic means cleanly and easily, so breeders selected for to give modifications in starch, protein, oil, and smaller shank-to-ear attachment. Use of higher other aspects such as kernel hardness, plant densities required selection by breeders of corn genotypes that tolerate stress due to Starch Modification plant crowding. About the same maturity corns were still being grown in a given area (gener- Most genes affecting endosperm composition ally full season), and test weight still was not are recessive. Starch from normal dent or flint a problem because corn sold off the farm was corn is composed of 73 percent amylopectin naturally dried ear corn. (starch fraction with branched molecules) and 27 percent amylose (the fraction from linear The field-shelling-harvest period (1960 to molecules). Corn breeders have been success- present) has brought larger farms, higher plant ful in developing waxy corn that has starch with densities and fertilizer rates, even more con- 100 percent amylopectin. However, yields of tinuous corn, and more corn marketed off the the waxy hybrids were less than those of their farm (55). Artificial dryers became common- normal dent counterparts. But newer waxy place throughout the Corn Belt. For a time, large hybrids are comparable to the better dent vari- farms and small equipment increased the need eties. It has also been possible to increase the for better standing corns, and newer combines amylose content of starch up to 50 percent. and other equipment steadily increased oper- Waxy and high-amylose hybrids are grown un- ational capacity. Corn became shorter and der contract for corn wet-milling. lower eared in this period as farmers shifted to earlier corns in order to start combining Oil sooner. Before the invention of quick-attach heads for combines, stalk quality became ex- The oil content of most hybrids ranges from tremely important to large operators in cash- 3.5 to 6.0 percent, with an average of about 4.5 grain operations because corn harvest often percent. Experiments indicate that oil content waited until soybean harvest was finished. Ear can range from a low of 0.1 percent to as high retention was also very important to these oper- as 19.6 percent (18). High oil hybrids with 6 per- ators. Harder starch, or flintier types, allowed cent oil content and above are lower in yield earlier start of harvest by reducing the num- than hybrids with less than 6 percent oil. In- ber of broken kernels with high moisture shell- creasing oil content genetically is not difficult, ing. Artificial drying of corn (which lowers test because variation occurs in existing germplasm weight), coupled with more direct selling from and most of it is heritable (2). Oil quality is a the field with test weight discounts, further in- function of the relative amounts of unsaturated creased the need for harder textured, flintier and saturated fatty acids, the amount of which corns, Hybrids with stronger cobs and easier is under genetic control and can be altered shelling became an advantage for combine har- through breeding. - .- —.———— ------—

126

Analyses of hybrid crosses have shown a neg- Methods of determining breakage suscepti- ative correlation of – 0.49 between yield and bility have been developed that indicate many percent oil. Data from these experiments sug- kernel characteristics are related to the break- gest that for significant increases in percent oil age problem. These include the ratio of vitre- content, yield would have to be sacrificed. ous to nonvitreous endosperm, kernel density and average weight, test weight, and kernel size Protein Quantity and shape. Most of these characteristics are heritable, but corn breeders have not given high The amount of protein in corn is a function priority to selection for kernel breakage reduc- of cultural practices and heredity. The current tion. Research also indicates that differences average protein content of U.S. hybrids ranges exist among genotypes for kernel fracturing between 9 and 11 percent. Through selection, caused by fast, high-temperature drying. Selec- protein can be altered. Experiments covering tion for resistance to this kind of kernel frac- 70 generations of selection for protein have turing should be possible. produced corn with a low of 4.4 percent protein and a high of 26.6 percent (18). But there Another solution to the problem is to allow is a trade-off between higher protein and yield. corn to dry in the field to a moisture content Genetic correlations between yield and protein that would require less artificial drying. Devel- range from – 0.41 to +0.34 and average – 0.06 opment of fast-drying hybrids is possible. (17). Data from these experiments indicate that within an intermediate range of approximately Genotype v. Environment 14 to 18 percent protein, yield and protein can be increased simultaneously. For higher ranges The environment greatly influences the qual- of protein, yields will decrease. Not much in- ity of grain. Fall seasons with much rain can terest exists in developing hybrids with higher increase ear rotting. The need for fast drying protein potential, however, because economi- in the field has caused selection of hybrids with cally available soybean protein can produce an less husk cover. These same hybrids may lack animal feed ration that is balanced with respect ear protection from heavy rainfalls. The best to the essential amino acids. hybrid for fast drying in a normal autumn may be the worst hybrid for ear rot in a high-rainfall Kernel integrity autumn. Early frosts may cause premature death that reduces kernel size and test weight. Damage to kernels during harvesting, drying, Dry seasons in general favor insects because elevating, and moving grain through commer- insect parasites are inhibited by lack of mois- cial channels is of concern. Contributing to the ture. Insects reduce grain quality by increas- problem is the change from harvesting on the ing broken kernels, foreign material, and ker- ear to using field picker-shellers. Artificial dry- nel rot. ing was usually not needed for corn harvested on the ear, because it dried naturally in the corn crib. Combine harvesters allow harvesting corn Genotype v. Management earlier to reduce field losses; however, grain Protein content can be increased with nitro- usually has a high moisture content and re- gen fertilizer. If the base yield is 75 to 100 quires artificial drying. Most farmers dry grain bushels per acre with 8.5 percent protein, and rapidly at high temperatures because of the the final yield with extra nitrogen is 100 to 125 small drying capacity of equipment, but this bushels, the first 100 pounds of nitrogen will excessively rapid removal of moisture causes probably raise the protein about 1 percent. The cracks to occur in kernels. When grain is moved next 100 pounds will raise the protein another through market channels, kernels break easily, 0.5 percent (l). Higher protein contents have resulting in fine particles that lower the value been found in corn after drought conditions be- of the product. cause a fixed nitrogen amount is distributed 127 through a smaller crop (25). This is because Experiment Stations (SAES) no more than most nitrogen accumulation precedes en- $150,000, and private companies at least $2 mil- dosperm filling. Only one-fourth of the protein lion on corn breeding and yield testing (59). Esti- in the kernel is in the endosperm. The en- mates for 1987 are Federal Government (USDA) dosperm increases in size with higher yields $4 million, State Experiment Stations through and is mostly starch—86 percent starch and 9 the Cooperative State Research Service (CSRS) percent protein (60). Thus, a negative associa- $8 million, and private companies more than tion occurs between yield and percent protein $70 million, For comparison, the 1987 Federal at high yield levels or at low nitrogen fertiliza- budget contained $35 million (USDA Agricul- tion levels. tural Research Service) and $46 million for State Experiment Stations (CSRS) for projects related Plant density can affect quality when enough to biotechnology (6). stress occurs to cause misshapen ears that may dry slowly or have many small kernels. Grain Until about 1960, for new inbreds most SAES texture may also be affected by stress. Late had delayed-release programs that served to planting dates reduce quality by causing flow- maintain State crop improvement programs by ering during hot weather and an immature crop favoring companies that sold State-certified at harvest with effects similar to early frost. hybrids. Delayed release policies plus the Fed- eral Seed Act of 1939 (58), which prohibits sell- The chosen drying method is a big factor in ing the same pedigree under different names, corn quality. When corn was harvested on the were to exclude new public inbreds from pri- ear and dried slowly in the crib, test weight and vate label seed companies. However, the Fed- broken kernels were no problem. Field shelling (combining) has changed all that. In the eral Seed Act does not prevent this. Public inbreds have been used in crosses and sold un- northern and central Corn Belt, harvest at high der different names (39), This confuses the moisture followed by rapid drying at high tem- farmer and prevents the spreading of risk un- peratures can cause puffing and case-hardening less the pedigrees of the purchased hybrids are that reduces test weight and increases brittle- known. ness, In the southern Corn Belt, ear quality can deteriorate in the field during humid fall con- At the beginning of hybrid corn, many small ditions. seed corn companies were enticed into the business by promises of new inbreds from the State Ear-corn storage has given way to shelled- Agricultural Experiment Stations. Inbred lines corn storage, As mentioned before, these from public agencies became the parental lines changes in harvest methods have greatly affected corn breeders’ selection traits. Stored for SAES commercial hybrids and for devel- corn typically has problems with molds and in- opment of new inbreds. By the late 1950s, larger seed corn companies had extensive research sects that interact with moisture content and programs to develop inbreds, and public temperature of the corn. breeders started doing additional basic research at the expense of inbred development. A total Role of Public and Private of 156 public lines were released from 1946 to Corn Breeders 1955. An American Seed Trade Association survey of the same period showed 52 hybrid corn Corn breeding at the Federal, State, and pri- companies in 12 States were using these lines vate level greatly increased subsequent to the as 1 or more parents in producing about one- double-cross-corn formula of hybrid production fourth of the hybrid seed used annually. About that made hybrids practical in spite of the weak 500 individual companies produced and sold inbreds and cultural practices of the period. In hybrid seed in Iowa in 1940; only about 100 1955, the Federal Government spent $300,000 companies were still in operation in 1957. Ob- ($80,000 for basic research), State Agricultural servers of these changes concluded that pub- 128 licly supported corn research was more basic mittee is called the PVRC (Plant Variety Review than 10 years earlier and that breeders involved Committee), and it serves in an advisory capac- felt even more time should go to basic research. ity to the Dean of the Experiment Station who is appointed by the Chancellor of the Univer- Variety Release Procedures sity. Each State Agricultural Experiment Sta- tion that has an active breeding program has The United States places few restrictions on a PVRC similar in function to that at the Univer- the release of new corn varieties developed by sity of Illinois. Although patenting of germ- public or private breeders, Release of new va- plasm and plant protection of varieties are cur- rieties takes place at agricultural experiment rently being discussed, the general philosophy stations within the land-grant system, Private of public institutions regarding variety release breeding takes place at research stations oper- has been one of information exchange and min- ated by private firms around the country, Most imum control. States have laws that control labeling of new varieties but these usually deal with seed pu- Private Varieties rity or certification procedures. For example, most State seed laws specify the information Evaluation of new varieties developed by pri- required on the tag on each bag of seed, Michi- vate firms occurs without significant State or gan appears to exert more influence on variety Federal intervention. The decision to release release than other States. According to breeders a new variety is an internal one arrived at by there, public varieties cannot be released un- review committees that vary according to firm less they show an “acceptable level of merit.” size. Each plant breeding company in the United Public Varieties States has a procedure for determining the use- As public breeders, agricultural experiment fulness or worthiness of new varieties. These stations around the country follow general procedures are generally informal in the case guidelines set forth by the seed policy commit- of smaller companies, but more formal and tee or the general executive committee for re- structured in the case of larger firms. The de- search, entitled ESCOP (Experiment Station cision to release a new variety often evolves Committee on Policy). ESCOP is organized un- during a series of meetings with company ad- der the Experiment Station Section of the Di- ministrative personnel, breeders, sales staff, vision of Agriculture of the National Associa- and so on. Large companies (nationals and mul- tion of State Universities and Land Grant tinationals) do their own screening and testing Colleges in Washington, DC. The seed policy of new varieties, and the data are made avail- subcommittees under ESCOP represent exper- able at each variety review stage. Recommen- iment stations on seed matters, including pro- dations on retesting, rejection, and release are duction and technology, in appropriate agen- made on the basis of performance data and ad- cies and associations. General policies vice from company personnel. A large firm regarding variety release procedures and other might start out with several thousand crosses breeding issues are established through these and end up with just a couple that actually meet committees. A function of ESCOP and its seed all necessary criteria. In private firms, the cri- policy committee is to maintain consistency in teria reflect field performance data as well as procedures and policies regarding release of information on the potential for effective sales, public varieties. ESCOP holds no legal power marketing, and advertisement. All of these are over experiment stations or variety releases, related to the firm’s profitability. The variety release decision within each Michigan is an exception among the Midwest State’s experiment station involves a commit- corn-and soybean- producing States in that tee within the College of Agriculture. At the State law requires public or private certified University of Illinois, for example, this com- seed to be subjected to performance trials for 129 at least 1 year before it can be sold as certified firm’s ability to measure standability and to how seed. This does not preclude selling uncerti- directly the firm relates standability to dry fied seed, nor does it prevent companies from down time or disease resistance. Other criteria, other States selling seed within Michigan that ranked loosely in order of importance, are her- has not been subjected to these tests. It does bicide tolerance, feed value, percent early prevent any dealer in Michigan from labeling stand, plant height, percent dropped ears, flow- seed as certified unless it has been subjected ering date, percent barren plants, and test to the performance tests established under au- weight. thority of the State. Corn Breeding Technology Field Performance Criteria Most U.S. Corn Belt germplasm used today In a 1981 survey, 454 commercial hybrids involves only two races, southern dents and were offered for sale; 212 precommercial northern flints, but more than 100 fairly dis- hybrids were in final testing stages; 7,400 ex- tinct races of corn exist. From this standpoint perimental hybrids were in advanced trials; and the available germplasm base is more than ade- 61,000 hybrids were in preliminary trials. About quate, Considerable genetic variability exists 2,800 proven inbreds were on hand and 23,000 among kinds of corn in terms of adaptation, inbreds were in preliminary tests (21). size, and purpose. It is likely that all traits cur- Criteria for judging new varieties in the field rently needed to improve corn quality already are similar for both public and private breeders. exist. The problem is to identify exactly what Performance criteria for measuring corn vari- is needed so that seedlots in germplasm banks eties are more diverse than those for judging can be efficiently screened for necessary traits. soybeans and wheat. For all grains and soy- Certainly a large range of test weight, kernel beans, yield is the number one criteria as texture (ratio of hard to soft starch), and kernel breeders try to persuade farmers that their va- size is presently available among materials ac- riety is superior to others in the market. tively being used by U.S. corn breeders. The hope that an existing, unidentified trait for ker- Private and public corn breeders interviewed nel integrity can be found depends on an ac- for this assessment stated that after yield, the curate and rapid test to identify it. ranking of remaining performance criteria differs among firms. This is in part a response As noted, present corn breeding technology to different environmental factors, herbicide has worked well. U.S. average yields are in- developments, or changes in production prac- creasing almost 2 bushels per acre per year tices that prompt a change in research empha- largely due to the highly competitive seed corn sis. Variation in the relative importance of field industry striving to provide hybrids that give performance criteria may also relate to differ- the highest net profit to the farmer. Corn ences in the ability to measure various perform- breeders today emphasize high yields, easy har- ance criteria and differences in terminology vest, and fast dry down with modern cultural among firms, since many performance judg- practices. The current system relegates corn ments appear to incorporate some subjective quality to fourth rank or lower. Making grain factors. quality or any other desired trait more profitable to the farmer will stimulate more breeding Several corn breeders indicated that for corn, effort for that trait under the present system, disease and pest resistance is the second most important performance criterion, with the third Future corn breeding technology will include being maturity, i.e., length of dry down time more of the present methods plus the biotech- required in the field. One firm indicated that nology approaches discussed in the wheat and standability was the second most important fac- soybean sections. Successful breeders are fit- tor, while another ranked standability seventh. ting these newer technologies into present Again the difference probably relates to the methods, Transformation of plants with genes 130 from other species and with engineered genes germplasm storage banks. Ultimately, it may may provide the needed trait with less effort be possible to build a needed DNA sequence and fewer side effects than screening various and position it into elite lines.

FINDINGS

In examining the objectives of genetic selec- netic alteration (especially with many gene tion, genetic influence on quality, the roles of sequences) of one trait frequently leads to public and private plant breeders, variety re- undesirable changes in other plant traits. lease, and new technologies for wheat, soy- ● Procedures for Release.—There are no le- beans, and corn, a number of common find- gally binding procedures for controlling ings are evident: the release of new corn, soybean, and • Yield v. Quality. —An inverse relationship wheat varieties in the United States. Each exists between yield and quality in all three State develops voluntary variety release grains considered. In wheat, corn, and soy- policies, and the criteria for release differ beans the trade-off is between protein and by commodity and geographic location. yield. Increasing the intrinsic factors that Public and private breeders have yield as improve quality means that yield usually their primary criterion and seldom include declines. quality of the harvested grain in their per- ● Objectives in Genetic Selection .—Yield in- formance tests. crease and the agronomic characteristics ● Time for Development and Release.—New that relate to yield are the major objectives crop varieties require approximately 9 to of plant breeders. Quality is not a high pri- 12 years for development and release, If ority in genetic selection but this varies by plant breeding program objectives were to commodity. The objective in wheat and change in 1988, such as aim to develop new soybeans is to at least maintain quality varieties with enhanced quality factors, it while improving yields. But this is difficult would be the year 2000 before new vari- to attain. In corn, relatively less attention eties were commercially available. is given to quality factors while striving to ● New Plant Breeding Technologies.—Genetic increase yield. engineering will in the future provide the ● Genetic Influence on Quality.—In general, opportunity for putting a new trait into a factors affecting quality are more herita- plant in a matter of months where it now ble than factors affecting yield. The poten- takes 5 to 7 years to breed into a variety tial for improving quality through genetics a specific trait. Much of the time is taken is therefore high. However, many quality up in testing cultivars under farm condi- factors are quantitative traits known to be tions and in seed increase, These steps under the influence of a number of genes. must be taken regardless of how a cultivar This makes the task of enhancing quality is produced initially, However, total time more difficult relative to altering a plant’s from identification of beneficial genes to trait influenced by only a few genes. This new plant introduction may be reduced by is further complicated by the fact that ge- 4 to 6 years. 131

CHAPTER 6 REFERENCES 1. Aldrich, S. R., and Leng, E. R., Modern Corn Pro- sity of Illinois, Urbana, IL, personal communi- duction (Cincinnati, OH: F&W Publishing Co,, cation, 1988. 1966). 18. Dudley, J. W., Alexander, D. E., and Lambert, 2. Alexander, D. E., Dudley, J. W., and Creech, R. G., R. J., “Seventy Generations of Selections for Oil “Corn Breeding and Genetics, ” Corn: Culture, and Protein Concentration in the Maize Ker- Processing, Products, G,E, Inglett (cd.) (West- nel, ” Seventy Generations of SeZection for Oil port, CT: AVI Publishing Co. Inc., 1970). and Protein in Maize, J.W. Dudley (cd.) (Madi- 3. American Soybean Association, 1985 Soybean son, WI: Crop Science Society of America, Research Annual Report (St, Louis, MO: 1985). 1974). 4. Asgrow Seed Co., “A Chemical of Plant Vari- 19 Dunphy, E. J,, “Characteristics of Soybean Va- ety Protection: 1983 Update, ” Kalamazoo, MI, rieties, in North Carolina, Ag-365, ” North Caro- June 27, 1983. lina Extension Service, North Carolina State 5. Bahrenfus, J. B., and Feher, J. B., “Registration University, Raleigh, NC, 1987. of Weber Soy bean,” Crop Science 20:415-416, 20. Duvick, D. M., “Genetic Rates of Gain in Hybrid 1980. Maize Yields During the Past 40 Years, ” Mag- 6. Bentley, O. G,, “Global Status of Agriculture and dica 32:187-196, 1977. Food Production, ” Public Perceptions of Bio- 21. Duvick, D, M., “Genetic Contributions to Yield technology, Agriculture Research Institute, Gains of U.S. Hybrid Maize, 1930-1980,” CSSA 1987. Special Pub. No. 7, Crop Science Society of 7. Boerma, H. R., “Comparison of Past and Re- America, Madison, WI, 1984.

cently Developed Soybean Cultivars in Matu- 224 Fehr, W. R,, “Breeding Methods for Cultivar De- rity Groups VI, VII, and VIII, Crop Science velopment” Soybeans: Improvement, Produc- 19:611-613, 1979. tion and Uses, Zd cd., J.R. Wilcox (cd,), 8. Brim, C. A., “Quantitative Genetics and Breed- Agronomy 16:249-293, 1987. ing,” Soybeans: Improvement, Production and 23. Finney, K. F., “Experimental Breadmaking Uses, B.E. Caldwell (cd,), Agronomy 16:155-186, Studies, Functional (Breadmaking) Properties, 1973. and Related Gluten Protein Fractions, ” Cereal 9. Brim, C. A., “Soybean Varietal Development,” Foods 30:794-801, 1985. Soybeans: Production, Marketing and Uses 24. Fraley, R. T., Rogers, S. G., and Horsch, R. B., (Tennessee Valley Authority, 1974). “Genetic Transformation in Higher Plants, ” 10. Brim, C. A., and Burton, J. W., “Recurrent Selec- Critical Review of Plant Science 4:1-46, 1986. tion in Soybeans, II: Selection for Increased Per- 25. Genter, C. F., Eheart, J. F., and Linkous, W. N., cent Protein in Seeds, ” Crop Science 19:494-498, “Effect of Location, Hybrid, Fertilizer, and Rate 1979. of Planting on Oil and Protein Contents of Corn 11, Burton, J, W., “Breeding Soybeans for Improved Grain,” Agronomy Journal 40:63-67, 1948. Protein Quantity and Quality, ” WorZd Soybean 26. Goodman, R. M., and Kiser, J., “Biotechnology Research Conference, III: Proceedings, R. Shi- and Its Impact on Future Developments in Soy- bles (cd.) (Boulder, CO: Westview Press, 1985). bean Production and Use,” World Soybean Re- 12, Burton, J. W., “Quantitative Genetics: Results search Conference, III: Proceedings, R, Shibles Relevant to Soybean Breeding, ” Soybeans: Im- (cd,] (Boulder, CO: Westview Press, 1985). provement, Production and Uses, Zd cd., J.R. 27. Hansen, M., Busch, L., Burkhardt, J., et al., Wilcox (cd.), Agronomy 16:211-247, 1987. “Plant Breeding and Biotechnology, ” Bio- 13, Burton, J. W., Brim, C. A., and Young, M. F., science 36:29-39, 1986. “Registration of ‘Young’ Soybean, ” Crop Sci- 28< Hartwig, E,, “Varietal Development, ” Soybeans; ence 27:1093, 1987. Production and Uses (Madison, WI: American 14. Castleberry, R. M., Crum, C. W., and Krull, C. F., Society of Agronomy, 1973). “Genetic Yield Improvement of U.S. Maize CUL 29 Hartwig, E. E,, Research Geneticist, USDA-ARS, tivars Under Varying Fertility and Climatic Stoneville, MS, personal communication, No- Environments,” Crop Science 24:33-36, 1984. vember 1987. 15. Cocking, E. C., and Davey, M. R,, “Gene Trans- 30 Hibberd, K. A,, Walter, T., Green, C. E., et al., fer in Cereals,” Science 236:1259-1262, 1987. “Selection and Characterization of Feedback– 16. Cox, T. S,, and Shogren, M. D., personal commu- In Sensitive Tissue Culture of Maize, ” P]anta nication, January 1988, 45:183-187, 1980. 17. Dudley, J. W,, Professor of Plant Science, Univer- 31 Holbrook, C. C,, “Approaches to Breeding for .

132

High Yield and High Percent Seed Protein in 46. Schmidt, J. D., “Genetic Contributions to Yield Soybeans (Glycine max L. Merrile), “Thesis,” Gains in Wheat,” Genetic Contributions to Yield North Carolina State University, Raleigh, NC, Gains in Five Major Crop Plants, CSSA Special 1985. Pub. No. 7, Crop Science Society of America, 32. Johnson, H. W., and Bernard, R. L., “Soybean Ge- Madison, WI, 1984. netics and Breeding, ” The Soybean (New York, 47. Sears, R. G., “Milling and Baking Performance NY: Academic Press, 1963), of Hard Winter Wheats: A Plant Breeder’s View- 33, Johnson, H. W., Robinson, H. F., and Comstock, point,” presented at End Use Quality Confer- R. E., “Genotypic and Phenotypic Correlation in ence, Fargo, ND, June 9-10, 1986. Soybeans and Their Implications in Selection,” 48. Shah, D, M., Hersch, R. B., Klee, H. J., et al., “En- I Agronomy Journal 47:477-483, 1955. gineering Herbicide Tolerance in Transgenic 34, Johnson, J. A., Kahn, M. A., and Sanchez, C. S., Plants,” Science 233:478-481, 1986. “Wheat Cultivars, Environment, and Breadmak- 49. Shorter, R., Byth, D, E., and Mungomery, V. E., ing Quality, ” Cereal Science Today 17:323-326, “Estimates of Selection Parameters Associated 1972. With Protein and Oil Content of Soybean Seeds 35, Johnson, V. A,, “Protein in Hard Red Winter (Glycine max L. Merrile),” Australian journal Wheat,” Bakers Digest 52(2):22-28, 1978. of Agricultural Research 28:211-222, 1976. 36, Johnson, V. A., Mattern, P. J., Peterson, C. J., et 50. Simpson, Jr., A. M., and Wilcox, J. R., “Genetic al., “Improvement of Wheat Protein by Tradi- and Phenotypic Association of Agronomic tional Breeding and Genetic Techniques, ” Characteristics in Four High Protein Soybean Cereal Chem. 62:350-355, 1985. Populations,” Crop Science 23:1077-1081, 1983. 37, Lambert, L., and Kilen, T. C., “Multiple Insect 51. St. Martin, S. K., and Bernard, R. L., “Strain In- Resistance in Several Soybean Genetoypes, ” dex for Regional Soybean Tests 00 to IV, 1976 Crop Science 24:887-890, 1984. to 1980,” Research Bulletin 1147, Ohio Agricul- 38. Martin, T. J., Wheat Breeder, Fort Hays Branch tural Research and Development Center, Ohio Experiment Station, Hays, KS, personal com- University, Wooster, OH, November 1982. munication, June 1987. 52. Strosnider, R. E., “A Private Seed Company’s 39. McConnel, Richard, Director of Corn Research, Views of the Roles of Public and Private Pioneer Hi-Bred International, Inc., personal Breeders–Cooperation and Support,” Hort- communication, May 1988. science 19:800-802, 1984. 40. North Carolina Agricultural Research Service, 53. Thorne, J. C., and Fehr, W. R., “Incorporation of School of Agriculture and Life Sciences, “Plant High Protein Exotic Germplasm Into Soybean Patent and Plant Variety Protection Policy and Populations by 2- and S-Way Crosses,” Crop Sci- Procedure Statement,” North Carolina State ence 10:652-655, 1970. University, Raleigh, NC, 1981. 54. Troyer, A. F,, and Ambrose, W. B., “Plant Char- 41, Openshaw, S. J., and Hadley, H. H., “Selection acteristics Affecting Field Drying Rate of Ear Indexes to Modify Protein Concentration of Soy- Corn,” Crop Science 11:529-531, 1971. bean Seeds,” Crop Science 24:1-4, 1984. 55. Troyer, A. F., and Rosenbrook, R. W., “Utility of 42. Penning deVries, F. W. T., Brunsting, A. H. M., Higher Plant Densities for Corn Performance and VanLaar, M. H., “Products Requirements Testing,” Crop Science 23:863-867, 1983. and Efficiency of Biosynthesis: A Qualitative 56. U.S. Department of Agriculture, Agriculture Re- Approach,” JournaZ of 7’heoreticaZ Biology search Service, “The Uniform Soybean Tests of 45:339-377, 1974. Northern States, ” RSLM 240, 1969. 43. Pioneer Hi-Bred International, Inc., “The Ex- 57. U.S. Department of Agriculture, Agricultural ecutive Summary of the 1982 Plant Breeding Re- Research Service and Soil Conservation Serv- search Forum, ” Des Moines, IA, Aug. 11-13, ice, Experiment Station Committee on Orga- 1982. nization and Policy, “Responsibilities and Pol- 44, Russell, W. A., “Comparative Performance of icies Relating to Seeds of Publicly Developed Maize Hybrids Representing Different Eras of Varieties and Other Propagation Materials,” No- Maize Breeding,” Proceedings of 29th Annual vember 1954, revised 1962, 1967, and 1972. Corn and Sorghum Research Conference, 1974. 58. U.S. Department of Agriculture, Agricultural 45, Schell, J. F., “Transgenic Plants as Tools to Study Marketing Service, “Federal Seed Act,” 1975. the Molecular Organization of Plant Genes, ” 59, Wallace, H. A., “Public and Private Contribu- Science 237:1176-1182, 1987. tions to Hybrid Corn—Past and Future, ” Pro- 133

ceedings: 10thloth Annual Hybrid Corn Industry Soybean Cultivars, ” Crop Science 27:927-9]1.27:927-931, Research Conference, 10:107-115.1955.IO:1O7-115, 1955. 1987. 60 Watson, S, A., “Measurement and Maintenance 62.62. Wilcox, J. R., Schapaugh.Schapaugh, W. T., Jr., Bernard, ofof Quality, ” Corn ChemistryChemistr~ and Technology R.I.., et al., “Genetic Improvement of Soybeans (St. Paul, MN: American Association of Cereal in the Midwest, ” Crop Science 19:803-805, 11979. 97~l. Chemists, 1977). 63.63, Williams, C., Chairman, Commercial Soybean 61 Wehrman, V. K., Fehr, W., Ci("lnzio,Cianzio, S., et al., Breeders, Jacob Hartz Seed Co., persona] com- “Transfer of High Seed Protein to High-Yielding munication, Nov. 9, 1987. .— - . . . . —- —

Chapter 7 Technologies Affecting Quality — .— . . . . — —. .- . - . ——

CONTENTS

Page Harvesting Technologies...... 137 In-bin Natural-Air Grain Drying Current Technologies ...... 137 System ...... 144 Conditions Affecting Combine In-bin Counterflow Grain Dryer ...145 Performance ...... 139 Portable Batch Grain Dryer ...... 145 Effects of Harvesting Technologies on Continuous-flow Crossflow Grain Grain Quality ...... 141 Dryer ...... 145 New and Emerging Technologies .. ..143 Dryeration Grain Drying Systems. 147 Drying Technology...... 143 Two-Stage Concurrent-Flow Grain On-Farm Drying Systems ...... 144 Dryer With Counterflow Cooler Off-Farm Drying Systems ...... 146 and One Tempering Zone ...... 148 Conditions Affecting Dryer Fluidized-Bed Grain Dryer...... 150 Performance ...... 148 Cascading-Rotary Grain Dryer ....150 New and Emerging Technologies ....150 Moisture, Temperature, and Storage and Handling Technologies ....151 Relative Humidity Interactions ....153 Current Technologies ., ...... 151 Moisture Migration Patterns in Quality Problems That Arise During Falling Temperatures ...... 155 Storage ...... 153 Moisture Migration Patterns in Storage Techniques That Protect Rising Temperatures...... 156 Grain Quality ...... 154 General Flow of Grain From the Emerging Technologies ...... ,.....158 Farm Through the System ...... 166 Insect Management Interventions...... 158 U.S. Soybean Quality by Region, Current Pesticides...... 159 1986 ...... ,...... ,...... 177 Conditions Affecting Insect Management ...... 162 Tables New and Emerging Technologies ....164 Page Transportation ...... 165 7-1. Grain Temperature, Moisture Current Modes of Transport ...... 165 Content, and Breakage Susceptibility Quality Problems That Arise During at Different Locations in the Grain Transport ...... 169 Column of a Crossflow Dryer .. ...146 Transport Techniques That Protect 7-2. The Effect of Dryer Type on the Grain Quality ...... 170 Drying-Air Temperature, the Cleaning and Blending Technologies ...171 Maximum Grain Temperature, and Cleaning ...... 171 the Breakage Susceptibility of Corn .149 Blending ...... 175 7-3. Breakage Susceptibility of Different Interactions/Findings and Conclusions. .179 Corn Genotypes ...... ,...... 149 Moisture ...... 179 7-4. Allowable Storage Time forlorn.. .154 Broken Grain and Fine Materials.. ...181 7-5. Relative Amounts of Breakage for Ability of System to Maintain Quality. 182 Grains Tested Under Four Handling Chapter preferences...... 184 Conditions ...... 155 7-6. Grain Hauled by Railroads and Barges, 1974-85 ...... 166 7-7, Comparison of Rail and Rail-Barge Rates From Jefferson, Iowa, to New Conventional Combine ...... 138 Orleans in Dollars Per Ton ...... 168 Single-Rotor Rotary Combine .. ...139 7-8, Nutritive Value of Corn Fines, by Corn Breakage v. Kernel Moisture Particle Size...... 173 Content for Laboratory Rasp Bar 7-9, Blending of Four Soybean Lots to Sheller Operated at varying Make U.S. No. 2, Maximum 13% Speeds ...... 142 Moisture ...... 178 ——

Chapter Technologies Affecting Quality

Producers are constrained by the quality Cleaning and blending—the mixing of two or characteristics of the seeds available to them, more grain lots to establish an overall quality-- as described in chapter 6. They cannot improve are the focus of many concerns about the the intrinsic quality of corn, wheat, or soybeans declining quality of U.S. grain, and indeed once the seeds are planted. Yet they—and others sparked the Grain Improvement Act of 1986. involved in the distribution of grain—can pre- This chapter therefore looks at these numer- vent a deterioration in intrinsic quality and can ous technologies that are applied to grain as determine the sanitary and some of the physi- it moves from the field to the export elevator cal quality characteristics, At each step along or the unloading dock of a domestic food or the way, the technologies applied and the way feed manufacturer. Considered in turn are tech- they are used can prevent, or at least minimize, nologies for harvesting, drying, storing and han- a loss of quality. dling, insect management, transporting, and Farmers who run combines too fast, for ex- cleaning and blending, The conditions farmers ample, can damage grain, especially as it dries, and handlers should strive for in one situation Grain that is either too dry or too wet when to maintain and deliver a quality product are harvested is more susceptible to damage. Pre- not always appropriate in another case. Higher cleaning wet grain before it reaches the dryer moisture content and temperatures are optimal would improve the quality substantially, yet few for minimizing breakage of corn, for example, dryer operators choose to do this, Breakage dur- but not for safe storage. Giving producers ing handling produces broken grains and fine enough information to consider all these inter- materials, which increases storage problems actions is one objective of this assessment. and the risk of infestation by insects or mold.

HARVESTING TECHNOLOGIES

Harvesting can be defined as the process by grains, In 1953 two individuals adapted the which grains and oilseeds are removed from combine for use on corn, which until then had a plant, gathered, and physically removed from been harvested by picking the ear, The switch a field. The crop is also threshed (using com- from picking corn by ear to combine shell- bines to remove kernels from crop material), ing/harvesting increased corn production effi- separated, and cleaned. ciency (52). Self-propelled combines of either conven- Rotary combines were introduced in the mid- tional or rotary design (figures 7-I and 7-2) har- 1970s. The rotary’s ability to use centrifugal sep- vest nearly all the grain produced in the United aration resulted in fewer moving parts and re- States. Rotary combines damage wheat and soy- duced grain cracking. Today, both designs are beans less than conventional combines do, al- used throughout the United States (57), though this is not the case for corn. Combine sales have dropped from a yearly average of about 30,000 units during the 1970s to fewer Current Technologies than 1,700 units in 1986. The weak market has Wheat combines differ from those used to slowed new combine development due to cut- harvest corn and soybeans. Conventional com- backs in research and engineering funds. bines are built in “grain” or “corn/bean” con- The first workable combine was developed figurations, with different separation functions and patented in 1836 (54) for use on small in several areas, First, the concave in the corn/ 137 ..-. —.—

138

Figure 7-1 .—Conventional Combine

i I I

Equipped with windrow pickup header: 1—cylinder, 2—concave, 3—beater, 4—beater grate, 5—strawwalkers, and 6—shoe.

SOURCE: G.E. Frehlich et al., John Deere 8520 Titan II self-propelled combine Evaluation Report No. 425, prairie %viculturai Machinery Institute, Saskatchewan, Canada, 1985. bean combine has wider gaps than in a wheat tem have been developed to deal with specific combine to allow the larger seeds. The concave problems in certain areas of the country. Two transition grate is usually a finger-type unit on such variations are the practice of windrow- corn/bean combines and a cell-type configura- ing wheat and the development of sidehill and tion on wheat combines. Second, strawwalkers hillside combines. in corn/bean combines have a louvered bottom Windrowers in the Northern Plains States cut design because the rectangular openings in the the wheat and place it in a swath on top of the bottom of wheat strawwalkers are prone to clog- wheat stubble, where it is later picked up by ging by corn cobs. Finally, the chaffer sieve in a combine equipped with a windrow pickup corn/bean combines has deeper teeth on the lou- device (figure 7-1) that offers gentler handling vers and wider spacing between louvers. than auger-type headers. Windrowing gener- In areas of the United States that grow wheat ally takes place when the wheat is at 30 to 35 as well as corn or soybeans, corn/bean com- percent moisture (54). Although windrowing bines are often used for harvesting wheat. The is an additional expense, it interrupts weed seed extent to which this compromises combine per- development, thereby improving weed control formance is not well documented. The expected in subsequent years; speeds wheat drying by impacts would be lower separation capacity up to 2 weeks and can shorten combining time and poorer cleaning due to the wide-spaced considerably; and allows the crop to better with- chaffer and higher cleaning-shoe loads pro- stand hail and high winds. duced by the corn concave. Combines with leveling in both pitch and roll Conventional self-propelled combines are modes have been developed to accommodate most common, although variations in the sys- the tilling of 40 to 70 percent slopes in the Pa- 139

Figure 7-2.—Single-Rotor Rotary Combine

1—Rotor, 2—threshing concaves, 3—separating concaves, 4— rear beater, 5—shoe, and 6—tailings return.

SOURCE: G.E. Frehllch et al., Case IH Self-Propelled Combine Evaluation Report No. 531, Prairie Agriculture Machinery Institute, Saskatchewan, Canada, 1987.

cific Northwest. Such machines are heavily Maturity and Moisture modified production combines with unique sus- Physiological maturity occurs when grain has pensions, drive lines, and feeder modifications. reached its maximum dry weight. Thus, the Sidehill combines with only roll leveling were grain’s moisture content at harvest directly af- developed in the mid-1970s for use on side- fects the amount of kernel damage produced slopes of up to 20 percent, and are used pri- through combining. marily on the moderately rolling terrain of the Midwest. Corn maturity is obtained at about 30 to 35 percent moisture. While corn can be harvested at this point, the soft pericarp will de damaged. Conditions Affecting Combine In the Midwest, harvesting is generally not rec- Performance ommended until the corn has field-dried to 26 percent moisture. In some parts of the United To be competitive, combine manufacturers States, such as south Texas, corn field-dries to must achieve an optimal balance between har- acceptable moisture levels and is not a prob- vest capacity, harvest losses, grain quality, and lem. In the Northern States, however, obtain- operator safety and comfort. Combine fuel effi- ing 26 percent moisture is not possible during ciency is also a concern, but is not the primary wet fall harvest periods, and corn must be har- factor when designing combines. Conditions vested at higher moisture contents. such as crop maturity, moisture content, standability, the presence of insects or disease, and It is generally recommended that soybeans the amount of weeds in the field are the main not be harvested until they reach 13.5 percent influences on combine performance. moisture. Soybeans readily absorb moisture . . .

140

overnight and during high humidity periods. to the clean grain bin (18). Several combine After first being field-dried to 13.5 percent, soy- modifications have tried to overcome this prob- beans can be harvested at moistures up to 15.0 lem. Three cascade gaps in the cleaning shoe percent. Soybeans at 14.4 percent moisture in have been introduced in some regions. Other the morning can easily dry to 11.4 percent by modifications include secondary cleaners and afternoon (11). Soybeans below 12 percent precleaning grain prior to delivering it to the moisture are exceptionally susceptible to shat- cleaning shoe. ter loss during harvest. The process of modifying combines to adequately harvest clean wheat from weedy fields Weeds has been complicated by the trend toward I The main factor affecting combine cleaning smaller wheat kernel size, which is a concern [ performance is the amount and type of weeds because the seeds of most grassy weeds are present in the field at harvest. Weed control smaller and lighter than wheat. Thus, the t is one of the most serious problems facing many smaller wheat kernel size reduces the margin I U.S. wheat-producing areas and southeastern between wheat and weed size and therefore in- I soybean-producing areas, where a warm wet creases the difficulty of cleaning within the I climate is conducive to weed growth. The cleaning shoe (57). amount of weeds affects not only yield, but also the amount of foreign material present in the Timeliness of Harvest harvested grain and the combine’s ability to re- Timeliness of harvest often takes precedence move this material. over other factors such as the optimal moisture Weeds types have a direct bearing on yield content needed for reduced breakage or lower and cleanliness. For example, the number of field losses. Everywhere in the United States Hemp sesbainia in soybean fields has a direct field conditions will permit harvesting for only effect on the amount of foreign material in com- a limited number of days. For example, in cen- ( bine samples (45). At 650 plants per acre, 0.8 tral Illinois, September and October have had I percent foreign material was found; at 52,270 16 harvesting days in 8 years out of 10, based I plants per acre, foreign material increased to on statistical weather records (48,65). I f 20,3 percent. In weedy fields farmers usually Producers must therefore match combine size increase cylinder/ rotor speed to force the weed and the number of combines available to the debris through the combine, but this can lead number of days required to harvest the total to increased grain damage. acreage. Thus, when combine capacity is not One way to reduce the amount of foreign ma- available, long hours must be spent harvesting, terial in soybeans due to weedy conditions is which cannot be delayed because of grain mois- to reduce the combine’s ground speed. It has ture. The result of this dilemma is that produc- been found, however, that in weedy fields (com- ers often push the moisture limits, accept higher pared with weed-free ones) 50 percent or more levels of kernel damage, and do not adjust com- of the soybean pods are located on the lower bines as crop conditions vary. 6 inches of the plant. Thus, the combine oper- In spite of the demands placed on the com- ator has to cut extra low, which increases the bine for high-capacity harvesting with minimal chance of picking up more soil. loss, field harvesting is only part of the total Bromus sacalinus (cheat) is a major problem operation. Trucks, wagons, and drivers must for winter wheat producers in the central be available to provide timely combine-tank un- Plains. One study found that between 66 and loading. If the crop must be hauled to a grain 99 percent of the cheat was introduced into the elevator, long truck lines can slow the harvest. combine and 41 to 91 percent was delivered Thus, it is essential to match hauling, drying — —

141 if needed, and storage capacity with harvest- Effects of Harvesting Technologies ing capacity. on Grain Quality A large percent of the harvest in the Great The primary quality factors affected by com- Plains is accomplished through custom wheat bine harvesting are grain damage (which in- harvesting. The biological ripening of wheat cludes damage to the pericarp, broken kernels, begins in Texas and proceeds up through the internal cracks, and splits) and cleanliness. Great Plains, This creates the opportunity for Grain damage is linked with threshing and han- combines to follow the harvest. With custom dling components within the combine; clean- combines concentrated where the crop is ripe, liness can be attributed to header height and wheat harvest is completed rapidly and the to separating and cleaning components. crops’ exposure to the elements is lowered.

Combine Adjustments and Grain Damage Operator Proficiency Cylinder speed, moisture at harvest, and the The combine is the most demanding machine amount of grain damage are all interrelated. to operate on most farms in terms of operational In general, damage occurs whenever grain is workload and knowledge required for adjust- harvested. It increases significantly, however, ment and maintenance, Modern combines pro- on extremely wet or extremely dry grain. When vides at least 25 adjustments for tailoring the grain is harvested at high moisture levels, the machine to specific conditions. Seven to ten kernel is soft and pliable. Moist kernels deform of the most frequent adjustments are accessi- easily when a force or impact is applied, and ble from the operator’s seat. Operators must a greater force is needed to thresh wet kernels constantly monitor ground speed, cutting than dry ones, so they suffer more damage. height, reel speed, and reel height as the ma- Drier kernels, however, can break when the chine moves through the field. In addition, crop same force is applied, Therefore, optimal con- conditions can demand readjustment within ditions exist for each grain when cylinder speed the same field on the same day. and moisture are balanced. Cylinder/rotor speed can be adjusted by the The impact of cylinder/rotor speed on corn operator and varies by crop, varieties, and mois- breakage varies by moisture level (figure 7-3), ture content. Generally, as moisture decreases, As moisture decreases, the impact increases. threshing speed should also be decreased, Con- Breakage is higher at extremely high and low cave settings must always be slightly larger than moistures regardless of cylinder/rotor speed. the size of the grain being threshed. A concave For wheat, the same principles apply: Cylin- setting that is too narrow causes severe kernel der/rotor speed increases wheat breakage, and grinding-like damage; if it is set too wide, ker- the impact is more pronounced on wheat mois- nels will be left in the head, on the cob, or in tures of 14.6 percent than 18.9 percent, For all the pod, contributing to high threshing losses, grains, cylinder/rotor speed must be reduced at lower moisture levels to minimize grain The extent to which combine operators un- damage. derstand and appreciate the interactions between combine components and adjustments The type of combine (rotary or conventional) varies widely. Because of the ease by which a affects grain damage in wheat and soybeans. nonoptimal cylinder/rotor speed can be con- Several studies have demonstrated reduced fused with an incorrect concave setting, con- damage from some rotary combines compared siderable operator experience is required when with conventional combines, One study on the the goal is to maintain low grain damage and amount of split soybeans from two types of ro- low header, threshing, and separating losses. tary combines and a conventional combine ——- —.-

142

Figure 7-3.—Corn Breakage v. Kernel Moisture Content for Laboratory Rasp Bar Sheller Operated at Varying Speeds

●

-40 30 20 10 Kernel moisture content, (%)

SOURCE: G E Hall and W H Hohnson, “Corn Kernel Crackage Induced by Mechanical Shelling,” American Society of Agricultural Engineers 13(1), 1970 demonstrated the reduced amount of splits harvesting certain varieties of soybeans with using rotary combines (47). Studies on rotary pods set very low on the stalk. Cutting below and conventional combines for wheat indicate the lowest pod or wheat head inadvertently in- a two-third reduction in grain damage using troduces some soil into the combine. Most soil rotary combines (57). Studies of corn breakage is aspirated out the rear of the combine unless using the two combine types have not shown it is about the same size as the kernel. In these any significant differences (52). cases, soil particles pass through the cleaning sieves with the grain. Cleanliness Material that is fed onto the cleaning shoe Three combine components directly affect after passing through the cylinder concave or the combine’s ability to harvest and deliver strawwalkers is divided into three streams. clean grain: header height, separating, and Whatever does not move through the top sieve cleaning shoe. (chaffer) passes out the rear. Grain and other Header height must be set to operate near or plant parts that pass through the chaffer but at uground level. This is particularly true when not the cleaning sieve are routed back to the 143 cylinder/rotor for rethreshing. Grain that passes These are mounted behind the combine’s sep- through the cleaning sieve is conveyed to the aration and cleaning sections and electronically clean grain tank. Aspiration (using fans) is also sense the number of kernels that hit a small used in this process to remove light material, acoustical pad. Loss monitors have been mar- If the fans are set too high, grain maybe drawn keted as a means of reducing threshing and sep- off along with the lighter material. arating losses. They can, however, aid operators in reducing threshing speed until losses This process removes material larger than the become noticeable, thus reducing grain dam- grain (such as plant parts) and material signifi- age. Since grain damage increases as thresh- cantly smaller (like sand and dirt), Sloping tering speed rises, cylinder/rotor speed must be rain, as previously discussed, can affect this reduced as grain dries until threshing losses, process. In wheat, the amount of foreign ma- observable on the grain loss monitor, start to terial increases as the angle of the cleaning shoe increase (52), decreases (59). Side slopes also create problems since the tendency is for material to congregate Information sensors are commonly provided on the downhill side of the cleaning shoe. as original equipment on newer combines. Such sensors include digital readout of cylinder/ro- New and Emerging Technologies tor speed, fan speed, feeder shaft speed, reel speed, engine speed, and ground speed. Sev- Changes in harvesting technology have been eral manufacturers now have warning lights evolutionary rather than revolutionary, For ex- for speed reductions of the fan, cylinder/rotor, ample, the rotary combines were widely publi- discharge beater, straw chopper, feeder, rear cized as a major breakthrough, yet studies of beater, clean grain elevator, and return eleva- centrifugal separation had been conducted tor. When this information is received, opera- some 15 years earlier. With declining combine tors can now make adjustments from the oper- sales over the past 8 years, revolutionary ator station, but they still must decide if changes changes are even less likely. are needed. Current harvesting technology provides com- Low-cost microcomputers and improved sen- bines capable of obtaining low grain damage sors mean many of the current operator deci- levels and reduced foreign material with accept- sions will soon become automatically con- able losses, The problem remains in getting trolled by computers. A limited number of operators to run the machines at the lowest computer-assisted programs are already avail- grain damage level the combine is capable of able to assist operators in selecting proper com- delivering. The major advance in this area is bine settings. through new control systems and automation, One recent aid for improving harvesting has been the introduction of grain loss monitors.

DRYING TECHNOLOGY

Cereal grains and oilseeds are harvested in than harvest moisture. Since wheat (and, in the United States at moisture levels too high some cases, corn and soybeans) dries naturally for long-term storage or even short-term stor- in the field in some parts of the country, this age and transportation within the marketing discussion mainly concentrates on drying tech- system. Corn, which is harvested at 20 to 30 nologies as they relate to corn. percent moisture, must be dried to 14 to 15 percent for safe storage. Wheat and soybean har- Considerable moisture is removed from grain vest moistures are substantially lower than during drying. When taking corn from 25 to corn, with safe storage levels marginally lower 15.5 percent moisture, 122 kilograms of water 144

are removed per metric ton. Drying grain in Figure 7-4.—in-Bin Natural. Air Grain Drying System the United States takes place on farm as well as off farm in commercial handling facilities using ambient air as the drying medium. On- farm drying systems are usually lower in throughput than off-farm units and frequently employ lower drying-air temperatures. Dryer design depends on grain type. The requirements for drying-air temperature, airflow )

, rate, and the time the grain remains in the dryer differ for wheat, corn, and soybeans. Drying wheat in a corn dryer without modification will Perforated floor lead to a significant decrease in wheat quality, It is generally agreed that the bulk of grain quality deterioration happens during drying (6). I SOURCE F W Bakker-Arkema, “Grain Drying Technology, ” background paper Too frequently, excessively high-drying-air tem- prepared for the Office of Technology Assessment, U.S. Congress, peratures and airflows are used to speed the Washington, DC, 1988

I process. This leads to excessive stress crack- need considerable expertise to operate these ing in corn and soybeans and degradation in systems properly by selecting the correct air- the milling quality of wheat. ! flow rate. Slower drying than the required rate can lead to grain molding before safe storage 1 I On-Farm Drying Systems levels are reached. I I Cereal grains and oilseeds are mainly dried In-bin storage layer drying differs slightly I on-farm in the United States. Indiana is typi- from natural air drying. Rather than filling a I cal: In 1984, less than 5 percent of the States’s bin all at once with wet grain, successive layers corn was dried off-farm (37). On-farm systems are placed in the bin after the preceding one fall into three broad categories: bin dryers, non- has almost reached the desired moisture con- Ib bin dryers, and combination systems. tent. Like natural air drying, this drying system has low capacity, requires considerable Bin Dryers operator expertise, is energy-efficient, and can produce excellent quality grain when operated Bin dryer systems include: in-bin natural 1) properly. air, 2) in-bin low temperature, 3) solar, 4) in- bin storage layer, 5) in-bin counter-flow, and In-bin counter-flow drying is relatively new 6) batch-in-bin. They all use a bin to hold wet and consists of two bins (figure 7-5). One is a grain as it is dried. The drying-air temperatures heated air in-bin counter-flow dryer and the of the first four systems are relatively low, while other is a natural air in-bin dryer and cooler. the last two need temperatures as high as 70 “C. Wet grain is loaded into the first bin and dried until the bottom centimeters has reached In-bin natural air, low temperature, and so- 10 16 to percent moisture. The partially dried, hot lar drying systems are similar (figures 7-4). Wet 18 grain is then moved to a second bin for slow grain is placed in a bin to a depth of 2.5 to 5.0 final drying and cooling. The automatic nature meters and slowly dried using an external fan of this process, along with the ability to pro- as the airflow source. Each system can produce duce quality grain at fairly high capacities, has high-quality grain. However, minimum airflow contributed to the commercial success of in- rates are critical for their success; these depend bin counter-flow dryers. on the initial moisture content, harvest date, and environmental conditions. Airflow rates Batch-in-bin dryers differ from in-bin coun- vary by location and, consequently, farmers ter-flow dryers in that they lack the second dry- 745

Figure 7-5.— In-bin Counterflow Grain Dryer Figure 7-6.— Portable Batch Grain Dryer

Temperature control

SOURCE F.W. Bakker-Arkema, “Grain Drying Technology, ” background paper prepared for the Off Ice of Technology Assessment, U.S. Congress, Washington, DC, 1988 ing and cooling bin, Airflow rates and drying temperature are similar, but the energy efficiency as well as the grain quality characteris- SOURCE F W Bakker-Arkema, “Grain Drying Technology, ” background paper tics are poorer (4). prepared for the Office of Technology Assessment, U S Congress Washington, DC, 1988 Non-bin Dryers Non-bin dryers are either portable batch or Figure 7-7.—Continuous-flow Crossflow Grain Dryer continuous-flow dryers. Over half the U.S. grain crop is dried (both on and off farm) in these two types (6). They utilize drying air temperatures in excess of 100 ‘C or more and airflow rates over 110 cubic meters per minute per ton. Thus, the drying rate is high, but the resulting grain quality is often lower, portable batch dryers consist of a plenum sur- rounded by a 30 to 40 centimeter grain column (figure 7-6). Hot air traverses the grain layer quickly and in the process overheats and over- dries part of the grain column. The batch is removed from the dryer as soon as the desired final moisture content and temperature are reached. A portable batch dryer is comparable to in-bin batch dryers except that grain is dried at higher temperatures and airflow rates due to the reduced depth of the grain layer. Continuous-flow dryers are predominantly of the crossflow type (figure 7-7). The drying SOURCE: F W Bakker-Arkema, ‘“Grain Drying Technology, ” background paper air flows perpendicular to the grain flow prepared for the Off Ice of Technology Assessment, U S Congress, through the dryer. The plenum/grain column Washington, DC, 1988 -- —.. .— —.. ----

146

is similar to that in a portable batch dryer. Cool- ation (figure 7-8). The two main advantages of ing takes place in the bottom one-third of the combination drying over non-bin dryers are the drying column. Airflow rates and drying tem- increased energy efficiency and improved grain peratures are the same for both types; the only quality. difference is the grain velocity. Continuous-flow crossflow dryers do not dry Off-Farm Drying Systems grain uniformly because a large moisture gra- Grain dryers located off farm in commercial dient exists across the grain column when dry- handling facilities are non-bin continuous-flow ing is discontinued. During the cooling cycle, models. Three types are currently in use: cross- t the degree of nonuniformity decreases, but a flow, mixed flow, and concurrent flow. definite moisture differential among kernels still exists when the grain leaves the dryer. In Crossflow one study, when drying 25 percent corn at 110 °C to 16 percent average moisture, the Crossflow dryer design was discussed in the corn’s moisture content at the air inlet side of on-farm section, The distinguishing feature the grain column reached 8 percent. At the air here too is the perpendicular direction of the outlet side, the grain was still at 22 percent, thus grain and airflows, which results in nonuniform drying. Recent design improvements , creating a moisture gradient of 14 percent (24). As table 7-1 indicates, part of the grain in a for off-farm crossflow dryers have improved crossflow dryer approaches the drying-air tem- grain quality and energy efficiency. perature, which results in overdrying and sharp In a conventional crossflow dryer, the dis- increases in breakage. charged air is only partly saturated, Recycling part of the drying air and all of the cooling air Combination Drying greatly decreases energy requirements. Along Combination drying is a system in which with air recycling, airflow reversal has been high-temperature, high-speed batch or contin- incorporated in some crossflow dryers in or- uous-flow drying is followed by low-tempera- der to offset the large moisture differential in ture, slower in-bin drying and cooling. This the grain column. Placing a grain inverter in attempts to maximize the advantages and min- the grain column is less expensive, but also less imize the disadvantages of the two systems. effective. Grain inverters turn the overheated grain at the air inlet side to the air exhaust side Combination drying is mainly used for corn. of the column and thus minimize overheating When corn is harvested in the 22 to 35 percent (50). Crossflow dryers without air reversal or range, it is dried in a high-temperature dryer grain inverters have moisture gradients across to an intermediate moisture content of 18 to the drying column as large as 20 percent and 24 percent and then moved hot to an in-bin grain breakage as high as 50 percent (24). dryer and slowly final dried and cooled. The in-bin dryer usually is a natural air dryer. The Two new features added recently to the basic best known type of combination drying is dryer- cross flow design—differential grain speed and tempering—improve grain quality (40). A cross- Table 7-1 .—Grain Temperature, Moisture Content, flow dryer incorporating air recycling, air and Breakage Susceptibility at Different Locations reversal, differential grain speed, and temper- in the Grain Column of a Crossflow Dryer ing is commercially available, but its high ini- Distance Grain Moisture Breakage tial cost is preventing general acceptance. from air temperature content susceptibility inlet (cm) (°C) (in percent) (in percent) Mixed Flow 1.25 ...... 102 10 48 7.50...... 78 20 Mixed-flow dryers are also called cascade or 13.75 ...... 51 24 10 rack-type dryers, Grain is dried by a mixture SOURCE: R J. Gustafson et al , “Study of Efficiency and Quality Vanatlons for Crossflow Drying of Corn, ” ASAE Paper No 81-3013, 1981 of crossflow, concurrent flow, and counterflow —

147

Figure 7-8.— Dryeration Grain Drying Systems

Full bin

Layer

Batch-in-bin cool with recirculator with or stirrer aeration

Dry

SOURCE F W Bakker.Arkema, “Grain Drying Technology,” background paper prepared for the Off Ice of Technology Assessment, U.S. Congress, Washington, DC 1988 drying processes. The grain flows over a ser- Concurrent Flow ies of alternate inlet and exhaust air ducts. This In concurrent-flow dryers the grain and dry- results in fairly uniform drying and therefore ing air flow in the same direction (vertically), a relatively uniform moisture content and quality. The drying temperature in mixed-flow dry- Cooling occurs in a concurrent-flow cooler in which the grain and air flow in the opposite ers is higher than in crossflow ones because direction. Commercial concurrent-flow dryers the grain is not subjected to the high tempera- consist of two or three concurrent-flow drying ture for as long. zones and one counterflow cooler (figure 7-9). Mixed-flow dryers are more expensive to The most distinguishing feature of these manufacture and require more extensive air dryers is the uniformity of the process. Every pollution equipment. For these reasons, the kernel undergoes the same heating/drying/cool- number of mixed-flow dryer manufacturers has ing process, unlike in crossflow and mixed-flow decreased in the United States. In other coun- dryers. The drying-air temperature is much tries, mixed-flow dryers remain the predomi- higher than in other dryers because the wet nant large continuous-flow dryer (6). grain is subjected to the hot drying air not for 148

Figure 7-9.-Two-Stage Concurrent-Flow Grain Dryer PhysicaI Factors With Counterflow Cooler and One Tempering Zone The physical factors affecting drying per- Rice formance are climate and weather. The climate in determines the type of hybrids that can be Ambient grown in a particular region, the expected mois- Heater Fan air + I ture content range, and the weather at harvest. First-stage A concurrent Initial grain moisture entering a dryer has a sig- drying nificant effect on dryer performance. Not only I I are dryer capacity, energy consumption, and operating costs influenced by the initial moisture, so is grain quality. When grain is harvested I Tempering I I above or below its optimum harvest moisture, 1 I quality losses during drying increase (12). Thus, in Northern States, where harvest moistures frequently exceed optimum value, corn and soybean quality is inherently inferior to that of I drying I Air I grains grown, harvested, and dried in the Cen- recycling I tral Corn Belt States. i I Certain years will be wet in the summer and fall and result in grain with excessively high moisture content reaching the dryers, This leads to lower dryer capacity, higher energy consumption, higher drying cost, and de- Rice creased grain quality. Weather conditions have out a direct effect on the performance of some on- farm bin dryers. These low-capacity systems SOURCE: F W Bakker-Arkema, “Grain Drying Technology,” background paper prepared for the Office of Technology Assessment, U S Congress, Washing- may not be able to dry wet grain before mold- ton, DC, 1988 ing sets in (58). Off-farm systems are less directly affected by weather conditions. hours (crossflow dryers), or minutes (mixed- BiologicaI Factors flow dryers), but only seconds. Thus, the grain does not approach the temperature of the dry- Two biological factors affect dryer performing air, as it does in other types. ance: grain type and genotype. First, wheat dries most rapidly and corn most slowly. A The uniform, relatively gentle grain drying concurrent-flow dryer has a 23 percent higher and cooling in concurrent-flow dryers results throughput for wheat than for corn while oper- in dried grain of superior quality (table 7-2). ating at the same drying temperature. The max- Breakage susceptibility in concurrent-flow dry- imum drying temperature for corn is substan- ers is half that of mixed-flow and one-fourth tially higher than that for wheat, thus affecting that of crossflow dried corn. the quality of these two grains differently. Also, energy use is affected by grain type. Conditions Affecting Dryer Performance Genotype determines the drying rate of single corn kernels (64). Some genotypes dry Dryer performance is affected by physical, slowly and others dry fast. Dryer capacity and biological, economic, and human factors. Each fuel efficiency are higher with new genotypes. can have an impact on grain quality. Drying rates for wheat and soybeans, however, — . ..— -— . ——

149

Table 7-2.—The Effect of Dryer Type on the Drying-Air Temperature, the Maximum Grain Temperature, and the Breakage Susceptibility of Corn

Drying-air Maximum Breakage temperature grain temperature susceptibility Dryer type ( c) ( c) (percent) Crossflow ...... 80-110 80-110 20 Mixed-flow ...... 100-130 70-100 10 Concurrent-flow ...... 175-285 60-80 5 SOURCE F W Bakker.Arkema. ‘ Grain Drvtna Technoloav, ” background Da~er DreDared for the Off Ice of Technoloav Assess ment U S Congress, Washington DC 1988 ‘“ - are not influenced by genotype (46). Breakage susceptibility after drying also varies by geno- Grain drying is a complicated heat/mass/mo- type (5 I ,63). Table 7-3 shows that a fivefold in- mentum transfer process of a heat-sensitive bio- crease in breakage susceptibility may occur logical product and is frequently not well un- when switching genotype. derstood by the average dryer operator. At most commercial handling facilities, the dryer oper- Economic Factors ator job is seasonal: It requires 12-hour days, Economics can affect dryer performance by 7 days a week, for 2 to 3 months. The pay rate influencing fuel prices and availability. The is marginal and job training is usually by trial relative price of natural gas, fuel oil, liquid pro- and error. Therefore, it is not surprising that pane, and electricity varies from year to year. dryer maintenance, supervision, and operation At the present time, natural gas is the least ex- are far from optimal. All these factors affect pensive and electricity the most expensive the performance of the typical dryer with re- energy source in the United States. The type spect to capacity, energy efficiency, and grain used affects dryer operation because it influ- quality (5). The most frequent mistake is using ences burner efficiency and drying-air quality. excessively high temperatures in order to increase dryer capacity. Grain dryers are directly heated in the United States, while indirect heating grain drying sys- Auxiliary Factors tems are common elsewhere. Indirect heating uses heat exchangers and is less energy-effi- Several auxiliary equipment (instrumenta- cient, more costly, and less grain polluting than tion) items influence grain dryer performance, direct heating. It is used to prevent absorption Included here are the grain moisture meter, the by the grain of polycyclic aromatic hydrocar- air temperature meter, and the dryer controller. bons contained in the drying air. Of the three Moisture meters are an integral part of the fossil fuels commonly used in direct-heated dry- grain drying system. Electronic meters are used ers in the United States, only fuel oil causes at grain handling facilities. Meters commer- hydrocarbon absorption by grain (35). cially available have an accuracy of ± 1 percent at the 13 to 16 percent moisture range and Table 7-3.–Breakage Susceptibility of ± 2.5 percent at higher moistures (34). This con- Different Corn Genotypes tributes substantially to overdrying or un- Breakage susceptibility derdrying of grain. Genotype (percent) FRB 73 FR 18...... 23.5 Air temperature measurement in a grain FRB 73 PA 91 ...... 10.5 dryer is usually accomplished by a single ther- FRB 73 FR Mo 17 ...... 7.5 mocouple or thermistor, an acceptable prac- FR Mo 17 x Fr 634 ...... 4.3 tice when the temperature distribution in the SOURCE M R Paulsen “Corn Breakage Susceptlbll!ty as a Function of Moisture Content “ ASAE Paper No 83.3078 1983 dryer plenum is uniform. This is not the case, --- ...... - - ...—

150

however, in many off-farm dryers (2) or on-farm Figure 7-10.--Fluidized-Bed Grain Dryer models (58). Temperature differences of 20 to 35 °C in the plenum are not uncommon, result- Air exit ing in overheating of part of the grain column and deterioration of average grain quality.

Controlling dryers is usually manual, and Dryer overdrying is frequently the result. Automatic Star control systems have recently become commercially available for in-bin and continuous-flow

grain dryers. Their use leads to savings in Air in energy and drying costs and limits the degree Disperser plate from fan of overdrying and grain quality deterioration. Heater

SOURCE: F W. Bakker-Arkema, “Grain Drying Technology,” background paper prepared for the Office of Technology Assessment, US. Congress, New and Emerging Technologies Washington, DC, 1988. Some new and emerging drying technologies have the potential for a significant impact on Figure 7-11 .—Cascading-Rotary Grain Dryer overall grain quality, especially in corn. Com- bination drying has already been discussed, Quench To cyclones along with its ability to improve corn quality air and fan. at the farm level. Although the procedure has been known for a decade, it is still used only sparingly because of the more demanding logistics and additional grain-handling equipment required. No other promising technology appears to be on the horizon for on-farm grain drying. Mixed-flow and concurrent-flow drying are off-farm drying technologies that produce Dry product higher quality grain than the standard cross- SOURCE: F.W. Bakker-Arkema, “Grain Drying Technology,” background paper flow dryers do. Both dryer types are commer- prepared for the Off Ice of Technology Assessment, U S. Congress, cially available in the United States. Their high Washington, DC, 1988. initial cost (10 to 20 percent more than comparable crossflow dryers) has thus far prevented maintenance costs plus high energy consump- their widespread use. The same can be said for tion characterize the U.S. rotary dryer design. automatic moisture controllers. If the payback At least two companies have experimented period of these technologies can be shortened, with microwave grain dryers, but both have rapid market penetration can be expected (6). marketed commercial models without success. The advantages of low energy consumption and Two off-farm systems not used in the United high grain quality were offset by high initial States for corn are the fluidized-bed dryer and cost and low product throughput. It is unlikely the cascading-rotary dryer (figures 7-10 and 7- that microwave grain dryers can compete with 11). A fluidized-bed grain dryer was at one time commercially available in the United States, but conventional drying techniques as long as the production was discontinued due to high elec- economic return of improved grain quality remains low. tricity costs and excessive air pollution. The cascading rotary dryer is used in the United A technology that could aid the drying rate States to dry parboiled rice. High initial and of corn is the use of ethyl oleate and ethyl ole- 151 ate/ethyl sterate mixture. Small-scale prelimi- drying rate. The National Corn Growers Asso- nary tests show that these chemicals applied ciation is coordinating a series of larger scale to high moisture corn significantly increase the tests of the chemicals at several universities.

STORAGE AND HANDLING TECHNOLOGIES The usual surplus of U.S. grain means stor- The belt bucket elevator using an elevator leg age is required for longer and longer periods. is the primary means of moving grain vertically With the increasingly large carryovers and the in commercial grain facilities. The leg consists necessity to store more grain for more time, of a vertical endless belt with buckets spaced grain could be stored for a year or longer. Grain evenly all along it. The buckets are filled by is a perishable commodity with a finite shelf scooping up the grain at the bottom (boot) of life. Storage can only extend that shelf life, not the leg. Grain is discharged at the top by cen- improve it. trifugal force as the buckets pass over the top (head) pulley. Recent elevator designs have The total U.S. grain storage capacity in 1987 eliminated the need for traditional elevator legs was about 23 billion bushels. Of this 14 billion by introducing incline belts to move grain ver- are located on farm, and the other 9 billion off tically, After discharge, the grain flows by grav- farm (56). Illinois leads in off-farm capacity, ity through spouting or horizontally by belts followed by Iowa, Kansas, Texas, and Nebraska or other conveying devices. (l). These States account for 53 percent of all off-farm storage. The number of off-farm stor- Commercial elevators using elevator legs or age facilities totaled 13,873 on December 1, incline belts are available in any size and ca- 1987. Smaller proportions of wheat and soy- pacity to meet the vertical lift requirements of beans are stored on farms (31 percent for wheat both large and small facilities. Elevators using and 25 percent for soybeans) than of corn (47 legs can operate relatively economically at less percent), Major wheat-producing States in the than their rated capacity, unlike some other Southern Plains tend to have more wheat stored grain-handling devices. There is no problem off farm in commercial facilities than the North- with increased grain breakage resulting from ern Plains States. Over 80 percent of the corn legs being used at less than rated capacity. The and soybean inventories are stored in the ma- amount of grain breakage occurring in eleva- jor corn- and soybean-producing States. tors using legs is affected by the type and size of the buckets, belt velocity, and transfer load- Current Technologies ing of the buckets. Overloading the buckets causes spillage and can increase kernel Grain is stored in buildings or piles for fu- breakage. ture marketing and in transportation modes en route to destination. A wide variety of sizes and Loading grain on the up side of the leg causes types of structures are used. The basic storage more damage than loading on the down side types can be classified as upright concrete or (20), which should be a consideration for ele- metal bins (vertical storage), buildings (horizon- vators handling corn. For wheat, no difference tal or flat storage), and onground piles. The han- can be detected as long as the leg is operated dling equipment used in each type is similar. at normal speed. Belt conveyors are the primary means of mov- Handling Equipment ing grain horizontally in most commercial fa- Handling equipment can be broken down cilities and, as mentioned, are becoming in- into two categories, based on grain movement creasing popular for vertical lifting. They direction: vertical or horizontal (56). consist of an endless belt supported by rollers 152

and driven by a shaft-mounted speed reducer sufficient pressure to overcome the airflow re- motor. They are usually open, but may be cov- sistance and the resistance of the grain to flow ered when used outside a building. Belt width through the system. Pneumatic system capac- varies and can be operated at 500 to 550 feet ity is a function of conveyor size, power sup- per minute. Conveyors can be inclined up to plied, and the vertical or horizontal conveying 15°, but should be horizontal at the point of distance. Pneumatic conveying normally re- loading. They can accommodate a wide range quires more power than bucket legs. Factors of speed or volume demands, are energy-effi- that increase grain breakage include air veloc- cient, and have relatively low maintenance and ities, poor pipe joint connections, and overload- , operating costs. Grain breakage is minimal ing the air-lock feeders. As with other handling I when moved this way. Most belt conveyors are equipment, breakage is not as great a concern used in fixed installations, but portable inclined for wheat as for corn. Pneumatic systems are I models are available for use in loading flat not widely used in commercial facilities mainly t storages. because of the high energy input and power I cost. Other types of conveying equipment include I drag flight, screw auger, and pneumatic con- Storage Types veyors. Drag flight conveyors are enclosed I tubes in which a chain with paddles or flights The most common and easily managed stor- moves. The chain is driven by a shaft and age type is upright concrete or metal bins (32). sprocket in the head discharge section with an Bin sizes can range from as little as 3,000 bushel idler shaft and sprocket in the tail section to farm bins to over 500,000 bushel bins at com- maintain tension on the chain. As the flighting mercial facilities. Upright bins are generally moves, it carries grain along with it. filled from the top and unloaded from the bottom by gravity flow. Bins can be various Drag conveyors are available in a wide range heights, with deep concrete bins ranging from of sizes and capacities and as fixed or portable 98 to 164 feet. The bottoms can be flat or con- models. They are relatively inexpensive, easy structed with hoppers. Flat bin bottoms require to load, move grain at low velocities, and re- the manual removal of grain left over after grav- quire less space than conventional belt con- ity flow has ceased. Most commercial bins have veyors. Since they are enclosed, they are sub- 1 hopper bottoms that allow complete grain reject to higher levels of insect infestation than moval without assistance. Configurations can belt conveyors are, The demand for low-cost range from one or more individual farm bins conveyors has resulted in a substantial increase to a multitude of bins tied together with han- in the use of drag conveyors. dling equipment in commercial facilities. Screw auger conveyors have for many years Horizontal systems have long been used for been the principal means of moving grain on extended storage. These buildings may be con- farm or where inexpensive portable equipment structed of metal, wood, concrete, or any com- is needed. They consist of a round tube with bination of these materials. Horizontal storages a continuous spiral or screw inside and can be usually have flat floors and are filled from con- powered by farm tractors or electric motors. veyors in the roof or by portable incline belts. They are space-efficient and portable, and can The grain is removed by conveyor tunnels in move grain horizontally or at relatively steep the floor and manual movement with front-end angles. On the negative side, they have high loaders. Movement into and out of these build- power requirements and can cause consider- ings is very labor-intensive. Grain depth is lower able grain breakage, depending on the design in horizontal storage than in most upright com- and operation of the auger. mercial bins. Storing grain in large buildings Pneumatic conveying is a system that moves creates additional problems in that the large grain by air inside a pipe. The air-moving de- roof area increases the risks of water leaks. vice must be able to provide the air velocity and These types of structures can stand alone or

153 be tied in with upright bins in commercial fa- increases insect activity. Basically, a grain mois- cilities. ture in equilibrium with 65 percent relative humidity will support mold activity. Different Grain can also be placed in piles directly on grains will create the optimum relative humid- the ground or on pads and can be either cov- ity at different moisture levels, which is why ered (usually with a vinyl tarp that provides soybeans cannot be stored at the same mois- some protection from the elements) or left un- ture content as corn (figure 7-12). covered. Piles can be contained by fixed or movable sloping walls or circular rings. Any type Many fungi species can develop in stored of onground pile is difficult to load and unload grain and each has its own requirements for and is very labor-intensive. growth. Aspergillus flavus is a prime example in corn. This species produces aflatoxins when Quality Problems That Arise humidity is at 75 to 85 percent (15). Other spe- During Storage cies grow at lower humidities and temperatures, Fungi are more sensitive to moisture con- Grain quality can be compromised by physi- tent than to temperature, with some species still cal damage during handling and by biological active at near-freezing temperatures but high agents (mold and insects) during storage. Grain humidities. damage during handling stems from breakage, Additional biochemical changes accompany which produces broken grains and fine mate- damage from mold and insect invasion. A lin- rials, Storage problems increase when this hap- ear relationship has been established between pens, and damage from molds and insects is free fatty acid content in soybeans and dam- more likely to occur with higher amounts of age (38). In wheat, heating grain destroys glu- these materials. Insects create numerous problems in stored Figure 7-12.-Moisture, Temperature, and Relative grain: Humidity Interactions ● economic losses because of the amount of grain consumed, • wastes left behind in the grain, ● insect fragments in finished products, and . grain heating, Insects’ metabolic processes can raise grain temperatures and moisture to ideal conditions for mold growth. In addition, another problem arises from the residues of pesticides used to control insects. (Insect control is covered in the next section of this chapter.) When molds grow they produce heat, moisture, and carbon dioxide. The heat and moisture provide even better growing conditions and the molds proliferate. Molds are parasites that obtain their sustenance from the grain they grow on. Grain quality is affected in that mold growth creates damaged kernels, deposits toxic substances, and creates a loss in dry matter, with accompanying decreases in density. Percent relative humidity Interactions between moisture, temperature, and relative humidity spurs mold growth and SOURCE: Office of Technology Assessment, 1989

88-378 - 89 - 6 ..

154 ten protein functionality. Damaged kernels may Storage Techniques That Protect or may not reduce feed value per unit of weight; Grain Quality studies have reported varying results. Moldy kernels have a greater risk of containing one Controlling Breakage or more toxins. Research has shown that breakage during Moisture weight is lost during routine aera- handling is more significant in corn than in tion. Also, when grain spoils, it heats, and the wheat and soybeans (43). Drop height in free- heat liberated is capable of evaporating addi- fall and spouting tests were found to be the most tional water. Investigations suggest that as significant variables, with the largest amount damaged kernels increase, additional weight of breakage occurring when dropping grain is lost. Kernel weight and density also reflect against a hard surface. Higher moisture con- loss in dry matter. One study reported a 1 to tent and temperatures are the best conditions 2 pound test weight loss in the entire grain mass for minimizing breakage, but these are not op- from typical insect infestation (61). timal for safe storage. Increases in damaged kernels and reductions in test weight are exponentially related to grain The National Grain and Feed Association has moisture and temperature (60). This research found that “repeated handlings showed that the led to development of an Allowable Storage amount of breakage was cumulative and re- Time Table for corn (table 7-4). At the end of mained constant each time grain was handled the Allowable Storage Time, corn will be on or dropped: This was found true whether or the verge of dropping one grade as defined by not the broken material was removed from the the U.S. Standards for Corn and will have lost test lot before subsequent handling” (43). It also about 0.5 percent of its original dry matter found that belt speed in bucket elevators has weight. no measurable effect on grain damage, but grain thrower tests show breakage increased with in- Neither grain temperature nor the moisture creased belt speed. Tests for impacts showed content of a spoiling mass remain constant over slightly less breakage against wooden bulk time (15). Other recent studies show that mold heads than against steel ones. Grain breakage toxins can be produced before the Allowable was also found to increase in screw conveyors Storage Time is reached. Extensive work to de- not operated at full capacity. Three factors must velop an Allowable Storage Time Table for be controlled to reduce the amount of breakage: wheat and soybeans has not been done. How- ever, the basic principles are the same; the only 1. velocity, differences would be the moisture content and 2. repeated handlings, and number of days. 3. impact surface.

Table 7-4.—Allowable Storage Time for Corn Corn moisture (percent) Grain temperature (oF) 18 20 22 24 26 28 30 days in storage 30 ...... 648 321 190 127 94 74 61 35 ...... 432 214 126 85 62 49 40 40 ...... 288 142 84 56 41 32 27 45 ...... 192 95 56 37 27 21 18 50 ...... 128 63 37 25 18 14 12 55 ...... 85 42 25 16 12 9 8 60 ...... 56 28 17 11 8 7 5 65 ...... 42 21 13 8 6 5 4 70 ...... 31 16 9 6 5 4 3 75 ...... 23 12 5 4 3 2 80 ...... 17 9 4 3 2 2 SOURCE: Midwest Plan Service, “Low Temperature and Solar Grain Drying, ” Iowa State University, Ames, 1A, 1980. .—

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Grain velocity is considered the most impor- ing moisture levels in horizontal or pile stor- tant factor to be controlled (table 7-5). age is difficult, and several different moisture levels are often comingled. Large upright bins Monitoring Moisture Content predominate in some corn- and soybean-producing areas. Depending on the number and Molds will grow on any kernel or group of size of bins available, and on the moisture levels kernels that provide the right conditions. Mois- being stored, differing moisture levels must be ture content and uniformity within storage fa- comingled. cilities is therefore critical to maintaining grain quality. As demonstrated by the Allowable Stor- Moisture content in any one particular loca- age Time Table for corn, knowledge of the mois- tion within a storage facility is subjected to the ture content is a key element in determining moisture/temperature/humidity relationship. storability. Moisture uniformity within a stor- Nonuniform moisture levels can lead to spoilage facility, on the other hand, is subject to the age in localized areas within storage (14,17). limitations of measurement equipment and the These locations are commonly referred to as ability to segregate differing moisture levels hot spots; if left unattended, they can spread within the facility. to the entire grain mass. Moisture meter accuracy was discussed in Even assuming that moisture and tempera- the drying technologies section of this chap- ture are uniform within a grain mass, they will ter. The meters provide average readings, but not remain so over time, as noted earlier. Mois- moisture levels within a grain sample can vary ture will migrate in response to temperature greatly. This can lead to false assumptions and differentials (figures 7-13 and 7-14). When the hamper appropriate actions based on the aver- Figure 7-13.—Moisture Migration Patterns age moisture reading, especially when handling in Falling Temperatures nonuniformly dried corn that has been blended with high and low moisture levels and when

handling freshly harvested corn. The problem ,1 is compounded by the fact that the moisture content of corn kernels on one ear can vary from 1 to 4 percent. Also, moisture will never moisture accumulation fully equalize, If the spread from high to low is 4 percent, moisture will equalize within 1 4 percent (49). The net result is that moisture variation in a grain sample cannot be detected and the diversity of moisture being placed into storage cannot be controlled. Nonuniform moisture levels in a storage facility can also be a function of the number and size of storages available. Segregating differ-

Table 7-5.—Relative Amounts of Breakage for Grains Tested Under Four Handling Conditions Percentage of grain breakage caused by: Free-fall Spouting Grain Bucket Grain drop drop thrower elevator .- .’ . . Corn ., . . . . . 6.3 3.2 1.6 1.1 .- Soybean . . . . 2.0 1.0 0.7 0.3 Wheat ...... 0.2 0.15 0.2 0.1 SOURCE G H Foster and J L Tulte, “Aeration and Stored Grain Manaae. SOURCE: J E Maness, “Malntaln Grain Quality Through Good Handllng Prac. merit. ” I n Sforage of Cerea/ Gra/ns and The/r Products (St Pau 1, M-N t!ce, ” National Grain and Feed Assoclatlon, Washington, DC, 1976 American Assoctatlon of Cereal Chemists, 1982) 156

Figure 7-14.—Moisture Migration Patterns in Rising Temperatures Maintaining low temperatures and moisture levels in grain is the principal way to preserve grain quality and prevent damage from molds and insects. Aeration is a very effective tool for controlling moisture content and temperature. The rate of development for both molds and insects is greatly reduced as the temperature is lowered. , I Aeration systems generally provide an airflow rate of 0.02 to 0.10 cubic feet per minute ) per bushel of grain. This is equivalent to 2 to 12 changes of air per hour. Aeration fans can be located at the base of a bin to create either 1

) a positive pressure pushing air up through the grain or a negative pressure by pulling air down

! through the bin. Some installations use fans mounted in the roof or bin top and some use fans, top and bottom, that pull and push the air. Resistance to airflow increases with grain I depth, so more power is required to aerate deep

I silo-type bins than shallow horizontal storage. Aerated bins and warehouses must have ade- I SOURCE G H Foster and J L Tulte, “Aeration and Stored Grain Manage- quate ventilator area in the top to allow air to merit, ” In Storage of Ce;ea/ Gra/ns and The/r Products (St. Paul, M-N’ American Assoclatlor l~tCereal Chemists, 1982) enter or exit when the fans are running. I outside air is warmer than the grain, the area The equipment and methods used to fill a stor- I age bin affect the aeration system’s perform- I of condensation is several feet under the grain surface, but still in the center. ance. Dropping grain into the bin’s center causes a cone to develop—with the lighter, less This moisture migration during storage dense material concentrating in the center means that grain assumed to be in a storable (spoutlines) while the heavier, denser material condition will not remain so over time. Cold flows to the sides. This impedes airflow dur- weather migration primarily affects grain in ing aeration and molds can begin to grow land-based storage, causing deterioration as almost immediately. In grains with relatively temperatures rise in the spring. Warm weather high amounts of fine material, such as corn, migration is particularly vexing for grain in spoutlines are often removed from upright stor- transit both from cold to warm areas of the age bins by drawing some of the grain out from United States and from the United States the bottom, a practice called coring. through warm waters to foreign buyers. A barge or ocean vessel is basically a storage bin and In large horizontal storages, loading from the will experience the same moisture migration center or from a loader that is gradually moved phenomena as land-based storage facilities. Al- backward through the center of the building though aeration is the tool for managing mois- as the pile is formed causes similar problems. ture migration, grain in transit cannot be aer- If grain is piled over each aeration duct on the ated, and ventilating the top of barges or ocean floor by moving the loading device back and vessels does little to remove moisture or heat. forth, airflow will be greatly increased. Airflow 157 distribution is not as uniform as in upright bins, at the point where the warm and cold grain however. Some methods of filling piles also re- meet, sult in fine material concentrating in local areas. Piles, however, are difficult to aerate and Temperature Monitoring their shape alone restricts uniform airflow. One way to monitor temperature is through Condensation in aeration ducts can be a prob- the use of temperature cables. These can be lem when the fans are not running during warm hung from the roof or bin top and extend down weather and when the grain mass is cold. If through the grain mass. Each cable has a steel outside air can enter the duct, moisture will con- support cable and a number of thermocouple dense there. Likewise, moisture from warm wires in a protective plastic shield. Cables can grain can condense on a cold aeration duct ex- be placed in the bin before it is filled or can posed to outside air, The accumulated mois- be probed into the grain, as is the case for hori- ture allows mold to grow, sometimes caking zontal storages and piles. As grain that is heat- the grain around the perforated ducts, Air ing more than 1 or 2 feet from a thermocouple valves or tight-fitting covers should therefore may not be detected until considerable dam- be used to prevent air infiltration when the fans age is done in the hot spot, spacing and the ex- are not running. tent to which detection is desired are critical. Although aeration is primarily used for tem- Temperature increases that cannot be ex- perature control, grain moisture can be plained by changes in ambient conditions are changed depending on the humidity, airflow a signal of possible mold or insect problems rate, and length of aeration time, If wheat with and should be investigated. Commercial facil- 13 percent moisture is aerated with air at 40 ities have relied on temperature monitoring sys- percent relative humidity, there will be a grad- tems for years, and many farmers also moni- ual moisture loss from the grain. Humidities tor grain temperatures. above 70 percent tend to add moisture to the Most temperature monitoring at commercial grain. For this reason, coupled with the cost facilities is done on a fixed schedule either man- of operation, aeration systems are often run at ually or by automatic recording equipment. A the minimums considered necessary. few facilities have installed programmable Many bins, especially on the farm, are equipment that can be used in conjunction with equipped with aeration systems but are often aeration fan controllers. The system can be pro- not used effectively (27). Farm storage bins, grammed to respond to higher temperatures by especially smaller and older ones, often are not switching on an aeration fan. The cost of such aerated. Small bins (holding less than 3,000 systems has thus far limited their use to a few bushels) will cool or warm quickly enough with large companies, the changing season that moisture condensation may not be a serious problem. Farm bins Transfer Turning that are aerated, on the other hand, are more Transfer turning is the process of physically likely to have systems improperly sized for the moving grain from one storage bin to another, bin. It is used primarily in upright storage facilities A majority of farm aeration systems are ei- that have bins linked together by conveying ther not operated at all or not operated suffi- equipment. The turning process mixes grain ciently (61). The most common problem is not and contributes to a more uniform moisture and running the fans long enough to bring the en- temperature. When hot spots are detected, the tire grain mass to a uniform temperature. If a affected bin may be unloaded and transferred cooling front is moved through only part of the to another bin to break up the hot spots and grain, a moisture condensation problem is likely allow the facility manager to identify and treat . . —..

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the cause. In facilities not equipped with aera- Emerging Technologies tion, turning has been the traditional means of grain cooling, It requires much more energy Little new technology is available in grain than aeration does, however, and can contrib- storage, but some technologies have been re- ute to physical damage by breaking the kernel. cently improved or applied. Programmable controllers for aeration systems are now available Turning grain cannot be performed in hori- that monitor ambient temperature and humid- zontal or pile storages because of the difficulty ity as well as grain temperature and that can in unloading and moving the grain. To turn be set up to run aeration fans. These will re- grain efficiently, a facility should have empty duce management errors such as not moving a I I bins at its disposal that are connected by a con- cooling front completely through the grain or aer-

, veying system. This is not the case on most ating when weather conditions are unsuitable. I farms. When bin space is limited, a bin can be unloaded and reloaded in one continuous operation. !

I lNSECT MANAGEMENT INTERVENTIONS I , As indicated in the preceding section, insects In the absence of preventive treatment, in- create numerous economic and quality prob- festations are controlled on a case-by-case ba- lems in stored grain. Losses due to insects sis as they occur. If grain is turned, a protec- worldwide range from 3 to 40 percent of the tive treatment may be applied. Exposed adult grain produced (44). insects may be killed, but the immature ones inside the kernels will not be killed until they Preventing insect infestations should begin I emerge as adults. Even when grain is fumi- on the farm with an effort to clean grain and gated, a 100-percent” kill may not be achieved. remove foreign material, (Cleaning technol- The population may be reduced to an undetect- ogies are discussed more fully later in this chap- able level and several generations may pass be- I ter.) A protective treatment, such as malathion, fore infestation is detected. In either case, nu- should be used if grain will be stored on farm. merous immature and even pre-emerging adult Beyond routine cleaning and spraying of empty insects remain inside the grain kernels. Many storage facilities, few preventive treatments are are not removed by the preconditioning proc- applied to freshly harvested grain (7,61). These esses used in the milling process, and insect treatments are performed mostly on wheat, but fragments can be found in finished products. sometimes on corn or soybeans. Also, protective treatments are used most frequently in the With present technology, pesticides are the southernmost grain-producing States, where only available and entirely satisfactory method the climate is most favorable for insect activity. of ridding grain of live insects. The use of other control measures is severely limited by the in- As grain is marketed and moves from the ability to penetrate grain depths, available time farm through various facilities for export or do- for application and kill, quantity to be treated, mestic use, it is impractical to maintain the and the product cost (including labor). identity of a particular lot that has been treated, Thus, a treated lot may receive additional in- Pest control in grain storage facilities and secticides or fumigants as it moves through the transportation vehicles is therefore economi- marketing chain, This can result in adultera- cally driven, If it costs money it will in all likeli- tion of either the grain or the finished product hood not be undertaken unless not doing so would with excessive pesticide residues. prohibit grain sales, Of course, this is true not 159 only for the use of pesticides, but also for aera- toxic and unique pesticides. It requires profes- tion, turning, cleaning, or other measures to sional personnel who are well trained and ex- control damage and/or prevent quality losses. perienced regarding both the fumigant and the Although this approach is an option in a free target organism. market, it can result in situations where buil- Insect infestations usually involve a complex dup reaches such proportions that preventive of insect species, and each species and life stage approaches such as aeration, turning, and the differs in its susceptibility to an insecticide or application of residual pesticides no longer fumigant (22,26), The dosage must therefore be work, Emergency or corrective actions, such directed against the least susceptible life stage. as the use of a fumigant, are then needed.

Current Pesticides Grain Protectants The pesticides used to control live insects can For many years, synergized pyrethrins were be divided into two broad categories: insecti- the only insecticides approved for use as a grain cides and fumigants. Insecticides are applied protestant, although none are approved for use to facilities or directly to grain. The term “grain on soybeans, Consequently, they have a long protestant” refers to the application of an in- history of safe usage. Pyrethrins are both toxic secticide to grain as it is conveyed into stor- and repellant to many species and have a rapid age. The application is expected to provide a “knock down” effect. This does not mean the residue that will protect the grain from insects insects are dead; in fact, they may recover with during storage. When properly applied, grain no detrimental effect (42). Even though pyre- protestants should prevent or minimize addi- thrins have been used for many years, insects tional damage caused by existing infestation have developed little resistance to them. and protect clean, uninfested grain from be- Several factors have limited the use of pyre- coming infested. Insecticides labeled as grain thrins during the past 15 to 20 years. Pyrethrin protestants can also be applied to empty stor- extracts must be imported and, as such, the sup- age facilities, although these must be cleaned ply is not as reliable as desired. With the beforehand if the full value of the treatment is approval of malathion as a grain protestant, to be realized. pyrethrins were no longer economically com- The term “fumigation” is often used incor- petitive. Also pyrethrins lacked the biological rectly today. Many people believe that any ap- efficacy desired as a grain protestant (less than plication of fine insecticide particles into an 100 percent kill of some species and life stages) enclosure or building as an aerosol, fog, mist, that appeared more promising with malathion. or smoke is to fumigate. But fumigation is a sep- Malathion has been the insecticide of choice arate technology from other chemical control for more than 20 years, although it too has never methods: been approved for use on soybeans, Convinc- . . . a fumigant is a chemical which, at a re- ing evidence of insect resistance to malathion quired temperature and pressure, can exist in was first reported in the mid-1960s, and dur- the gaseous state in sufficient concentrations ing the last 15 years alarmingly high levels of to be lethal to a given pest organism (9). resistance have been reported. Because there is no practical and economical alternative, As this definition implies, fumigants act as malathion continues to be used even though a gas in the strictest sense of the word; they its value as a grain protestant is doubtful in can penetrate into the material being treated many cases (23). and can then be removed by aeration. Fumiga- tion, therefore, is a highly specialized art in- Pirimiphos-methyl has been recently intro- volving the application of some of the most duced. The commercial name for this product 160 is Actellic. It controls a wide range of insect An ideal fumigant should be: species, including those resistant to malathion. 1. highly toxic to all life stages of the target Pirimiphos-methyl was approved for use on ex- insect; port corn and wheat (but not on soybeans) in 2. relatively nontoxic to humans and 1986. In 1987, it was approved for domestic animals; corn use. It is approved for use on stored grain 3. highly volatile, with good penetrating in 14 other countries (36). ability; Chlorpyrifos-methyl has also recently been 4. noncorrosive to metals; introduced. The commercial name for this in- 5. nonflammable or explosive under prac- secticide is Reldan 4E. It controls a wide range tical conditions of usage; of insect species including those resistant to 6. nonreactive with the commodity (does not malathion. In 1986, it was approved for use on produce an adverse flavor, aroma, or wheat but not on corn or soybeans. A dust for- residue); mulation has been approved for use as a pro- 7. nonharmful to seed germination; tectant for wheat and corn but not soybeans. 8. economical, readily available, and simple to use; Bacillus thuringiensis (BT), a bacterium, is 90 fast acting, able to be aerated quickly, and the only insect pathogen used as a grain pro- nonharmful to the environment; and tectant. To be effective, the spores must be in- 10. easily detectable, with adequate warning gested by the insect; however, only moth spe- properties. cies of grain pests are controlled by BT. BT provides little or no control of grain beetles or Unfortunately, there is no ideal fumigant. weevils. However, the grain fumigants available possess Inert dusts, such as silica aerosols, magne- some of these characteristics. Therefore, it is very important that fumigators be well in- sium oxide, aluminum oxide, diatomaceous formed on the performance characteristics of earth, and clays, have varying degrees of potential as grain protestants. In general they are each fumigant so that a fumigation can be performed in a safe and effective manner. Two slow-acting and kill insects mainly by an abra- compounds—methyl bromide and hydrogen sive action that results in desiccation of the in- phosphide—are presently available as grain fu- sect. They do not perform well in moist grain migants. Of these hydrogen phosphide is the or in high temperatures. The disadvantages to using inert dusts may outweigh their value. fumigant of choice. These include environmental contamination, Methyl bromide is highly toxic to all life damage to machinery, increased fire risk, lung stages of grain insects and humans. Because damage to workers, and reduced grade and/or it is essentially odorless, extreme care is nec- test weight of grain. As such, relatively little essary to avoid exposure. As methyl bromide use has been made of inert dusts in the United is a liquid under pressure, it is highly volatile, States (26). but to achieve good grain penetration, forced recirculation is required. Methyl bromide gas Fumigants is noncorrosive to metal, but the liquid phase reacts with aluminum in the absence of oxy- A structure must be gastight for fumigation gen to forma compound that ignites spontane- to be successful. The fumigant gas concentra- ously in the presence of oxygen. It is, however, tion must be maintained long enough to kill the neither flammable nor explosive under practi- least susceptible life stage of the insects in- cal conditions of fumigation. volved. Most fumigation failures can be traced to inadequate gastightness of a storage facil- This fumigant reacts with most food com- ity; higher dosages will not compensate for such modities and grains to produce inorganic bro- deficiencies (66). mide residues that are permanent and accumu- 161 late with each additional fumigation. It also concentrations of gas. It does not react with reacts with a host of other nonfood items, espe- grain to cause either adverse flavor or aroma cially those that contain sulfur compounds. The nor does it cause excessive residues. Hydro- degree of reaction is relative to the dosage ap- gen phosphide is economical, readily available, plied, product temperature, duration of the fu- and the simplest fumigant to apply. A formu- migation period, and the number of times it is lation can simply be scattered randomly, placed applied. When the inorganic bromide tolerance systematically on the grain surface, or sub- is exceeded, adverse flavor or aroma (or both) merged into the grain. Many methods have of the product may occur. been developed to increase gas distribution in the grain mass. Hydrogen phosphide is not a Methyl bromide is economically competitive fast-acting fumigant compared with methyl bro- with other fumigants and is readily available mide, and it can take 3 to 5 days or longer de- to authorized personnel. Using it requires spe- pending on the temperature. Even longer peri- cial equipment both for application and safety, ods are required when large masses are to be Because it is a liquid under pressure, knowl- fumigated. edge and experience in using the equipment is essential. The need for recirculation substan- With cross-ventilation, hydrogen phosphide tially limits its use. Recirculation equipment is is removed from the free space in storage facil- expensive and can only practically be used in ities within minutes. Low gas levels may con- facilities that are sufficiently gastight to pre- tinue to evolve from the grain, but with con- vent gas losses caused by the positive pressure tinued cross-ventilation, people can enter the of the system. facility and even work with the grain. Hydro- Fumigations can be completed within 16 to gen phosphide is easily detected by use of de- 24 hours, as methyl bromide is considered to tector tubes and contains an odor so it can be be as fast acting as most fumigants. The recir- detected at very low levels, Although the odor culation system used during application can can be a useful warning sign, it may not per- be used as an aid in aeration. Most of the un- sist throughout the fumigation to therefore pro- reacted methyl bromide can be aerated in 3 to vide adequate warning during aeration. 4 hours; however, atmospheric aeration should Among the chemicals used as insecticides, continue for 48 hours or more before moving fumigants are the finest tools available. Fumi- the grain. As methyl bromide is practically gation, however, is the last line of defense when odorless at low levels that are dangerous to hu- all other insect control methods fail. Special mans, it lacks adequate warning properties. care needs to be exercised to avoid any exceed- Hydrogen phosphide will probably continue ing tolerances that may lead to cancellation by to be the fumigant of choice within the fore- regulatory authorities or the loss of effective- seeable future. It falls short of the ideal, but has ness due to development of insect resistance. many usable qualities not available in any other Although the technology is available to accom- fumigant. It is highly toxic to all life stages and plish 100 percent kills of the target insect, the is very toxic to humans. Hydrogen phosphide diversity of storage facilities and conditions un- is highly volatile with excellent penetrating der which fumigation is performed means a 100 quality. It is formulated as a solid either as alu- percent kill is seldom achieved. minum or magnesium phosphide. Gas is released Most fumigations are of a commercial or eco- when the formulation is exposed to the atmos- nomic control type. This is accepted because pheric moisture. However, it is corrosive to cer- most storage facilities are not sufficiently tain metals such as copper, gold, and silver. gastight to retain the fumigant, and the cost of This fumigant can be highly flammable or securing gastightness maybe prohibitive. This even explosive under conditions of misuse, type of fumigation is often accepted where very such as application resulting in extremely high large grain masses are involved or when time —. —

162

is limited, such as in large elevators and export ter. Farm storages have generally been suitable grain in shipholds. Although some of these fa- for fumigating with liquid fumigants (e.g., car- cilities may be sufficiently gastight, the tech- bon tetrachloride, ethylene dibromide, ethylene nology for achieving gas distribution through- dichloride, carbon disulfide, and chloropricrin) out the grain mass has not been adequately that were poured, sprinkled, or injected into researched and developed. the grain. These liquid fumigants are no longer available, and it is questionable whether some If there are enough insects to require fumi- of these facilities can be sealed adequately and gation, there are greater numbers of immature economically to retain fumigant gas such as insects living inside individual grain kernels. hydrogen phosphide. In some cases, farmers Commercial or economic control fumigations I may be advised to increase fumigant dosage to , often do not kill these immature insects. Though compensate for gas leakage. This will result in the grain may pass visual inspection for live I failures and can lead to insect resistance and I adult insects, many of the immature insects de- ultimately the loss of the fumigant from the velop and emerge as adults within the next 2 market. to 4 weeks and the grain is reinfested. Two important problems arise from this type For several reasons—such as remoteness of of fumigation. First, shipments certified as not farm storage facilities, small amounts of grain being infested may arrive at their destination to be treated, inadequate storage structures, and infested. Second, insects not killed by fumiga- lack of information—much on-farm grain may tion are exposed to sublethal dosages, which never receive properly applied insect controls. is the basis for developing resistance. Insect re- When this infested grain is marketed, it co- sistance to any of the fumigants means a ma- mingles with noninfested grain and inflates the jor loss in this last line of defense. problem (7). Although many high-quality on-farm storage Conditions Affecting Insect facilities boast good pest management prac- Management tices, the well-constructed facilities that utilize pest management technologies are generally The application and effectiveness of resid- found in commercial handling facilities that use ual insecticides and fumigants may be seriously upright silos (or bins) or horizontal (flat) stor- limited by the amount of time available, the age. They are usually equipped with some type space or volume of grain to be treated, the eco- of forced aeration for cooling and drying. These nomics or dollar value saved or gained by their systems are not designed for recirculation, use, or legal restrictions on the use of various which is required for fumigation with methyl pesticides by local, State, or Federal authorities. bromide. Most horizontal or flat facilities are The effectiveness of residual insecticides de- not adequately gastight for fumigation with ei- pends on the grain and storage facility being ther of the available compounds. Hydrogen properly treated: The insect must come in con- phosphide can, however, be used when facil- tact with the residual before the pest will be ities are adequately gastight. killed. Similarly with fumigants, if there is not sufficient time for the gas to reach all parts of Most upright storage structures are gastight the grain mass in the required quantity and for or can be made adequately gastight with a min- the required duration, the pest will survive. imum of sealing. The ideal time to fumigate with hydrogen phosphide or apply an insecticidal protestant is when the grain is conveyed Types of Storage into storage. However, it is impractical to ap- The types and quality of grain storage facil- ply a fumigant at this time because the flow or ities vary greatly, as noted earlier in this chap- supply of grain is irregular, and much of the .

163 harvest must be completed before the storage trucks, Other types of railcars, trucks, and even is filled. Thus, a great deal of the fumigant gas barges cannot be made gastight either at all or is lost as grain is added, The next best treat- economically, Ocean vessels, on the other hand, ment opportunity is when turning grain from have proved to be effective locales for fumigat- one full tank or silo to an empty one. This is ing grain in transit, not always done because empty storage space may not be available and it is expensive to turn Outside Factors grain. Sometimes grain is fumigated by probing or submerging fumigants into the grain sur- Physical.—Many physical factors affect the face. Most of these fumigations are only par- performance of chemical interventions. Among tially effective because sufficient time is not these are temperature, moisture, and humid- allocated to effect gas distribution. ity. Temperature probably has the greatest impact. Usually within well-defined limits, an Port Facilities increase or decrease in temperature means a similar increase or decrease in the insecticide’s All port facilities have upright storage struc- performance, Temperature most dramatically tures, although these are best described as han- affects the performance of fumigants, especially dling, not storage, facilities. Any type of insect methyl bromide, High-moisture grain increases control remedy can cause expensive delays in absorption of fumigants such as methyl bro- loading. Because of the different types and mide, requires higher dosages, and accelerates grades of grain handled, even the largest port the breakdown of protective treatments such facility can seldom store enough grain for one as malathion, The influence of humidity is var- shipment. Instead, enough grain is held to be- ied, with minimal effect on the performance gin loading a ship, then a constant flow of grain of most pesticides. However, hydrogen phos- from railcars and barges is unloaded into the phide formulations require at least 25 percent facility and transferred directly onto the ship. relative humidity to cause the chemical reaction Incoming grain that is infested can be set aside that releases the gas. and fumigated before unloading, but grain found to be infested after loading on the ship Foreign material and dockage covers a wide is usually fumigated with hydrogen phosphide variety of items, but grain dust and other fine while in transit. materials have the greatest effect on the performance of insect control interventions. When a protective treatment is applied, grain dust Transportation Modes may absorb much of the insecticide, reducing The time grain normally spends in various its effectiveness. Likewise, concentrations of transportation modes—combines, trucks, rail- dust and fine material may require increased cars, and barges—is minimal. Yet these can be dosages of a fumigant to penetrate the grain important sources of infestation. prolonged mass. Dust also inhibits penetration of fumi- storage, especially in ocean vessels, is a unique gant gases and causes the gas to channel so that situation that should be treated as storage rather penetration is slow or nonexistent in certain than transportation. parts of the grain mass. To be effective, a fumigant gas must be dis- Human.—The competence of applicators is tributed throughout the grain mass and held a major factor in the performance of any pest for the duration required to kill the insects in- management intervention. An incompetent or volved. Few transportation modes are ade- inadequately trained applicator may apply too quately constructed to retain fumigant gases. little or too much pesticide. The grain is either Those that may be sealed or made gastight in- not protected or it may be contaminated with clude covered hopper railcars and hopper-type residues from high dosages, Inadequate train- 164

ing and experience are most likely on the farm, phos-methyl and chlorpyrifos-methyl. Both where pesticides are often applied by farmers compounds appear promising as replacements themselves. for malathion. Both are effective against malathion-resistant insects, but are less than totally Biological. —Several biological factors must effective against the lesser grain borer, a ma- be taken into account for successful insect con- jor pest to stored grain. In Australia, mixtures trol. Some of the most important factors include of bioresemthrin, a synthetic pyrethroid, with the species and life stage of the insects involved, chlorpyrifos-methyl have been shown to be ef- insect resistance to the insecticide, kind and fective. The use of insecticide mixtures has not condition of the grain to be treated, and the received much attention in the United States presence of beneficial organisms such as par- because regulation requires safety data on all asites and predators. components as well as the mixture. Infestation usually involves several insect species, and susceptibility to insecticides varies Several new approaches to insect control or among species, life stages, and even the age of prevention have been researched and brought the insects within a species. Therefore, the in- to a usable point, but they have received little secticide or fumigant must be directed toward or no acceptance within the grain marketing the least susceptible species and life stage. Sev- system because of costs or predetermined per- eral insect species are highly resistant to mala- formance limitations. thion and/or moderately resistant to synergized Modified atmosphere is a relatively new tech- pyrethrins (69), and a few species have devel- nology. Its basic performance needs are simi- oped low levels of resistance to hydrogen phos- lar to those of a fumigant in that the facility phide (13). must be gastight to retain a modified atmos- Financial.—The cost involved should not be phere of either nitrogen, carbon dioxide, or no a deterrent to the timely and proper applica- oxygen for several days. The use of carbon dition of insect control. Studies indicate that ma- oxide appears to have the greatest potential, terials cost less than 1 cent per bushel and that Regardless of whether nitrogen or carbon di- complete programs involving treating empty oxide is applied or an exothermic burner and bins or warehouses average 2 cents per bushel condenser is used to create a low oxygen atmos- (67). Other studies indicate that farmers do lit- phere, the logistics of providing large quanti- tle to maintain quality during storage on the ties of these substances or the initial cost and farm even though grain is discounted for live maintenance of the burner system will hinder insects (7). implementation. Discounts assessed for live insects are quite Hermetic storage involves total sealing, af- variable. Discounts in Minnesota are reported ter a facility is completely filled, to exclude oxy- as high as 17 cents per bushel for corn to 33 gen. Then, during long-term storage, the natu- cents per bushel for wheat (27). A survey of com- ral respiration of the grain and insects will mercial handling facilities across the Mid- deplete the oxygen and create an atmosphere western States reported discounts ranged from lethal to the insects. 1 to 20 cents per bushel (62). Obviously, the incentives to initiate and maintain insect control Much research has been completed on using measures and deliver insect-free grain are ei- irradiation to kill or sterilize insects and to dis- ther lacking or in question. infect grain. Recent studies indicate that the electron acceleration method of irradiation is New and Emerging Technologies the most practical and may be the most economical. Adoption of irradiation has been The greatest potential for new residual-type limited because of the high initial cost of in- pesticides may be in expanding the approved stallation. Installing an accelerator capable of usage of the relatively new insecticides pirimi- treating 1,000 tons of grain per hour would cost some $4 million (10). By operating the unit two maintain quality of certain high-value agricul- shifts per day, 6 days a week, the maximum tural products, However, it would be economi- annual throughput would be 5 million tons. cally impractical to freeze large grain masses With this throughput and taking into account by mechanical refrigeration. Where climate all foreseeable operating costs, treatment would provides naturally cold temperatures, aeration cost about 23 cents per ton. systems in storage facilities are used to reduce grain temperature to achieve insect control. At a temperature of 16 °C or lower, insect activity ceases. Little or no feeding or repro- High temperatures can also kill insects. Stud- duction occurs, but many insects will survive ies using high temperatures concluded that mi- long periods at these temperatures, At temper- crowave and infrared radiation can heat grain atures near freezing, it requires 10 days or more in thin layers, such as found on conveyor belts, to actually kill some species. Obviously the tech- to disinfest it (39). nology is available to modify temperatures to

TRANSPORTATION

The U.S. grain transportation and distribu- Accurate measurement of the share of grain tion system is probably the most efficient one hauled by each mode of transportation is diffi- in the world (8), Much of this efficiency was cult since no agency collects data on grain ship- achieved during the 1970s when demand for ments by truck. Also, more than one transpor- export grain placed enormous stress on the sys- tation mode may be used to move grain from tem. Improvements made then resulted in high- a country elevator to the final user. Informa- speed, low-cost transportation and grain dis- tion on the total quantities of grain moved by tribution. It is estimated that the United States rail and barge is available (table 7-6). The share is now capable of exporting over 8 billion of transportation by train ranged from a high bushels of grain per year, whereas in the mid of 80 percent in 1974 to a low of 66 percent to late 1970s the system was under great stress in 1982. Barge shares tend to rise and fall as to export 3.5 billion to 5,0 billion bushels. exports increase or decrease, primarily because most grain moving by barge is destined for export. The share of grain moving to export by Current Modes of Transport rail declined from 62 percent in 1974-75 to 38 Grain may be moved from farms to country percent in 1983-84, while the share by barge elevators or to inland terminal elevators, or increased from 37 to 60 percent (3). directly to domestic end users (figure 7-15). Do- mestic users may obtain grain directly from By Rail farms or from country, subterminal, or terminal elevators by truck or train. Grain for export Trains have been the major carrier since the can be shipped from these elevators directly late 1830s, and single boxcar shipments re- by rail, by truck to barge, or by rail to barge mained the dominant grain transportation tech- to export elevators in major U.S. ports for load- nology until the late 1960s. The use of boxcars, ing onto ocean-going vessels. Some farmers however, resulted in grain damage. The grain close to export elevators bring grain directly was loaded through a center door using flexi- to these facilities by truck. Grain is also shipped ble pipes that direct the grain flow into either by rail from subterminal or inland terminal ele- end of the boxcar. Grain throwers were also vators to Mexico, and small amounts of wheat used to assist in this process. Once loaded, the and corn move directly into Canada by truck. grain was leveled by hand. Since boxcars had Thus, the major carriers of grain are trucks, no unloading devices, unloading involved an trains, barges, and ocean vessels. electric shovel that was dragged or pulled by 166

Figure 7-15.-General Flow of Grain From the Farm Through the System

Overseas processor

I I I I I I I

River Port elevator elevator

SOURCE: U S Department of Agriculture, Office of Transporlatlon, “The Physical Dlstnbutlon System for Gram,” Agriculture Information Bulletin No 457, Washington, DC, October 1983 -

Table 7-6.—Grain Hauled by Railroads and Barges, a cable to the center door, using an electric mo- 1974-1985 tor. Unloading devices were designed to lift and tip the entire car in either direction so the grain Billions of bushels would flow out the center doors. The whole pro- moved by Percent moved by cess of transporting by boxcar was labor- Year Rail Barge Rail Barge intensive and damaging to the grain. 1974 ...... 4.21 1.03 80.3 19.7 1975 ...... 4.06 1.20 77.3 22.7 Boxcars were also a ready source of insect 1976 ...... 4.10 1.61 71.8 28.2 infestation since they have an inside wood wall 1977 ...... 3.91 1.52 72.0 28.0 1978 ...... 4.12 1.63 71.7 28.3 liner. Frequently these were damaged, and bulk 1979 ...... 4.41 1.62 73.1 26.9 material, including grain from previous ship- 1980 ...... 5.00 1.91 72.4 27.6 ments, became lodged behind the liners. This 1981 ...... 4.38 1.99 68.8 31.2 1982 ...... 4.22 2.18 66.0 34.0 material was for all practical purposes impos- 1983 ...... 4.72 2.11 69.1 30.9 sible to remove and, therefore, became infested 1984 ...... 4.81 1.97 70.9 29.1 and contaminated the next cargo. 1985 ...... 3.99 1.67 70.5 29.5 The advent of the covered hopper car in the SOURCE Association of American Railroads, The Gra/n Book 1986(Washington, DC 1987) mid-1960s greatly reduced the loading and un- —-

167 loading stress on grain quality. Covered hop- While the single-car transit system has been per cars have full-length top hatchways for rela- virtually nonexistent in the corn and soybean tively easy loading that does not require market since the mid-1970s, it continues to per- throwing or leveling. Each car consists of three form a major function in wheat distribution, to four smooth, hopper bottom compartments. particularly in areas producing Hard Red Win- Since grain is unloaded by gravity flow, each ter wheat. More than half the wheat transported compartment is essentially self-cleaning, reduc- by rail from Kansas, Oklahoma, and Texas ing the risk of insect infestation in the next ship- moves under transit rates. In part, this is be- ment. The covered hopper car is tight and es- cause a large percentage of the grain storage sentially leak-proof, making it easier to fumigate capacity in these areas is located at inland ter- than boxcars. Moreover, loading and unload- minals. In contrast, most storage capacity in ing is less labor-intensive and damaging to the Corn Belt and the wheat-producing areas grain. By 1985, 99.6 percent of all grain trans- in the Northern Plains States is located at coun- ported by rail moved in covered hopper cars. try elevators, and multiple-car and unit-train shipments are now standard. In addition, ag- Until the mid-1960s, almost all grain trans- gregating large quantities of wheat at inland ported by rail moved under single-car transit terminals permits blending of Hard Red Win- rates, This means that grain was shipped to a ter wheat to meet export standards. Only a small transit location (an elevator), unloaded for stor- number of country elevators in these areas are age, and later reloaded and shipped to its final capable of blending wheat to meet export speci- destination, The transit rate was usually lower fications. than the inbound rate to a location plus the out- bound rate to the final destination. In the mid- By Barge 1960s, however, rail companies began offering low-cost, multiple-car and unit-train rates from Most grain moving by barge originates on the country elevators direct to final destination, Mississippi River system, which includes the thus eliminating the stopover at transit Illinois and Ohio rivers. These rivers became locations. navigable when a system of locks and dams made the entire river system navigable at 9-foot Unit trains are a group of railcars shipped drafts in the 1930s. The major export locations from one origin to one destination on one bill served by barges are the Mississippi River ele- of lading and consist of 50 or more railcars. vators in New Orleans and the Pacific North- The unit-train concept eliminated the need to west ports that are served by the Columbia and stop at numerous elevators to pick up cars for Snake rivers. switching into a train. Turnaround time from All grain moving by barge must be trans- the country elevator was much faster for unit ported by truck or rail to barge-loading facil- trains than for single-car shipments. Thus, unit ities, unloaded, and then reloaded into the trains lowered costs of switching, fuel, and barge. Barge tows, consisting of 12 to 30 barges crews, and enabled companies to haul more pushed by a towboat, make the trip from barge grain with existing fleets. A portion of these loading facilities on the upper Mississippi to savings were passed onto shippers in the form export elevators in New Orleans in 15 to 25 of lower rates, which enabled rail companies days. to be more competitive, Barges are not self-unloading, so unloading By the mid-1970s, multiple-car and unit-train causes more grain damage than unloading hop- shipments became the standard method for per-type railcars. Typically barges are unloaded transporting corn and soybeans by rail. This by lowering into the barge a marine leg or ver- shift to large direct rail shipments reduced not tical belt with large buckets attached to scoop only grain transportation costs but also grain up the grain, When a barge is partially un- damage by eliminating unloading and reload- loaded, a small crawler tractor with a front-end ing at transit elevators. blade is lowered into the barge to push the re- 168 -—

maining grain to the marine leg to complete area. These can be collected and moved to the unloading. elevator based on quality demands of a particular shipment at specific times desired. Unload- The major advantages of barges over railcars ing railcars means extra work in dealing with are the large carrying capacity of barge tows individual smaller units and storing specific and the relatively low rates charged to trans- quantities in the facility. Also, switching rail- port grain to deep water ports in New Orleans. cars into the facility and removing empty cars Table 7-7 shows the range of rail and rail-to- is subject to the availability of train crews. This barge rates for grain shipped from central Iowa places the facility at the mercy of the rail com- to New Orleans. Rail rates decline as the size panies regarding delivery schedules when an of the shipment increases in both situations, entire export shipment is not in the facility. but are still higher than for barge shipments. Barge rates respond to supply and demand. By Ocean Vessei During the 1970s, barge rates fluctuated be- I tween 100 and 200 percent of the Merchants I In the 1960s, the Public Law 480 program I Exchange of St. Louis trading benchmarks. dominated grain exports. A substantial portion Even with barge rates at 200 percent of tariff, of these exports were shipped in small (10,000 however, the combined rail-to-barge rates are to 15,000 ton) vessels. Many of these were mul- I tipurpose vessels (’tween deckers) with several t sharply lower than rates on rail direct to New I I Orleans. The rail rate advantage only increases decks and small holds. Loading often caused ) with origins located closer to New Orleans. grain damage. To provide cargo and vessel stability and to obtain full utilization of capacity, Other advantages of barge movements are these vessels had to be trimmed, which involved that they can be used as an extension to the ex- throwing the grain under ledges and into port elevator for storage and that barges can corners of small holds, causing more grain dam- be marshaled and unloaded in the New Orleans age. These vessels were difficult to unload and area. Many export elevators in New Orleans I fumigate for the same reasons. are high-speed transfer facilities with limited storage that are equipped to unload barges rap- During the 1970s world prosperity increased

, idly, usually one per hour. These elevators cash export sales substantially. Importers and $ would be hard-pressed to unload the equiva- exporters shifted a high percentage of their lent amount of grain from railcars in an hour shipments to larger vessels (50,000 tons or more) and still maintain low-cost, high put through to gain lower per-ton shipping costs. These ves- rates. Barges with specific qualities and quan- sels are relatively easy to load and unload be- tities being stored on the river are controlled cause of their large open holds with rolltop by the grain companies in the New Orleans hatches and smooth sides, and thus create less grain damage than the “tween deckers.” Table 7-7.—Comparison of Rail and Rail. Barge Rates From Jefferson, Iowa, to New Orleans Grain can also be transported in tankers that in Dollars Per Ton are used primarily to ship oil. Loading tankers can damage grain, especially corn, because it Rail to Rail Clinton, 1A, must be loaded through a small opening, just direct barge to big enough for a person to enter, in the middle Size of to New New of each hold. In each opening there is a perma- Mode shipment Orleans Orleans nently affixed ladder. As grain is loaded, it Rail ...... 25-car $25.40 $7.20 50-car 23.60 6.60 bounces off the ladder, causing increased break- 75-car 21.40 6.00 age. Also, holds must be filled through very Barge at 100°/0 of tariff . . . 5.32 small openings at the corners to increase the 10.64 Barge at 200°/0 of tariff . . . hold’s capacity. Based on the location of these SOURCE: C.P. Baumel, “Alternative Grain Transportation and Distribution Tech- nologies and Their Impacts on Grain Quality, ” background paper pre- openings, grain may have to be thrown and pared for the Office of Technology Assessment, U S. Congress, Washington, DC, 1988. diverted into the opening. Unloading tankers 169 is more difficult and causes additional grain ply during shipment. This is because grain is damage because pneumatic unloaders are re- in fact being stored while in transit, quired. Several factors peculiar to grain transportation must be noted, however. The areas dis- Quality Problems That Arise cussed in the storage section as they pertain During Transport to solutions or preventive measures are not applicable to grain during shipment. For ex- The grain transportation and distribution sys- ample, no mode of transportation is equipped tem aims to move grain from the farmer to its with aeration, nor can grain temperatures and final destination at minimum cost, subject to corrective actions be taken during shipment. maintaining a specified level of grain quality. Therefore, moisture uniformity is critical to As figure 7-15 indicated, a large number of maintaining quality. Moisture migration can routes are available. Assuming a minimum of be more dramatic during shipment since grain two handlings (one in and one out) at each loca- can undergo several outside air temperature tion, grain might be handled six to eight times and humidity changes. This is especially true when moving through this system. This figure when grain is loaded in a cold climate and does not include the number of times grain is moved through warm water rather quickly to handled on the farm or within facilities. Thus, a warm, humid climate. the relationship between the transportation and distribution systems affects grain quality. Barge shipments appear to be more suscep- Changes in one system will require changes in tible than railcars to these influences, since the other. more time is spent in transit. One explanation is that railcars are more uniformly loaded than The grain distribution system, as currently barges in terms of moisture, as barge-loading organized, has large investments in duplicate facilities have fewer bins for segregating differ- and out-of-location facilities, which tends to in- ent moisture levels. Also, barges are primarily crease the number of handlings. The abandon- used to transport corn and soybeans, with mois- ment of a large number of branch rail lines dur- ture and damage at higher levels than in wheat. ing the 1970s left many country elevators Once grain is loaded into the mode of trans- without rail service. Most of these facilities, portation that will carry it to its destination, however, are still in operation. A substantial maintaining grain quality is out of human portion of grain received at these locations must control. be trucked to another facility that unloads, stores, and reloads the grain into railcars. At Grain travels up to 2,000 to 3,000 miles from least two handlings could be avoided if farmers the major grain-producing regions in the United delivered grain directly to facilities with rail States to ports. In the case of barge shipments, service. In effect, the facilities on abandoned up to 3 weeks might be spent in less-than- rail lines recreate the transit system for corn optimum storage conditions. Spoilage in barge and soybeans that caused additional breakage shipments to New Orleans have been found due due to increased handlings. (This is not as im- to high moisture levels in portions of the barges. portant for wheat, which is less affected by ex- This happened in less than 3 weeks. Vessels tra handling.) used to transport grain to foreign buyers can take up to 50 days, not including port delays Other than increased breakage during load- for unloading. This time increases the poten- ing and unloading, grain quality deteriorates tial for grain spoilage and has been the focus in shipment in much the same manner as it de- of several studies on grain quality and the ba- teriorates during storage. The negative impacts sis for many foreign complaints. on grain quality presented in the storage section of this chapter regarding moisture uniform- As discussed previously, as bulk grain is ity and migration, temperature and humidity, loaded, fine materials tend to accumulate in the insect invasion, and mold development also ap- center while the larger material tends to roll 170

to the sides. The impact that concentrations of Direct transfer from a barge to an ocean ves- fine materials (spoutlines) have on grain qual- sel can be accomplished with conventional un- ity can be minimized to some degree by mov- loading methods, marine legs, and movement ing the loading spout around so those materi- by belt to the ocean vessel. A second method als do not concentrate in one spot. This cannot involves floating rigs. Currently, nine floating be done in tankers. But no degree of spout rigs in the New Orleans area perform this serv- movement can completely eliminate the segre- ice. The cost, however, of direct transfer using gation of material in the hold of a vessel. floating rigs is higher than moving grain through export elevators, This creates some unusual problems beyond the effect fine materials have on quality. As vessels have gotten larger (for the reasons previ- Bagging ously discussed), foreign buyers are receiving quantities that must be divided for distribution Export bagging facilities are currently in to the ultimate users. Many times the entire place at export elevators in Corpus Christi and cargo is not reblended before being divided and Houston, TX, as well as in Pascagoula, MS. The distributed. This results in some users receiv- bagging operation consists of placing grain into ing higher quality (as defined by the average bags, sewing the bag shut, placing it on a pallet, and transferring the full pallet to a ware- I amount of fine material reported for the entire house on the dock for loading to a vessel. I shipment) and some receiving poorer quality, I I even though the entire cargo was within speci- Most of the export bagging is currently be- t fication. ing performed for Public Law 480 shipments of 1,000 to 4,000 tons per order. The cost is sub- I Transport Techniques That Protect stantially higher: Bagging, including moving full pallets to a warehouse and then loading Grain Quality them, costs about $27.30 per metric ton com- , pared with less than $1.00 for loading bulk grain I Identity Preservation Within I Ship Holds (8). Bagging grain at country or inland elevators and shipping the bags to a port for loading One of the problems associated with large would decrease the number of handlings. i bulk shipments is the nonuniform nature in a ship hold of the grain that will ultimately be distributed to several users. One way to over- Containers come this problem is to place a layer of burlap Since the mid-1970s, most of the manufac- or plastic cloth and plywood between individ- tured U.S. imports have been shipped in 20- ual portions. Some countries specify that indi- and 40-foot containers. A large share of these vidual portions destined for specific users be return empty to Japan, South Korea, and Tai- separated in this manner. wan. Special high-quality grains such as seeds and soybeans for human consumption have been Direct Transfer exported in these containers. However, little or no commercial-grade grains have been One method for reducing the number of grain shipped in containers. handlings is to transfer grain directly from one mode of transportation to another without un- The cost of shipping containerized grain is loading it into an elevator. For transfer from significantly higher than any of the current bulk a railcar or truck to a barge, direct transfer shipping technologies. One recent attempt to could involve unloading the railcar or truck into ship corn from Iowa in containers cost twice a pit and transferring the grain by belt directly as much as the least-cost bulk handling rate. into a barge, thus eliminating the elevator han- Grain loaded into containers at interior loca- dling. This method is currently being used in tions could be shipped overseas, thus reduc- some locations. ing a significant number of handlings (8). 171

Identity-Preserved Shipments quantity carried are the major determinants of the economic feasibility. The pipelines are The basic concept behind identity preserva- cheaper than unit trains on shipments less than tion is that individual grain shipments should miles and quantities in the range of 70 mil- not be comingled with others. Thus, the grain 300 lion to 80 million tons per year (8). The short shipped from a specific location in the United distances mean that shipments would be lim- States is the exact grain that the final user re- ited to river terminals for loading onto barges ceives. Any of the previously mentioned modifi- for shipment to a port. cations can be used for identity-preserved shipments. The associated costs are therefore Large volume requirements are unlikely to related to the type of transportation mode be available to any inland shipping elevator un- selected. Much discussion has taken place on less the grain is trucked or railed to the pipe- the merits of this concept, and several ship- line loading elevator. This would raise costs and ments have originated from interior locations number of handlings. Once grain is loaded into for delivery to importing countries with their a truck or railcar, usually the least cost method identities preserved. of transportation is to haul it directly to its destination. Emerging Technologies The final remaining possibility for pipelines Only two new transportation technologies or belts is to transfer grain very short distances could help preserve grain quality: capsule pipe- from large elevators to nearby export elevators lines and long-distance belts. The pipeline tech- or from export elevators to ocean vessels un- nology would move grain in capsules propelled able to reach the elevator because of shallow by air pressure, Long-distance belts would carry water, The widespread distribution of grain the grain gently from one point to another. supplies in the United States effectively rules out the use of these technologies for moving Recent studies on the economic feasibility of grain from country elevators. capsule pipelines indicate that distance and

CLEANING AND BLENDING TECHNOLOGIES

Cleaning and blending are operations at the CIeaning heart of many grain quality controversies. The Cleaning wheat in commercial handling fa- purpose of cleaning is to remove material other cilities is normally limited to removing dock- than grain, shriveled kernels, and broken pieces age, insects, and to a limited degree shrunken of kernels. Blending is the mixing of two or and broken kernels. In corn, cleaning regulates more grain lots to establish a quality different the amount of broken kernels and foreign ma- from either lot. Blending is performed by ex- terial; in soybeans, it controls the amount of porters, individual elevator managers, and pro- foreign material and split soybeans. The han- ducers to assure uniformity and increase prof- dling and harvest properties of each grain, its (33). Concerns over cleaning and blending along with the location of grain cleaners, dic- initiated the Grain Quality Improvement Act tate the amount of cleaning required to meet of 1986. In essence, many people believed that various contract specifications. For example, there was something inherently wrong about corn harvested at low levels of broken corn and reintroducing material that had been removed foreign material but high moisture must be from the grain. The act prohibits: 1) recombin- dried and, due to its inherent nature, it breaks ing or adding dockage, dust, or foreign mate- up during each handling. rial to any grain at export facilities; 2) blending different kinds of grain; and 3) adding Thus, cleaning corn to remove broken corn broken kernels from one grain to another. and foreign material is required at each han- .—

172

dling in order to meet contract specifications the throughput capacity needed for modern and avoid discounts. As most dockage in wheat bulk handling facilities. is generated during harvest, and as normal handling does not cause significant dockage in- The Official U.S. Grain Standards for corn creases, cleaning is not required each time and soybeans use particle size to discriminate wheat is handled. Soybeans, on the other hand, between whole and broken kernels and foreign fall somewhere in between regarding breakage material. In wheat, particle size separations and susceptibility and the amount of cleaning re- aspiration are used to separate all matter other quired at each handling. than wheat. This process does not distinguish between whole or broken kernels. The scalp- Data are not available on the number of ing process removes material considered to be cleaners on v. off farms. The number on farms foreign to grain (i.e., stems, chaff, cobs, etc.) is probably related to the particular crop, the and also does not distinguish between whole amount of on-farm storage, and the number of or broken grains. Screening removes smaller operations performed on the crop at the farm foreign matter, dirt, weed seeds, etc., but de- level. For example, most corn is stored and pending on screen size can also separate whole, dried on farm. In wheat, on the other hand, dry- broken, or split grains. ing is not required and the amount of dockage can be regulated by the combine. Therefore, When establishing screen sizes, the relation- I significantly fewer cleaners are probably found ship between removing unwanted foreign ma- on wheat then on corn farms. terial and removing broken, split, or shriveled I grains is important. Whenever grain is cleaned by screening to remove foreign material, screen I Principles of Cleaning size has an impact on the amount of broken I The most common types of cleaners are me- or shriveled grains that will ultimately pass chanical screening and scalping devices. Scal- through, but no matter what screen size is estab- I pers remove material larger than grain and al- lished, screens cannot remove everything. For I low the grain and fine material to pass through. corn, the common screen size is a 12/64-inch Smaller screens are used to retain the grain and round-hole sieve. This size has recently caused , allow small material to pass through. Screens much discussion since it removes a large per- i may be stationary, with grain flowing or being centage of broken kernels. It is generally agreed swept along them, or they may be shaken or that scalpers remove unwanted foreign mater- rotated. Cleaning grain using screen and scalp- ial, but much debate has centered on the value ing devices makes a particle size separation. of the broken grain removed at the same time. Screen sizes vary by commodity, but usually Since cleaning is intended to remove material coincide with the sieve sizes used in each Offi- that is lower in value than the remaining grain, cial U.S. Standard for Grain to define the re- setting screen size, especially in corn, is a bal- spective factors. ance between separating material that may have value from material that is of no value and that Other types of cleaning devices use aspira- may cause quality deterioration. tion. This separates grain from less dense material by drawing air over a falling grain stream A more recent discussion on setting screen and pulling the lighter material into a cyclone- size centers on the particle sizes that form type separator. In addition to removing fine ma- spoutlines. Recent studies have shown that terial, aspiration has also been found to be ef- crevices between kernels act like a screen. Fine fective in removing insects from wheat. Clean- particles small enough to fall into these crevices ers using gravity tables (seed weight separation) form spoutlines. One study found larger parti- and length graders (seed size separation) are cles in corn spoutlines than in soybean spout- used by seed conditioning plants. Screens and lines, and that spoutlines essentially do not ex- aspirators, however, are the only methods with ist in wheat. It concluded that the best screen 173 sizes for corn and soybeans would be ones that more biologically active than the sieve sizes cur- will remove all particles of a size to form rently being considered for inclusion in the Offi- spoutlines. cial Standards for Corn (8/64 and 6/64) (30). The debate continues, therefore, on what should be Aspiration, which is predominantly used to removed and how much, and the material’s re- clean wheat and in some areas has been used lationship to setting grade limits and its effect to remove insect infestations, has been effec- on storability. tive in removing the lighter, less dense material normally considered to be of no value. The Current Procedures problems associated with the percent and value of broken and shriveled kernels removed, there- Cleaners in commercial facilities are nor- fore, would appear to be less. However, den- mally placed after the final elevation, Clean- sity decreases with particle size (31,68), and ing, therefore, is performed during loadout un- aspiration cleaning will produce cleanings of less the grain is being cleaned to enhance dryer lower density than screen cleaning for the same performance or is going into storage. On-farm percentage of material removed. One study cleaning, when done, is primarily to improve found that low-density whole corn kernels are dryer performance. not of inferior feed value (28), but more recent Introducing clean grain to the dryer has the studies show that they are a detriment to mill- following advantages: 1) it results in more uni- ing operations (53). form airflow in the dryer and thus a more uni- Another study measured the nutritive value form moisture content of the dried grain, 2) it of various corn particle sizes (30) (table 7-8). No decreases the static pressure (airflow resistance) particle size discriminated by nutrient content, of the grain, thus increasing the airflow rate nor was nutrient content. dramatically reduced and dryer capacity, 3) it eliminates the drying with decreasing particle size. On the other of material that deleteriously affects final grain hand, the majority of the dust and inert mate- quality, and 4) it results in less air pollution (55), rial was concentrated in the sizes 8/64 inch and Obviously, cleaning before drying also has below, while weed seeds were mostly between some disadvantages. It requires additional in- the 10/64 and 6/64 size. vestments in cleaners, the handling of wet broken corn and fine material, and the rapid sale The relationship between screen size and the of wet, easily molding material: it also results value of the material removed is further com- in some dry matter loss. Although the advan- plicated by the fact that smaller particle sizes tages of precleaning wet grain are fairly well contain less available starch to support mold understood by dryer operators, most do not do growth (30), However, studies have also shown it. The quality of U.S. grain would improve sub- that concentrations of broken and fine mate- stantially if precleaning was adopted (21). rial are conducive to insect growth and reduce airflow during aeration. Broken corn between Commercial cleaning requires high flow the 16/64 and 8/64 sieves has been found to be rates. Gravity or vibrator screen cleaners with

Table 7-8.— Nutritive Value of Corn Fines, by Particle Size

Size range, 64th-inch Property Whole corn 15-12 12-10 10-8 8-6 6-4.5 <4.5 Protein, percent dry basis ...... 10.20 10.06 10.35 10.38 10.44 - 10.97 - 12.27 Oil, percent dry basis ...... 4,47 3.86 4.25 3.40 2.48 2.43 2.43 Fiber, percent dry basis ...... 2,24 2.34 2.64 2.85 3.51 4.24 5.91 Digestible energy, Kcal/lb...... 1,785.80 NA 1,717.30 1,691.50 1,660.50 1,631.90 1,610.80 — NA = not available. SOURCE L D HIII et al , Changes In Qualtty of Corn and Soybeans Between the United States and England Special Publlcatlon No 63 Agricultural Experiment Sta tlon, Unlverslty of Illlnols, Urbana, IL, 1981 174 capacities up to 40,000 bushels per hour are are not normally exceeded at the first point of the norm. The general configurations of clean- sale. As these commodities move through the ing systems are found in commercial facilities. marketing chain, however, they must be con- First, the entire grain stream can be passed tinually cleaned in order to meet grade limits. through the cleaner, with the throughput adjusted to produce the desired amount of mate- Wheat dockage levels delivered by the farmer rial in the cleaned product. Alternatively, the to the first point of sale are purchased, with grain stream can be overcleaned and the clean dockage being deductible as a reduction from out metered back as required. weight, Cleaning wheat to remove dockage at this point and throughout the marketing chain Second, the entire grain stream can be is therefore strictly a function of economics cleaned using a screen larger than the size re- and, in many instances, quality is better regu- quired. The cleanings can either be recleaned lated through blending instead. to remove smaller material or reintroduced directly. This option is particularly useful when In practice, four basic economic factors de- handling both corn and soybeans because it al- termine whether wheat should be cleaned or lows the facility to use corn screens, thus re- not: ducing the time and costs associated with 1. the cost of cleaning, changing screens. Third, the grain stream may 2. the price of screenings, be divided so that only part is cleaned and part 3. dockage levels, and left uncleaned, 4. the cost of transportation. All these designs are useful only if part or A 1987 publication by North Dakota State Uni- all of the grain exceeds desired levels. This may versity reported on the results of its yearly sur- not occur at the first point of sale. Studies on vey of elevator operators in that State (16). Of handling breakage indicate that for corn, about 168 elevator managers surveyed, 159 indicated 0.5 percent broken corn and foreign material, that wheat was cleaned prior to shipment. They as defined by a 12/64-inch round-hole sieve, is also indicated that incoming harvest wheat was created at each handling. This percentage could cleaned when dockage levels reached on aver- be higher or lower, depending on the particu- age 2.6 percent. Wheat shipments exceeding lar handling facility and the drying method. the 2.6 percent average were cleaned down to Breakage susceptibility in wheat is far less. an average 0.9 percent. After harvest, incom- Once inert material such as stems, pods, cobs, ing dockage exceeding an average 2.1 percent weed seeds, dirt, and chaff is cleaned out, no were cleaned down to an average 0.8 percent. further cleaning is required. However, depend- The North Dakota survey also indicated that ing on the type of grain and its susceptibility the cost of cleaning can range from 2 to 5 cents to breakage, breakage will occur at each han- per bushel, depending on cleaner capacities dling throughout the marketing chain. Thus (16), Since dockage is treated as a deduction corn and soybean cleaners are located through- to weight, transportation costs to the final des- out the marketing chain and in every export tination and price for cleanings are critical elevator, whereas wheat cleaners are located when determining the economics of cleaning. closer to the first point of sale and, except in Transportation rates as well as the price for a few instances, are not found at export ele- cleanings have decreased in the mid-1980s. vators. Multiple-car and unit-train shipments have re- The amount of cleaning is dictated by the lim- duced the cost of moving wheat from the North- its established by official grades, subsequent ern Plains States to the Pacific Northwest. discounts for particular factors, and storabil- When the cost of cleaning, transportation rates, ity. For corn and soybeans, official grade limits and the price of cleanings are evaluated, the 175 survey indicates that it is not economical to Several cleaners in Europe are arranged to clean wheat in these areas unless dockage levels use centrifugal force rather than vibratory mo- exceed 2 percent. tion or impact to cause screen separation. The one offered in the United States also has aspi- The amount of grain cleaning prior to stor- ration before the screens. The principle was age revolves around the risk of grain deterio- designed to preclean wet grain before drying. ration as a result of mold and insect invasions With the majority of corn being dried on-farm, and the costs associated with maintaining qualit is doubtful that a moderate capacity (4,000 ity. The effects of mold and insects on grain to 10,000 bushels per hour) cleaner will pene- quality, along with technologies used to main- trate the commercial market. However, it is a tain quality, are discussed in the section deal- viable concept for preparation of specialty ship- ing with storage and handling technologies. ments and might be useful to clean corn after commercial drying. Fine material segregates in spoutlines, as discussed in other sections of this chapter. Hall Rapid sensing systems for physical proper- (25) found that materials that pass through a ties open possibilities for on-line control of 12/64-inch round-hole sieve segregate in spout- cleaning systems. No commercial devices of lines, while larger pieces rolled with the whole this type are available, but investigative work corn to the sides, This phenomena affects aer- is being done. ation since fine materials have higher airflow resistance than whole kernels, and the air Blending detours around them, commonly causing over- aeration. Blending can be defined as mixing two or more grain lots to establish an overall quality Several other investigations on the effect of that may or may not be different from any one corn particle size on aeration have been con- individual lot. Blending occurs for three ducted. Small pieces (12/64 inch in diameter reasons: and smaller) cause the most increase in airflow resistance during aeration, and the finer the 1. there are economic incentives for grain to particles, the more the resistance. However, the beat a specific quality, no better or worse; level of broken corn and foreign material 2. the uniformity of the reblended product present in the grain mass can also have an im- makes it better suited for handling, stor- pact. Even though the impact of cleaning on age, or utilization; and dryer performance and storage technologies is 3. sometimes an aspect of a particular proc- well known, moisture content is the principal ess requires a specific quality or range of factor in decisions regarding storability and quality in preference to other possible qual- dryer performance, not cleaning. ities. Except for factors such as protein and falling New and Emerging Technologies number in wheat, the present U.S. marketing system does not normally emphasize user prop- Aspiration cleaning is a relatively new tech- erties, so the first two explanations are the most nology being used in some wheat-producing applicable. However, as more user properties areas to clean grain and remove insects. Mul- (e.g., protein, oil, and starch) become trading tipass systems, in which grain is aspirated sev- factors, situations will occur when a blended eral times at progressively increasing air ve- product will be more valuable to the user. locities, have improved efficiency. Aspiration cleaning will become more prevalent if clearly The central issue in blending is whether it demonstrated to be capable of cleaning at nor- has a positive or negative impact. The list of mal production handling rates. important quality factors can be divided into 176 two categories: those that are defects (or will mandatory targets, growers in some areas will cause defects) and those that are specially tied face discounts relative to growers elsewhere, to individual end use. The line is not always clear, but defect factors are of negative value The basic mathematics of blending are rela- to all users whereas user-sensitive factors will tively simple. The quality of a blend is the be evaluated differently, even oppositely, by weighted average of the qualities being blended. different users. Primary examples of defect fac- The application is straightforward when two tors are foreign material and damaged kernels. or fewer are involved. If several characteris- As all defect factors have negative value, blend- tics have economic value, however, then a prof- ing these factors will not improve the value of it function must be set up in terms of all rele- grain (29). vant factors. The optimum blending proportion is the one that yields maximum profit. Many Blending can be neutral or even beneficial other considerations—storage space, market ex- for user-sensitive factors such as protein in pectations, shiploading plans, and so on—must wheat. If the value of factors can be determined be included. Linear program methods have on a linear continuous scale (e. g., protein in been used to analyze complex blending wheat and soybeans and oil in soybeans), then problems (4 I). deliberate blending will neither help nor hurt. However, if the premium scale is not propor- If more than one factor is being controlled, tionally sensitive, then blending may may not then the blend is most easily optimized if the be beneficial. Processes may also have to be ad- one quality factor is concentrated in all grain justed to make the most use of varying quali- lots used in the blend. This minimizes the ef- ties (e.g., steeping time in wet milling or pro- fect of blending for that factor and allows con- tein in wheat milling), which means that centration on the others. When the levels for uniformity within the shipment as evidenced the factor are low, then concentrating on the by test results clustered around some mean individual factor being blended will minimize value will be preferred to random distributions. the number of secondary streams. This explains why cleaning and relending broken grains and/ or foreign material is preferred over blend- Principles of Blending ing two grain streams of differing percentages. Many States contribute to national wheat, It is also easier to hold a uniform blend when corn, and soybean production. Weather, genet- controlling a small flow rate of pure foreign ics, and agronomic differences virtually assure material, pure damage, or clean, high-moisture quality differences within and across crop years grain. and contribute to the lack of uniformity within U.S. grain-handling facilities are designed to a particular grain. These differences exist for store large masses of relatively uniform grain whatever factors are used to describe quality. of some intermediate quality, with small spe- For example, if an importer were to purchase wheat today, the shipment could be comingled cial storage for lots concentrated in one qual- with a multitude of varieties, from several ity factor (high moisture, high damage, high pro- regions, covering several crop years. tein, etc.), although to a lesser degree in spring and Durum wheat-producing areas. This is pos- As intrinsic factors start to be measured and sible because the most heavily traded grades taken into account in the marketplace, the allow the majority of the grain to fall within regionality problem will be magnified. Figure broad limits and thus be stored en masse. As 7-16 presents data on regional soybean protein additional quality factors are introduced, this and oil. Blending will have to occur if fixed design and management philosophy will pre- specifications are set. If soybean protein and sent more difficulties, since there will be more oil are priced on a continuous scale with no factors to consider in profit maximization. In- 177

Figure 7-16.–U.S. Soybean Quality by Region, 1986

SOURCE. American Soybean Association, 1987 trinsic factors cannot be as readily concentrated or manipulated as physical factors. markets is 14 percent, In the Pacific Northwest, protein premiums of 3 cents were being paid Current Procedures for each 0.25 percent over the base, whereas 6-cent discounts were applied to shipments un- Premiums and discounts can encourage or der the base, At the same time, in the Min- discourage blending and are set by merchants neapolis market premiums of 5 cents were paid subject to buyers’ needs and supply conditions. for every 0.2 percent over the base with dis- For example, high-damage corn is more likely counts of 3 cents being applied for shipments to be directed to export for blending into No. under the base. With such a schedule, a ship- 3 than to a domestic processor buying No. Z. per would be better off blending protein levels Likewise, poorer quality soybeans are more apt for shipment to the Pacific Northwest and ship- to fit in No. 2 export cargoes than in No. 1 pur- ping 13 and 15 percent shipments separately chases by domestic processors. On the other to the Minneapolis market. hand, protein in wheat can be directed to either the domestic or the export market using pro- Grain handlers do not solve complex mathe- tein premiums and discounts. matical formulas to adjust blending proportions A case in point is protein content in spring as they move grain. Table 7-9 shows a typical wheat using March 1988 protein premiums and example of four soybean lots being combined discounts in both the Pacific Northwest and to make a U.S. No. 2 grade. The equal-propor- Minneapolis markets. The base protein value tions blend would not necessarily be the high- 178

Table 7.9.—Blending of Four Soybean Lots to Make U.S. No. 2, Maximum 13% Moisture

Moisture Damage Value a Lot (percent) (percent) (dollars per bushel) 11.5 1.0 1.0 6.00 2 ...... 14.5 1.2 1.0 5.82 3 ...... 12.5 1.0 5.0 5.94 4 ...... 11.5 4.0 1.0 5.88 Average value ...... 5.91 Blend of equal proportions...... 12.5 1.8 2.0 6.00 Contract specification . . . 13.0 2.0 3.0 6.00 aga~ed on typical d~gcount schedules relative to U.S. NO. 2. base Price of *.~/b”.

SOURCE: C.R. Hurburgh, “The Interaction of Corn and Soybean Quaiity With Grain Storage,” background paper prepared for the Office of Technology Assessment, U.S. Congress, Washington, DC, 1988.

est profit one, but is quite common. If the for- Quality Factors Affected by Blending eign material were removed and reblended as Moisture.—The primary reason for moisture pure foreign material, more wet soybeans (lot blending is purely economic, and it is most com- Z) and more damaged beans (lot 3) could be mon at interior locations where high-moisture blended without exceeding specifications. Like- grain is more available. Handlers and growers wise, if lot 3 were more concentrated in dam- routinely capitalize on cold weather to store age, it would exert more effect on the damage moderate-moisture corn (up to 20 percent) and percentage and less on other factors. Overall, I soybeans (up to 15 percent). Furthermore, car- however, profits from blending are possible ryover stocks from previous years are usually I only if the average quality of grain normally much drier than market limits, offering an op- exceeds specifications. The closer the specifica- portunity for blending with fresh wet grain tions are to the available average quality, the from the field at harvest. Moisture blending can less the potential for blending. cause grain deterioration, as discussed in the storage and humidity technologies section of Operationally, blending is accomplished with this chapter. varying degrees of sophistication. At export, barge, and major inland terminals, grain is con- Particle Size.—Blending for particle size fac- tinuously sampled with a mechanical diverter tors has stirred the most controversy because as it is being loaded. Samples are analyzed and these include dockage, foreign material, and changes to the mix can be made. Generally, the dust. As discussed in the cleaning section, corn facility manager will target quality somewhat and soybeans break during each handling, cre- better than the specifications to protect against ating foreign material and dust. This is com- the chance that normal variability in loading, pounded by the fact that corn breakage suscep- sampling, and analysis will yield a result ex- tibility increases about 40 percent for each ceeding specifications. 1-percent reduction in moisture (19). Soybean breakage susceptibility increases 22 percent for Modern facilities have proportioning gates each l-percent reduction in moisture (32). that control the flow of individual qualities to Breakage is not the critical factor in wheat. the blend. If the facility is equipped for any of However, since dockage in many areas of the the cleaning/reblending options discussed in country is not removed, each handling gener- the cleaning section, cleaner throughput and ates dust, which is collected. Therefore, blend- relending rates will also be controlled from ing of these factors is essentially a defensive the loadout control center. Older facilities do operation to minimize the economic effects of not have continuous sampling and automated constant handling, breakage, and dust gen- flow control. eration. 179

As mentioned in other sections of this chap- cause normal damage levels are less than alter, as grain is loaded, fine material concen- lowed in specifications. Corn is harvested with trates in the center of a grain mass and uni- about 2 percent damaged kernels, soybeans nor- formly blended grain streams will not stay mally with less than 0.5 percent, and wheat well uniform once loaded because fine material within the limits of No. 1 (2.0 percent). Grade segregates. No amount of blending will elimi- limits for damaged kernels in export shipments nate this problem. of No. 3 corn (7 percent), No. 2 soybeans (3 percent), and No. 2 wheat (4 percent) are wide Kernel Damage.—Blending damaged kernels enough to accommodate blending of any un- is a purely economic operation that exists be- usual or storage-damaged lots.

INTERACTIONS/FINDINGS AND CONCLUSIONS

Grain is a living, breathing organism and as erally recommended not to harvest until the such is a perishable commodity with a finite corn has field-dried to 26 percent moisture. shelf life. The best harvesting, drying, storing, However, obtaining a 26 percent moisture in handling, and transporting technologies in the the Northern States is not possible during wet world cannot increase quality once grain is har- fall harvest periods, and corn must be harvested vested. Each technology is a self-sustaining at higher moisture contents or it will not get operation, but the way each is used affects the harvested at all, ability of the others to maintain quality. For ex- Since cereal grains and oilseeds are harvested ample, if grain is harvested wet, not only will in the United States at moisture levels that are this lead to increased breakage during harvest- too high for long-term storage or even short- ing, but it means the grain must be dried. Im- term storage and transportation, these com- properly used dryers means more breakage and modities must be dried to acceptable moisture nonuniform moisture content. Moisture con- levels. Corn, harvested at 20 to 30 percent mois- tent, uniformity of moisture content, and the ture, must be dried to 14 to 15 percent for safe amount of broken grain and fine materials af- storage. Wheat and soybean harvest moistures fects storability and can have an impact on the are substantially lower, with their safe storage technologies used to maintain quality during levels marginally lower than harvest moisture. storage. Therefore decisions made at harvest, In certain regions of the United States, wheat as well as at each step thereafter, influence the dries naturally in the field. In some cases this system’s ability to maintain and deliver a qual- is also true for soybeans. ity product, The process of drying has a greater influence As discussed throughout this chapter, grain on grain quality than all other grain-handling moisture and amount of broken grain and fine operations combined. For superior grain qual- materials stand out as the two critical factors ity, it is imperative to optimize dryer type and affecting the performance of each technology. operation since half the corn crop is dried in continuous-flow, portable batch, and batch-in- bin dryers of the crossflow type. Of particular concern is the increase in breakage of corn and Moisture at harvest directly affects the soybeans and the decrease in milling quality amount of kernel damage produced through of wheat. Artificial drying of wheat and soy- combining. For corn, physiological maturity is beans, however, is not frequently required. obtained at about 30 to 35 percent moisture. Although corn can be harvested at this point, The main dryer operating factors affecting it is damaging to the kernel’s soft pericarp and grain quality are air temperature, grain veloc- is not recommended. In the Midwest, it is gen- ity, and airflow rate. Operators can adjust the 180 first two on every dryer and, on some units, ture levels. That is why wheat and soybeans can adjust all three. Collectively, the three con- cannot be stored at the same moisture content ditions determine the drying rate and maximum as corn. In the case of controlling insects, high temperature of the grain being dried, and thus moisture contents increases absorption of establish the quality of the dried lot. fumigants such as methyl bromide, requires an increase in dosage, and accelerates the break- Over 80 percent of the United States corn down of protective treatments such as malathion. crop is dried on farms. On-farm dryers fall into three categories—bin, non-bin, and combina- The equipment and methods used to fill a stor- tion dryers. Bin dryers are in general low- age bin affect the performance of aeration sys- capacity, low-temperature systems, able to pro- tems used to control the effects of moisture/tem- duce excellent quality grain. Non-bin dryers, perature/humidity. Dropping grain into the the most popular dryer type, are high-capacity, center of a bin causes a cone to develop, with high-temperature systems that frequently over- the lighter, less dense material concentrating heat and overdry the grain, and thereby cause in the center (in spoutlines) while the heavier, serious grain-quality deterioration. Combina- denser material flows to the sides. This impedes tion drying combines the advantages of both airflow during aeration, and molds can begin systems (i.e., high capacity and high quality) to grow almost immediately. but requires additional investment, and is In large horizontal storage areas, loading logistically more complicated. A switch by from the center or from a loader that is grad- farmers from non-bin to combination drying ually moved backward through the center of would significantly improve U.S. corn quality, the building as the pile is formed causes simi- Off-farm dryers fall into three classes— lar problems, If grain is piled over each aera- crossflow, concurrent-flow, and mixed-flow tion duct on the floor by moving the loading dryers. All are high-capacity, high-temperature device back and forth, airflow will be greatly units. In the United States, crossflow models increased. However, airflow distribution is not are the most prevalent; they dry the grain non- as uniform as in upright bins. Some methods uniformly and cause excessive stress-cracking of filling piles also result in fine materials con- of the grain kernels. Mixed-flow dryers are com- centrating in local areas. These accumulations mon in other major grain-producing countries; are more subject to insect and mold growth, the grain is dried more uniformly in these, and and they divert airflow. But piles are difficult is usually of higher quality than that dried in to aerate, and the shape of some restricts uni- crossflow models. Concurrent-flow dryers have form airflow. the advantage of producing the best quality Nonuniform moisture levels can lead to spoil- grain; their disadvantages are the relatively high age in localized areas within a storage facility. initial cost and the newness of the technology. Even assuming that moisture and temperature A change from crossflow to mixedflow/concur- are uniform within a grain mass, they will not rent-flow dryers will benefit U.S. grain quality. remain so over time. Moisture will migrate in response to temperature differentials. If the out- Moisture content and uniformity within a side air is warmer than the grain, the circula- storage facility are critical to maintaining grain tion reverses, and the area of condensation is quality, as demonstrated by the Allowable Stor- several feet under the grain surface, but still age Time Table for corn. The interaction be- in the center. tween moisture, temperature, and relative humidity spurs mold growth, increases insect The effect of moisture migration on storage activity, and causes other quality losses. Basi- is that grain assumed to be in a storable condi- cally, grain moisture in equilibrium with 65 per- tion will not be. Cold weather migration pri- cent relative humidity will support mold ac- marily affects grain in land-based storage, caus- tivity, but different grains will create the ing deterioration as temperatures rise in the equilibrium relative humidity at different mois- spring. Warm weather migration is particularly 181

vexing for grain in transit both from cold to warm wet climate is conducive to weed growth, warm areas of the United States and from the The amount of weeds affects not only yield, but United States through warm waters to foreign also the amount of foreign material present in buyers, A barge or ocean vessel is basically a the harvested grain and the combine’s ability storage bin and will experience the same migra- to remove this material. tion phenomena as land-based storage facilities. Combines are being modified to improve per- Broken Grain and Fine Materials formance in weedy fields. In the case of wheat, kernel size has been decreasing, which com- Three factors—cylinder speed, moisture at plicates this modification. The trend toward the time of harvest, and amount of grain smaller kernel size is a concern because the damage—are interrelated. In general, whenever seeds of most grassy weeds are smaller and grain is harvested, damage or breakage occurs. lighter than wheat, Thus, smaller wheat ker- However, grain damage is much greater in each nel size reduces the margin between wheat and case on extremely wet or extremely dry grain. weed size and, therefore, increases the diffi- When grain is harvested at high moisture levels, culty of cleaning within the combine. the kernel is soft and pliable. Moist kernels deform easily when a force or impact is applied, As discussed in the drying technology sec- and greater force is needed to thresh wet ker- tion, rapidly drying moist grain with heated air nels than dry ones, Thus, wet kernels suffer causes stress cracking. The drying operation more damage than drier kernels. However, itself does not cause grain breakage, but can drier kernels can break when the same force make grain more susceptible to breakage in is applied. Therefore, optimal conditions exist later handlings. Cleaning grain before it reaches for each grain. the dryer can improve dryer efficiency. Intro- ducing clean grain to the dryer: In addition to grain breakage due to moisture content, factors such as weed control and ● results in a more uniform airflow in the kernel density, especially in wheat, also affect dryer and thus a more uniform moisture a combine’s ability to harvest and deliver clean content of the dried grain; grain. Cutting below the lowest pod or wheat ● decreases the static pressure (airflow re- head inadvertently introduces some soil into sistance) of the grain, thus increasing the the combine. Most soil is aspirated from the airflow rate and dryer capacity; and rear unless there are soil particles about the ● eliminates the drying of material that same size as the kernel, in which case they pass detracts from final grain quality, through the cleaning sieves with the grain. Obviously, precleaning also has disadvantages. Harvesting technologies normally remove It requires additional investments in cleaners, material larger than the grain (such as plant the handling of wet broken corn and fine ma- parts) and material significantly smaller (like terial, and the rapid sale of wet, easily molding sand and dirt). Sloping terrain, however, can material, and it results in some dry matter loss. affect this process. Side slopes also create prob- Although the advantages of precleaning wet lems since the tendency is for material to con- grain are fairly well understood by dryer oper- gregate on the downhill side of the cleaning ators, most do not preclean. The quality of U.S. shoe. grain would improve substantially if precleaning were adopted, The main factor affecting the combine’s cleaning performance is the amount and type Mechanical damage during handling results of weeds present in the field during harvest. in grain breakage, which produces broken grain Weed control is one of the most serious prob- and fine materials, This causes a decrease in lems facing many wheat producers in the quality, greater storage problems, and an in- United States. This is also true for Southeast- crease in the rate at which mold and insects ern U.S. soybean-producing areas, where a invade stored grain, —

182

Research has shown that breakage in han- Ability of System to Maintain dling is more significant for corn than for wheat Quality and soybeans. Higher moisture content and higher temperatures prove to be the optimum Technologies are in place to harvest, main- conditions to minimize breakage but are oppo- tain, and deliver quality grain. Each technol- site of the optimum safe storage moisture and ogy must be used, however, in a manner con- temperature. The effect of repeated handlings ducive to maintaining grain quality. on grain breakage is cumulative and remains Although data indicate that nearly any com- constant each time grain is handled or dropped. bine can deliver acceptable quality, farmer- This is true whether or not broken material is operated combines tend to have higher levels removed before subsequent handlings. of grain damage than the combine should de- The impact of grain breakage and fine mate- liver. From a technology standpoint two areas rials on all aspects of the system has resulted need emphasis: in the need to clean grain. Cleaning wheat in 1. greater education efforts to help operators commercial handling facilities is normally better understand the interactions of cyl- limited to removing dockage, insects, and to inder/rotor speed, concave openings, fan a limited degree shrunken and broken kernels. speed, and sieve openings with grain qual- For corn, cleaning regulates the amount of bro- ity and grain losses; and ken kernels and foreign material, and for soy- 2. more monitoring devices and possible beans, the amount of foreign material and split automatic controls on combines-to help soybeans. operators adjust or fine tune the combine. Cleaning corn to remove broken corn and for- Weed control and its relationship to kernel eign material is required at each handling in size and density are critical to optimum com- order to meet contract specifications and avoid bine performance. Unless new technologies ad- discounts. For wheat, however, the majority of dressing this area are developed or better weed the dockage is generated during harvest and control measures for use by the farmer are normal handling does not cause significant in- forthcoming, the combine’s ability to harvest creases. Therefore, cleaning is not required at and clean grain will continue to present each handling. Soybeans, on the other hand, problems. fall somewhere in between regarding their A significant improvement in grain quality breakage susceptibility and the amount of cleaning required at each handling. can be obtained by optimizing the dryer operating conditions of existing crossflow dryers, The amount of grain cleaning prior to stor- by precleaning wet grain, by selecting the best age involves the factors of risk to grain deteri- grain genotypes, and by installing automatic oration as a result of mold and insect invasions dryer controllers. and the costs associated with maintaining qual- Molds will grow on any kernel or group of ity. In the case of fumigation: broken grains, kernels that provide the right conditions. There- grain dust, and other fine materials have the fore, moisture content and moisture uniform- greatest effect on the performance of insect con- ity within storage facilities are critical to trol interventions. When a protective treatment maintaining grain quality. Maintaining low is applied, grain dust may absorb much of the temperatures and moisture levels in grain are insecticide, which reduces the effectiveness. the principal ways to preserve grain quality and Likewise when a fumigant is applied, concen- prevent damage from molds and insects. Aer- trations of dust and fine material may require ation is also a very effective tool. The rate of increased dosages to penetrate the grain mass. development of both molds and insects is Dust also inhibits penetration of fumigant gases greatly reduced as temperature is lowered. and causes the gas to channel so that penetration is slow or stopped in certain parts of the Many storage bins, especially on the farm, grain mass. are equipped with aeration systems that are . . . - . .- . —

183

often not used effectively. Farm storage bins, storage facilities are inadequate to receive an especially smaller and older ones, often are not insect control treatment. Therefore, when grain aerated. Small bins will cool or warm with the that has not received a properly applied treat- changing season quickly enough that moisture ment is marketed, it becomes mixed with nonin- condensation may not be a serious problem, fested grain and magnifies the problem, thus A majority of farm aeration systems are either creating greater loss and the need for more ex- not operated at all or not used enough. The most pensive and time-consuming remedies, common problem is not running the fans long The high-speed, low-cost U.S. grain system enough to bring the entire grain mass to a uni- does not readily accommodate special quality form temperature level. If a cooling front is needs. While these needs can be met by slow- moved through only part of the grain, a mois- ing belt speed, installing and using cleaning ture condensation problem is likely at the point equipment, eliminating unneeded handlings, where the warm and cold grain meet. and preserving the identity of grain, most of In addition to aeration, the turning and trans- these actions increase costs. fer process mixes grain and contributes to a All the factors affecting quality just discussed more uniform moisture and temperature. In fa- —nonuniform moisture, moisture migration, cilities not equipped with aeration, turning has temperature and humidity, insect invasion, and been the traditional means of grain cooling. mold development—have an impact on grain However, turning requires much more energy quality during shipment. No mode of transpor- to cool grain than aeration does, and it can con- tation is equipped with aeration, nor can grain tribute to physical damage by breaking the temperatures and corrective actions be taken kernel, during shipment. And moisture migration can Turning grain cannot be performed in hori- be more dramatic during shipment since grain zontal or pile storages because of the difficulty can undergo several outside air temperature in unloading and moving the grain. In order and humidity changes, This is especially true to turn grain, a handling system must have when grain is loaded in a cold climate and trans- empty bins connected by a conveying system. ported through warm water rather quickly to This is not the case on most farms. a warm humid climate. Therefore, moisture uniformity is critical to maintaining quality dur- Most grain storage facilities provide a natu- ing shipments. ral habitat for stored-grain insects even when the facility is empty. Grain residue in floor The interactions between technologies re- cracks and crevices, wall and ceiling voids, and garding moisture content and breakage on grain ledges provide an ample supply of food to sus- quality are evident. Each technology is capa- tain several insect species. Thorough cleaning ble of preserving grain quality. Once inert ma- is the first and most effective step toward pre- terial such as weed seeds, dirt, stems, cobs, and venting insect infestation of freshly harvested so on are cleaned out of grain, no further clean- grain. Because insects live from season to sea- ing is required. But grain, especially corn, must son, cleaning and removing trash and litter is be cleaned to overcome breakage due to han- important. Also, a thorough cleaning should dling in the system and is inevitable. Once grain precede any insecticidal treatment of storage quality deteriorates at any step in the process, facilities if the full value of the treatment is to it can never be recovered. As demonstrated by be expected. the Allowable Storage Time Table for corn, shelf life is a time line with a certain share ex- For several reasons—such as remoteness of pended at each storage condition, Once this farm storage facilities, small amounts of grain time has passed, there is no way to recover what to be treated, and lack of information—farm has been lost. 184

CHAPTER 7 REFERENCES

1. Agricultural Statistics Board, “Grain Stocks,” 15. Christensen, C. M., and Meronuck, R. A., “QuaZ- NASS, U.S. Department of Agriculture, Wash- ity Maintenance in Stored Grains and Oilseeds ington, DC, January 1988. (Minneapolis, MN: University of Minnesota Z. Anderson, J. C., “Performance Evaluation of Press, 1986), Commercial Crossflow and Concurrent-flow 16. Clew, B. B., Wilson, W. W., and Heilman, R., Grain Drying,” MS Thesis, Michigan State “Pricing and Marketing Practices for North University, East Lansing, MI, 1985. Dakota Durum and HRS Wheat 1986 Crop 3. Association of American Railroads, The Grain Year,” Agricultural Economics Miscellaneous Book 1986 (Washington, DC: 1987). Report No. 105, Department of Agricultural Eco- 4, Bakker-Arkema, F. W., “Selected Topics of Crop nomics, North Dakota State University, Fargo, Processing and Storage,” JowmaZ of AgricuZturaZ ND, April 1987, Engineering Research 30(1):1-22, 1984. 17. DeHoff, T. W,, et al., “Corn Quality in Barge 5. Bakker-Arkema, F. W., “Grain Handling and Shipment, ” Transaction of ASAE 27:259-264, Storage: Drying,” Grain Elevator and Process- 1984. ing Society, Paper No. 85-07, Minneapolis, MN, 18. Downs, H. W., et al., “Strip Control of Volun- 1985. teer Wheat and Other Weeds in Conservation 6. Bakker-Arkema, F. W., “Grain Drying Technol- Tillage,” ASAE Paper No. 85-1518, 1985, ogy, ” background paper prepared for the Office 19. Dutta, P. K., “Effects of Moisture Drying Meth- of Technology Assessment, U.S. Congress, ods and Variety on Breakage Susceptibility of Washington, DC, 1988. Shelled Corn as Measured by the Wisconsin 7. Barak, A. V., and Harein, P. K., “Losses Associ- Breakage Tester,” Ph.D Thesis, Iowa State ated With Insect Infestation of Farm Stored University, Ames, IA, 1987. Shelled Corn and Wheat in Minnesota, ” Mis- 20. Foster, G. H., and Holman, L. E., “Grain Break- cellaneous Publication No. 12, University of age Caused by Commercial Handling Methods, ” Minnesota, 1981. Marketing Research Report 968, Agricultural 8. Baumel, C. P., “Alternative Grain Transporta- Research Service, U.S. Department of Agricul- tion and Distribution Technologies and Their ture, Washington, DC, 1973. Impacts on Grain Quality,” background paper 21. Gilbert, G., “Grain Handling and Storage- prepared for the Office of Technology Assess- Quality Control With Aspiration,” Proceedings ment, U.S. Congress, Washington, DC, 1988. of Szth conference of GEAPS: 51-57, 1986. 9. Bond, E. J., “Manual of Fumigation for Insect 22. Gillenwater, H. B., and Burden, G. S., Control,” Plant Production and Protection, Pa- “Pyrethrum for Control of Household and per No. 54, U.N. Food and Agriculture Orga- Stored-Product Insects, ” Pyrethrum: The Nat- nization, Rome, 1984. ural Insecticide, J.E. Casida (cd.) (New York, NY: 10. Borsa, J., “Grain Irradiation: Philosophical, Academic Press, Inc., 1973), Technical and Economic Perspectives, ” VVork- 23. Gillenwater, H. B., and Davis, R., “Fumigation ing Group on Control of Stored Grain Pests, and Other Insect Management Interventions, ” Newsletter No. 2, March 1987. background paper prepared for the Office of 11. Brizgis, L. J,, et al., “Automatic Cyclinder Speed Technology Assessment, U.S. Congress, Wash- Control for Combines, ” Transaction of ASAE ington, DC, 1988. 23:1066-1071, 1075, 1980. 24, Gustafson, R. J., et al., “Study of Efficiency and 12. Brooker, D, B., Bakker-Arkema, F. W., and Hall, Quality Variations for Crossflow Drying of C. W., Drying CereaZ Grains (Westport, CT: AVI Corn,” ASAE Paper No. 81-3013, 1981. Publishing Co., 1974). 25. Hall, G. E., “Broken Corn in Grain Handling,” 13. Champ, B. R., and Dyte, C. E., “Report of the Proceedings: Ssth Technical Conference, Grain FAO Global Survey of Pesticide Susceptibility Elevators and Processing Society, Minneapolis, of Stored-Grain Pests, ” Production and Protec- MN, 1987. tion, Paper No. 5, U.N. Food and Agriculture 26. Harein, P. K., “Chemical Control Alternatives Organization, Rome, 1976. for Stored-Product Insects,” Storage of Cereal 14. Christensen, C. M., and Kaufman, H. H., Grain Grains and Their Products, C.M. Christensen Storage: The RoZe of Fungi in Quality Loss (Min- (cd.) (St. Paul, MN: American Association of neapolis, MN: University of Minnesota Press, Cereal Chemists, Inc., 1982). 1969). 27. Harein, P., et al., “1984 Review of Minnesota 185

Stored Grain Management Practices,” Univer- University of Hohenhein, Stuttgart, West Ger- sity of Minnesota Experimental Station Bulle- many, 1980.

tin AD-SB-2705, 1985. 41( Ladd, G. W., and Martin, M., “Prices and De- 28. Hill, G., and Hill, L. D., “Test Weight as a Grad- mands for Input Characteristics, ” American ing Factor for Shelled Corn, ” AERR-124, De- [ournal of Agricultural Economics 58:21-30, partment of Agricultural Economics, University 1976. of Illinois, Urbana, IL, 1974. 42( Lloyd, C. J., and Hewlett, P. S., “Relative Suscep- 29, Hill, L. D., “Principles for Evaluating Present tibility to Pyrethrum in Oil of Coleoptera and and Future Grain Grades, ” Paper 85 E-329, De- Lepidoptera Infesting Stored Products, ” Bulle- partment of Agricultural Economics, University tin of Entomology Research 49(1):177-185, 1958. of Illinois, Urbana, IL, 1985. 43, Maness, J. E,, “Maintaining Grain Quality 30. Hill, L. D., et al., “Changes in Quality of Corn Through Good Handling Practices, ” National and Soybeans Between the United States and Grain and Feed Association, Washington, DC, England, ” Special Publication No. 63, Agricul- 1976. tural Experimental Station, University of 11- 44, May, R. M., “Food Lost to Pests,” Nature linois, Urbana, IL, 1981. 267:669, 1977. 31. Hurburgh, C. R., “Particle Size Characteristics 458 McWhorter, G. C., and Anderson, J. M., “Hemp of Unit-Train and Barge Corn Shipments, ” De- Sesbania Competition in Soy beans,” Weed Sci- partment of Agricultural Engineering, Iowa ence 27(1):58-63, 1979. State University, Ames, IA, 1986. 46. Nellist, M. E., personal communication with 32 Hurburgh, C. R., “The Interaction of Corn and F,W. Bakker-Arkema, National Institute of Agri- Soybean Quality With Grain Storage, ” back- cultural Engineering, Silsoe, UK, 1985. - ground paper prepared for the Office of Tech- 47. Newberry, R. S., et al., “Soybean Quality With nology Assessment, U.S. Congress, Washington, Rotary and Conventional Treshing,” Trans- DC, 1988, action of ASAE 23:303-308, 1980, 33. Hurburgh, C. R., “Cleaning and Blending of 48. Nolte, B. H., and Byg, D. M,, “Timely Field Oper- Corn and Soybeans, ” background paper pre- ations for Corn and Soybeans in Ohio, ” Coop- pared for the Office of Technology Assessment, erative Extension Service Bulletin 605, Ohio U.S. Congress, Washington, DC, 1988. State University, Columbus, OH, 1976, 34. Hurburgh, C. R., and Hazen, T. E., “Performance 49. Nugyen, V. T., et al., “Breakage Susceptibility of Electronic Moisture Meters in Corn, ” Dry- of Blended Corn, ” Transaction of ASAE 27:209- ing Tech. 2(1):149-156, 1984. 213, 1984. 35. Hutt, W., and Oelschlager, W., “Influence of 50, Otten, L., Brown, R., and Anderson, K., “A Burner Emissions on the Concentration of an Study of a Commercial Crossflow Grain Dryer,” Organic Deposit in Grains Dried With Direct Canadian Agricultural Engineer 22(2): 163-170, Heating,” Grundl, Landtech 26(3):134-140, 1976. 1980, 36. ICI Americas, Inc., Agricultural Chemical Divi- 51, Paulsen, M. R., “Corn Breakage Susceptibility sion, Product Specimen Labels, 1986. as a Function of Moisture Content, ” ASAE Pa- 37. Indiana Crop Livestock Reporting Service per No. 83-3078, 1983. (ICLRC), Indiana Agricultural Report, vol. 4, No. 52. Paulsen, M. R., “Effect of Harvesting Technol- 9, Department of Agricultural Statistics, Purdue ogies on Corn and Soybean Quality, ” back- University, West Lay fayette, IN, 1984. ground paper prepared for the Office of Tech- 38. Iverson, M. L., “The Effect of Changes in In- nology Assessment, U.S. Congress, Washington, terpretive Lines for Damaged Soybeans Upon DC, 1988. the Free Fatty Acid Content of Graded Soy- 53. Paulsen, M. R., and Hill, L. D., “Corn Quality Fac- beans,” Special Study SS-3-1986, Federal Grain tors Affecting Dry Milling Performance, ” Jour- Inspection Service, U.S. Department of Agricul- nal of Agricultural Engineering Research ture, Washington, DC, 1986. 31:255-263, 1985. 39. Kirkpatrick, R. L., and Tilton, E. W., “Elevated 54. Quick, G. R., and Buchele, W. F., “The Grain Har- Temperatures To Control Insect Infestations in vesters, ” American Society of Agricultural Engi- Wheat,” }. Georgia Entomol. Soc. 8(4):264-268, neers, St. Joseph, MO, 1978. December 1973. 5.5. Regge, H., and Minaer, V., “Grain Precleaners 40. Kuppinger, H., “Investigation and Improvement and Trends of Their Develop merit,” Agrartech- of Crossflow Drying of Grain, ” Ph. D Thesis, nik 29(8):349-352, 1979. ————. . . . - . —

186

56. Sauer, D. B., and Converse, H. H., “Handling and 63. Stroshine, R., et al., “Comparison of Drying Storage of Wheat: An Assessment of Current Rates and Quality Parameters for Selected Corn Technology,” background paper prepared for Inbreds/hybrids, ” ASAE Paper No. 81-3529, the Office of Technology Assessment, U.S. Con- 1981. gress, Washington, DC, 1988. 64. Stroshine, R., and Martins, J., “Varietal Differ- 57. Schrock, M., “Wheat Quality as Influenced by ence in High Temperature Drying of Maize in Harvesting Machinery, “ background paper pre- the Midwestern United States,” presented at the pared for the Office of Technology Assessment, Fifth International Drying Symposium, Cam- U.S. Congress, Washington, DC, 1988. bridge, MA, 1986. 58. Silva, J. S., “An Engineering-Economic Compar- 65. Successful Farming, “Machinery Manage- ison of Five Drying Techniques for Shelled Corn ment,” June-July 1979. on Michigan Farms, ” Ph.D Thesis, Michigan 66. Winks, R. G., “Phosphine Fumigation—26 Years State University, East Lansing, MI, 1980. Later,” Bulk Wheat, pp. 69-70, 1980. 59. Simpson, J. B., “Effect of Front-Rear Slope on 67. Womack, H., et al., “Summary of Losses From Combine-Shoe Performance,” Transaction of Insect Damage and Costs of Control in Georgia, ASAE 29:1-5, 1986. 1985,” University of Georgia, Agricultural Ex- 60. Steele, J. L., et al., “Deterioration of Shelled Corn periment Station, Special Publication No. 40, as Measured by Carbon Dioxide Production, ” December 1986. Transaction of ASAE 12:685-688, 1969. 68. Yang, X., “Airflow Resistance of Fine Material 61, Storey, C. L., et al., “Insect Populations in Wheat, Removed From Corn, ” M.S. Thesis, Iowa State Corn, and Oats Stored on Farms,” Journal of University, Ames, IA, 1987. Economics of Entomology 76:1323-1330, 1983. 69. Zettler, J. L., “Insecticide Resistance in Selected 62, Storey, C. L., et al., “Present Use of Pest Man- Stored-Product Insects Infesting Peanuts in the agement Practices in Wheat, Corn, and Oats Southeastern United States, ” Journal of Eco- Stored on Farms, ” JournaZ of Economics Ento- nomics Entomology 75:359-362, 1982. mology 77:784-788, 1984. Chapter 8 Analysis of . -- - — - . - - - —

CONTENTS

Page Inspection and Testing ...... 189 FGIS Inspection ...... 190 Non-FGIS Inspection ...... ,..... 190 Export Inspection ...... 190 Testing Technologies...... 191 Establishing Grain Standards ...... 196 Evaluation of Grain Standards ...... 200 Historical Review ...... 201 Objectives of Grain Standards ...... 201 Integrating the Four Objectives...... 204 Alternatives to the Present System ...... 205 Applying Economic Criteria to Grain Standards ...... 209 Grade-Determining, Non-Grade-Determining, and Official Criteria Factors ...... 210 Establishing Grade Limits ...... 211 Number of Grades ...... 211 Evaluation of Recent Legislation ...... 212 Optimal Grade ...... 212 The Grain Quality Improvement Act of 1986 ...... 212 Prohibitions. Market Incentives ...... 212 Findings and Conclusions ...... 213 Chapter 8 References ...... 215

Box Box Page 8-1. Testing Technologies for Aflatoxin...... 194

Figure Page 8-1. Alternative Authorities to FGIS for Implementing New Tests ...... 197

Tables Table Page 8-1. Wheat Standards ...... 198 8-2. Corn Standards...... 199 8-3. Soybean Standards ...... 199 8-4. Examples of Quality Measures Under USGSA and AMA...... 199 Chapter Analysis of U.S. Grain Standards

The evaluation of the current U.S. inspection dence that it would benefit the industry as a system, possible alternatives, and proposed whole. Measures of oil and protein in the soy- changes in grain standards requires principles bean standard may logically meet opposition on which to base the criteria for change. This from individual firms whose profits depend on chapter sets forth those principles. No attempt being the first to identify sources of soybeans has been made to assess the economic conse- with oil content above the average for that crop quences of the alternatives because they depend year, on the market response to the actions of many individual companies involved in marketing Uniform grain standards provide all buyers grain, Uniform, accurate, and objective qual- and sellers with equal access to information on ity measurement should be based on the logic value. This forces competition on the basis of and consistency of the system, not on the eco- operating efficiency, rather than on control of nomic benefits to individual companies or sec- information, The inability to gain acceptance tors (2). of voluntary standards prior to the 1916 United States Grain Standards Act (USGSA) can be Marketing efficiency requires a system of de- traced to conflict between market opportunity scriptive terms that enable purchase and sale for individual firms through product differen- by description. The sale of millions of bushels tiation and the efficiency of marketing asso- of grain by telephone and telex would not be ciated with product uniformity. Only through possible without the common language on qual- nationally enforced grain standards could in- ity and value provided by U.S. grain standards. dividual firms reap the benefits of industrywide Since most commercial transactions use only market efficiency emanating from uniform one or two grades, the many diverse qualities standards. produced by nature and varying farm practices are combined into a few relatively uniform The 1916 USGSA and subsequent amend- standardized categories during the marketing ments and regulations have established two process. The move toward a uniform product, areas of responsibility for the Federal Grain In- however, conflicts with the profit-maximizing spection Service (FGIS) of the U.S. Department principle of product differentiation, of Agriculture (USDA): private gains from product differentiation are to establish uniform grades and standards, offset by aggregate losses in the efficiency of and market transactions, It is not surprising to find to implement national inspection pro- individual exporters and domestic grain han- cedures to assure accurate and unbiased dlers unwilling to support change despite evi- results.

INSPECTION AND TESTING

Grain can be inspected many times as it tests, such as breakage susceptibility in corn, moves from the farm to its ultimate destination, to laboratory tests like dough handling proper- as demonstrated by figure 2-2 in chapter 2. Nor- ties of flour. mally grain is tested for one or more important characteristics each time it is moved into No single national policy outlines what tests or out of a grain elevator. The number and type will be performed or who will perform them. of tests performed vary from those provided The USGSA requires that grain standards be for in the grain standards to specific end-use developed and used when marketing grain. The

189 standards provide tests covering such items as In addition to developing standards and pro- moisture content, bulk density, and amount of viding inspection services, FGIS: impurities, but do not specify who will perform ● the tests or what tests will be conducted on develops and publishes inspection pro- grain moved within the United States. In fact, cedures, ● two USDA agencies have been authorized by evaluates and approves equipment for use Congress to provide testing services, using the during inspection, grain standards, on grain moving domestically. ● monitors inspection accuracy of FGIS em- Except for protein content in wheat, other tests ployees and licensed inspectors, ● such as for protein/oil quantity and quality and periodically tests sampling and inspection specific end-use tests are performed at the dis- equipment for accuracy, cretion of the ultimate user. The only manda- ● provides appeal inspection, and tory testing is performed by FGIS on export ● responds to complaints regarding service. grain. FGIS also audits its own activities to ensure that In practice, grain traded between two com- service is being provided on a nondiscrimina- panies is normally tested by FGIS or one of its tory basis and that no licensed individual has affiliated agencies, using tests contained in the a conflict of interest. grain standards. However, some domestic processors and nearly all grain companies that buy Non-FGIS Inspection farmer-owned grain purchase it on the basis of tests performed by their own personnel. Inspection services using grain standards These groups, except in cases where a particu- established under USGSA may be performed lar buyer requires additional tests, normally use by grain company employees or by private com- some or all of the tests provided for in the grain panies not affiliated with FGIS. Grain received standards. In other cases, in-house testing is from farmers is seldom graded by FGIS or FGIS- used by grain companies on shipments mov- licensed inspectors but by employees of the ele- ing between their own facilities. vator or processing firm. The standards established under USGSA are FGIS Inspection generally used as the basis for inspection by company employees. FGIS procedures may or The inspection system mandated by USGSA may not be followed, based on individual com- currently consists of FGIS offices with Federal pany policy. Equipment and inspection ac- inspectors located at major ports, 72 designated curacy are not monitored unless the company State and private agencies located in the interior has established an internal monitoring proof the United States, and 8 delegated State agen- gram. In many cases, company inspectors com- cies at ports not serviced by FGIS. FGIS admin- pare their test results to those obtained by FGIS isters field offices throughout the country to or FGIS-licensed inspectors on the same grain oversee the activities of State and private in- in an effort to ensure accuracy. Either buyer spection agencies. or seller may request FGIS or an FGIS-licensed All nonfederal employees employed by State inspector to check the grain if the results of the and private agencies authorized to perform in- private inspection are in question. However, spection on behalf of FGIS must pass exami- neither party is required by law to abide by the nations on grading proficiency and must be inspection results. licensed. These individuals can be licensed to inspect one or more of the grains for which Export Inspection standards have been established. In no instance, however, can individuals perform official in- USGSA requires that all grain being exported spections unless they hold a valid license for be inspected by FGIS or a FGIS-delegated State that grain. agency. The only exceptions are for grain mov- . .-

191 ing into Canada and Mexico by land carrier and societies such as the American Oil Chemists’ for small exporters who ship less than 15,000 Society and American Association of Cereal metric tons in a given year. Chemists develop criteria for approving tests, publish performance procedures, and establish Notwithstanding this requirement, importers programs to ensure equipment accuracy. Many often request private companies in the United tests covered by professional societies are not States to represent their interests and inspect in the grain standards. the grain as it is being loaded. Such inspections can include checking for grade as defined by Regardless of which tests are performed and USGSA grain standards or for factors not cov- who performs them, several factors are impor- ered by these standards, such as falling num- tant. These include instrument precision and ber in wheat or oil and protein in soybeans. standardization, calibration, the choice of refer- When private companies perform inspections ence methods and traceability to standard refer- using the grain standards, two groups issue ence methods when developing rapid objective certificates—FGIS and the private company. tests, and natural error resulting from sampling. Samples obtained by private companies are Standardization often submitted to FGIS for analysis and grade, and results from FGIS are then used as the ba- The term standardization means that a meas- sis for the private company’s certification. In uring device has been adjusted to be in fun- other instances, private company inspectors damental agreement with a universally ac- actually perform the inspection. Settlement in cepted standard and that ongoing efforts are most instances is based on the results provided made to keep it in agreement (4). Standardiza- by FGIS or a FGIS-delegated State agency. In tion is vital to fair trade and will be even more rare cases settlement has been based on the pri- important as technologically advanced testing vate inspector’s results or destination grades. equipment is introduced into the marketplace. The validity of a commercial measurement is Testing Technologies judged by comparing it with a more stringent method that is accepted as determining the true Since no single policy exists for inspecting value. The standard is the base method defined grain, no one group is responsible for develop- as being the true value. Working standards are ing and overseeing the tests and equipment devices and methods used to actually validate used. FGIS provides independent, third-party an individual test instrument. For dimensional services using tests contained in the standards. measures such as mass, time, and volume, the Other tests such as for protein content and fall- reference standards are very precise. The pro- ing number tests in wheat, aflatoxin in corn, cedure of matching routine devices against work- and ethylene dibromide residue are also pro- ing standards and working standards against vided, All tests done under the authority of FGIS reference standards introduces little variability. are regulated in that the equipment must be ap- Probably the most visible example of stand- proved, procedures for its use developed, and ardization is the weights and measure program the accuracy of results monitored. coordinated by the National Bureau of Stand- Tests provided under the authority of the ards (recently renamed the National Institute Warehouse Division of the USDA, on the other of Standards and Technology* (NIST)) of the hand, are not regulated to the same degree. No Department of Commerce in conjunction with requirements for type of equipment, procedures the National Conference of Weights and Meas- for its use, or monitoring of equipment accuracy ures. NIST develops specifications for instru- have been developed under this program. In some instances, individual States have de- *The National Bureau of Standards was recently renamed the National Institute of Stand arcls and Technology (NIST) \t.ith the veloped criteria for approving equipment and passage of the Omnibus Trade and Competitiveness Act of 1988 monitor the equipment’s accuracy. Professional (Public Law 100-418) as of August 1988. . . . .

192

ment precision and accuracy along with scale In the case of moisture, choosing a reference tolerances, and maintains national standards. method is more difficult since no one method Scale testing agencies follow NIST procedures is universally accepted. As on electronic mois- in performing periodic testing using field stand- ture meters, FGIS has approved the Motomco ards that can be traced back to the NIST na- brand meter for its testing program and cali- tional standard. In the case of grain measures brates it to the air oven. In States that do not other than weight, no single national organiza- enforce moisture meter accuracy or that allow tion exists for standardizing tests. different sets of calibrations to be used, several types of meters test 1.0 to 1.25 percentage points Measuring grain quality is difficult to stand- higher than the air oven and the Motomco. In ardize because the true answer is not always addition, some meters used on farms are less known, as in the case of characteristics such accurate than those used by industry (5). This as moisture, protein, and oil content. The refer- could result from the fact that not all manufac- ence method is therefore defined rather than turers standardize to the air oven since there proven. Choosing the reference method, however, can be difficult since it can also be as variable as the instruments themselves. For moisture, the standard reference is the air-oven method; for protein, it is the kjedahl procedure. The kjedahl procedure for determining protein is internationally accepted and used. Cur- rently, protein can be determined rapidly by using near-infrared-reflectance analyzers (NIR). These instruments measure reflectance readings at various wavelengths. The precision (repeatability) of the kjedahl procedure is+ 0.15 and for NIR it is ± 0.10. Therefore the NIR is more precise than the kjedahl, but after standardizing NIR to the kjedahl procedure, the results obtained with NIR are ± 0.2 to the kjedahl.

Photo credit: OTA Staff Photo The near-infrared-reflectance analyzer (NIR) is the most advanced rapid objective testing technology. It currently is used to measure protein content in wheat. It will soon be used to measure oil and protein content in soybeans and corn protein. - .- . —-

193 is no legal requirement to do so. As all oven uted to the recent controversies over the ac- methods are empirical, relying on weight loss curacy of FGIS wheat protein testing. that is assumed to be water, varying oven pa- The chain between the instrument used in rameters will give varying results. Most inter- the field to the standard reference method is national buyers use an oven method standard- referred to as traceability. The more steps there ized to the Karl Fisher titration method. In the are in the traceability chain, the more chance United States, this is not the case, and some there is for compounding random errors from feel that the United States is underestimating one step to the next. In the case of moisture, corn moistures by as much as 0.7 percent. for example, a standard meter in the main laboratory is standardized to the air oven, stand- Further difficulties arise in standardizing ard meters in the field can then be checked to tests when subjective measurements are in- the standard meter in the main laboratory, and volved. Results for many of the current tests field-standard meters can be used to check in- contained in the grain standards are performed dividual meters. Minimizing the number of by visual and sensory evaluation and rely on comparison steps in the traceability chain may human judgment. FGIS monitors its own ac- or may not maximize accuracy, depending on curacy and has developed visual aids as the ba- the actual size of the random variations. sis for determining many visual tests, such as the degree of damaged kernels. These types of Source of Testing Errors tests are difficult to standardize, and accuracy can vary widely especially when the same tests Since any test result is based on a small sam- are performed without using FGIS visual aids ple that represents the entire population, test or being subjected to FGIS oversight. sample portions are subject to bias and variability, and any test result is really only an estimate of the properties of the entire population. Calibration The types of variation can be described as ran- In addition to having standardized tests, the dom and nonrandom. Nonrandom variation equipment used to determine grain quality must occurs from uneven distribution of grain prop- be calibrated to standard reference methods. erties, improper sampling procedures, and in- The calibration must always contain the full accurate measurement. Random variation is range of properties and equipment variations natural and unavoidable, since each grain ker- that will be encountered in general use, so that nel differs from all others. the instrument will not be overly sensitive to If a load of grain is homogeneous, the close- inevitable variations. However, the major cali- ness of the test result to the actual condition bration issue in grain testing is the pervasive is governed by the laws of probability. The sam- variability of these tests. Calibration is further ple size required to produce a result that has complicated by having to use actual grain sam- the desired probability of approaching the ac- ples to calibrate instruments, which introduces tual condition of the grain can be calculated. sampling variation independent of analytical To increase the probability, additional quanti- error. As discussed, both the instruments to be ties of grain must be obtained or the size of the calibrated and standard reference methods are sample actually tested must be increased. For subject to error. Changes in grain properties example, at a 90-percent confidence level a test due to climatic variables complicate the prob- portion size will produce results within a de- lem of obtaining truly representative sample fined range. To narrow the range, a larger por- sets. In addition, as with NIR analyzers, units tion is required or more than one analysis must of the same brand are not identical, which be performed to increase the accuracy of the means that the same calibration constants can- result. not be universally used. It should be noted that NIR calibrations require continuous monitor- When setting portion sizes, the frequency of ing for accuracy. Lack of monitoring contrib- occurrence within a grain mass must also be 194 considered. For example, aflatoxin in corn can corn. Other factors, such as fine material, seg- affect only a few kernels in a grain mass and regate and cause uneven distribution within a in order to detect levels of 20 parts per billion, load. The method and type of sampling is there- which is the limit established by the Food and fore critical to obtaining a truly representative Drug Administration (FDA), 10 pounds of corn sample. Other nonrandom errors involve in- should be examined. This compares to only 2.5 accurate measurements from incorrectly cali- pounds of grain required to determine the brated and maintained instruments, from weight per bushel. (For additional information human error, or from not following correct on aflatoxin testing technologies see box 8-l.) procedures. Uneven distribution in a load of grain is more Knowledge of the source of the variation is of a nonrandom error problem with some char- critical for assessing and improving the ac- acteristics than others. For example, variance curacy of test results. For example, improving in weight per bushel—even though it can fluc- moisture meter precision is an unnecessary ef- tuate within a load—is normally not that great. fort because it contributes less than 10 percent Moisture, on the other hand, can vary due to of the total variability associated with the test mixing or flow characteristics of damp and wet (4). Moisture measurement errors arise mainly

Box 8-1.—Testing Technologies for Aflatoxin Aflatoxin, a known carcinogen, appeared in a large proportion of the corn crop for the first time in many years due to the extremely dry weather conditions in 1988. The principles discussed in this section are very germane to the ability to test for aflatoxin. Aflatoxin is a secondary metabolize produced by the fungus, aspergillus flavus, which infects the corn during field growth. Environmental conditions that favor the production of the mold are high temperatures coupled with dry, drought type conditions during kernel maturation. Aflatoxins are particularly important metabolizes because they are toxic and potent animal carcinogens in excess of certain threshold levels. It is not uncommon for some of the corn crop in the South and Southeast to be infected with aflatoxin at levels that exceed FDA guidelines. Due to the stress this year’s crop underwent, the incidence of aflatoxin extended well beyond these regions into the corn belt, especially the Eastern corn belt. At the present time, testing technologies are not adequate. The rapid test used at the country elevator or terminal is not always reliable. And the more reliable tests are not conducive to elevator environments. The most common and rapid test is examination of corn under an ultra-violet light. This is a screening method which does not quantitate the aflatoxin. Contaminated corn will have spots on the kernel that fluoresce a bright greenish-yellow (BGY). But the presence of BGY does not necessarily mean aflatoxin is present. The possibility therefore exists of false positive test results. Corn can also be tested with the Holaday-Velasco minicolumn or thin-layer chromatography methods. The minicolumn test, which takes about 45 minutes, gives indications of whether the corn exceeds the 20 parts per billion guideline established by FDA. Thin-layer chromatography, which takes between 3 and 4 hours, provides quantitative results of aflatoxin levels. The minicolumn and thin-layer chromatography tests are most suited to laboratory environments. Both use chemicals that must be controlled and are not suited to the normal grain elevator environment. Recently, several new technologies, such as methods based on enzyme immunoassay or rocket immune assay techniques, have been developed to detect aflatoxin that require less chemicals and are more suited for use in grain elevators. They also produce results in a more timely manner. These technologies are currently being reviewed by the American Association of Cereal Chemists. As with any method, adequate sampling must be used because aflatoxin is not uniformly distributed among kernels. 195 from differences in electrical properties of grain established testing procedure errors when load- samples, not from the meter’s precision. When ing grain of a desired quality. examining the variability of any test made with an instrument, it is essential to know the rela- Stationary sampling is usually performed tive contribution of instrument error. with a grain probe. Because a probe obtains samples from only one point in the grain mass Sampling at a time, multiple probings are crucial in obtaining representative samples. Probing pat- Grain samples are obtained with either on- terns have been developed to ensure represen- line or stationary methods. On-line sampling tative samples are obtained and to counteract can be done manually, using an Ellis cup or the segregation of fine material in grain at rest a pelican sampler, or mechanically, using a in a carrier. However, probes cannot reach the diverter-type mechanical (D/T) sampler. This bottom of barges or hopper railcars, which af- equipment allows samples to be drawn from fect the representativeness of the entire grain a moving stream of grain being carried on a mass. belt or within a spout, or from a free-falling stream. Samples drawn on-line are generally Probing grain is time-consuming and labor- considered to be most representative since the intensive, and current probing patterns only grain is sampled more frequently and is more obtain about 5 pounds of grain. Mechanical homogeneous in nature than stationary grain. truck probes have been developed and are being used in some locations to reduce the cost Export cargoes must be sampled with a D/T. and labor requirements. But, in many locations, Many barge and railcar shipments are also sam- such as country elevators, only one or two prob- pled with this method even though there is no ings per truckload are taken or a pan full of requirement to do so. D/Ts provide quite large grain is taken as the truck is unloaded. This samples that must be reduced in a secondary compares to the five-to-nine probings required sampler to more workable sizes. The smaller under FGIS procedures. Limited sampling samples are further divided in a laboratory makes the test results more vulnerable to divider to the prescribed test portion sizes. It nonuniformity within the grain mass. is important to recognize that every subdivi- sion as well as the initial sample collection con- As indicated, the sample size used has a direct tributes potential errors. Shippers must there- bearing on the test result’s accuracy. For fore allow for sampling variations as well as aflatoxin, the 10 pounds required to accurately

Photo credit: U.S. Department of Agriculture

The diverter-type mechanical (D/T) sampler allows grain to be drawn from a moving stream. Samples drawn from a D/T sampler are considered to be most representative since grain is sampled more frequently and is more homogeneous than stationary grain. to measure protein content in wheat. This technology has been discussed to some degree throughout this section. Considerable work is being done to develop additional tests with NIR, which will be particularly important at the first point of sale. Calibrations for barley protein are being developed. Work is also being done on developing calibrations for determining soybean oil and protein along with corn protein. The ability of NIR to determine wheat hardness, along with other important tests for wheat, is also being investigated. The first point of sale will probably be the most difficult place to introduce new technol- Photo credit: OTA Staff Photo ogies, The time constraints are severe and the Stationary sampling is performed by a grain probe. resources, both human and capital, are limited. Multiple probings are crucial in obtaining a Yet, the demands of testing at this point should representative sample. In many locations, such as country elevators, only one or two probes are taken be paramount in designing new tests. As these compared to the five to nine probes required are developed and introduced, the impact of under FGIS procedures. the amount of sample required to perform not only the particular test but more importantly detect aflatoxin requires that a truck be sam- all the tests required at the first point of sale pled twice using the current five-to-nine prob- must be evaluated in terms of practicality. ing pattern, which only yields 5 pounds. Get- ting 10 pounds from a D/T sampler is simpler Many of the potential new tests require the since large quantities are obtained through the grain be ground or processed before testing, normal course of sampling. If increased ac- while the tests currently in the grain standards curacy is required, or as additional tests are are performed on the grain as a whole. As more adopted requiring larger sample sizes, the im- tests are introduced that require processing, the pact on the test’s accuracy must be weighed impact of the sample size required to provide against the cost of obtaining the sample. This accurate results versus the quantity of sample will be especially relevant to samples obtained obtained through stationary sampling becomes at the first point of sale from trucks. critical. For example, FGIS introduced a test for sunflower seed oil content, The sample size Criteria for New Technologies required to predict oil content accurately was determined to be 250 grams, which would have As additional tests on an ongoing basis be- required double probing of stationary grain lots come more relevant, criteria must be estab- and consequently increased testing time and lished to govern the design of rapid test require- costs. Thus a trade-off between accuracy and ments. Yet, development of rapid tests must cost became necessary. To overcome this prob- meet the basic criteria associated with stan- lem, a smaller sample size (45 to 50 grams) was dardization, traceability to standard reference established but duplicate tests were required methods, and calibration. In addition, rapid to help minimize the impact of lowered accu- tests must be evaluated in terms of speed, cost, racy due to smaller sample size. accuracy, durability, and capability of handling wide ranges in quality. Establishing Grain Standards The most notable advance in rapid objective Standards are established by FGIS under the testing technology has come from using NIRs authority of Section 4 of USGSA. In the case 197 of corn and wheat, the factors contained in the Figure 8-1.– Alternative Authorities to FGIS for standards were selected in the early 1900s. Soy- Implementing New Tests bean standards were established in 1922 as New test voluntary and brought under the USGSA by congressional amendment in 1941. No changes were made in the number of factors included until moisture was removed as a factor from wheat in 1934 and from corn and soybeans in 1985, The grade limits and factor definitions have been changed frequently during the years, however; tables 8-1,8-2, and 8-3 contain the current standards for wheat, corn, and soybeans. The procedure for changing grades is clearly specified in USGSA. Proposed changes require publication in the Federal Register, solicitation of comments, and, in the case of the new or amended policies, a 1-year waiting period before becoming effective. Grade-determining Non-grade-determining

Introducing new factors requires an under- SOURCE: Office of Technology Assessment, 1988 standing of the alternatives available to FGIS for implementing a new test or quality factor. The agency operates under two authorities— corn is one example. It was an FDA ruling that USGSA and the Agricultural Marketing Act the addition of water to grain to increase its (AMA)–and new tests can be implemented un- weight or value was adulteration and subject der either one (figure 8-l). to prosecution. FDA also regulates color addi- Three methods for implementing tests are tives mixed with grain for identification pur- available under USGSA. The category “official poses and the adhesives and coatings that may criteria” is used for tests provided only at the come in contact with grain transported in rail- request of buyer or seller. Factors contained cars and barges, in the category of “standards” must be determined for each inspection. However, non- The FDCA prohibits food products contain- grade-determining factors are always reported ing whole insects, insect parts, and excreta. Fu- but have no maximum or minimum associated migation or treatment of grains already infested with assigning a numerical grade, whereas does not make grain legal under the act. Chem- grade-determining factors establish a numeri- ical treatment may be used as a preventive to cal grade according to the lowest factor ap- keep grain from becoming infested, but residues proach. Examples of current tests are given in from these chemicals must not exceed permis- table 8-4. sible tolerance levels. Grain is illegal if it contains residues of pesticides not authorized or The Food and Drug Administration also has in excess of safe tolerances set by the Environ- responsibility for grain quality issues as they mental Protection Agency and enforced by relate to health and safety. Under the Federal FDA. Food, Drug and Cosmetic Act (FDCA), grain is deemed to be adulterated if it bears or con- The separation of responsibilities between tains an added or a naturally occurring poison- FGIS, FDA, and other government agencies is ous or deleterious substance that may render somewhat vague in principle, For example, it injurious to health. Aflatoxin-contaminated grain dust is a health and safety issue covered Table 8-1.—Wheat Standards

Minimum limits of— Maximum limits of— Test weight per bushel Hard Red Damaged kernels Spring All other Shrunken d wheat or classes Heat- and Wheat or other classes White Club and damaged Foreign broken Contrasting wheata subclasses kernels Total b material kernels Defects c classes Total e Grade (pounds) (pounds) (percent) (percent) (percent) (percent) (percent) (percent) (percent) U.S. No. 1 ...... 58.0 60.0 0.2 2.0 0.5 3.0 3.0 1.0 3.0 U.S. No. 2...... 57.0 58.0 0.2 4.0 1.0 5.0 5.0 2.0 5.0 U.S. No. 3...... 55.0 56.0 0.5 7.0 2.0 8.0 8.0 3.0 10.0 U.S. No. 4...... 53.0 54.0 1.0 10.0 3.0 12.0 12.0 10.0 10.0 U.S. No. 5...... 50.0 51.0 3.0 15.0 5.0 20.0 20.0 10.0 10.0 U.S. Sample grade: U.S. Sample grade is wheat that: a. Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; or b. Contains 32 or more insect-damaged kernels per 100 grams of wheat; or c. Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign substance(s) or a commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent quantity of other animal filth per 1,000 grams of wheat; or d. Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or e. Is heating or otherwise of distinctly low quality. ~These requirements also apply when Hard Red Spring or White Club wheat predominate in a sample of Mixed wheat. Includes heatdamaged kernels. cDefect~ include damaged kernels (total) foreign material, and shrunken and broken kernels. The sum Of these three faCtOrS may not exceed the limit for defects ‘Or each ‘Umerical grade ‘Unclassed wheat of any grade may contain not more than 10.0 percent of wheat of other classes. elncludes contrasting classes’

SOURCE: Federal Grain Inspection Service, U.S. Department of Agriculture, 19SS. 199

Table 8-2.-Corn Standards

Maximum limits of— Minimum test weight Damaged kernels Broken corn and per bushel Heat-damaged Total foreign material Grade (pounds) kernels (percent) (percent) (percent) U.S. No. 1 ...... 56.0 0.1 3.0 2.0 U.S. No. 2 ...... 54.0 0.2 5.0 3.0 U.S. No. 3 ...... 52.0 0.5 7.0 4.0 U.S. No. 4 ...... 49.0 10.0 5.0 U.S. No. 5 ...... 46.0 15.0 7.0 U.S. Sample grade: U.S. Sample grade is corn that a. Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; or b. Contains 8 or more stones which have an aggregate weight in excess of 0.20 percent of the sample weight, 2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign substance(s) or a commonly recognized harmful or toxic substance(s), 8 or more cock- leburs (Xanthium spp.) or similar seeds singly or in combination, or animal filth in excess of 0.20 percent in 1,000 grams; or c. Has a musty, sour, or commercially objectionable foreign odor; or d. Is heating or otherwise of distinctly low quality. SOURCE Federal Grain Inspection Service, U.S. Department of Agriculture, 1988.

Table 8-3.—Soybean Standards

Maximum limits of— Minimum Damaged kernels test weight Heat Foreign Soybeans of per bushel damaged Total material Splits other colors Grade (pounds) (percent) (percent) (percent) (percent) (percent) U.S. No. 1 ...... 56.0 0.2 2.0 1.0 10.0 1.0 U.S. No. 2 ...... 54.0 0.5 3.0 2.0 20.0 2.0 U.S. No. 3a...... 52.0 1.0 5.0 3.0 30.0 5.0 U.S. No. 4b ...... 49.0 3.0 8.0 5.0 40.0 10.0 U.S. Sample grade: U.S. Sample grade is soybeans that: a. Do not meet the requirements for U.S. No. 1, 2, 3, 4; or b. Contain 8 or more stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.) 4 or more particles of an unknown foreign substance(s) or a commonly recognized harmful or toxic substance(s) 10 or more rodent pellets, bird droppings, or equivalent quantity of other animal filth per 1,000 grams of soybeans; or c. Have a musty, sour, or commercially objectionable foreign odor (except garlic odor); or d. Are heating or otherwise of distinctly low quality. ‘Soybeans that are purple mottled or stained are graded not higher than U.S. No. 3. !Soybeans that are materially weathered are graded not higher than U.S. No. 4. SOURCE: Federal Grain InspectIon Service, U.S. Department of Agriculture, 1988.

Table 8-4.—Examples of Quality Measures by the Occupational Safety and Health Admin- Under USGSA and AMA istration (OSHA) but prohibiting its reintroduc- Authority Example factors tion into grain falls to FGIS. A Memorandum USGSA: of Understanding between FGIS and FDA has Grade-determining standards . . Foreign material enabled the two agencies to work together in Damage several areas. FDA has established action limits Test weight Non-grade standards...... Moisture for many factors, such as aflatoxin in corn and Official criteria...... Protein in wheat pesticide residues in grain. The agreement be- AMA: tween agencies requires that FGIS report to Official criteria...... Aflatoxin FDA whenever inspection results for the items Falling number Pesticide residue (EDB) identified in the agreement exceed FDA’s SOURCE: Office of Technology Assessment, 1989. limits. 200

EVALUATION OF GRAIN STANDARDS

Recent debates over grain standards, foreign recognized that the industry as a whole would buyers’ complaints, and the numerous propos- benefit. als for regulatory and legislative changes echo earlier calls for change. Recent complaints con- After many years of educational efforts and cerning certificate final contracts, excess for- attempts to obtain support, the National Grain eign material at destination, spoilage, and heat- and Feed Dealers Association agreed to endorse ing during transit are nearly identical to those a compromise bill for Federal standards. The of the late 1800s. (Certificate final in the ex- compromise garnered reluctant support from port/import contract means that grade is de- the two opposing positions of voluntary adop- termined at the point of loading and the buyer tion of inspection and grain standards versus has no legal recourse regardless of delivered full Federal control. The compromise allowed quality, unless it can be proved the origin grade Federal supervision of uniform standards and was incorrect at the time of loading.) inspection by private firms, many of which were already in business in 1916. These problems have been documented re- peatedly in congressional hearings in 1908, More than 150 bills and amendments have 1928, 1975, and 1986 (3). Even the wording is been submitted to Congress since Senator Pad- almost identical, despite a span of some 75 dock first proposed Federal legislation in 1890 years. The Senate Report 988, of July 27, 1912, to establish measures of quality that would be criticized the current system for rewarding uniformly and objectively applied. Yet the basic adulteration: premises and procedures of the Grain Stand- ards Act of 1916 remained intact until 1986. Under the present conditions an enormous Further, the complaints and persistent prob- system of mixing or adulteration of grain is forced on all the home markets and also the for- lems regarding quality have continued for over eign market, destroying all confidence in our a century despite all the legislative, adminis- grades and working to the detriment of the trative, academic, and industry efforts spent grain trade. on improving quality measurement. Several ob- stacles to a permanent solution must be recog- In 1986, Representative Byron Dorgan (D-ND) nized and dealt with if current efforts of Con- used similar phrases: gress and industry are to succeed:

In short, the U.S. system being what it is al- ● lows and encourages dockage to be added back The changing nature of the industry in into wheat shipments . . . unless we confront terms of technology and genetics results this problem, we will further erode our export in quality characteristics that change from potential, one crop year to the next and from one part of the country to the next. All these diverse Historical Review qualities enter the marketing channels and must be handled. The legislation establishing Federal grain ● Industry and government have often re- standards was passed in 1916 following more fused to accept that problems exist. Faith than 50 years of debate and repeated attempts in the infallibility of a market system has by the grain industry, trade associations, and made it difficult to accept that government boards of trade to establish private and regional agencies have a function in setting uniform measures of grain quality. Private firms can in- grain standards in order to facilitate an ef- crease profits by individually differentiating ficient market. quality from that of other firms. As noted ● Most of the participants in the debate have earlier, this self-interest blocked every attempt seen themselves as adversaries since the at obtaining voluntary adoption of uniform beginning of the discussions. Each group– standards even though the trade associations farmers, processors, grain merchandisers, 201

and government—has expended consider- trary inconsistencies. For example, test weight able public effort trying to blame one or limits in corn for grades No. 1 and No. 2 were more of the other groups. in the original standards in 1916; were added The USGSA and the regulatory agencies to grade Nos. 3, 4, and 5 in 1918; were lowered implementing the act have focused on one in 1934; and were raised in 1959. Throughout objective— “to facilitate marketing.” Eco- all these changes, researchers questioned nomic principles have not been incorpo- whether test weight was a relevant measure of rated into the grade factors, factor limits, value in any grade. Those who argue that the or the many seemingly arbitrary changes. only objectives of standards is to describe physical and biological characteristics have been un- Objectives of Grain Standards able to find a criterion by which they could justify the characteristics chosen. For example, Since the beginning of Federal regulation in why measure kernel density but not kernel size? 1916, the official purpose has been to provide Why measure the percent of split and broken uniform standards for promoting and protect- beans but not the percent of whole kernels in ing grain moving in interstate and foreign corn? Grain has many physical and biological commerce “so that grain can be marketed in properties, and without additional criteria for an orderly and timely manner and that trading guidance, the factors and factor limits become in grain maybe facilitated. ” It has seldom been arbitrary numbers. recognized that the lack of an economic justification in that directive has caused much of the In practice, few markets quote prices for No. difficulty in arriving at a consensus on grain 1, 2, and 3 corn, soybeans, or wheat. In nearly standards and standardization within the grain all cases, a base price is given for one grade industry. Although early researchers frequently and discounts or premiums attached to devia- referred to “intrinsic value” and “value in end tions on each factor from that base. At the coun- use,” these criteria were seldom in evidence try elevator level, for example, nearly all corn when developing standards, or in the numer- is purchased on a No. 2 base and farmers’ prices ous changes that were introduced in subsequent are established by discounting each factor that years. falls outside of the No. 2 limits. International markets generally specify No. 2 soybeans or No. Much of the disagreement over specific 3 corn, and prices in the contract are usually changes is the result of explicit or implicit dis- quoted for that one grade with adjustments for agreement over the objectives of standards. deviations. Each group held a different view. Many in industry and government viewed standards as a A set of clearly stated objectives for stand- convenience for merchandisers. Processors ards based on sound economic principles was wanted the standards to indicate yield of proc- absent in legislative and administrative changes essed products. Farmers wanted assurance that between 1916 and 1986. The many changes dur- discounts associated with grade factors were ing that period did little to resolve the basic based on differences in real value in use. Con- problems and issues. In 1986 a relatively sim- gress often viewed the standards as a cause of ple change in the language of the USGSA opened foreign complaints and lost export markets. the door to a new era in the identification of Clearly, if grain exporters, grain processors, quality as a means of efficient communication Congress, and farmers hold divergent views on of information about value. what grain standards are intended to accom- In June the North American Export plish, they cannot be expected to agree on 1986, which grade factors would meet their diverse Grain Association submitted a report emanating from a series of industrywide workshops. and conflicting purposes. This report, entitled “Commitment to Quality,” The lack of clear goals, objectives, and cri- presented a consensus to serve as guidelines teria inevitably led to reversals as well as arbi- for Congress and FGIS in revising standards 202

(6). One of its most important aspects was a new The technology and terminology for meas- definition for the objectives of grain standards. uring current factors have been in use for The four objectives were identified as: enough time to make the trading of grain on these factors and grades limits extremely effi- 1. to define uniform and accepted descrip- cient. Domestic and international contracts tive terms to facilitate trade, have been written using this terminology for 2. to provide information to aid in determin- many years. Trading in the marketplace is reading grain storability, ily handled with a minimum of specification. 3. to offer end-users the best possible infor- These terms are adequate for basic contracts mation from which to determine end prod- and quotes in the futures market as well as in uct yield and quality, and international trade. Basing price on the numer- 4. to create the tools for the market to estab- ical grade, millions of bushels change owner- lish incentives for quality improvement. ship with a simple phone call. These objectives were incorporated in the 1986 Grain Quality Improvement Act with the Aid in Determining Grain Storability passage of Public Law on November 99-641 10, The factors that influence storability of grain 1986. FGIS for the first time had a set of criteria on which to base changes in standards and have been well documented by many scientists, to evaluate the numerous proposals for change. dating as far back as the grain storage studies Each criterion provides a basis for assessing done in the early 1900s by Dr. Duvel of USDA. current standards and the recent efforts by These factors are moisture, temperature, air FGIS to improve measurements of quality. flow, mold, and insect infestation. The more technical attributes of these characteristics are covered elsewhere in this assessment. The Facilitating Trade length of time grain has been held in storage and the condition under which it has been Almost any set of factors can meet this cri- stored are also important criteria. teria. It is important that grain be grouped into a relatively few number of categories to make Current tests for factors contained in stand- buying, selling, and classification efficient and ards provide little information on direct meas- inexpensive. Trade is facilitated by having a ures of storability. Moisture content is provided small number of grades determined by a mini- in terms of averages, but it has been demon- mum number of factors. From the standpoint strated that the range of moisture among indi- of trading simplicity, three numerical grades vidual kernels may be more important than the in the corn standards may in fact be more average. The standards identify damage, but desirable than five. this is an arbitrary determination of a stage of The factors in the current grades are for the development and storage deterioration that most part easily measured and provide a basis does not provide information on how much on which buyers and sellers can communicate longer the grain may be stored before it goes price and appropriate discounts. Some have the out of condition. Numerical grades alone cer- additional advantage of being commonly used tainly provide no information on storability. in international trade and thereby serve to fa- Foreign material, test weight, damage, and cilitate communication within the international moisture are thus indirect indicators at best as well as domestic market, even though they are reported on every inspection certificate. Since almost any set of factors and grade limits can be handled equally well by the grain Changes in inspection practices and stand- industry as long as they are universally ac- ards have done little to improve measurement cepted, recent FGIS changes have made little of storability since the 1920s, when Dr. Duvel improvement on this criterion. suggested acidity as a measure of storage life 203 and an indication of mixtures of old and new from corn standard factors is often unrelated crop grain. The 1986 changes in the interpretive to its feeding value or starch yield. In general, line slides used to identify damage in soybeans those characteristics of raw grain most closely did not improve the ability of the standards to associated with value of products derived are predict storability. However, the correlation be- not currently covered by the standards. Purity tween damaged kernels and levels of free fatty and cleanliness in terms of foreign material, acid better equipped standards to indicate oil numbers of insects, or other grains provide one quality. of the few indications of value in the current standards. Even here, however, there is lack Most current measures for storage life are of clarity; the term “foreign material” means based on laboratory procedures. No rapid com- different things in each grain, and the term mercial test is available to provide a quick in- “broken corn and foreign material” (BCFM) dication of the stage of deterioration or the time does not differentiate between broken corn and remaining before grain’s condition worsens. foreign material despite the difference in value.

Measuring Value in Processing FGIS in the last few years has moved toward Products improving the measurement of end-use value. For example, even the simple step of rounding Because most grains are used for more than dockage percentage to the nearest one-tenth in one purpose, it is not a simple matter to iden- wheat gives a better indication of the amount tify the characteristics that influence value (see of grain versus nongrain being purchased. Com- ch. 4). The nutritional composition, starch con- pared with the previous method of rounding tent, and recovery rate of corn and baking char- down to the nearest half-percent, the new ap- acteristics of wheat are all end-use properties proach better reflects true value. FGIS has also desired by processors. Few of these, however, taken steps to differentiate more critically on can be converted directly to measures of phys- damage in soybeans. The change in the inter- ical or intrinsic properties of the raw grain. Re- pretive line slides has been linked to the level search in recent years has identified some fac- of free fatty acid, which is in turn a direct meas- tors that relate to value that can be measured ure of the quality of oil derived from the soy- in the commercial market channel. For exam- beans. Progress is therefore being made toward ple, hard endosperm corn provides a higher finding better measures of value. yield of flaking grits. Obviously, high oil and high protein soybeans provide higher yields of Additional measures are available that have oil and soybean meal. Breakage susceptibility not been incorporated in the standards. There tests identify the ability of corn to withstand is a lack of total industry agreement that these handling without increasing breakage. Many measures are sufficiently accurate and relia- tests—such as falling number, farinograph, ble to be introduced. Continued commerciali- hardness, and baking tests–are available that zation of measures of breakage susceptibility indicate baking and milling characteristics of in corn and soybeans; intrinsic properties of wheat and are frequently used in laboratories corn, soybeans, and wheat; new measures of in the United States and Europe. But the in- baking properties and classification of wheat dustry does not completely agree that these at- varieties; and rapid measures of oil and pro- tributes always clearly indicate value. tein in soybeans are all candidates for inclusion in the standards or should at least be made Factors currently contained in the standards available as information. do a poor job of meeting the criterion of end- use value. Soybean standards include little in- Providing Market Incentives dication concerning oil and protein content. New varieties of wheat have diminished the ef- Measurement of factors that result in price fectiveness of class and grade for evaluating differentials in the market provide an incen- flour and baking characteristics. Information tive for each point in the market channel to 204 make decisions to improve quality and avoid processor. Yield becomes the primary and in discounts. This incentive works back through most cases the only criterion on which to select the market channel to producers, who may the variety to be planted, A second example is change harvesting, drying, and storing prac- the drying temperature of corn. Although most tices (see ch. 7) or may select different varie- corn processors object to the use of high tem- ties (see ch. 6). Preference for varieties with cer- peratures during drying, the market does not tain quality characteristics will be conveyed to differentiate between corn dried at high and plant breeders who will in turn generate bet- low temperatures. The premiums paid by a few ter varieties. In a competitive market, profit is dry millers for low-temperature-dried corn in- a strong driving force in any company’s deci- dicate that farmers do respond to these incen- sions, whether they be exporters, individual ele- tives when offered. At present the incentives vator managers, producers, or plant breeders. are not offered by means of the standards, but While the market itself sets incentives in terms by means of contracts in localized areas. It is of prices and price differentials, the standards especially difficult for buyers some distance are not neutral in this scenario. For example, from the production point to obtain qualities farmers have an incentive to select corn varie- they desire when those qualities are not incor- ties that weigh at least 54 pounds per bushel porated in uniform standards and terminology. in order to avoid discounts in the market. This producer incentive translates into incentives Recent FGIS efforts have had limited effect for plant breeders, who have spent significant upon incentives within the market channel. The research funds to develop varieties that will removal of moisture as a grading factor reduced produce a high test-weight corn under normal the number of factors on which blending was required when purchasing on grade only, but conditions. the market still generates income from blend- Current grain standards provide incentives ing wet and dry corn. The change in rounding in several ways. For example, the allowance procedures for dockage percentages in wheat of 3-percent BCFM in No. 2 corn, in conjunc- removed the incentive to blend dockage just be- tion with the market practice of paying top price low the next higher break point. However, the for No. 2 corn, gives farmers an incentive to number of grades and the steps between grades incorporate 3 percent BCFM in their deliver- have not been significantly altered, and incen- ies. By the same token, elevator managers have tives and disincentives still fall short of the an incentive to clean or blend in such a way ideal. as to deliver 3 percent BCFM throughout the Measurement and sampling technology or market channel. Any shipment containing less testing is a problem in terms of incentives only than 3 percent BCFM is a lost profit opportu- so far as the accuracy of the equipment will nity. Shipments containing more than 3 per- not accommodate a finer distinction between cent BCFM will usually receive a discount. The qualities on certain characteristics. Increased step functions between the grades create incen- accuracy will permit narrowing the spread be- tives for blending when grain is purchased on tween numerical grades, thereby reducing the grade alone. The wider the range between incentives for blending when purchasing on grades, the greater the number of factors, and grade only. the greater the number of grades, the greater is the opportunity for blending when purchasing on grade without specifying factor limits. integrating the Four Objectives The other side of this coin is the lack of in- Changes in grade-determining factors, or fac- centive for improving quality on those charac- tor limits, should meet the four objectives of teristics omitted from the standards. With no grain standards. But, not all alternatives will price differential for soybeans with high oil and contribute to all four objectives, and it is likely protein, farmers have no incentive to select vari- that conflict between the objectives will de- eties that will represent greater value to the velop. For example, complex and lengthy tests 205 for measuring end-use value will slow the in- sis for any dispute or arbitration regarding qual- spection process, increase marketing costs, and ity. This certificate final system, which was in thereby detract from the purpose “to facilitate use prior to the USGSA, provides advantages trade. ” Similarly, incentives are best created in terms of efficiency and costs. Other alterna- by a continuous discount schedule on each fac- tives are currently used in other countries (see tor, starting from zero. But a zero base requires ch. 10 and companion report) and variations each buyer to specify factor levels in the con- of the official U.S. system are being used even tract. Numerous contract specifications in- in the domestic market. Understanding the crease the number of segregated lots and re- basics of each alternative can help develop pol- duces the interchangeability of shipments, icy for directing future quality regulations, Increasing the amount of information available to users increases the difficulty of merchandis- Total Defects ing uniform lots. Under the lowest factor approach, all factors The “perfect standard” that optimizes all four can be at the maximum limit for the determi- objectives may not exist. The final solution will nation of a particular grade, For example, No. be a compromise among some of the objectives 2 corn can have 54 pounds test weight, 3 per- (e.g., sacrificing complete information for all cent BCFM, 4 percent damage, and 0.2 percent users in order to facilitate orderly efficient mar- heat damage. This provides the opportunity to keting) and among various buyers and sellers. blend on one or more factors to achieve the maximum allowable limit within that grade. A Alternatives to the Present System system of “total defects” introduces one more limiting factor that sums the defects in that An evaluation of the alternatives to the cur- grade across all factors and places a maximum rent system in the United States illustrates some that would be more restrictive. Thus the accu- of the trade-offs inevitable in establishing grain mulated value of the defects would become standards. The system today is generally known more restrictive than the individual factors, In as “numerical grades determined by the lowest factor.” the example just given, the defects are BCFM, total damage, and heat damage, Under the to- The “lowest factor” approach requires that tal defects system, a maximum value of 6 per- the grade be set by the factor representing the cent might be established, for example, and the lowest quality. For example, if the test weight corn would be considered No. 3 if the sum of of corn is 53 pounds per bushel, that sample damage, heat damage, and BCFM exceeded 6 is graded No. 3 even though all other factors percent. Currently, the wheat standard includes are equal to No. 2 or better. This method has a total defects factor with a maximum limit of the advantage of simplicity and is used by many 3 percent for No. 1. If shrunken and broken ker- of the major grain-exporting countries. How- nels, for instance, are at the maximum No. 1 ever, it does not always reflect true value since limit, which is 3 percent, all other defects would it fails to consider factors above the minimum. have to be at O. This approach provides addi- Considerable variation in quality can occur be- tional information about quality and an incen- tween shipments without a grade change. The tive to increase quality if the total defects fig- lowest factor system also encourages blending ure is more restrictive. to bring all factors down to the quality of the lowest factor determining the grade, and there- The total defects approach differs from the fore does not generate incentives for quality im- lowest factor only by accumulating the sum of individual factor results. The greater restric- provement unless limits are established by con- tion it entails could also be achieved by chang- tract that are more restrictive than the grade limit. ing limits on the present grade factors. Total defects also contains a logical inconsistency: In export trade, most contracts specify that It establishes limits on three factors for No. 2 the grade determined at origin is the legal ba- wheat but if the sample meets all these criteria, it will be classed as No. 4 on the basis of total Contract Specifications defects. The issue of whether standards are required or whether each buyer may simply specify Absence of Imperfections terms in their contract has been debated since The “total perfect kernels” approach also the idea of numerical grades was first presented sums the percent of defects, but subtracts the to merchandisers in the late 1800s. So long as total from 100 to obtain the percent of perfect contracts are legally enforced, buyers and kernels. Each grade has a minimum limit on sellers may agree to any set of factors, charac- percent of perfect kernels. Corn grades in China teristics, and conditions of shipment they de- are based on this system, and U.S. standards sire. The advantage of numerical grades over for oats include a factor for “sound oats.” This contract specifications is that they facilitate system differs little from the “total defects” con- communication. When the grain trade became cept except that it reports absence rather than too large for buyers and sellers to physically presence of defects. and simultaneously view the grain being sold, terminology was required that would permit Weighted Factor description by factors. The numerical grade was chosen as a way of describing several fac- The “weighted factor” approach would in- tors in one number. Each buyer could identify clude a set of grade-determining factors and the characteristics and factor limits that best factor limits, but each factor would exert a meet the conditions in a particular plant. If the different effect in terms of grade determination. buyer’s needs are unique, however, resale in This is in contrast to the lowest factor approach, the market becomes difficult and segregation in which the grade is lowered when any one is required for each one’s specifications. The factor result exceeds the limit. Instead, defects efficiency of the current marketing system re- would be divided into major and minor cate- lies heavily on uniformity for the majority of gories and each assigned a weight to be multi- the crop being marketed. plied times the percent of that defect present. The sum of the defects times the weighting fac- Although most foreign buyers now use nu- tor would determine the grade. Grade would merical grades for purchasing corn, soybeans, be influenced by the number of factors below and wheat, they almost always include addi- grade, the distance each of those factors fell tional factors besides the numerical grade in below the grade limit, and the relative serious- their contracts. Numerical grade alone seldom ness of the defect. conveys sufficient information to satisfy a buyer’s needs. Other factors are therefore speci- This system would incorporate more infor- fied. It is a small step to go to an entire factor mation in the numerical grade and allow finer basis system and eliminate numerical grades. distinction among the combinations of factors. The primary disadvantages are a much wider Its disadvantage is its complexity, the arbitrar- range of quality characteristics between ves- iness of the weighting factor assigned to each sels and thus difficulty in resale if other buyers defect, and the lack of clear criteria on which do not want the same specifications, greater to set the break points between grades. In or- difficulty in segregation and blending to a wider der for the numerical grade to indicate end-use range of specifications, and increased complex- value, the weighting factors would have to dif- ity in writing contracts. fer among uses. The complexity of such a system would probably eliminate this alternative None of these disadvantages is insurmount- on the criteria of the first objective of stand- able. The problem of reselling uniform lots has ards—” to facilitate trade,” become much less important in recent years. -- . . . —

207

The number of times a vessel is resold after leav- are based on delivered quality. The standard ing port has fallen compared to the 1970s sce- varies between months, countries of origin, and nario. The complexity of identification is also crop years. The quality characteristics are few less daunting since most buyers are already in number and consist primarily of visual ob- specifying grade plus two or three factors; they servation. would be specifying only one or two more. The advantage of FAQ is its simplicity and There would be greater problems in keeping its flexibility for adapting to changing crop qualities segregated throughout the market years. This advantage to the seller is, of course, channel if there were no numerical grades. a disadvantage to the buyer. The contract does One of the purposes of blending is to achieve not cover all factors on which buyers might like a uniform product, and the first objective of information, and the floating standard leaves standards is to facilitate merchandising. This the buyer uncertain as to what quality may be purpose is not accommodated by a system received for processing. It is often a destina- where all buyers develop their own set of qual- tion contract (advantage to buyers, disadvan- ity factors, their own definitions, and their own tage to sellers) and covers factors not likely to limits. The complexity and inefficiencies of change in transit. Since half the vessels are such a market would result in a major reduc- mathematically below the FAQ standard, it is tion in welfare for both buyers and sellers conceivable that many contracts would require throughout the market chain. Numerical grades court arbitration. In fact, the system is man- therefore are a means of creating uniformity ageable because FAQ factors and sampling of quality in the market channel. They are most methods are not sufficiently specific to support useful if they reflect the needs of the majority arbitration action except in cases of extreme of buyers in the market so that additional con- deviation from the standard. tract quality specifications are the exception The FAQ system provides no incentive for rather than rule. improving quality since it only describes whatever quality is produced. The extent to which Fair Average Quality the FAQ system describes value to users de- The contract for fair average quality (FAQ) pends on the factors included. In the case of specifies that the grain shall be equal to the aver- the GAFTA corn contracts, the factors describe age quality of grain exported or imported at a primarily condition of the grain rather than in- specific location. The most common FAQ con- trinsic value characteristics. Some of the soy- tract in previous years has been the GAFTA bean contracts include oil and protein. The sim- (Grain and Feed Trade Association) of London, plicity of FAQ facilitates trade but the potential which specifies that quality delivered will be for disputes and arbitration can reduce mar- equal to the average of the quality from the keting efficiency. country of export to the importing country for Variations on the FAQ system include con- the month in which the delivery was made. tracts that specify origin instead of destination. Samples are taken from each vessel and stored Canada and Australia have sometimes gener- by GAFTA in their London laboratories. A com- ated a fair average quality based on harvested posite sample at the end of each month is cre- quality for that crop. The FAQ standard is usu- ated as the standard, and shippers who think ally established with respect to selected char- that the quality of their shipments did not meet acteristics of special importance. FAQ submit samples to be judged against the GAFTA standard. Arbitration decisions are In recent years the FAQ contract has been based primarily on visual inspection by an ar- less frequently used. Argentina, South Africa, bitration committee. Most GAFTA FAQ contracts and Brazil all report exporting primarily on nu- 208 merical grades. However, European buyers through warm water, how can shippers guar- have reported continued use of destination antee quality at destination? FAQ on soybeans. The buyer has always had the alternative of using a contract that specifies destination qual- Destination Grades v. Certificate Final ity. Few shippers are willing to take that type of risk at a price the buyer would be willing Most contracts originating in the United to pay. With no control over unloading or sam- States specify that grade is final at origin. This pling, shippers are in a poor position to guar- means that the grade certificate, issued imme- antee destination quality and the number of diately after the vessel is loaded, is the final doc- contracts taken into arbitration court would un- ument on quality and the buyer has no recourse doubtedly rise dramatically, resulting in a sig- beyond proving incorrect inspection on the ori- nificant increase in cost and delays in set- gin samples. Foreign buyers must prove that tlement. the vessels were improperly loaded or inspected at origin before they can claim restitution for Origin and destination contracts can be used quality. Grain received in poor condition, badly to guarantee quality under any set of standards. broken, spoiled, sprouted, or insect-infested is Yet, the two systems incorporate different in- not sufficient evidence on which to base claims centives. Destination guarantees place addi- for damage because the contract specifies ori- tional responsibility, and thus economic incen- gin certificate final. tives, on the exporter to load grain that will maintain quality during transit as well as meet Certificate final is a highly efficient market- the contract at time of loading. This alters the ing technique, and enables minimum cost qual- loading strategy. Under origin grades, for ex- ity guarantees up to the point where the example, a 14. O-percent moisture contract could porter transfers responsibility for quality to the be met by blending 8 and 16 percent moisture captain of the vessel or to the importer. It has corn. Under destination quality guarantees, this the disadvantage of the ultimate customers’ dis- blending would not be a good strategy under satisfaction with the delivered quality and their most time and temperature conditions. The inability to control quality when several han- high-moisture corn would probably result in dlers stand between shipper and user. It also damage levels and spoilage at destination ex- enables the shipper to load closer to the qual- ceeding the contract limit. ity limits without regard to the inevitable con- sequences of placing that quality in the vessel. The issue of origin and destination grades must also be considered in the context of do- The alternative is destination grades (often mestic markets. The same issues exist as in the in conjunction with a cargo, insurance, and export market, but the results are different for freight sale). In this case, the seller guarantees two reasons: delivery to the foreign port and guarantees quality at that destination. This alternative has often 1. the time between origin and destination is been suggested as a solution to the problem of usually much shorter in the domestic mar- foreign complaints. But many unanswered ket; and questions remain about such contracts. For ex- 2. sampling and inspection procedures at ori- ample, who will take the destination samples gin and destination are subject to a single and how? Second, what type of guarantee can set of regulations in the domestic market, shippers make for a vessel that will be distrib- whereas FGIS has no control over sam- uted among 10, 20, or even 50 different buyers, pling and grading at foreign destinations. each one getting only a small portion from a vessel with a highly variable quality among Domestic contracts specify origin or desti- holds? Third, since the buyer specifies the qual- nation grades as well as whether settlement will ity characteristics and frequently requests a be based on official or private inspection re- moisture content unsafe for long voyages sults. Confidence in accuracy is developed with 209 a large number of transactions over a period especially with respect to sanitary quality fac- of time and by the option of calling for FGIS tors, and could include more information on inspection and an appeal if needed. This con- value in processing. fidence often results in acceptance of non-FGIS Separate standards for different users could origin inspection where direct contact between provide more information on value. The food buyer and seller has generated mutual trust. grade or export grade could have price differen- Trade rules and arbitration procedures estab- tials that would generate market incentives for lished by the National Grain and Feed Asso- improved quality. The market would direct the ciation also provide an important alternative higher qualities into the higher valued uses. The and supplement for domestic trade. dual system would create a more complex marketing system and would probably increase the Dual Grades cost of segregation and transport. Probably the A dual grading system could be based on sep- greatest difficulty would be determining which arating domestic and foreign markets or sepa- standard and discount to apply to the producer. rating use, Separate export standards have often Since ultimate use would not be determined been suggested as a way to compete in inter- at the time of farmer delivery and, in fact, in- national trade with more restrictive quality tended use might be changed more than once specifications. The Canadian system establishes in the market channel, the higher discounts on separate grade requirements for export wheat food grade or export grade would have to be and controls purchases, movement, and clean- applied against the producer. This would gen- ing procedures between country elevators and erate incentives for quality improvement on all the ports to administer this system (see com- grain at a cost that would not be justified for panion report). Separate food grades and feed feed use in domestic markets. Dual standards grades have also been suggested for corn and would thus not facilitate an efficient market. wheat. Food grades would be more restrictive,

APPLYING ECONOMIC CRITERIA TO GRAIN STANDARDS

As the four objectives of grain standards This purpose would be met by tests that specified in the 1986 Grain Quality Improve- reflect storage history as well as predict- ment Act do not lead directly to a system of ing remaining storage life. Information on grades and standards, an intermediate set of infestation by molds, fungi, and insects guidelines is required to: needs to be accompanied by the extent of the development and deterioration. Kind ● Define uniform and accepted descriptive of infestation is also an important meas- terms to facilitate trade. ure of storability as a guide to actions re- This requires a small number of categories established by clearly defined factors. quired to inhibit further deterioration. The factors must be readily measured in ● Offer end-users the best possible informa- commercial trade and objectively deter- tion from which to determine end-product mined by technology that gives repeatable yield and quality. results at each point in the market chan- The characteristics of raw grain that in- nel. The factors must be acceptable to and dicate the quality and quantity of processed used by most participants in the market. products differ with different industries. Trade is also facilitated by stability and ab- Factors selected for inclusion in standards sence of change, since any change results should either be common to several indus- in uncertainty and adjustment. tries or be important to an industry con- ● Provide information to aid in determining suming a significant portion of the crop. grain storability. The more directly the factor measures the 210

desired end product, the more efficiently such as broken kernels, moisture, oil and pro- will the standards reflect value. tein content, and other intrinsic characteris- Create tools for the market to establish in- tics or physical properties that influence value centives for quality improvement. for the major processing uses. Higher or lower Incentives in standards are created in percentages for these do not necessarily mean part by including factors that are economi- higher end-use value over the entire range. For cally important. To provide the market the example, the required level of protein in wheat maximum opportunity to establish price depends on the ultimate product to be made incentives the standards should: 1) mini- from the flour. Lower moisture content means mize the distance between factor limits for more dry matter per pound, but 5 percent mois- each numerical grade; 2) report all values ture corn is not generally of greater value than as accurately as measurement technology 12 percent because of the effects of overdry- allows, using standard mathematical pro- ing. Usually some optimum value is indicated cedures for rounding to the nearest signif- for each of these factors, but the optimum varies icant digit; and 3) convey important eco- with the use and location in the market channel. nomic information to producers that will enable them to respond to producer prefer- Under Section 4 of the USGSA, factors con- ences related to value. - tained in the standards must be measured during any official inspection. Those considered official criteria are measured upon request. Al- Grade-Determining, though the advisability of that particular part Non-Grade Determining, and of the law is a matter of debate, in its present form it leads to the conclusion that characteristics most important to the largest number of The factors selected as indicators of value users would be incorporated into the standards. may be included as grade-determining factors, Those of lesser importance, or important to only as non-grade-determining factors, or as official a few users, would be considered official cri- criteria. As described earlier in this chapter, teria available upon request to buyers who need grade-determining factors set numerical grade them. Thus moisture and basic intrinsic prop- according to the factor limits established. Non- erties—such as protein content, kernel hard- grade-determining factors contained in the ness, and falling number tests in wheat; pro- standards do not influence grade but must be tein and oil in soybeans; and starch in reported as information whenever an official corn—might be incorporated as non-grade- inspection is made. Factors defined as official determining factors. Breakage susceptibility criteria are measured and reported only when and kernel hardness in corn and kernel size in requested. soybeans are examples of factors to be made available under official criteria. Assigning each factor to one of the three categories requires a guideline that can be used The advantage of putting the major factors objectively. As noted previously, standards in as non-grade-determining factors rather than should serve the needs of a majority of users official criteria is that the characteristics would and should reflect value for those uses. This move into the market channel much more read- suggests that grade-determining factors should ily. Obligatory measurement throughout the be those that relate to sanitary quality, purity, market would spread the cost across the entire and soundness (absence of imperfections). Us- industry. The cost per unit would be insignifi- ing this guideline, the grade would be based cant and therefore the information would be on factors such as impurities, foreign material, readily available as an incentive. A character- total damage, and heat damage. The lower the istic that must be specified by a separate re- values of any of these defects, the greater is the quest from each individual buyer would in- value of the product. Non-grade-determining crease the cost of information. For example, factors would be those related to properties the true value of information on test weight is 211

irrelevant under the present system since every- ing applied for additional levels within the abil- one is required to measure test weight. The mar- ity of sampling technology to differentiate. ginal cost to the buyer for that information is nearly zero. In contrast, if only one buyer speci- The base for the non-grade factors is of course fies oil content in a soybean contractor falling immaterial, since it is not grade determining, number in a wheat contract, the cost of infor- and the market is now free to choose what, if mation would be much greater because the cost any, price adjustment is to be made for differ- of measurement throughout the market chan- ent levels of those factors. nel would be borne by the single buyer and The zero base concept is limited by the free- would be spread over only the bushels that dom of the market to respond. Unless (or until) buyer purchased. export contracts and prices are established at zero base, merchandisers could start discounts Objective criterion based on the four purposes of standards has thus provided a basis at any level they desired, including the current for choosing factors and for dividing them factor levels for No. 2 corn and for No. 1 wheat among grade-determining, non-grade-deter- and soybeans. mining, and official criteria. Number of Grades Establishing Grade Limits The final question in setting standards is the number of different grades required. The num- As noted earlier, the grade limit on various factors is an automatic incentive throughout ber of numerical grades differs among grains— the market channel to add materials or to blend malting barley has three, soybeans and sorghum have four, and corn and wheat have five—and to reach that limit. Blending damaged soybeans with good ones does not increase the value of all grains have a sample grade designation. His- the damaged soybeans, but it does increase their torical records provide no rationale for these price, for they may now be sold as a higher numbers and the justification for the different grade. The criterion of providing incentives for numbers between standards is not clear. The improving quality dictates that the base be set fewer the numerical grades, the simpler is the marketing and the less space required to seg- at zero. The overall objective of a standard is regate these grades in storage. “to describe the value of the lot of grain being sold. ” If the percent of damaged kernels can A single grade would force the foreign buyer change from 5.0 to 6.9 percent without chang- to specify the quality characteristics and the ing grade, then numerical grade alone does not level of those characteristics desired. Buyers provide complete information on differences would no longer receive 4 percent BCFM by in value. Current soybean standards allow 1.0 default when ordering No. 3 corn. They would percent foreign material and no discount is ap- be forced to specify the levels desired and would plied by the market, implying that any level be- know in advance the trade-off with price. tween and 1.0 percent represents equal value. O The market seldom uses more than two The first 0.5 percent of foreign material in a grades. More grades increase the complexity shipment of soybeans has no more real value for the market and provide no increase in in- than the third 0.5 percent, even though the third formation. The disadvantage of a single grade is discounted and the first is not. is that nearly every buyer must use one grade Tighter limits on existing grade factor limits or specify levels on each factor. This would re- would reduce the incentives for blending and sult in increased diversity of contracts, less op- provide a more accurate measure of value as portunity to resell uniform lots, and increased long as discounts continue to be applied on the transaction costs. The final number of grades same grade. However, it is as difficult to justify to be established for each grain must be a com- an arbitrary limit of 0,5 percent as it is to justify promise between the purposes of providing in- an arbitrary limit of 1.0 percent. The only ob- centives, identifying value, and facilitating jective limit is zero, with market discounts be- trade. 212

EVALUATION OF RECENT LEGISLATION

Optimal Grade Prohibitions v. Market Incentives The optimal grade concept proposed a sin- Developing solutions to the problems and is- gle grade, with low values for selected defects sues raised by grain standards faces two basic and discounts on any defects above the base. choices: The object was to reduce the incentive for 1. legislative prohibitions against practices blending built into the current standards by that are detrimental to quality; and lowering the limits and thereby better meeting 2. changes in the economic incentives of the fourth objective of standards. It used the standards in pricing practices to allow the principle of grade factors being required to re- market to discipline offenders. flect cleanliness, soundness, and purity. It set low levels for that grade but not at zero. It would The first alternative focuses on controlling the have met the criteria of simplicity, facilitating process by which grain is marketed; the sec- trade, and removing incentives for blending. ond, on accurately evaluating the product and However, it did not meet the criterion for meas- value of different qualities. uring quality for various uses. Its greatest deficiency was a failure to identify the non-grade- Throughout history numerous bills and determining factors that would be incorporated amendments have tried to legislate specifics in in the standards. It also failed to eliminate com- grain standards. Nearly all legislative attempts pletely the incentive to blend off large quanti- have failed. The few successful activities since ties of poor quality grain by not setting the base the late 1800s have focused on setting policy values at zero. Congressional rejection of the and creating a framework for administrators optimum grade was probably more a reflection to implement rather than legislating specifics. of problems of implementation than of failure During the 1980s numerous bills or amend- to meet the criteria established by the purposes ments have been submitted to restrict the way of grades. in which foreign material, dockage, or dust can be handled, particularly in the export markets. The 1986 Grain Quality Improvement Act in- The Grain Quality Improvement cluded a prohibition against reintroducing dust Act Of 1986 or foreign material into the grain stream once it has been removed. The intent was clear: to Perhaps the most important contribution of improve the quality of the grain being exported this legislation was introducing into the USGSA and especially to improve the U.S. image in in- the four explicit objectives for grain standards, ternational grain markets. The success of this including three relating to economic value. type of legislation is not yet clear. Yet several Without these objectives, the standards had pri- difficulties can be identified in implementing marily reflected response to pressure from vari- prohibitions while leaving intact the standard ous groups. Without support from one or more structure that generated the incentives for major associations or organizations, it was ex- blending when purchasing on grade only. tremely difficult to make any changes in the standards because the only criterion was that The prohibition in the 1986 Grain Quality Im- of facilitating trade. As noted, FGIS now has provement Act focuses on controlling the proc- criteria on which to base changes and can ess rather than the product. Consequently, its justify those changes in terms of what is best enforcement has presented numerous problems, for the industry. not the least of which is a definition of what 213

constitutes foreign material, which the stand- and foreign material in the grain, nor does it ards define in many different ways and iden- prevent blending of different lots of grain con- tify with many different names. For example, taining various levels of foreign material to in corn only one factor encompasses all non- achieve the maximum allowed. It only limits grain material: BCFM, which is defined as any the procedure by which the maximum maybe material passing through the 12/64-inch sieve achieved. In addition, some if not most of the plus noncom material remaining on top. Wheat “foreign material” in overseas processing includes a factor for foreign material and one plants is broken grain created during unload- for shrunken and broken kernels as well as a ing of vessels. Consequently, it is unlikely that category called dockage. Barley standards con- the actual amount of “foreign material” deliv- tain three factors: dockage, foreign material, ered to the foreign buyer will change, but it may and broken kernels. In nearly all cases, foreign be more expensive to attain the contract levels material is defined in conjunction with parti- at the export elevator. cle size, meaning materials that got through a The most basic problem is one of trying to certain size sieve. The sieve size varies among legislate restrictions to counter the economic grains. In almost all cases, not all foreign material is actually removed, and in almost all incentives built into the standards themselves. Having an allowance of 4 percent BCFM in No. cases the foreign material contains small grain particles that are not “foreign” at all. (For in- 3 corn builds in an automatic incentive to add that much foreign material to the load when formation on problems in defining grain, see corn is purchased on the grade alone. Remov- ref. 1.) ing that incentive would be more efficient than Another problem with the prohibition ap- a prohibition. If a set of standards can be estab- proach is that the quantity of foreign material lished that creates incentives to achieve the or broken kernels incorporated into a grain desired end product in terms of quality, the shipment is controlled by the contract in con- legislative prohibition would become unnec- junction with the grade limit. Therefore, the essary. prohibition does not prevent leaving dirt, dust,

FINDINGS AND CONCLUSIONS

Continual review of grain standards since ● include arbitrary grade limitations on their inception in the 1916 United States Grain many factors that do not always reflect real Standards Act has generated numerous changes differences in value, and in some cases are and proposals for change in factors and factor not consistent with statistical principles. limits. These have not resolved the problems or foreign complaints related to quality. U.S. The many regulatory and legislative standard changes have failed to move the industry grain standards today: in a consistent direction. In fact, there have ● create incentives for practices not consist- been numerous reversals of previous changes. ent with good management and efficiency; What has been lacking is a clearly defined goal ● fail to identify many of the characteristics toward which the system is being moved. With related to value in use; the four objectives for standards now estab- ● fail to reward producers and handlers for lished by legislation, it is possible to develop improved drying, harvesting, handling, for each grain a set of “ideal” standards that and variety selection; and could provide a direction for future changes 214 and a yardstick against which to evaluate alter- of properties to be included. The criteria for natives. If each change adopted moves the oper- inclusion should be that the cost of obtaining ational standards closer to the ideal, repeated the information is less than the value of that reversals should no longer create unnecessary information to users who need the information. adjustment costs and confusion in domestic By starting with the major products generated and foreign markets. from each grain, a list of physical and intrinsic properties can be developed that correlates with Conflicts between purposes can be explicitly value in use. New, rapid objective testing tech- identified and the trade-offs and economic con- nology is also a requirement prior to inclusion. sequences calculated and recorded as guidance for a long-range consistent policy. The ideal sys- The list of factors to be measured under offi- tem should include grade-determining factors, cial criteria is almost unlimited except by meas- non-grade-determining factors, and definition urement technology. Any properties that can and measurement technology for official be accurately measured can be requested by criteria. buyers and sellers. These would be developed only after evidence of sufficient demand to Existing research is generally adequate to identify grade-determining factors—sanitary cover the cost. Information on the factors of interest for the various users could be provided quality factors, damage that reduces yield and by private laboratories and would be added to quality of processed products or value in use, official criteria only after rapid objective tech- and foreign material including dust. For No. nology is developed and when there is suffi- 1 grade, these factor limits should be set as close cient demand by domestic or foreign buyers to zero as measurement technology will allow. to justify including them. Any value above zero violates the third and fourth purposes of grades. The exact definition Standards should be designed to reward posi- of these factors, including sieve size for foreign tive actions, such as genetic improvement, and material, still requires additional research to sound harvesting, drying, and marketing prac- evaluate the alternatives against the criterion tices. They should also be designed to provide of reflecting value accurately. the best information available on the value of each shipment by descriptive terminology. All Non-grade-determining factors should meas- changes must be evaluated against the criterion ure value for a majority of users. The preferred of providing information that is worth the cost level may differ among uses. For example, splits in soybean reduce oil quality only in propor- of obtaining it. Optimum information, not maximum information, is the goal. Proposals for tion to the time in storage. Thus, domestic proc- change must also be tempered with current ca- essors buying for immediate use may allow high levels of splits with no discounts. Foreign pabilities of the industry, the cost of adjustments v. potential benefits, the realities of in- buyers, whose processing of the soybeans may ternational trading rules, and the historical lag harvest by 12 to 18 months, may place much sequence by which the industry has attained more restrictive limits and discounts on splits. the present situation. Measurement and de- Many of the intrinsic and physical proper- scription of quality is only one part of the prob- ties that influence the quantity and quality of lem. Quality must be evaluated in the context products derived from the grain have not been of technology, competition, foreign demand, identified. More research may add to the list and processing requirements. - - .- . -. - .—

215

CHAPTER 8 REFERENCES 1. Evans, Cooper, and Livingston, Kristi, Grain ground paper prepared for the Office of Tech- Quality: Positioning Ourselves for the Future, nology Assessment, U.S. Congress, Washington, Iowa Quality Grain Study Final Report, Cedar DC, 1988. Falls, IA, 1987. 5. Hurburgh, Charles R., Paynter, L. N., Schmitt, 2. Hill, Lowell D., “Analysis of the United States S. G., and Bern, C. J., “Performance of Farm-Type Grain Standards,” background paper prepared Moisture Meters,” Trans. American Society of for the Office of Technology Assessment, U.S. Agricultural Engineers 29(4):1118-1123, 1986. Congress, Washington, DC, 1988, 6. North American Export Grain Association, 3. Hill, Lowell D., Grain Grades and Standards: His- “Commitment to Quality,” Washington, DC, June torical Issues Shaping the Future, submitted to 1986. University of Illinois Press. 4, Hurburgh, Charles R., “Technology for the In- spection of Corn, Soybeans, and Wheat, ” back- — - —— ——...—

Chapter 9 Government Farm Policy and Economic Incentives Affecting Quality ......

CONTENTS

Page Government Program Effects on Grain Quality ...... 219 Loan Rate Program Premiums and Discounts...... 221 Farm Programs and Variety Selection ...... ,225 Government Storage Policies ...... 228 Impacts of Markets, Farm Programs, and Technology on Quality ...... 232 Findings and Conclusions ...... 233 Chapter preferences ...... 234

Figures Figure Page 9-1. Historical Loan Rate and Market Protein Premium for HRS 15 Percent and HRW 13 Percent, 1965-86 ...... 222 9-2. Producers’ Protein Choice for Wheat ...... 232

Tables Table Page 9-1. Loan Rates, Target Prices, and Deficiency Payments for Wheat in the United States, 1974-86 ...... 220 9-2. Loan Rates and Market Premiums for HRS and HRW, 1965-86 ...... 221 9-3. Sedimentation Value Premiums and Discounts Provided by Loan Rate Program, 1963 and 1964...... 223 9-4. Loan Rate Premiums and Discounts on Wheat by Grade ...... 224 9-5. Additional Loan Rate Discounts on Wheat for Test Weight...... 224 9-6. Additional Loan Rate Discounts for Damaged Kernels in Wheat...... 225 9-7. Market Discounts for HRS, February 1987 ...... 225 9-8. Wheat Quality Factors Determining Grade Standards ...... 226 9-9. Average Price Adjustments for Each Factor Among North Dakota Country Elevators, Fall 1984, 1985, and 1986 ...... 227 9-1o. Theoretical Revenue feral-AcreFarm in North Dakota, 1965-86 ....228 9-11. Theoretical Revenue for a 1-Acre Farm in Kansas, 1965-86...... 229 9-12. Implied Premium Necessary for HRS Producers To Be Indifferent About Growing 14 or 15 Percent protein Wheat ...... 229 9-13. Implied Premium Necessary for HRW Producers To Be Indifferent About Growing 11 or 13 Percent Protein Wheat ...... 230 .— —

Chapter Government Farm Policy and Economic Incentives Affecting Quality

Government farm policy and varying govern- resulting in increased yields also has the po- mental economic incentives to the grain sys- tential to reduce quality. tem have a significant influence on grain qual- This chapter looks at the impacts of farm pro- ity. Government farm programs in particular grams on grain quality, which have historically play an essential role in providing incentives been stronger than they are today. It reviews to farmers to produce a range of crop quantity farm program legislation with a focus on its and quality. In commodities such as wheat, soy- impacts on grain quality, analyzes the extent beans, and corn, where biological trade-offs ex- of and dynamics in the trade-offs between yield ist between yield and a major quality factor like and quality, and considers potential impacts protein, farm programs potentially have impor- of higher prices on incentives to increase yields tant impacts on quality, and decrease quality. Farm programs have played a key role in U.S. The analysis focuses on wheat because data agriculture since at least the mid-1930s (4). The are more easily attained. But the principle can numerous programs have shifted gradually be applied to any grain in which commercial from price supports to income supports. The premiums and discounts exist for particular constraints and incentives they provide are quality characteristics, and in which measura- transmitted throughout the production and ble trade-offs exist in production between yield marketing system and consequently may have and quality. In the two classes of wheat dis- an impact on grain quality. Two provisions are cussed here—Hard Red Spring (HRS), predom- particularly important—the loan rate program inantly grown in North Dakota, and Hard Red and its associated premiums and discounts for Winter (HRW), in which Kansas is the leading quality differentials, and the target price pro- State—premiums and discounts play an impor- gram, which results in higher prices associated tant role in the marketing system and yield is with yield. To the extent that yield and quality inversely related to protein, an important qual- are inversely related (see ch. 6), any program ity characteristic.

GOVERNMENT PROGRAM EFFECTS ON GRAIN QUALITY One of the main purposes of government farm Wheat program participation prior to 1964 policies since World War II has been to sup- was mandatory in most years. Acreage al- port farm incomes. Several different policies lotments were imposed along with marketing and programs have been used over time to quotas in 1951 and from 1954 to 1963 (l). The achieve this goal. Loan rate provisions have allotments were set at the amount of acreage been in effect in wheat programs since before needed to produce a crop that, together with the war. The target price/deficiency payment carry-over and imports, would provide a sup- system has been used since 1973; it did not have ply equal to a normal year’s domestic consump- major effects until 1977, however, because mar- tion and exports plus an allowance for reserves. ket prices at first exceeded the loan rate and Marketing quotas were used along with acre- in some cases the target price. age allotments as a more stringent means of

219 .— . .

220 controlling output. When expected supply for farmers in the first 5 months of the marketing a year exceeded estimated use by a specified year, or between the target price and the loan amount, marketing quotas had to be proclaimed rate, whichever is higher. Historical loan rates, by the Secretary of Agriculture. A quota became target prices, and deficiency payments are pre- effective by a two-thirds vote of approval by sented in table 9-1. Deficiency payments in- wheat producers. When marketing quotas were creased dramatically in 1984 and have since approved, compliance with acreage allotment nearly doubled. As a result, in recent years pay- was mandatory; when they were not approved, ments that are by definition based on yield ac- the level of price supports was lowered sub- count for an increasing proportion of a produc- stantially. er’s income. Beginning in 1964, farm programs no longer A producer’s total payment is calculated by required mandatory participation and market- multiplying the per-bushel deficiency payment ing quotas were voted out. From 1964 to 1973, times the program acres and then times the loan rates were reduced and farm income was proven yield. Program acres are a historical supported by domestic certificate and export average of acres planted to wheat, and proven certificate payments in cash, based on a per- yield is a historical, 5-year moving average of centage of production on a farmer’s allotted an individual producer’s past yields. These his- acres. torical averages change over time, meaning producers increase or decrease the program acres In 1973 marketing certificates were replaced devoted to wheat and increase proven yield by by target price/deficiency payments as a means altering variety choices or production practices. of supporting farm income. From 1974 to 1976, The incentive encourages them to maximize wheat prices increased dramatically and were proven yields in order to achieve the highest higher than loan rates. Hence, government par- deficiency payment possible. ticipation in the form of income support to wheat producers, directly or via prices, was The Food Security Act of 1985, the most re- virtually nonexistent. Implementation of the cent major farm legislation, made several target price program did not effectively begin changes in the loan rate and target price provi- until 1977 and is still in effect today. The per- sions. The loan rate for wheat in 1986 was re- bushel income support payment (called a defi- duced 20 percent, from $3.30/bushel to $2.40, ciency payment) is the difference between the while the target price remained at $4.38/bushel target price and the average price received by for 1986. This meant that with market prices

Table 9-1 .–Loan Rates, Target Prices, and Deficiency Payments for Wheat in the United States, 1974-86 (In dollars/bushel)

National Actual Deficiency payments average deficiency as proportion of Year market price Loan rate Target price payment target price (percent) 1974 ...... 4.09 1.37 2.05 — — 1975 ...... 3.56 1.37 2.05 — — 1976 ...... 2.73 2.25 2.29 — — 1977 ...... 2.33 2.25 2.90 0.65 22.4 1978 ...... 2.97 2.35 3.40 0.52 15.3 1979 ...... 3.78 2.50 3.40 — — 1980 ...... 3.91 3.00/3.30 3.08/3.63 — — 1981 ...... 3.65 3.20/3.50 3.81 0,15 3.9 1982 ...... 3.55 3.55/4.00 4.05 0.50 12.3 1983 ...... 3.53 3.65 4.30 0.65 15.1 1984 ...... 3.38 3.30 4.38 1.00 22.8 1985 ...... 3.08 3.30 4.38 1.08 24.6 1986 ...... 2.40 2.40 4.38 1.98 45.2 SOURCE: US. Department of Agriculture, Statistical Reporting Service, Agricultural Statisflcs, various issues. .

221 near the loan rate, the deficiency payment in- ums for protein above a certain level and dis- creased from $1.08/bushel to $1.98/bushel in counts for grade differentials. In addition, dis- 1986. counts originally used for loan rate adjustments have changed over time. Loan Rate Program protein premiums as provided by the loan Premiums and Discounts rate program have been relatively stable (table The loan rate program was the primary mech- 9-2). The premium applicable to HRW 13 percent protein over HRW 10.5 percent protein anism for price support prior to 1973 and con- has been 4.5 cents/bushel since 1965 with the tinues to be an important form of support. A exception of 1973 and 1974, when it decreased key component of the loan rate program is the to 4.25 cents/bushel. From 1950 to 1965 the provision that allows for adjustment in the loan premium for HRW 13 percent protein rose from price a farmer receives based on quality differ- 3 cents to 4 cents/bushel. Throughout the 1950s entials. Each year a schedule of premiums and and early 1960s the protein premium for HRS discounts is published in the provisions for the 15 percent protein was 6 cents/bushel; it loan rate program. In addition, the market es- reached 10.5 cents/bushel from 1965 to 1976; tablishes premiums and discounts reflecting the and it increased to 16 cents/bushel in 1977. market-determined value of quality attributes. These provide incentives with the potential to The loan rate premium has been less than the influence yields and the allocation of wheat be- market premium in most of the past 22 years tween the market and government via loan for- (figure 9-1). The market premium was lower in feitures, This allocation may take place within only 5 years for both HRS and HRW. The as well as between crop years. Administration spread between the loan rate and market of the loan rate program has included premi- premiums has been increasing steadily since

Table 9-2.— Loan Rates and Market Premiums for HRS and HRW, 1965-86 (cents/bushel)

HRW HRS Loan rate Market Loan rate Market premium 13% premium 13% premium 15% premium 15% Market year over 10.5%a over ordinaryb Difference over 11.5%a over 12°/oc Difference 1965 ...... 4.50 –2 –6.50 10.50 0.50 1966 ...... 4.50 5 0.50 10.50 – 9.50 1967 ...... 4.50 3 – 1.50 10.50 4 –6.50 1968 ...... 4.50 17 12.50 10.50 22 11.50 1969 ...... 4.50 3 – 1.50 10.50 17 6.50 1970 ...... 4.50 15 10.50 10.50 12 1.50 1971 ...... 4.50 6 1.50 10.50 16 5.50 1972 ...... 4.50 5 0.50 10.50 8 –2.50 1973 ...... 4.25 8 3.75 10.50 12 – 1.50 1974 ...... 4.25 44 39.75 10.50 69 58.50 1975 ...... 4.50 42 37.50 10.50 98 87.50 1976 ...... 4.50 31 26.50 10.50 36 25.50 1977 ...... 4.50 9 4.50 16.00 19 3.00 1978 ...... 4.50 3 – 1.50 16.00 11 – 5.00 1979 ...... 4.50 9 4.50 16.00 16 0.00 1980 ...... 4.50 5 0.50 16.00 50 34.00 1981 ...... 4.50 3 – 1.50 16.00 14 –2.00 1982 ...... 4.50 19 14.50 16.00 18 2.00 1983 ...... 4.50 30 25.50 16.00 20 4.00 1984 ...... 4.50 19 14.50 16.00 53 37.00 1885 ...... 4.50 34 29.50 16.00 74 58.00 1986 ...... 4.50 15 10.50 16.00 78 62.00 au s Depa~ment of Agriculture (USDA), Agricultural Stabilization and Conservation se~~ce, “Schedule of Premiums and Discounts,” various issues blj&DA Economic Research se~ice, “Wheat Outlook and Situation,” various issues. cMinne’apolis Grain Exchange, Sfatistica/ Annual, VariOUS @UeS — . .- . . . - —

222

Figure 9-1. - Historical Loan Rate and Market Protein Premium for HRS 15 Percent and HRW 13 Percent, 1965-86

Year

Market premium HRW Loan premium HRW

1982. In general, the loan rate premiums for gram spreads relative to the market result in protein have not reflected market fundamen- isolating lower protein wheat from the market, tals, and this spread has been increasing in re- and may to some extent discourage develop- cent years in both the HRW and HRS market. ment and adoption of lower protein varieties. This situation has a potential to distort production decisions of variety choice and fertilizer Other features of the loan rate program have application to the extent that a trade-off exists changed over time. Prior to 1973, two other between yield and protein. Storage decisions measures were used to reflect quality in pro- are also likely distorted by the disparity in gov- gram prices. The first was called a sedimenta- ernment and market protein premiums. Pro- tion test, which measures the quality of producers have the incentive to put low-protein tein content in wheat (5). This testis performed wheat under loan and to forfeit the loan if mar- by suspending ground wheat in water and treat- ket prices for that type of wheat do not appreci- ing it with lactic acid. The portion that within ate. The market premium is typically high 5 minutes settles to the bottom of a graduated enough to encourage commercial sales of cylinder is the sedimentation value. Values higher protein wheat. Consequently, the pro- range from 3 for very weak wheat to 70 for very 223 strong wheat. Premiums and discounts for dif- basis as long as the grade is “sample” or better ferent sedimentation values were used during (table 9-4). Additional discounts based on fac- 1963 and 1964 (table 9-3). tors do apply on test weight and damage if the wheat is No. 4, No. 5, or sample grade in spe- The second measure was the discounts asso- cific years (tables 9-4, 9-5, and 9-6). The dis- ciated with varieties, which was used through- counts applied to damaged kernels were sub- out the 1960s and up through 1972. Discounts stantially reduced beginning in 1980. were applied on varieties in each class of wheat deemed “undesirable” due to poor quality char- Market premiums and discounts for grade acteristics. (The term “undesirable” was used factors are measured differently than those in in the schedule of premiums and discounts,) the loan rate provisions. In market transactions, The varieties and number of varieties changed discounts are normally taken for individual fac- over time to reflect newly released wheats. Gen- tors such as test weight, damaged kernels, or erally, a half-dozen varieties were subject to dis- foreign material (table 9-7). count in any given year. Examples of “undesirable” HRW varieties in the early 1970s included It is difficult to compare market discounts Blue Jacket, Purkof, Cache, Red Chief, Staffor, with loan rate discounts because they are not and Yogo. Examples of “undesirable” HRS va- quoted on the same basis. In general, the loan rieties included Red River 68, Era, and Neep- rate discounts by grade while the market dis- awa. The discount was 20 cents/bushel through- counts on the individual factors that determine out this period. This discount ended in 1973 grade. Individual wheat factors that determine and is no longer used. grade are presented in table 9-8, Comparisons must be tentative when using the quoted mar- Wheat is subject to other premiums and dis- ket discounts and premiums because they are counts under the loan program. These are ap- for a particular point in time and, even though plied by grade and not on an individual factor they may represent the market as a whole, they do change. Table 9-3.—Sedimentation Value Premiums and Discounts Provided by Loan Rate Program, Damage has been one of the more limiting 1963 and 1964 factors in recent years in grade determination Premium or Premium or in HRS and is used here for comparison. The Sedimentation discount, 1963 Sedimentation discount, 1964 market discount for a sample with 4 percent value, 1963 (cents/bushel) value, 1964 (cents/bushel) damage would be 10 cents assuming no other 21 and below –9 22 and below –6 22-23 –8 23-25 –5 factor discounts. For comparison, 4-percent- 24-25 –7 26-28 –4 damaged kernels would be graded No. 2 and 26-27 –6 29-31 –3 would result in a 2 cents/bushel discount from 28-29 –5 32-34 ...... , –2 30-31 –4 35-37. ., –1 the loan rate. Thus, market discounts are sub- 32-33 –3 38-42 0 stantially greater than those in the loan rate pro- 34-35 –2 43-45 + 1 gram; if other factor discounts were also in- 36-37 –1 46-48 ., +2 38-42 0 49-51 +3 cluded (e.g., test weight or foreign matter), the 43-44 +1 52-54. : : +4 comparison would be even more dramatic, 45-46 +2 55-57 +5 47-48 +3 58-60 +6 Annual surveys of country elevators in North 49-50 +4 61-63 +7 Dakota on discounting practices suggest that, 51-52 +5 64-66 +8 53-54 +6 67 and above +9 in general, market premiums and discounts 55-56 +7 have increased in the past 3 years (table 9-9). 57-58 +8 For example, the discount for 4-percent-dam- 59-60 +9 61-62 ., +10 aged kernels (i. e., No. 2) rose from an elevator 63-64 +11 average of 2 cents in 1984 to 8.9 cents in 1986. 65 and over +12 SOURCE: U S Department of Agriculture, Agricultural Stabilization and The individual factors for discount in table Conservation Service, “Schedule of Prem!ums and Discounts,” various issues. 9-4 are the factor levels allowable in order for 224

Table 9-4.—Loan Rate Premiums and Discounts on Wheat by Grade (cents/bushel)

No. 4 Year No. 1 No. 2 No. 3 No. 4a No. 5a No. 5b

~Ontest weight otherwise No.3. No. 4or No.5 because containing Durumand erred Durum. C$O.O1 premium for No. 1 heavy. dTest weight discount for No.4, N0.510r sampie. ‘No. 3 or better heavy. SOURCE: U.S. Department of Agriculture, Agricultural Stabilization and Conservation Service, “Schedule of Premiums and Discounts,” various issues.

Table 9.5.—Additional Loan Rate Discounts on would apply, while the loan program discount Wheat for Test Weighta (cents/bushel) No. 2 wheat would have been 2 cents/bushel. The differential between the loan rate and Test weight 1962 1964 the market premiums and discounts—a differ- 53 to 54.9 ...... –6 –4 ential that is apparently growing—has a signif- 50 to 52.9 ...... –9 –6 49 ...... –13 –9 icant impact. Most important is the allocation 48 ...... –17 –12 of wheat with different qualities between the 47 ...... –21 –15 loan program and market. In general, this 46 ...... –25 –18 45 ...... –29 –21 differential results in higher quality wheat be- 44 ...... –35 –25 ing sold commercially, while the poorer qual- 43 ...... –41 –29 ity wheat, being subject to greater market dis- 42 ...... –47 –33 41 ...... –53 –37 counts, is put under loan and stored since the 40 ...... –59 –41 applicable discounts would be substantially aApplicable if wheat isNo.4, No, 5, Or sample grade. lower. (Domestic millers have methods of de- SOURCE: US. Department of Agriculture, Agricultural Stabilization and Confer- vation Service, “Scheduleo fPremiums andDiscounts,’’varlous issues. termining where the higher quality wheats are located and can purchase by location. Millers can also specify other factors such as falling wheat to grade No. 2. In adding up the discounts numbers, pesticide residue, and sedimentation for each factor except protein, the total possi- before shipment.) With market prices hovering ble discount for wheat (i.e. on all factors to the around loan levels, this wheat has the poten- limit) that grades No. 2 by the market accord- tial of being stored for an extended time and ing to the survey was 36 cents/bushel in 1986. of being released to the market only gradually. The discount for wheat grading No. 2 by the loan rate program is 2 cents/bushel. Wheat must For comparison, if loan rate premiums or dis- meet the limit of only one of the factors listed counts reflected or exceeded those of the mar- in table 9-8 (except moisture and protein) in or- ket, the incidence of relatively poor quality der to grade No. 2. In reality wheat would not wheat would likely not be reduced due to much likely be discounted by all factors, and only one of it being weather-related. Rather, it would re- or two factors would be limiting for discount sult in poor quality wheat being sold to the mar- purposes. Generally, damaged kernels have ket directly, rather than being put under loan been one of the more limiting factors in grade and stored. In this case the loan rate would sup- determination in this time period. The discount port prices of the higher quality grain, rather for 4-percent-damaged kernels was 8.9 cents than that of lower quality, as is currently the in 1986, assuming all other factor discounts case. -. -—

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Table 9-6.—Additional Loan Rate Discounts for Damaged Kernels in Wheat (in cents/bushel)

1951 1962 No. 4 or No. 4, No. 5 1977 & 1978 1980-86 Total percent damage No. 5 or sample sample sample 7.1 to 8.0...... –1 N/A N/A 8.1 to 9.0 ...... –2 –2 N/A N/A 9.1 to 10.0...... –3 –3 N/A N/A 10.1 to 11.0 ...... –4 –4 N/A N/A 11.1 to 12.0 ...... –5 –5 N/A N/A 12.1 to 13.0 ...... –6 –6 N/A N/A 13.1 to 14.0 ...... –7 –7 N/A N/A 14.1 to 15.0 ...... –8 –8 N/A N/A 15.1 to 16.0 ...... N/A –lo –lo –2 16.1 to 17.0 ...... N/A –12 –12 17.1 to 18.0 ...... N/A –14 –14 18.1 to 19.0...... N/A –16 –16 –8 19.1 to 20.0...... N/A –18 –18 10 20.1 to 21.0...... N/A –20 –20 –12 21.1 to 22.0...... N/A –22 –22 –14 22.1 to 23.0...... N/A –24 –24 –16 23.1 to 24.0 ...... N/A –26 –26 –18 24.1 to 25.0...... N/A –28 –28 –20 25.1 to 26.0...... N/A –30 –30 –22 26.1 to 27.0...... N/A –32 –32 –24 27.1 to 28.0...... N/A –34 –34 –26 28.1 to 29.0...... N/A –36 –36 –28 29.1 to 30.0...... N/A –38 –38 –30 over 30.1 ...... N/A –60 3 cents 3 cents each percent each percent over 30.0 over 30.0

N/A = not available SOURCE: U.S. Department of Agriculture, Agricultural Stabilization and Conservation Service, “Schedule of Premiums and Discounts;’ various issues

Table 9-7.—Market Discounts for HRS, February 1987

Item Discounts

Farm Programs and tween yield and quality characteristics (protein Variety Seduction in this case), any farm program not adequately discounting for quality deviation will have an One impact of farm programs is that they may effect on agronomic practices. This section distort producers’ choices regarding variety presents a budget analysis of the impacts of loan selection. Given an inverse relationship be- rate protein premiums and deficiency pay- Table 9-8.—Wheat Quality Factors Determining Grade Standards

Minimum limits of— Maximum limits of— Test weight per bushel Hard Red Damaged kernels Spring All other Shrunken d wheat or classes Heat- and Wheat or other classes White Club and damaged Foreign broken Contrasting wheat a subclasses kernels Total b material kernels Defectsc classes Total e Grade (pounds) (pounds) (percent) (percent) (percent) (percent) (percent) (percent) (percent) U.S. No. 1 ...... 58.0 60.0 0.2 2.0 0.5 3.0 3.0 1.0 3.0 U.S. No. 2...... 57.0 58.0 0.2 4.0 1.0 5.0 5.0 2.0 5.0 U.S. No. 3...... 55.0 56.0 0.5 7.0 2.0 8.0 8.0 3.0 10.0 U.S. No. 4...... 53.0 54.0 1.0 10.0 3.0 12.0 12.0 10.0 10.0 U.S. No. 5...... 50.0 51.0 3.0 15.0 5.0 20.0 20.0 10.0 10.0 U.S. Sample grade: U.S. Sample grade is wheat that: a. Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; or b. Contains 32 or more insect-damaged kernels per 100 grams of wheat; or c. Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign substance(s) or a commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent quantity of other animal filth per 1,000 grams of wheat; or d. Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or e. Is heating or otherwise of distinctly low quality. aThe~e ~e~ulre~ent~ also apply When Hard Red Spring or White Club wheat predominate In a samPle of Mixed wheat blncludes heat-damaged kernels ~Defects Include damaged kernels (total), foreign material, and shrunken and broken kernels The sum of these three factors may not exceed the Ilmlt for defects for each numencal grade Unclassed wheat of any grade may contain not more than 100 percent of wheat of other classes elncludes contrasting classes

SOURCE: Federal Grain InspectIon Service, U S Department of Agriculture, 1988 . . . .-

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Table 9-9.—Average Price Adjustments for Each Factor Among North Dakota Country Elevators, Fall 1984, 1985, and 1986 (cents/bushel)

Commodity (base grade) Factor 1984 average 1985 average 1986 average HRS 57 Ibs. test weight...... – 1.9 –1.8 –2.9 #1 DNS 14.5% moisture ...... –5.9 –6.8 –6.5 140/0 Protein 16% protein ...... 41.0 63.4 62.6 12% protein ...... –38.0 –67.4 –43.9 4% damaged kernels ...... –2.0 –6.6 –8.9 1% foreign material ...... –1.4 –1.3 –1.7 5% shrunken and broken kernels ...... –2.2 –3.0 –4.2 2% contrasting classes ...... –1.6 –3.2 –3.5 5% wheat of other classes ...... — –7.0 –8.6 SOURCE: B Clew, W. Wilson, andR Hielman, ‘‘Pricing and Marketing Practices for North Dakota Durum and H RS Wheat 1986 Crop Year, ” Department of Agricultural Economics, North Dakota State University, Fargo, ND, 1987. ments. Typical producer situations are posed programs have always favored higher yielding for a North Dakotan and a Kansan wheat pro- wheats, but the difference increased during the ducer from 1965 to 1986. 1980s. In 1969 the difference in North Dakota was $9/acre; in 1979 it was $16/acre. Since then The measure used in this analysis is total rev- the spread favoring production of higher yield- enue. Costs per acre are assumed the same ing wheats has increased to $20/acre. Similar across varieties. The protein premiums used results were observed in Kansas. for HRS were the government loan rate premium and the market premium for 14 per- The shift toward higher yielding varieties cent and 15 percent protein; for HRW, the forces the market premium to increase in or- premiums used were for 13 percent and 11 per- der to achieve a certain level of protein, To ana- cent protein. Government program impacts lyze the potential impacts, the producer budgets were incorporated into the analysis in that tar- just described were calculated under various get price instead of market price was used to yield scenarios in order to determine the pro- calculate total revenue. This assumes 100 per- tein premiums necessary for a producer to be cent participation in government programs, indifferent about using high- or low-yielding Yield used in the analysis was 30 bushels/acre wheat. In the case of North Dakota, the total for HRS 14 percent protein and 25 bushels/acre revenue was equated to $144/acre, which cor- for HRS 15 percent protein in order to reflect responds with production of 30 bushels/acre a typical yield/protein trade-off. For HRW, the and 14 percent protein in table 9-10. figures used were 35 bushels/acre for 13 per- The results are shown in table 9-12 for vari- cent protein and 41 bushels/acre for 11 percent ous yield levels, but in each case protein was protein. Total revenue was calculated by add- 15 percent and total revenue was constrained ing the market protein premium or government to $144/acre. For example, if a producer could premium to target price and multiplying this achieve an increase of 1 percent protein with sum by the yield per acre. a decrease in yield of 1 bushel/acre, the pre- Total revenues under the market premium mium necessary for $144/acre is 53 cents/ condition and the government premium con- bushel. A more realistic situation is where 3 dition would be relatively similar in these bushels/acre would be foregone to increase pro- hypothetical cases except for two brief periods tein 1 percent. In this case the protein premium (tables 9-10 and 9-11). In the mid-1970s and would have to increase to 75 cents/bushel per 1980s, when market premiums were much higher, 1 percent of protein. total revenue would be greater under them than The protein premium needed to neutralize under the government premium. a producer’s decision to produce 14 percent or Of particular interest is the revenues per acre 15 percent protein wheat increases rapidly as achievable under the loan program. The farm the yield difference increases. This is caused . . .

228

Table 9-10.—Theoretical Revenue for a One-Acre Farm in North Dakota, 1965-86

25 bushel/acre/15% protein 30 bushel/acre/14°A protein Protein premium Revenue per acre Protein premium Revenue per acre Target (dollars/bushel) (dollars/acre) (dollars/bushel) (dollars/acre) Year price a Market Loan rate Marketb Loan ratec Market Loan rate Marketb Loan ratec 1965 ...... 1.69 0.11 0.105 45 45 0.060 0.075 53 53 1966 ...... 1.84 0.01 0.105 46 49 0.010 0.075 56 57 1967 ...... 1.73 0.04 0.105 44 46 0.040 0.075 53 54 1968 ...... 1.80 0.22 0.105 51 48 0.100 0.075 57 56 1969 ...... 1.89 0.17 0.105 52 50 0.070 0.075 59 59 1970 ...... 2.00 0.12 0.105 53 53 0.020 0.075 61 62 1971 ...... 1.79 0.16 0.105 49 47 0.150 0.075 58 56 1972 ...... 1.72 0.08 0.105 45 46 0.080 0.075 54 54 1973 ...... 1.47 0.12 0.105 40 39 0.120 0.075 48 46 1974 ...... 2.05 0.44 0.105 62 54 0.280 0.075 70 64 1975 ...... 2.05 0.71 0.105 69 54 0.440 0.075 75 64 1976 ...... 2.29 0.36 0.105 66 60 0.230 0.075 76 71 1977 ...... 2.90 0.19 0.160 77 77 0.110 0.090 90 90 1978 ...... 3.40 0.11 0.160 88 89 0.035 0.090 103 105 1979 ...... 3.40 0.16 0.160 89 89 0.010 0.090 102 105 1980 ...... 3.63 0.50 0.160 103 95 0.220 0.090 116 112 1981 ...... 3.81 0.14 0.160 99 99 0.060 0.090 116 117 1982 ...... 4.05 0.18 0.160 106 105 0.090 0.090 125 125 1983 ...... 4.30 0.20 0.160 113 112 0.150 0.090 134 132 1984 ...... 4.38 0.53 0.160 123 114 0.300 0.090 140 134 1985 ...... 4.38 0.74 0.160 128 114 0.420 0.090 144 134 1986 ...... 4.38 0,78 0.160 129 114 0.430 0,090 144 134

apriorto 1g73 target ~ric. is blended average Priceto program participants reflecting national average price received by farmers and the marketing ceflificate ‘alue averaged for participant’s total production. Post-1973 target price is loan rate plus deficiency payment bRevenue is market premium piustarget price times yield. cRevenue is government premium plus target price ‘imes yield

SOURCE: U.S. Department of Agriculture, Statistical Reporting Service, Agricu/tura/Statistics, various issues. by the target price deficiency payment program, ers areas such as standards for approving ware- which pays a producer $1.98/bushel more than houses, inspection requirements, load out and the market. Thus the opportunity cost of de- delivery requirements, and settlement proce- creasing yield and increasing protein is $4.38 dures (3). (target price) This creates a high-protein premium needed to render a producer indiffer- Warehouses, for the purpose of applying the ent between producing 14 percent and 15 per- UGSA, are defined on the basis of whether in- cent protein wheat. Similar results are shown spections sponsored by the Federal Grain In- in table 9-13 for HRW wheat in Kansas. spection Service (hereafter referred to as "official inspection’’) and UGSA-approved weights Government Storage Policies are available. Country elevators are those locations where official inspections and UGSA The Commodity Credit Corporation (CCC) of weights are not available, while terminal ele- the U.S. Department of Agriculture (USDA) vators do have these available. Within the enters into agreements with commercial ware- UGSA, different rules apply to country and ter- houses to handle and store grain. This covers minal warehouses. grain owned by CCC, pledged to the agency as collateral under the price support program, de- Inspection requirements obviously differ livered to the warehouse for purchase by CCC since the distinction between country and ter- under a price support program, delivered to the minal elevators is based on whether official in- warehouse in liquidation of a price support spection is available. In general, grain shipped loan, or held by CCC for any other reason. The into and out of terminal elevators must be offi- contractual agreement is referred to as the Uni- cially inspected. However, CCC retains the form Grain Storage Agreement (UGSA). It cov- right to have quality determined at other points 229

Table 9-11 .—Theoretical Revenue for a One-Acre Farm in Kansas, 1965-86

25 bushel/acre/15% protein 30 bushel/acre/14% protein Protein premium Revenue per acre Protein premium Revenue per acre Target (dollars/bushel) (dollars/acre) (dollars/bushel) (dollars/acre) Year price a Market Loan rate Market b Loan ratec Market Loan rate Marketb Loan ratec 1965 ...... 1.69 –0.02 0.0450 58 61 — 69 69 1966 ...... 1.84 0.05 0.0450 66 66 — 75 75 1967 ...... 1.73 0.03 0.0450 62 62 — 71 71 1968 ...... 1.80 0.17 0.0450 69 65 — 74 74 1969 ...... 1.89 0.03 0.0450 67 68 — 77 77 1970 ...... 2.00 0.15 0.0450 75 72 — 82 82 1971 ...... 1.79 0.06 0.0450 65 64 — 73 73 1972 ...... 1.72 0.05 0.0450 62 62 — 71 71 1973 ...... 1.47 0.08 0.0425 54 53 — 60 60 1974 ...... 2.05 0.44 0.0425 87 73 — 84 84 1975 ...... 2.05 0.42 0,0450 86 72 — 84 84 1976 ...... 2.29 0.31 0.0450 91 81 — 94 94 1977 ...... 2.90 0.09 0.0450 105 103 0.005 119 119 1978 ...... 3.40 0.03 0.0450 120 121 0.005 139 139 1979 ...... 3.40 0.09 0.0450 122 120 0.005 139 139 1980 ...... 3.63 0.05 0.0450 129 129 0.005 149 150 1981 ...... 3.81 0.03 0.0450 134 135 0.005 156 156 1982 ...... 4.05 0.19 0.0450 148 143 0.005 166 166 1983 ...... 4.30 0.30 0.0450 161 152 0.005 176 177 1984 ...... 4.38 0.19 0.0450 160 155 0.005 180 180 1985 ...... 4.38 0.34 0.0450 165 155 0.005 180 180 1986 ...... 4.38 0.15 0.0450 159 155 – 0.005 180 180 aprior t. 1973 target price is blended average price to program participants reflecting national average PriCe received by farmers and the marketing certificate ‘alue baveraged for participant’s total production. Post-1973 target prices is loan rate plus deficiency payment. Revenue is market premium plus target price times yield. Cflevenue is go ve rnment premium plus target price times yield. SOURCE:US Department of Agriculture, Statistical Reporting Service, “AgriculturalS tatistics;’ various issues,

Table9-12.—lmplied Premium Necessary for HRS Producers To Be Indifferent About Growing 14 or 15 Percent Protein Wheat

Yield Protein Premium a Loan rate Revenue b (bushel/acre) (percent) (dollars/bushel) (dollars/bushel) (dollars/acre) 29...... 15 0.53 2.40 144 28...... 15 0.64 2.40 144 27...... 15 0.75 2.40 144 26...... 15 0.87 2.40 144 25...... 15 1.00 2.40 144

aPremiums are derived from equating TR to $144/acre, + bRevenue (TR) was derived asTR = YP* Dp + (’fa ” po) ‘a* ‘remium where YP is proven yield (30 in this case), DP is the deficiency payment, Ya is actual yield (29. .25), P. is market price or loan rate. SOURCE: Office of Technology Assessment, 1989. and as agreed to by the warehouse operation out of country elevators by truck, quality is de- and CCC. The quality of producer deliveries termined on the basis and at a point specified for liquidating price support loans at terminal in the CCC loading order. For all other carriers, elevators is determined as agreed to by pro- it is obtained at destination or at a point speci- ducer and warehouse receiver. fied in the loading order. Quality determination on grain received into When grain is accepted for storage, the ware- country elevators is based on agreement either house operator must issue negotiable ware- between the warehouse and CCC or between house receipts that show results for all factors producer and the warehouse. For grain loaded contained in the grain standards and furnish ——

230

Table 9-13.—lmplied Premium Necessary for HRW Producers To Be Indifferent About Growing 11 or 13 Percent Protein Wheat

Protein Premium a Loan rate Revenue b Yield (bushel/acre) (percent) (dollars/bushel) (dollars/bushel) (dollars/acre) 39...... 13 0.10 2.40 179 37...... 13 0.24 2.40 179 35...... 13 0.39 2.40 179 33...... 13 0.56 2.40 179 31 ...... 13 0.75 2.40 179

apremium~ are derived from equating TR to $179/acre = bRevenue(TR) was derived asTR ‘ P

+ i where YOis proven yield (41 inthiscase),“‘p DPts+ ‘y’ the ● ‘!)delclency‘a•‘re payment,m um Ya isactualyleld (39 31), Po is market price or loan ratd, SOURCE” Office of Technology Assessment, 1989 all weight and quality certificates to CCC. These representing a specific grade with weighted receipts are then used to determine the quan- average quality to a terminal elevator, each ship- tity and quality of the grain being stored for ment must meet the specific grade and weighted CCC and as the basis for issuing loading orders. average results. CCC can request a unit ship- CCC uses the individual factor results reported ment (a minimum 10 railcars shipped on the on the various warehouse receipts for comput- same bill of lading to comply with a tariff that erized blending to arrive at weighted average offers rate incentive). When unit shipments are grade and factor results. These averages then called from a terminal elevator, individual rail- serve as the grade and weighted average qual- cars will be accepted if they do not grade more ity that appears on the loading order. In some than one grade below the weighted average cases, this has resulted in a higher grade than grade and no lower than the lowest grade ware- is represented by any of the warehouse receipts house receipt. (2). For example, grain at grade Nos. 2,3, and CCC may reject shipments of grain loaded 4 can be blended to arrive at a weighted aver- out of terminal elevators if: age grade of No. 1 even though no individual warehouse receipts have been issued for No. 1. 1. the quality is lower than the weighted average quality or specific quality called for Recently CCC amended the UGSA regarding even though it meets the specific grade, load out and delivery requirements for termi- 2. if it does not meet the unit shipment re- nal elevators in order to restrict computerized quirement, or blending to three broad categories. Factor re- 3. if it is not fairly representative of the qual- sults for grade Nos. 1, 2, and 3 will be blended ity ordered. together as one category, factor results from grade Nos. 4 and 5 as the second category, and At country elevators, the warehouse opera- results from sample grade as the third. The tor must load a grade and quality that is fairly amendment also specifies that blending should representative of the quality described by ware- not result in a weighted average quality of a house receipts. Unit shipments can be loaded higher grade than reported on at least one-third from country elevators under the terms spelled of the warehouse receipts used as the basis for out for terminal elevators when that is agree- determining quality. able to the warehouse and CCC. On grain delivered from country elevators, the grain may Load out and delivery requirements con- be rejected if it does not meet the requirements tained in the UGSA call for the warehouse to specified in the loading order. CCC, however, deliver the grain ordered shipped by CCC. At will not reject individual railcars, except those both country and terminal elevators, the quali- grading sample grade, in a unit shipment from ties represented by the warehouse receipts country elevators as long as the whole shipment serve as the basis for the load out quality re- is fairly uniform in terms of the quality called quirements. When CCC surrenders receipts for in the loading order. 231

Settlement for load out is based on the value country elevators handling corn charge on aver- of the grain delivered and the grain ordered age 7.92 cents/bushel for handling inbound shipped by CCC using premium and discount truck deliveries and 8.79 cents/bushel for out- schedules established by the agency. On grain bound by rail. The average storage charge there delivered from terminal elevators that is ac- is 37.74 cents/bushel. Based on these figures, cepted by CCC, settlement will be based on the a country elevator that takes in corn, holds it value of the net deficiencies for all grain in the for 1 year, and then loads it out receives 54,45 loading order. No discounts will be applied on cents/bushel for handling and storing, unit shipments if the quality in all railcars equals the weighted average quality called for The USDA premiums and discounts for corn in the loading order, The warehouse operator do not completely reflect the market discount must pay CCC for the value of underdeliveries levels. For example, USDA for June, 1988 in quality, but CCC will not pay for the value assessed a 1-cent discount for corn damaged of overdeliveries. This is not the case for grain between 5.0 and 6.0 percent. A 2-cent discount shipped from country elevators, as CCC will was assessed for every l-percent increase above pay for the value of their overdeliveries. 6.1 percent. Yet, market discounts for corn arriving in Kansas City on June 15, 1988 were 3 When grain is rejected at terminal elevators, cents per percentage point above 5,0 percent, the warehouse will not be given credit for load- Thus corn containing 7.4 percent damage is ing out that quantity. The rejected grain must assessed a 9 cents/bushel discount by the mar- be replaced even though additional grain must ket, but only 5 cents/bushel by CCC. be obtained to meet the loading order issued by CCC. The agency can accept rejected grain All these considerations–the fact that CCC if agreement is reached between both parties accepts grain below the quality represented by on a discount prior to CCC’s authorization to warehouse receipts, the costs of maintaining ship. quality while in storage, the revenue received from handling and storage, and the less-than- At country elevators, the warehouse opera- market discounts that are applied—combine to tor replaces the rejected grain at CCC’s option. create a situation in which the benefits of main- If rejected grain is not replaced, however, CCC taining quality must be weighed against the eco- sells it for their account. In determining values nomic benefits of delivering grain of poorer for grain shipped from country elevators, spe- quality than indicated on warehouse receipts. cial provisions have been included for sample Furthermore, the economics of this situation grade shipments not required by the loading are more dynamic at country than at terminal order and a 10 cents/bushel charge is included elevators. for rejected grain that is not replaced. As noted, grain shipped from country eleva- The differences in CCC rules as they pertain tors can be rejected if it does not meet the qual- to country versus terminal elevators creates ity specified in the loading order, but country some unusual problems for grain quality. The elevators do not have to replace the grain, in fact that CCC does not apply the same rules is contrast to terminal elevators. When country a negative influence on the quality of CCC grain. elevators request unit shipments, the quality of Given that CCC premiums and discounts do not individual railcars shipped as part of a unit will always reflect the market, the possibility there- not be discounted as long as the average for fore exists for quality deterioration of grain the unit is fairly representative of the quality stored by country elevators and to some degree ordered. For unit shipments from terminal ele- by terminal elevators. vators, on the other hand, individual railcars are discounted. CCC policies therefore allow USDA publishes figures for State average movement from country to terminal elevators UGSA handling and storage rates for country of grain that is inferior in quality to what must and terminal elevators. In Iowa, for example, be shipped from the terminal elevators, plac- -—— —1

232

ing more responsibility on them to maintain Figure 9-2. - Producers’ Protein Choice for Wheat quality. Percent I (o-1) Impacts of Markets, Farm Programs, and Technology on Quality Agronomic practices and variety choice influence both the quantity and quality of production despite the uncertainties of biological processes. For example, the physical relationship between fertilizer and yield is well known, and there is some evidence that producers adjust yields in response to changing economic conditions. It is also plausible that quality characteristics adjust with changing economic and technological conditions. Changes in farm programs and market prices influence producer decisionmaking regarding yield versus quality. c Protein This section examines the extent of and poten- a: Percent yield loss from higher protein tial for adjustments in quality content (via wheat b: Percent price gain from a protein increase protein) in reaction to economic variables. c: Protein level that would maximize profits

The trade-offs governing yield and protein SOURCE: Office of Technology ~nt 1989 choices are somewhat imprecise biological relationships. In particular, yield and fertilizer are reflecting the reduced yields that accompany positively related because soil nutrients stim- increases in protein. The shape of the percent- ulate grain production. Also, yield and protein age price gain function depends on the char- are inversely related because varieties may be acteristics of the protein premium schedule. For chosen with relatively high yield and low pro- demonstration purposes, it is a downward slop- tein or vice versa. ing function of protein content. However, it Producers are faced with a conflict between could be flat, which would imply the percent- incentives and trade-offs, or between improving age price gain is constant across protein levels. quality and reducing production. Production The protein level that would maximize pro- on a given parcel of land can be expanded ei- ducer profits occurs where the percentage price ther through more intensive farming practices gain and yield loss are equal. From the produc- or through reduction in crop quality. Resolu- er’s perspective, this would be the most desira- tion of these alternatives requires evaluation ble protein level. of contributions to profits by small changes in Thus, the producer’s choice between expand- fertilizer and protein content. The profit con- ing yield or protein entails evaluation of the tribution of a l-point increase in protein con- trade-off of the economic returns associated sists of an increase in revenue due to the higher with each alternative. As protein premiums price and a decrease in revenue due to reduced change (e.g., due to a change in the market), yields. Profits can no longer be increased when the percentage price gain function (b) shifts, the revenue gain from increased yield and the resulting in a different optimal protein level. loss from reduced protein offset each other. Similarly, if target prices increase, at a given The functions influencing the producer’s protein premium level in cents/bushel, the pro- choice of protein level are illustrated in figure tein premium as a percent of target price dimin- 9-2. The yield loss function is upward sloping, ishes, resulting in a reduction in the desired . . -

233 protein level. Likewise, as technology changes, level. One explanation is that in both cases, but the yield loss function would change, also re- especially Kansas, only a narrow range of pro- sulting in a different desired protein level, tein choices is available from plant breeders, thereby limiting producers’ ability to respond This conceptual framework suggests that pro- to economic variables (4). ducers can and do respond to protein premiums in their production decisions. An analysis of A decline in protein content of 0.2 to 0.5 per- the extent to which producers have responded cent has occurred in Kansas and North Dakota to changes in the market in variety choice and during the last 20 years (4). This decline co- therefore protein levels in Kansas and North incides with the adoption of new generations Dakota showed that protein levels have been of technology; semidwarf varieties released decreasing in Kansas since 1978. Protein levels since the 1970s have included varieties with in North Dakota have been more variable, with lower protein levels than those previously avail- a reduction from 1979 to 1985, followed by a able. Producers’ choices among varieties in- slight increase in 1986 (4). clude several factors in addition to protein content, such as yield advantage and disease This study found overall only a small and oc- resistance, that may be the primary influences casional protein response to market incentives. on seed selection. Decisions about yield advan- In North Dakota, a change in the protein pre- tage and disease resistance may have indica- mium from historical minimum to maximum tions for protein levels, but it does not appear resulted in a 0.3 percent change in the average that protein incentives have a strong influence protein content. There is no evidence of any on the average protein content of the Great protein response in Kansas. Both States regis- Plains wheat crop. tered a long-term downward trend in protein

FINDINGS AND CONCLUSIONS Farm programs have played an important those of the market. The spread of pre- role in U.S. agriculture. Because they send in- miums and discounts for protein has nearly centives throughout the system, they have the always been less than that for market potential to affect quality. Two farm program premiums/discounts, and this difference provisions are generally applicable: the loan has been increasing in recent years. The rate program and its associated premiums and signals transmitted via the loan rate thus discounts for deviations from a specified qual- do not provide incentives for quality im- ity, and the target price/deficiency payment pro- provement and, because of these spreads, gram, which bases payments on yield. To the inferior quality wheat will have a tendency extent that yield and quality are inversely re- to go to the loan program. lated, incentives to increase yield put pressure ● There is a distinct trade-off in production on producers to reduce quality indirectly. Anal- between yield and protein. In recent years ysis of these two aspects of farm programs re- this trade-off has been increasing, suggest- sulted in the following findings. ing the opportunity costs of maintaining ● The administration of loan rate values for a certain protein level in terms of yield fore- wheat has changed over time. In the 1960s gone is rising. two additional premiums/discounts for ● The target price program provides an in- quality were available in addition to those centive to increase yields because of a for grade: one based on sedimentation tests higher price level per bushel. From a pro- and another for variety discounts. These ducer perspective the optimum protein were discontinued in the early 1970s. level decreases as target prices increase. • Substantial differences exist between loan As target prices stimulate higher yields and rate premiums and discounts relative to therefore lowered protein levels, pressure 234

to increase protein premiums in the mar- The target price program has longer term im- ket has escalated due to a shortage of high pacts. Incentives are transmitted throughout protein wheat. the production sector to increase yields. The transmission of signals from producers to plant Given these findings, a combination of pol- breeders and ultimately to variety development icy and institutional factors may inhibit pro- is along, dynamic process. The target price producer response to quality incentives. Public gram causes underlying pressure for reduced information about the yield and quality conse- protein levels in the market and thus fundamen- quences of particular variety selections is not tal pressure on protein premiums. There has generally available. Further, in some regions been little response in the past to variability in of the country the first point of receipt in the protein premiums. This could be due in part market channel typically does not apply to in- to constraints of technology and variety devel- dividual producers premiums and discounts for opment, and in part to release programs that quality. And finally, the range of protein or qual- have been given persistent signals over the ity choices available to producers from the plant years for increased yield. breeders is small and may preclude adjustment. Results of this analysis of farm programs were Farm programs potentially have important presented in testimony before the Senate Com- impacts on quality in commodities such as mittee on Agriculture, Nutrition and Forestry wheat, corn, and soybeans in which the loan and the House Agriculture Committee. Con- rate program is an important feature and where gress then amended the U.S. Grain Standards trade-offs exist between yield and a major qual- Act in Public Law 100-518 to direct the Secre- ity factor such as protein. When the loan rate tary of Agriculture to establish a pilot project program is less than market premiums and dis- for the 1989 wheat, soybeans, and feed grains counts, it results in distortions. The most im- crops to determine a method of requiring the portant one is that the incidence of inferior Commodity Credit Corporation to determine quality is not reduced. Given the amount of a schedule of premiums and discounts on grain carryover storage of grain in the United States offered as loan so as to encourage the market- between crop years compared with other ex- ing of high-quality grain. porting countries, inferior quality grain is distributed over several subsequent years.

CHAPTER 9 REFERENCES

1. Cochrane, W., and Ryan, M., American Farm 4. Wilson, W., Gallagher, P., and Riepe, J., “Analy- Policy (Minneapolis, MN: University of Min- sis of Demand for Wheat Quality Characteris- nesota Press, 1976). tics,” a background paper prepared for the Office 2. National Grain and Feed Association, Grain Mer- of Technology Assessment, U.S. Congress, chandising and Storage in 1987-88 (Washington, Washington, DC, 1988. DC: 1987). 5. Zeleny, L., “Criteria of Wheat Quality,” Wheat 3. U.S. Department of Agriculture, Commodity Chemistry and Technology (St. Paul, MN: Ameri- Credit Corporation, “Uniform Grain Storage can Association of Cereal Chemists, 1978). Agreement (UGSA),” Pub. No. CCC-25, Washing- ton, DC, 1988. —. - —..

Chapter 10 Comparison of Technologies and Policies Affecting Grain Quality in Major Grain-Exporting Countries - - . --- - . . -

CONTENTS

Page Production Technologies and Practices...... 237 Handling Technologies and Practices at First Point of Receipt ...... 239 Drying ...... 239 Cleaning ...... 239 Storage and Handling ...... 239 Transportation to Ports ...... ,...... 239 Handling Technologies and Practices at Export ...... 241 Storage...... 241 Drying and Cleaning ...... 241 Blending ...... 241 Institutions and Regulations Affecting Grain Quality ...... 241 Seed Variety Control...... -...... 241 Grain Receival Standards ...... ! ...... 244 Marketing by Variety...... 244 Grain Inspection Authority and Grade Standards ...... 244 Government Policies Affecting Grain Quality...... 244 Price Policy...... 244 Farm Storage ...... ,246 Comparison of U.S. Institutions, Policies, and Technologies With Those of Other Grain-Exporting Countries. .. -...... -.-246 Policy ...... , ...... 246 Institutions ...... 246 Technologies and Grain-Handling Practices ...... 247 Tables Table Page 10-1. Comparison of Production Technologies of Major Grain-Exporting Countries ...... 238 10-2. Comparison of Handling Technologies and Practices at First Point of Receipt of Major Grain-Exporting Countries ...... 240 10-3. Comparison of Handling Technologies and Practices at Export of Major Grain-Exporting Countries ...... 242 10-4. Comparison of Institutions and Regulations Affecting Grain Quality of Major Grain-Exporting Countries ...... 243 10-5. Comparison of Government Policies Affecting Grain Quality of Major Grain-Exporting Countries ...... -....245 . . .

Chapter 10 Comparison of Technologies and Policies Affecting Grain Quality in Major Grain-Exporting Countries

This chapter focuses on the grain systems of each country except Canada to gather needed the other major exporters—Argentina, Brazil, information. The study teams arrived during Canada, France, and Australia—in order to un- the harvest to observe the system at work. In- derstand better their grain systems as they re- formation was gathered via numerous inter- late to quality and to consider adopting some views with producers, handlers, processors, ex- aspects of those systems. porters, grain inspectors, plant breeders, researchers, and government officials. Detailed Observed differences among countries are reports on each country are found in a second important because the differing strategies in- report in this assessment, Grain Quality in fluence incentives and the quality of the final International Trade: A Comparison of Major product. A comparison of the major technol- U.S. Competitors. ogies, market channels, pricing strategies, and grading practices in each country provides the This chapter looks at the technologies, han- background for a comparison and analysis of dling practices, institutions, and government the quality delivered into the domestic and ex- policies that affect grain quality in each coun- port markets of each. Little published informa- try and compares them in each case with the tion is available about the grain systems of the U.S. system. The technologies are basically the other countries, especially with regard to tech- same, with some minor variations. But major nologies, institutions, and policies affecting differences exist in the use of technologies, in quality; Canada is a major exception. To pro- institutions established, and in policies that af- vide the documentation needed to prepare this fect grain quality. chapter, OTA formed study teams to travel to

The major grains—corn, wheat, and soybeans Common Agricultural Policy of the European —are grown under various soil and climate con- Community (EC). ditions and differing cultural practices (table 10-1). Most of the best soil conditions in each Harvesting technologies are similar in all country are used to produce these grains. Cul- countries. The only difference of note is in Aus- tural practices differ, depending on site condi- tralia, where a second screen may be used on tions. All the countries, however, use mecha- the combine to filter nonmillable materials from nized soil preparation, seeding, and cultivation. the wheat. Farmers have the incentive to use this practice because they do not want their Differences exist in the degree to which fer- wheat rejected at the country terminal. No such tilizer, insecticides, and herbicides are used. France is the most intensive user of fertilizer, incentive exists in the United States at the point and this is reflected in its tremendous increase of first receipt. in wheat yield over the past 10 years. The high Major differences among countries can be yields and fertilizer rates are primarily a re- found in the capacity for and reliance on on- sponse to economic incentives provided by the farm storage. The United States has the capacity

237 Table 10-1 .—Comparison of Production Technologies of Major Grain-Exporting Countries

, . . ,. Activity United States Argentina Brazil France Canada Australia

Soils and topography Major production areas Flat, fertile soils in the Expanding production Major production areas Wheat grown for export Major wheat production are on stable soils. Low corn belt. Rolling land on newly cleared soils. for wheat located north in four soil zones in areas include south and erosion. Fertility stabi- farther south in wheat Long slopes and year- and southwest of Paris western Canada. All east coast, and western Iized. Soybeans usually and sorghum area. Long round erosion and leach- on stable, low erosion wheat grown under dry- Australia. Rolling, dry incorporated in a rota- rotations including leg- ing create more prob- soils. Rolling land farther land conditions. land. Extended rotations tion with corn or other ume pasture. Soybeans lems of maintaining fer- south in corn-producing with clover. crops. Winter wheat and wheat are often tility. Extensive terracing area. grown under dry land double-cropped. required. Continuous conditions. soybeans not unusual in Parana and Mato Grosso — do Sul. Cultural practices. Fertilizer, insecticide, Limited use of fertilizer Fertilizer, insecticide, High use of fertilizer, in- Fertilizer, insecticide, Phosphatic fertilizers, in- and herbicide used as on corn, increasing use and herbicide used as secticide, and herbi- and herbicide used as secticides, and herbi- needed. Mechanized soil on wheat. Limited use of needed. Mechanized soil cides. Mechanized soil needed. Mechanized soil cides used as needed. preparation, seeding and herbicides and insecti- preparation, seeding and preparation, seeding, preparation, seeding, Mechanized soil prep- cultivation. cides. Mechanized till- cultivation. and cultivation. and cultivation. aration. age seeding and cultivation. Harvesting ...... Self-propelled combines. Self-propelled combines. Self-propelled combines. Self-propelled combines. Self-propelled combines. Self-propelled combines. Wheat crop in Northern Wheat crop is swathed plains is swathed before before harvest. harvest. On-farm storage On-farm storage available Only 5 to 10 percent Virtually no on-farm stor- Very little stored on On-farm storage for the Virtually no on-farm stor- for about 50 percent of stored on farms. Only age. farms, majority of wheat. age. corn and soybeans. very large farms use on- farm storage. ——. .— . SOURCE: Office of Technology Assessment. 1989 . . . . -—

239 to store about half the on-farm grain produced. quality problems. Greater use of on-farm stor- In Argentina, Brazil, France, and Australia, on- age would, according to the Australians, in- farm storage capacity is small. Quality control crease infestation and/or pesticide residue, An is the major reason given by Government agen- important fundamental of grain marketing in cies for discouraging on-farm storage. In Aus- many countries is that the establishment of tralia, for example, the Wheat Board empha- stringent requirements at the first point of re- sizes cleanliness and insect control in wheat. ceipt precludes problems downstream in the It is their belief that storage provided off-farm marketing system. Minimal on-farm storage is by handlers, more experienced with and knowl- an important component of that concept. edgeable about the procedure, results in fewer

HANDLING TECHNOLOGIES AND PRACTICES AT FIRST POINT OF RECEIPT Handling technologies and practices at first grain at the first point of receipt ensures that point of receipt include the receiving, drying, foreign material remains, adding to the cost of cleaning, storage, conveying, and transporting transporting and handling grain throughout the of grain (table IO-2). Few differences exist rest of the marketing channel. among the countries in how grain is received. Country elevators basically accept grain in ei- Storage and Handling ther farm wagons or trucks. Some countries (the United States) are more mechanized than others The technologies for storage and grain han- (Brazil). But the differences are minor and in- dling are the same for all countries. Differences consequential as far as quality is concerned. arise in the configuration of storage units and in the speed of handling equipment, In some Drying countries, such as the United States, vertical or upright storage facilities predominate. Flat The same type of drying technology basically storage is most prevalent in Brazil. And in Aus- is used in all countries, Most corn needs to be tralia, storage facilities vary by state. dried everywhere. Soybeans in Brazil are usually dried, but in Argentina and the United Transportation to Ports States this is done to a lesser extent. High- temperature dryers, either gas- or oil-fired, are Rail and truck are the major modes for trans- used for the most part. Wheat drying varies by porting grain to port facilities in most coun- country. France harvests wheat above 15 per- tries. The United States is an exception in that cent moisture and dries it for safe storage. Aus- it also has major waterways for transport. Barge tralia, on the other hand, rarely needs to dry transportation is more cost-effective than truck wheat because of’ the country’s dry climate. and rail. From a quality viewpoint, however, it has potential problems. As discussed in chap- Cleaning ter 7, moisture uniformity is important in maintaining quality. During shipment, moisture mi- Cleaning practices differ by country. In the gration can be significant if grain is exposed United States and Canada, grain is generally to several outside temperature and humidity not cleaned at the first point of receipt. In Ar- changes. Barges seem to be more susceptible gentina, Brazil, and France, economic incen- to these factors than railcars. In addition, grain tives exist to clean grain at this level in the may need to be handled more at times because market channel. In fact, in France it is not un- of barge movement, which increases the likeli- common for wheat to be cleaned going in and hood of damaging the kernel–especially for coming out of country elevators. Not cleaning corn, The United States may have an advan- Table 10-2.—Comparison of Handling Technologies and Practices at First Point of Receipt of Major Grain-Exporting Countries —

Australia Activity United States Argentina Brazil France Canada— — Receiving . . . . Truck dumps and hoists Truck dumps and hoists Truck dumps and hoists Truck dumps and hoists Truck dumps and hoists Truck dumps and hoists for virtually all farm wag- at larger facilities. A few at larger facilities. Many for farm wagons and for farm wagons and for farm wagons and ons and trucks. receiving stations lack vehicles unloaded by trucks. trucks trucks. hoists. Waiting lines are hand. common at harvest. — . . ..— Drying ...... The majority of corn is Majority of corn and some Majority of soybeans Some drying of wheat if The majority of wheat is Generally wheat does not dried and stored on farms. soybeans and wheat are dried. Wood and coal harvested above 15% dried and stored on farm. need to be dried. No Most of the corn delivered dried in high-temperature used for fuel. moisture Majority of corn Propane dryers are most dryers at bulk handling au- at harvest is dried by first dryers. Nearly all country dried with high- tempera- common. thority (BHA) facilities. handler in gas-fired elevators have dryers. ture dryers similar to dryers. Little drying of Usually oil-fired. those used in U.S. soybeans or wheat. Cleaning . . . . . Generally grain is not Since there is a premium Soybeans that exceed Most wheat cleaned going Very little cleaning done Generally wheat does not cleaned when it comes off for No. 1 grain, most grain Brazilian export quality into country elevator and at this level of marketing need to be cleaned. No the farm. It is placed in is cleaned to less than (foreign material 1.OO/O) are some cleaned going out. system. cleaners at BHA facilities. bins according to quality 1.OO/O foreign material. cleaned. Corn is cleaned Corn routinely cleaned be- so that it can be blended to less than 1.0%. cause of broken kernels. with grains of different quality when loaded out. Storage ...... Flat and upright storage. Flat and upright storage. Flat and upright storage. Upright storage predomi- Vertical cement bins; flat Upright, flat, and bunker. Upright predominates. Determined by relative Flat predominates. nates. Grain often turned storage and steel tanks. Predominance of any type costs and handling re- and sampled for end-use Vertical predominates. varies by state. quirements. quality tests. Also use flat storage with numerous vertical bins, Handling . . . Use augers, conveyors, Use augers, conveyors, Use augers, conveyors, More use of chain con- Use augers, conveyors, Use augers, conveyors, belts, and vertical legs. belts, and vertical legs. belts, and vertical legs. veyors than belts. belts, and vertical legs. belts, and vertical legs. Transportation to ports ...... Trucks for short hauls. Truck and rail choice de- Truck predominates for all Grain predominantly trans- Grain predominantly Most wheat is moved by Rail and water for long termined by cost and distances. Water available ported by truck. moved by rail over long rail, some by truck. distance. shortage of rail service. only in southern district distances. Barge available for move- moving beans to Rio ment to Buenos Aires. —. Grande do Sul. .— SOURCE Off Ice of Technology Assessment, 1989 241 tage compared with other countries because a quality standpoint, this may not be an ad- barge transportation is more cost-effective than vantage. alternative modes of transportation. But from

Many of the handling technologies at the fi- ditioned for safe storage and handling. But in nal point in the marketing channel are similar most other countries, such as Argentina and among the countries (table IO-3). But, as with Australia, grain received at export has already the practices at first point of receipt, how they been conditioned at the first point of receipt. are used differs. A major exception is Canada, which cleans wheat at the port facility. However, Canada is storage presently studying this practice and the research indicates that cost savings exist in clean- Storage technologies do not vary among the ing wheat at inland terminals versus at export. countries. The number of bins for segregating A basic marketing fundamental of most export- by quality does differ, however, as well as the ing countries is to condition grain at the first speed of moving grain in and out of storage. point of receipt and avoid problems and costs The United States has the capacity to segregate at later stages in the marketing channel. grain into multiple bins for storage, which ex- pedites blending. Other countries, such as Ar- Blending gentina and Brazil, have few bins into which grain can be segregated by quality. Canada blends wheat to a degree at primary elevators but is limited to the extent it allows Drying and Cleaning blending at export terminals. Other exporters blend grains only to a small degree, mainly be- No major differences exist in either technol- cause it is uniform upon receipt. The physical ogies or practices of drying and cleaning grain facilities in these countries have been con- at this point. As grain basically is dried and structed to limit blending of wide margins of cleaned at the first point of receipt, there is lit- quality. In contrast, grain moving through the tle need for dryers or cleaners at export. The marketing channel in the United States is not United States is somewhat of an exception uniform. Blending is done across diverse qual- because many export facilities receive grain ities in an attempt to produce a uniform prod- directly from farmers. And grain must be con- uct for export.

Although the technologies of producing, Seed Variety Control transporting, and handling grain do not differ significantly among exporters, the use of them The fundamental area for influencing qual- does. And they differ to a large extent because ity is through incentives to plant breeders. All of the varying institutions in each country. This major grain-exporting countries except the section discusses the institutions and regula- United States have instituted formal mecha- tions important in influencing grain quality in nisms for controlling variety development and these countries (table IO-4). release. In France, Canada, and Australia, va- Table 10-3.—Comparison of Handling Technologies and Practices at Export of Major Grain-Exporting Countries

Argentina Activity United States Brazil —. France Canada Australia Storage . . . . Vertical storage with mul- Vertical silos predominate. Vertical and flat storage. Upright bins predominate, Vertical, cement bins pre- Vertical storage segre- tiple bins, high speed in Few bins for quality segre- Small number of bins stored according to end- dominate. Blending is very gated by quality and out. Segregated by gation. Iimits segregation by use qualities. limited—grades must be quality to expedite blend- quality. kept separate. ing at time of shipping. ..——— Drying . . . . Most export facilities have Grain dried by first han- Grain dried by first han- Very few export elevators Most export facilities have No dryers at export fa- large drying capacity. Corn dler; dryers at export are dler, dryers at export sel- have dryers; grain is con- modest drying capacity. cilities is often dried if received seldom used. dom used. ditioned by first handler. direct from farmer but soybeans and wheat are seldom dried. Cleaning . Most export facilities have Grain cleaned by first han- Grain cleaned by first han- Most export elevators do Most cleaning of wheat is No cleaners at export fa- capacity for cleaning. dler. Relatively small ca- dler. Little or no cleaning not have cleaners; grain done at this point in mar- cilities. Grain (mostly corn) often pacity cleaners. capacity. cleaned by first handler. keting system. cleaned prior to exporting. ———-——.. Blending . . . Normal practice. Econom- Limited blending because Limited blending because Some blending of wheat Blending at primary eleva- Limited blending at export ic incentive for blending of of uniform grain received of uniform grain received moving to export, but no tors, but at export only 2°/0 but only for a few factors. wide range of quality due and lack of physical facili- and lack of physical facili- incentive to blend wide of higher grade can be a to the extremes in quality ties for blending. ties for blending. margins of differing quali- blend from a lower grade. of grain accepted into the ties. system.. — SOURCE Office of Technology Assessment, 1989. Table 10-4.—Comparison of Institutions and Regulations Affecting Grain Quality of Major Grain-Exporting Countries -—— Activity United States Argentina Brazil France Canada Australia Seed variety control No State or Federal Committee of govern- Committee with broad Formal mechanism ex- Formal mechanism Formal mechanism- fol-- control. Release of vari- ment and industry must representation directs ists that regulates re- used to license new I owed as a prerequisite eties influenced to approve agronomic research and approves lease of varieties based varieties. Agronomic for release of varieties. some extent by land- properties, Quality fac- varieties. Quality is on agronomic and qual- and quality criteria Quality and agronomic grant universities. tors of minor influence. potential criterion but ity criteria. given equal weight in criteria are used Largely the market de- not currently effective. testing new varieties. termines adoption of varieties, —. .——— Grain receival standards ., . . . None. All types of qual- Grain not meeting a Soybeans not meeting Grain not meeting ex- Developed eight grades Wheat must meet mini- ity are accepted with specified minimum a minimum quality are port contract specifica- for CWRS to differenti- mum quality standards. appropriate discounts quality (Condition Ca- rejected at first point of tions can be rejected by ate quality, Lowest if not it IS allocated to for low-quality grain. mara) is rejected at first sale. surveying company or grade goes to feed mar- feed market. point of sale. receiving elevator. ket. Marketing by variety ., No mechanism exists Variety is not identified Variety is not identified Very common. Variety Licensed grain must be Very common-use vari- for variety identifica- in marketing channel. in marketing channel. often specified in visually distinguishable. ety control scheme to tion. wheat contracts facilitate segregation by classes. Grain inspection authority...... Federal Grain Inspec- Junta Nacional de Private inspection Private inspection Canadian Grain Corn- Export Inspection Serv- tion Service (FGIS), U.S. Granos —Government agencies. agencies. mission. ice of Department of Department of Agricul- agency responsible for Primary Industry. ture. agriculture Grade standards ...... Official standards es- Official standards es- Official standards are No official standards. Grain standards estab- Official standards established by FGIS. tablished by Junta. not used in export. Only official quality Iished by Canadian tablished by Depart- Quality is based on As- criteria are require- Grain Commission. ment of Primary sociation Nacional dos ments for intervention Industry. Exportadores de Cer- mechanism. eais contract. SOURCE Off Ice of Technology Assessment, 1989

f& cd 244 riety approval and release must take into ac- Marketing by Variety count quality as well as agronomic criteria. And quality is given equal weight with agronomic In some countries grain is identified in the criteria for approval of new varieties. Argen- marketplace by variety, which is used as a proxy tina and Brazil also have formal structures for for end-use value. France and Australia are the release of new varieties, but currently give more countries that use variety in the marketing of weight to agronomic criteria than quality. Im- wheat most extensively. Farmers in these coun- proving yields in these countries is more im- tries must declare in an affidavit the variety of portant than quality improvement at present. wheat marketed at the first point of receipt. But the mechanism is in place to consider qual- France and Australia use variety to facilitate ity criteria when it becomes necessary. The the segregation of wheat by class. The United United States stands alone as the only major States has no mechanism for variety identifi- grain exporter with no State or Federal Gov- cation. ernment involvement in release of new varieties. The U.S. market largely determines the Grain Inspection Authority and varieties adopted. Grade Standards Most of the countries have official standards Grain Receival Standards established by the Government and the inspec- Another common characteristic of most ex- tion of grain is conducted by a Government porters concerns receival standards. All coun- agency. Brazil and France are major excep- tries except the United States have minimum tions. France has no official standards or Gov- quality standards that must be met for grain ernment involvement in grain inspection. Qual- to be accepted at the first point of receipt. Grain ity standards have been established by state and that does not meet these standards is rejected, national agencies in Brazil but domestic and and is diverted to the feed market in most coun- export trade is based on a contract under the tries. However, the United States accepts all Association Nacional dos Exportadores de qualities of grain into the market channel, with Cereais. In France the quality requirements for appropriate discounts for low-quality grain. the EC intervention mechanism provide the Uniformity of quality is more difficult to attain minimum standards. Private agencies in both without minimum receival standards and pro- countries provide grain inspection services. vides the incentive for blending discussed earlier.

GOVERNMENT POLICIES AFFECTING GRAIN QUALITY As discussed in previous chapters, govern- program, premiums and discounts are estab- ment policies on agriculture play a major role lished for major grains, but as discussed earlier in determining the importance of quality in the the level of the premiums and discounts has market. These policies differ considerably not reflected market conditions since the 1960s. among the grain exporting countries. The most In addition, economic analysis clearly shows important policies affecting quality include that the price signals of the loan program fa- price policy and farm storage (table 10-5). vor yield over quality (see ch. 9). At the other extreme, the Argentine Government provides Price Policy a minimum price and establishes premiums for high-quality grain. The grain industry of Ar- Price policy and the signals it sends through gentina produces and conditions grain for the the market vary among the exporters. At one best quality grade. Brazil, France, Canada, and extreme is the United States. Through its loan Australia also have Government price policies Table 10.5.—Comparison of Government Policies Affecting Grain Quality of Major Grain-Exporting Countries —— .—— Policy United States Argentina Brazil France Canada Australia Price ...... Loan rate IS principal Government establishes Government establishes Key policy is European Initial producer price is Guaranteed minimum price policy, Includes minimum prices for farm- a minimum price prior to Community intervention the principal price policy. price (GMP) is key price premiums and discounts ers and exporters, Gov- planting. It is adjusted price, which includes Separate prices estab- policy. It is established for major grains but has ernment also establishes during the crop year to premiums and discounts lished for each grade of by class and provides not been responsive to premiums for high-quality account for inflation and for quality factors. Lower grain. Lower qualities of differentials for quality. market conditions. grain. political pressure. qualities of wheat equat- wheat equated to feed Lower qualities of wheat ed to feed values. values. equated to feed values Farm Storage Farm policy in past de- Government policy No Incentive for farmers Farm policy through the Producer deliveries ‘are Use of GMP provides no cade has encouraged ex- through pricing does not to store on farm. Common Agricultural regulated to primary ele- Incentive for delivery in tensive on-farm storage encourage on-farm or Policy (CAP) has not en- vators via quotas. On- post-harvest period, lead- and Inter-year storage inter-year storage couraged development of farm storage is substan- ing to minimal use of on- extensive on-farm stor- tial. farm storage. age. Also relatively limited Inter-year storage due to CAP. SOURCE Office of Technology Assessment, 1989 246 that include quality incentives for the grain in- deliveries to primary elevators. On-farm stor- dustry. age therefore is a requirement. However, grain is moved through the system during the market- Farm Storage ing year. In contrast, the United States has encouraged extensive on-farm storage through the Government policies also influence the loan program and farmers’ reserve. In addition, amount of on-farm storage. Most countries do it is unusual to market the entire crop in any not have policies that encourage on-farm stor- one year. Indeed, it is more common for grain age and/or inter-year storage. The exceptions— to be stored on-farm for more than a year, cre- Canada and the United States—do have incen- ating more potential for quality problems to tives for such storage. But there are differences. develop. Canada establishes quotas to regulate farmer

COMPARISON OF U.S. INSTITUTIONS, POLICIES, AND TECHNOLOGIES WITH THOSE OF OTHER GRAIN-EXPORTING COUNTRIES This final section focuses on the major differ- tries do not provide incentives for on-farm stor- ences between the U.S. grain system and that age. This allows grain to enter the market chan- of other countries. No one system is ideal. Only nel with a better likelihood that it will be by understanding how the U.S. system com- handled and stored with a minimum of quality pares with other exporters is it possible to be- deterioration. In fact, Australia has built its en- gin considering potential changes here to entire system around the concept of controlling hance quality. the grain as soon as possible off the farm to As noted, from a technological standpoint maintain quality. However, another distin- few differences exist among the countries. The guishing characteristic of the U.S. system is that grain has the potential for carry-over from one major differences revolve around exporters’ institutions and policies regarding grain quality year to the next, sometimes for as long as 3 to which influence how these technologies are 4 years. Other countries do not have the storage capacity for such carry-over. This forces applied. the marketing of most grain within a year of production and nearly eliminates any problem Policy regarding quality with inter-year storage. The United States has a farm price policy that affects grain quality in at least two ways: it pro- Institutions vides economic incentive for yield v. quality, The U.S. grain system has three major institu- and it provides economic incentive for on-farm tional characteristics regarding quality: storage. This stands in contrast to other countries. As indicated in chapter 9, premiums and 1. lack of a seed variety development and re- discounts are not reflective of market condi- lease program, tions. Even with price differentials, the eco- 2. lack of a variety identification mechanism, nomic incentive is for yield, and low-quality and grain moves into government loan storage 3. no minimum receival standards for grain. program. These major, fundamental differences from On-farm storage is a unique characteristic of other grain-exporting countries have a consid- the U.S. and Canadian systems. The other coun- erable influence on quality. 247

Seed Variety Development new varieties, especially of wheat, are not eas- and Release ily distinguishable. Chapter 6 discussed in detail the plant breeding programs for corn, soybeans, and wheat in Grain Receival Standards the public and private sector of the United As noted earlier, the United States is the only States. There is at best a loose mechanism for country that does not have minimal receival the development and release of new varieties. standards for grain. Producers can deliver any Committees, particularly at land-grant schools, quality of grain and it will be accepted with can evaluate new varieties. But there is no State appropriate discounts. Other countries would or Federal involvement in any formal way. Gov- not allow this. Grain that does not meet the ernment basically gives no formal signal as to established minimum quality may be rejected the criteria for release. The signal comes in- at the first point of sale. Keeping low-quality directly through the price support program, grain out of the market channel eliminates most which emphasizes yield and the agronomic quality problems at the export elevator and re- characteristics to achieve higher yields. In con- duces the opportunity for blending diverse qual- trast, Governments of other countries have for- ities. Once low-quality grain is in the system mal input into the criteria for development and it is much more difficult to keep it segregated release and they formally approve new vari- from higher quality grain or to keep it from be- eties. Quality is a major criteria they consider ing blended with such quality grain destined in the release of new varieties, at least for wheat, for export.

Variety Identification Technologies and Grain-Handling In some countries, mainly France and Aus- Practices tralia, not only is variety controlled for use by farmers but variety is also important as a proxy The policies and institutional structure of the for end-use value. An important feature of the U.S. grain system provide the framework for French marketing system is that variety is often various grain-handling practices. The technol- a contract term. In practice, varieties are speci- ogies for producing and handling are quite sim- fied as either an individual variety, a category ilar everywhere. The main difference is that the of varieties, or excluded varieties. Given that United States is slightly more efficient in their varieties are in general not usually distinguish- use. Differences do exist, however, as to when able by visual inspection, various mechanisms the technologies are used in the marketing are used at the first point of receipt to assure channel, the integrity of variety specification. First, in A case in point is cleaning. Most countries most cases, the cooperative receiving the grain except the United States clean grain at the first in France has sold the seed to the producer and point of receipt. Canada and Australia are two knows its variety. Second, producers must de- exceptions, but for different reasons. Canada, clare the variety at the time of sale via an however, is studying the economic feasibility affidavit. Third, the buyer can perform a rudi- of cleaning grain in the country versus at ex- mentary testing procedure or request an elec- port and will probably change. Australia does trophoresis test from a laboratory to verify the not clean because unlike in the United States, variety. By knowing the varieties at the time the farmers deliver grain that does not need to of receipt, country elevators are capable of bin- be cleaned. Basically, no economic incentive ning by varieties, or categories of varieties, and exists to clean grain at the first point of receipt of selling on that basis. The United States has in the United States. no mechanism for variety identification and instead relies on grade structure for segregating The other major handling practice in which quality, which is becoming more difficult as the United States differs from all other ex- . . - . — — - - - - . - —-

248 porters is blending. Blending of grain over wide uniformity in quality throughout the market margins of quality to create a uniform product channel. When grain reaches export, blending for sale is necessitated by the lack of any mini- is used in an attempt to produce a uniform qual- mum receival standards. Blending does exist ity meeting the buyer’s specifications. The OTA elsewhere, but not to the same extent. Blend- survey of foreign and domestic buyers of U.S. ing in other countries is done over narrow grain clearly indicated that lack of uniformity ranges in quality. These countries basically between shipments is buyers’ biggest complaint have a uniform quality moving through the sys- (see ch. 4). tem at any point in time. The U.S. system lacks ..

Chapter 11 Policy Options for CONTENTS

Page and Dimensions Problems ...... 251 Fundamental Advantages of the U.S. Marketing System ...... 251 Problem Areas ...... ,...... , . . ...:...... 252 Policy Options ...... 254 Market Solutions and Regulations...... ~ ...... 254 Interdependence of the Grain System ...... 256 Fundamental Policy Alternatives, ...... 257 Summary and Conclusions ...... 267

Figure Figure Page 11-1. Components of the Interdependent Grain System ...... 256 Table Table Page 11-1, Fundamental Policy Alternatives...... 257 .- . . ---

Chapter 11 Policy Options for Enhancing Grain Quality

Grain quality is influenced by numerous focused on delivering the optimum quality for highly interdependent features of the U.S. grain each domestic and foreign user. The inter- marketing system, including variety develop- dependence of the system means that more pol- ment, production, handling, and merchandis- icy alternatives exist than are traditionally con- ing. Trade throughout the system is facilitated sidered and that changes in any one part of the by a set of grain standards, and those involved system will have impacts elsewhere. in the market channel respond to incentives and disincentives established for quality character- The first section of this chapter on policy istics. Much of the policy debate on U.S. grain alternatives briefly describes the problems iden- quality has focused on grain standards, but they tified during this assessment. The second sec- are only one of many policy and regulatory tion discusses the interdependence of the grain alternatives that influence quality. Quality must system, and identifies a number of policy alter- be thus viewed as part of an integrated system natives and their implications.

The system for marketing grain in the United tages are identified that encompass several States has a number of important characteris- others. tics that affect quality. The handling (including export) and transport industries are highly 1. Efficiency competitive, with relatively limited government The U.S. marketing system performs a num- intervention. One important principle through- ber of complex functions—assembling, han- out the system is decisionmaker sovereignty: dling, conditioning, and allocating different Producers plant varieties that are perceived to qualities to domestic buyers in many locations be in their best interest; users (domestic and for export from a multitude of ports. Indeed, importers) specify and purchase qualities, given the quantity of grain produced, the many differ- a range of alternatives and prices, that are in ences in qualities produced at different loca- their interest; handlers and exporters condition tions, and wide-ranging locations of end-users and move grain in their own interest. Each de- and ports all mean that the U.S. marketing sys- cision assumes the sovereignty of the individ- tem is more complex and performs more chal- ual decisionmaker and is based on incentives lenging functions than the systems of any other and disincentives reflected in market premiums exporter. Yet the grain handling and transport and discounts for quality characteristics. system is more efficient than that of nearly all other countries. Efficiency is used here in the fundamental Advantages of the context of cost (or inputs used) in performing U.S. Marketing System the necessary marketing activities. Efficiency In comparing the grain systems of other ex- and competition assure lower marketing margins and higher prices to producers. porting countries (see ch. 10), several fundamental advantages of the U.S. marketing sys- 20 Productivity Growth tem are clear in addition to those discussed in chapter 2. At the risk of simplification and with Plant breeding in the United States is rela- the intent of being general, five broad advan- tively unfettered, compared with other coun-

251 252 tries, in terms of regulations over variety de- This is not necessarily the case in exports from velopment and release. Success of a variety is other countries. Major changes cannot be im- ultimately determined by the market for seed plemented in less than a year after they are man- stocks. Producers make choices in response to dated. Some other exporting countries adjust market incentives. Where comparisons are ap- factor limits with each crop year. propriate (e.g., in wheat), productivity growth as measured by yield exceeds that of most other exporting countries, with the exception of 5. Market-Determined Premiums France. Productivity differences are affected and Discounts by a multitude of factors including environ- In all countries, premiums and discounts ment, soils, other inputs, relative prices, insti- and/or regulations are used to provide quality tutions, and policies. Thus it is impossible to incentives to market participants. Those in the attribute yield differences to the institutional United States act through the interaction of the environment affecting varieties, but growth supply and demand for measurable quality char- rates are influenced by variety release pro- acteristics, i.e., the market for quality charac- cedures. teristics. Consequently, values of quality characteristics in the United States perhaps reflect 3. A Wide Range of Qualities the true values better than do the premiums and Compared with other countries, a wider discounts administered by government agen- range of intrinsic qualities is available in the cies of several other exporters, with the nota- United States, particularly for wheat. This is ble exception of France. Efficient determina- obvious given the class differences in wheat, tion of these price differentials is important which are facilitated by production regions of because these essentially allocate grain across differing environments and soils. There is also end-users and provide signals throughout the a wider range of physical and sanitary quality production and marketing system. Through in the United States. Although this is an advan- these differentials the system responds to needs tage in that more alternatives are available to of the market. buyers, some at lower costs, it maybe viewed as a disadvantage in the sense that “reputation” is affected. The uniformity problem discussed later in this chapter is a direct result of the mul- This assessment identified a number of im- titude of qualities available. In addition, given portant general problem areas that must be con- the lack of controls in the system, the multi- sidered when discussing policy alternatives. tude of qualities requires expertise on the part of importers if they are to fully benefit from Genetics and Variety Release the wide range. An inverse genetic relation often exists between yield and important intrinsic quality 4. Grading and Inspection System characteristics in each of the major grains. In The grading and inspection system in the the case of wheat, this relationship is well rec- United States provides grade determination by ognized between yields and protein quantity, an independent government agency (i.e., one and a similar situation exists in corn and soy- not having financial stakes in the transaction). beans. Breeding programs generally aim to im- The factors and limits in factors in the grade prove yield and disease resistance and satisfy standards are relatively stable across crop apparently desirable intrinsic quality goals. In years—e.g., No. 2 corn does not change from the case of corn, breeders have always sought year to year. Similarly, the definition of No. 2 to increase yield and improve harvestability, Hard Red Winter wheat does not change in the with intrinsic quality not being a priority. In grain standards, although intrinsic differences many cases yield is emphasized because intrin- not measured in the standards may change. sic quality characteristics, though important, 253 are not measured in the market. Incentives No standard can be perfect, and any revisions therefore are not transmitted through the mar- must consider trade-offs. To move toward an ket as readily as those associated with agro- ideal system, changes in grain standards should nomic characteristics such as yield, disease re- focus on grade-determining factors, non-grade- sistance, and harvestability. determining factors, and definition and measurement technology for official criteria. (Each Individual breeders or their institutions ex- of these, as well as their interrelationship, is ercise tremendous discretion regarding release described inch. 8.) Such a system would entail of varieties, However, this discretion is tem- minimal interference yet allow for improved pered by the market system, which determines efficiency in the market. the success of any release. Market efficiency requires measurement of relevant intrinsic Buyers’ Attitudes Toward Quality quality characteristics, which is absent in many cases. For example, a variety with lower yield As part of this assessment an extensive sur- but an improved intrinsic characteristic (e.g., vey was conducted of grain buyers’ attitudes bake test) that cannot be measured in the mar- toward quality, grain standards, and merchan- keting system would fail to survive in the seed dising practices. Several general findings are market. Current variety release procedures are important. First, all buyers, but particularly those outside the United States, indicated that not applied uniformly across States (or firms, in the case of private breeding) or over time. uniformity between shipments was a problem No effective national policy on variety release (i.e., uniformity in intrinsic quality). As proc- assures uniformity in application of release cri- essing technologies become more sophisticated, teria. In the case of wheat, in which public uniformity will become more important. Sec- breeding is more important, the State Agricul- ond, in the case of wheat, nearly half the foreign buyers relied on imports because of the tural Experiment Stations maintain variety re- inadequate quality of domestically produced lease procedures that are in turn guided by the Experiment Station Committee on Organiza- wheat; wheat from all other exporters was preferred at equal prices to similar types of U.S. tion and Policy. Individual States may and do vary from this policy. Ultimately a particular wheat. Third, buyers thought that the standards for wheat, corn, and soybeans were inadequate class of wheat, corn, or soybeans produced in and did not accurately describe the underlying different parts of the Nation may differ in intrinsic quality. shipment. Fourth, no one set of quality attributes meets the demands for each product of the grain system. Grain Standards U.S. Farm Policy The current U.S. grain standards have four important limitations: Two important features of U.S. farm policies have an impact on several aspects of quality. 1. they create incentives for practices incon- Because of the inverse relation between yield sistent with good management and effi- and intrinsic quality, the target price program ciency; in wheat (and to a lesser, or less identifiable, 2. they fail to identify many of the character- extent in feed grains) has a negative long-term istics related to value in use; impact on intrinsic quality in conjunction with 3. they fail to reward producers and handlers price differentials less than those of the mar- for improved drying, harvesting, handling, ket. As the target price typically exceeds the and variety selection; and market price, farmers have an incentive to ex- 4. grade limitations on many factors are arbi- pand yields. Impacts vary by grain and region, trary, do not always reflect real differences depending on the extent of the inverse relation in value, and in some cases are not con- between yield and intrinsic quality. The effect sistent with statistical principles. had been exacerbated by previous farm bills .

254

that used different methods of determining has increased substantially in recent years. This yield. The total impact in the case of wheat has has caused a number of difficulties in the mar- been to force market premiums for wheat pro- keting system (due to measurement and uni- tein to relatively high levels in order to neu- formity problems), and has affected inter- tralize producers’ decisions. national competition. Specialization and sophistication in corn and soybean processing Administration of the loan rate program also have also opened new markets with more ex- has an impact on intrinsic quality, as well as acting quality requirements. on physical and sanitary quality. In particular, the market for measurable quality characteris- Competitors’ Policies tics is distorted because premiums and discounts on forfeited grains, particularly wheat, Major differences exist in the institutions, pol- are less than those determined in the market. icies, and trading practices in other grain ex- Poorer quality grain is put under storage, and porters marketing systems. The extent of mar- market differentials are depressed. ket intervention varies from highly regulated throughout (e.g., Australia and Canada) to partial or no regulation. Differences also exist in Changing Role of Demand procedures for variety development and re- The international wheat market is more dif- lease, the use of variety identification in the ferentiated today than at any time in the past marketing system, and the use of grain receival 25 years, a reflection of the divergent nature standards. In addition, a number of countries of end use and the intensity of exporter com- address grain quality problems as part of their petition. Unique preferences were identified effective agricultural policy variables. At least in the OTA survey across types of wheat, sug- for wheat exporters, the quality at first point gesting homogenization would be counterpro- of sale is more extensively controlled than in ductive. In general, demand has shifted toward the United States. The wheat from these coun- higher protein and soft wheats. An important tries is now probably preferred over U.S. related problem in international wheat compe- wheats at the same price due to these mech- tition is that the market premium for protein anisms.

POLICY OPTIONS A number of policy alternatives are available ity. To do so, however, appropriate information to address these problems. Their overall pur- must be provided so that relevant incentives pose is to create a policy environment that en- and disincentives can develop. A fundamen- hances grain quality. As discussed, the U.S. tal policy alternative is to create an environ- grain production and marketing system is ment that would improve the ability of the mar- highly interdependent, and policies focused on ket to identify and allocate grains of differing any one sector affect other sectors to differing qualities to the highest value use. extents. This section analyzes a number of specific policy alternatives in the context of the The market for different quality characteris- interdependence of the system. Alternatives tics drives the multitude of individual decisions can range from regulation to reliance on the that affect quality from seed to end use. market. Through the market for quality characteristics, price differentials develop that provide incen- Market Solutions and Regulations tives and disincentives for participants throughout the system. An important aspect of this mar- A properly functioning market system can ket is that premiums and discounts, and solve many of the apparent problems in qual- therefore incentives and disincentives, develop 255 for important measured characteristics. Bar- participants in a marketing system such as that gaining and contracting for quality specifica- in the United States would violate the impor- tions occurs throughout the system, explicitly tant principle that market participants can or implicitly, between buyers and sellers. specify the cleanliness they want. Regulations Premiums and discounts are built into con- therefore control the process and limit the range tracts, reflecting marginal valuations of the par- of qualities available, in contrast to a market ticipants, and limits are frequently included where “anything goes” if buyer and seller agree. beyond which the shipment would be unacceptable. Thus, fairly fluid implicit markets (i.e., Although all buyers may prefer a particular premiums and discounts) exist for character- characteristic, all may not value it sufficiently istics such as protein quantity in wheat; to absorb the higher cost. Consider wheat dock- damaged kernels, dockage, moisture and bro- age, for example. On the supply side, cleaner ken corn/foreign material in corn; and damaged wheat can be produced and exported, as in kernels in soybeans. These reflect market- other countries, by imposing regulations. End- determined values of these characteristics. Less users all prefer cleaner wheat but their resis known about other unmeasured quality char- ervation values—or willingness to pay—differ. acteristics (intrinsic or otherwise), and the mar- Wheat millers in the United Kingdom, for in- ket is not necessarily capable of reflecting end stance, may have a high reservation value for values in underlying prices. clean wheat because they have to pay a Varia- ble Import Levy on dockage equal to that of The important point is how the market works, wheat. Or buyers with high per-ton transport through premiums and discounts, and that it costs or the need for extended storage (the costs works efficiently only for easily “measurable” of which increase with dockage levels) would (and verifiable) characteristics. This poses the have high reservation values for clean wheat. fundamental problem in that not all items of On the other hand, wheat importers with low importance in end use are easily measurable transport costs and/or high resale prices for in- in the marketing system. In fact, as discussed, ternal feed grains (an alternative use for wheat few intrinsic characteristics are included in the cleanings) would have low reservation values standards. Instead, proxies are often used that for clean wheat. In a competitive market, the are less than precise. Domestic buyers can make distribution and allocation of the measured purchases by location, or by region, an alter- characteristic can easily be illustrated. Each native not easily exercised by foreign buyers. buyer would have alternative contract speci- The problem is lessened somewhat to the ex- fications reflecting individual marginal reser- tent that variety release procedures use qual- vation values. Buyers would specify contract ity tests that are important but that are not used limits by appropriately evaluating their values in the marketing system. with the price differentials in the market.

An alternative to market solutions would be Imposing a regulation on a quality level for to impose regulations, which could very well all shipments has two general implications, solve many of the perceived quality problems. First, the limit would have to be imposed on But regulations impose costs on the system, all shipments to preclude buyers with low res- which due to the competitiveness of the mar- ervation values from downgrading their speci- keting system are passed back to producers in fications. Second, the result would be a higher the form of lower prices and/or to users in the overall price level, unless the cost were ab- form of higher prices. Higher costs associated sorbed by lower producer prices, and some with regulation would not be absorbed by the buyers with low reservation values would be handling system. In other words, regulations excluded from the market. impose costs on the system that buyers maybe unwilling or unable to pay for in the form of One of the overall purposes of quality cer- higher prices. Wheat cleaning provides a clas- tification is to facilitate trade and to assure sic example: To impose regulations across all buyers of quality. Indeed, U.S. grain standards - -.

256 provide measures of physical quality and to impetus of these controls in a number of other some extent information to facilitate trade on countries is to reduce quality uncertainty in those dimensions of quality. But, as noted, the dimensions not easily measured by standards. quality of some grains regarding some intrinsic and sanitary characteristics is not neces- Interdependence of the sarily resolved in the grain standards. Buyers’ Grain System true preferences are for intrinsic characteristics such as loaf volume (bake test), farinograph The interdependence in the production and measures in wheat, and oil and meal content marketing system with respect to quality is il- in soybeans. None of these is measured in the lustrated in figure 11-1. This triad could be marketing system for technical and institutional viewed as a three-legged stool, with each leg reasons. True performance cannot be assessed having an impact on quality as well as on the until after the purchase, and in many cases un- overall system. Producers make varietal and til use. As a result, buyers make purchases based agronomic decisions in response to incentives. on expectations of intrinsic quality that reflect These, as noted, are also influenced by farm reputation. Thus, it would be desirable to have a low variance with respect to these immeas- Figure 11-1.-Components of the Interdependent urable intrinsic characteristics—resulting in Grain System more reliable expectations. Information with respect to these quality characteristics is one-sided: Typically the seller I . Plant breeders’ objectives I has more information about quality than the ● Release criteria and buyer does at the point of negotiation. As an procedures example, producers know the variety at the time of sale, but it is not revealed. Handlers know the extent or components of the blend, or the extent of conditioning, and this information is not revealed either. This level of informational uncertainty provides an economic justification in general for sellers to provide certificates of quality. The role of certification is to reduce uncertainty for buyers, and therefore to facilitate trade. Tradi- tionally certification via the grain standards is largely on physical, and somewhat on sanitary, characteristics. However, this is not the case with respect to important intrinsic character- Market for quality characteristics istics. Thus one of the purposes of certification ● Producers is elimination of uncertainty about quality, not – Variety selection – Cultural practices, harvesting, handling only physical, but also sanitary and intrinsic. – Farm programs Accurate and relevant information therefore ● Handlers and merchants allows buyers to make purchases without con- – Condition and handle ducting extensive testing, which would reduce – Contract/trade liquidity of the market. As a result trade is facili- ● End-users tated, and transaction costs are reduced. One – Foreign competition – Domestic production of the mechanisms to reduce this informational – Products produced uncertainty is the grain standards. Others include controls earlier in the grain production system, such as variety release criteria. The SOURCE: Office of Technology Assessment, 19S9 257 programs. The demand for characteristics is Policy cannot affect numerous phenomena influenced by end-use needs and foreign com- that influence quality, such as weather, and a petition. Merchants and handlers procure, han- number of policies are short-run and only treat dle, condition, and blend to meet contract speci- symptoms of the problem. The policies devel- fications. In addition, they make offers on what oped here aim to affect underlying causes of they can sell, and at what price differentials, the problem, which over the long term will re- based on the availability of quality character- sult in improved quality. They are limited to istics and their conditioning capabilities. Each the three general categories of variety controls, of these activities are influenced by the incen- market intervention, and grain standards (see tives established in the market, by trading rules, table 11-1). The policy alternatives have been and by grain standards. Blending to the factor narrowed to these three to focus on those that limits specified in the standards is one exam- appear to be most logical and likely to be effec- ple of this interaction. tive in the long run. Only selected alternatives are presented in each category; in reality, a con- Fundamental Policy Alternatives tinuum of alternatives is likely, rather than having discrete choices as shown in the table. The interdependence of variety development, the market for quality characteristics, and grain Just as there is an interdependence in the sys- standards must be recognized in the evaluation tem, the policy alternatives must interact. Con- of policy alternatives with the objective of a trols over variety identification and release im- more integrated relationship between policies. prove the efficiency of the market, and have A number of other exporting countries have the potential to act as a surrogate for intrinsic more integrated and better coordinated policies measures in grain standards. If variety release than those of the United States. In fact, the were controlled, there would be less of a need United States has made no effort to coordinate to measure intrinsic performance in the grain and/or integrate policies affecting these activi- standards. Instituting incentives can also act ties. Policy interventions could be focused on as a surrogate for control of both intrinsic any of the components of the system, but assess- and/or physical and sanitary quality character- ment of their effectiveness must include im- istics. In addition, depending on application, pacts elsewhere in the system. Any policy on instituting incentives can indirectly spur vari- grain standards, for example, will affect variety development. By the same token, policies ety development and the efficiency of the mar- applied to grain standards affect both the market for quality characteristics. Similarly, any ket and variety development. Should intrinsic policy affecting the market (e.g., incentives) will quality characteristics be measured in the grain have an impact on variety development and standards, the market would establish incen- grain standards. The inability to measure in- tives, which would be transmitted to produc- trinsic characteristics in grain standards has ers and to variety development. If such char- implications for policies affecting the market acteristics are not measured, alternative and variety development. mechanisms should be used. As mentioned, in

Table 11-1 .—Fundamental Policy Alternatives

Variety controls Market intervention Grain standards No change Marketing board Mandatory USGSA inspection Variety identification) Export bonus Single agency to approve testing categorization No change in loan policy Mandatory USGSA inspection in conjunction Variety licensing Increased differentials in government with NIST equipment approval policies Minimum quality specifications for farmer loans SOURCE: Office of Technology Assessment, 1989 258 most other exporting countries, the policies In particular, greater pressure would be across these three sectors are coordinated and placed on grain standards to measure in- viewed systematically. trinsic quality within the marketing system. ● Continued lack of information on intrin- Variety Controls sic quality in some grains, and thus of current inefficiencies in the market. Three important considerations lead to the ● Productivity growth facilitated to a greater policy alternatives listed under variety controls. extent by having complete freedom on va- First, with few exceptions grain standards do riety release and selection. not measure important intrinsic characteristics. ● Buyers seeking consistent intrinsic prop- Second, intrinsic quality differs significantly erties purchasing from exporters with less across some varieties. Third, varieties are not diversity. visually distinguishable, thus segregation in the market system is precluded, resulting in in- With no change from the current system of creased uncertainty about quality. These three administering variety release, the pressure on points apply to some extent to each of the grain standards to introduce measures of in- grains, though their relevance—and thus the trinsic quality would increase. Other countries attractiveness of each alternative—varies. The use variety identification and release proce- classic case is that of wheat, in which perform- dures in part to reduce pressure on the grain ance varies across varieties and increasingly standards to measure intrinsic quality. Alter- it is becoming difficult to differentiate wheats natively, by incorporating intrinsic quality into in the marketing system. In some of these cases farm program policies (discussed later in this it may be easier to identify variety, or groups chapter), at least some incentive to improve in- of varieties, than intrinsic characteristics. Fur- trinsic quality could be built into the system. ther, identity of a variety provides more comprehensive quality information than any sub- Variety Identification and Categorization.— set of measured quality characteristics. To some Any sort of variety identification or control extent, domestic processors attempt to resolve scheme would pose administrative challenges. problems of varietal differences by purchasing One alternative would be to provide a mecha- by location or region. But foreign buyers, or nism (which does not currently exist) in which any buyers using purely grade specifications, varieties can be identified in the market sys- are precluded from this option. tem, as done in other exporting countries. These consist of affidavit systems, random testing No Change.—Five main effects of leaving the using electrophoresis, and categorization. Pro- variety control system unchanged can be iden- ducers would declare the variety at the point tified: of first sale or loan application. This would provide information to handlers on segregation ● Continued lack of uniformity in intrinsic based on categories of the grain, or groups of quality characteristics among States/re- varieties. Categories would be developed ac- gions/shipments. In the current system cording to end-use similarity, and could become with only informal, uncoordinated variety part of the grain standards. release criteria, many basic characteristics vary among varieties, These characteris- Alternatively, variety or groups of varieties tics lose their identity in a market incapa- could become part of the contract governing ble of measuring end-use characteristics. the transaction, as in France. The number of As a result there are important intrinsic categories established would vary by grain, de- quality differences across regions of the pending on the three considerations discussed country that are not detected in the mar- earlier, and the end-use specificity. Thus, for keting system. example, if there were only one end use and ● Problems elsewhere in the system due to the varieties did not vary sufficiently with re- the inability to measure intrinsic quality. spect to intrinsic quality, only one category 259 would be necessary. On the other hand, for ous forms in different exporting countries, from wheat with intrinsic differences across varieties quite restrictive, as in Canada and Australia, and a multitude of end uses, there would be to fairly neutral, such as the system in France. a larger number of categories. The intent here The intent of each though is to provide some would be to formalize a mechanism not dissimi- mechanism that assures certain intrinsic char- lar from the current system of classification for acteristics (given that they cannot be easily de- wheat. The difference, however, is that the cur- tected in the market system) and to apply uni- rent system relies on visual distinguishability, form criteria throughout the country, i.e., to and categorization is based on fairly imprecise reduce uncertainty of intrinsic characteristics criteria. through uniform application of release criteria. The program would require procedures simi- The implications of such a categorization sys- lar to those of the variety identification system tem include: just described above. In addition, some criteria ● An increase in information (by category of would have to be established for categorization varieties), thus increasing the efficiency of (i.e., to license varieties by end use), and for the market in its allocative role. For most administration. grains, variety is a better indicator of quality than are selected tests for quality. Thus Five effects of such a system can be identified: buyers’ information regarding quality would 1. increased uniformity, and an increase in be improved. the ability to control intrinsic quality; ● Improved signals transmitted to produc- 2. a formal mechanism for categorization ers, breeders, and end-users through a relative to a simple variety identification more efficient market. scheme; ● A complex administrative program, espe- 3. depending on administration, a feeling of cially given the large number of varieties restrictions on productivity growth, al- currently grown in the United States. though this is not necessarily the case, e.g., Administration would be further compli- in France; cated by the fact that intrinsic quality de- 4. difficulty in administration, with complex pends not only on variety, but also on loca- enforcement, bureaucracy, and cumber- tion and climatic factors. some implementation; and ● More complex contract specifications. The 5. licenses by location, due to differences in informational requirements, particularly quality, and by end use. of foreign buyers, for contract specifica- A stricter variety licensing system would have tion would increase. Depending on the ex- similar impacts on interdependence discussed tent of categorization, however, this com- under the preceding alternative policy. In par- plexity could be reduced. ticular, licenses could act as surrogate grain Introduction of a variety identification standards for intrinsic characteristics. scheme would result in incentives and disincentives being readily associated with varieties Market Intervention having desired/undesired intrinsic character- Marketing Board.—Central to the U.S. sys- istics. In addition, it would reduce pressure on tem is the market in which prices are estab- the grain standards to measure intrinsic per- lished. Embedded in this market, and all prices, formance in the marketing system, as categori- are premiums and discounts for measurable zation of varieties would serve that function. characteristics that serve to allocate grain Variety Licensing.—A more restrictive ap- across different users. In addition, these qual- proach would be to institute a variety licens- ity characteristics provide the incentives and ing scheme. Varieties would be subjected to cri- disincentives for participants throughout the teria administered at a national level for release marketing system. Several other countries ac- into the market system. Licensing takes vari- complish this by some form of board control. 260

Thus, one alternative in the United States would Overall, however, the costs of introducing a be to establish a marketing board system to re- board system in the United States would likely solve quality problems. The emphasis of the dis- outweigh the benefits of quality improvements. cussion here is on the implications of such a system for quality and the coordination of pol- Export Bonus.—An alternative policy would icies on quality. Other effects of a marketing be to establish a bonus payable to exporters who board are more far-reaching (e.g., bargaining deliver quality superior to contract specifica- power, resource allocation, impacts on non- tions. This policy is discussed as being applied board grains, and impacts on physical coordi- at the point of export, but it could be applied nation) and are not discussed. The major im- elsewhere in the marketing system. The major plications of a board with respect to quality are: implications of this approach are:

● ● Coordination of the many aspects of the Immediate results, especially if the pro- production and marketing system that have gram were tied to a physical or sanitary an impact on quality. quality characteristic. However, longevity ● Improved quality to the extent that only should be a concern, in that if terminated, two transactions—one between producer the effects would not likely last. and board, and another between board and ● Administrative questions. First, which buyer–would take place in the marketing quality characteristic(s) should be tied to system. This is in contrast to the multitude the bonus—physical, sanitary, or intrinsic? of current transactions, all requiring meas- Quality would improve on whatever char- urement of quality. acteristic the bonus were applied to. De- • More subjective and judgmental adminis- pending on the length of the program, how- tration of price differentials, since trans- ever, the bonus would likely not influence actions would take place without an active intrinsic quality. Second, should the bonus market. Market determination of price be applied at the point of export, or the differentials is an important advantage of point of origin? the current U.S. system. ● The cost of administration, and/or a direct ● High cost, given the complexity and outlay, to finance the program. breadth of the U.S. marketing system. ● A risk that importers may manipulate the Countries that already have boards oper- system by specifying a lower grade, in or- ate in relatively simple logistical systems, der to receive the same grade they tradi- and cover few grains. As either of these tionally purchase, but at a lower price. increase, as they do in the United States, ● An increase in perception of quality, or of the problems associated with bureaucratic attention to the issue. allocation of decisions intensifies. An export bonus program, by definition, ● Loss of the highly efficient U.S. grain han- would be oriented to the merchants and handling and distribution system that stems, dlers in the system. It would provide incentives in part, from the competitive environment. for them to improve the quality of particular A board system could reduce the emphasis attributes or particular shipments to which the on grain standards at the point of export, and bonus were applied. Due to competition within for that matter throughout the system, if suffi- the industry, any benefits would be distributed cient controls were imposed early in the sys- to appropriate decisionmakers so as to provide tem to resolve grain quality problems, thereby incentives. Given that more information would reducing the importance of quality measure- not be provided to the market, and that infor- ment at the point of export. In addition, vari- mation uncertainty would not be reduced, the ety release procedures could be easily admin- efficiency of the market would not be improved. istered in a board system. Incentives could be Breeders’ objectives and release criteria would administered rather than relying on market de- be affected only to the extent that the bonuses termination. were applied to intrinsic characteristics, and 261 to the extent they were applied over very ex- natively, farm policy could take the lead by tended time periods. providing price differentials at least equal to market differentials, to provide incentives No Change in Loan Policy.—The current throughout the system. administration of the policy on loan forfeitures and Commodity Credit Corporation (CCC) grain As discussed in chapter 9, CCC administers storage policies could remain the same (see ch. programs for handling and storing CCC-owned 9). The fundamental problem is that price dif- grain. Different rules are applied to country and ferentials for loan forfeitures and transactions terminal elevators. CCC requires that terminal on CCC-owned grain are substantially less than elevators deliver the quality that is represented those in the market. Implications of no change by the warehouse receipts, and it discounts in- from the current status are: dividual railcars. CCC does not pay terminal ● A distorted market for quality character- elevators for overdeliveries in quality. This is istics. The loan and CCC storage practices not the case for country elevators, which are would continue to support the price of not subject to the same rejection rules if the lower quality grains. In addition, the in- quality delivered is inferior to the warehouse trinsic, physical, and sanitary quality of receipts and which receive payment for over- U.S. grain would be unchanged. deliveries. ● Grain under extended storage, which would potentially deteriorate more than if One of the few ways to legislate incentives grain of superior physical and sanitary into the system, particularly for intrinsic qual- quality were stored. ity, is via the price differentials for loan forfei- ● Growers isolated from the market, which tures and transactions involving CCC-owned masks the incentives for improving qual- grain. This alternative consists of loan-associ- ity. ated price differentials greater than or, alternatively, equal to the market. They could be ap- In general, the market today is distorted in plied as currently done, on grades, or could use the allocation between storage and commercial specific physical and sanitary quality criteria. sales, with superior-quality grain going to the A simple example would be a 4 cents/bushel latter. Since the program does not effectively price differential for clean wheat (i.e., less than distinguish intrinsic quality, loan rate disincen- 0.5 percent dockage). In addition, measures of tives do not transmit signals to producers. Thus, intrinsic quality (e.g., falling number in wheat, a major impact of not changing the policy oil content in soybeans, protein content in corn) would be to increase the role and function of could be incorporated, as they are in other grain standards in measuring quality. countries. Increased Differentials in Government Pol- The implications would be as follows: icies.—In a number of other countries quality problems are addressed as a matter of agricul- ● A greater impact on wheat than other tural policy. These take the form of incentives grains, because the relationship between by using regulations and substantial premiums market prices and loan values varies across and discounts for quality deviations. Realign- grains and because participation rates ing the incentive system via farm policy ad- vary. In addition, the impact itself would dresses one component of the system, i.e., the vary, due to the loan being effective only market for quality characteristics. That mar- periodically. ket already exists and develops premiums and ● Grain of lower value being forced onto the discounts. But it is distorted somewhat by market, as opposed to going into the loan administration of the farm program. Thus, this program, as it currently does. This implies policy alternative could be seen as merely elim- also that the loan program would support inating a distortion, which would allow the prices of higher quality grains. market to function more efficiently. Alter- ● An increase in the amount of grain going 262

into alternative uses, with lower end value. Normally grain marketing is integrally related The most vivid example is wheat feeding. to prices and policies (e.g., initial payments) and ● Incentives for intrinsic quality relatively therefore it is difficult to isolate physical mar- easily incorporated into the loan program keting from pricing. As developed here, mini- (more easily, that is, than measuring them mum quality specifications would be applied in the marketing system). to grain entering the loan program as opposed ● The development of a mechanism for to when it entered the marketing system. The measuring quality of grain going under global application of minimum quality speci- loan, perhaps through samples submitted fications to the U.S. marketing system would by farmers. be next to impossible to implement since a ● Difficult administration of optimum price majority of grain under loan is stored on farms. differentials. This is especially true given The concept of setting minimum quality spec- the large number of markets in the United ifications for loans is similar to the option just States, and given that—at least in the past— discussed except that a constraint, rather than loans have to be announced long before a price incentive, is being used for entry into crop quality is realized. ● the loan program. Minimum quality specifica- Country elevators forced to become more tions could be applied to physical characteris- concerned with maintaining quality. Also, tics (e.g., minimal dockage) or intrinsic char- CCC would be guaranteed that the quality acteristics (e.g., variety, protein, falling number, of grain received into the country elevator oil, or meal protein). would be delivered out of the elevator. This change in policy would relieve the pres- Under this policy alternative, the potential sure of maintaining discount schedules exists that grain not meeting specifications that reflect the market in that CCC would would be diverted to the export market or a not accept quality below that called for by lower valued market. One way to help mini- warehouse receipts. mize diversion to the export market would be to use whatever quality specification has been This particular alternative addresses the mar- established for government programs as a ba- ket for quality characteristics and provides in- sis for rejecting grain going into an export ele- centives in an important market for some vator. This would have the added benefit of re- grains. Such a change could have a number of ducing the spread of qualities available for systemwide benefits. First, to the extent that blending within the export elevator; however, intrinsic characteristics are used, variety de- blending of wide ranges in quality would still velopment would be favorably affected. Signals occur in country/terminal facilities. As dis- from this important market would be directly cussed in the next section of this chapter, man- transmitted to breeders and would affect their datory inbound inspection into export eleva- objectives and release criteria. Thus it would tors could serve as the basis for rejecting or provide somewhat of a surrogate for variety accepting grain. control. Second, there would be somewhat reduced pressure to measure intrinsic quality in The first five implications of increased dif- grain standards. In the extreme of a proactive ferentials in government policies would also farm policy, together with variety identifica- apply to this alternative. Other implications are: tion/licensing, the role and function of grain ● standards could to some extent become one of Minimum quality specifications, which measuring only physical and sanitary quality would be difficult to establish and main- characteristics. tain in the current political environment. ● Desirable quality characteristics incorpo- Minimum Quality Specifications for Loans. — rated in the loan program. These could also Many countries have minimal receival stand- be characteristics not easily measured in ards on grain entering the marketing system. the marketing system. 263

● Depending on the minimum quality speci- The grain standards, if modified along these fications (physical, sanitary, intrinsic, or lines, would facilitate trade by providing a variety), a requirement for farmers to cer- limited number of grades and grade-determin- tify the variety planted or take samples of ing factors. Incorporating some factors as non- stored grain for testing as directed by the grade-determining or even official criteria al- U.S. Department of Agriculture (USDA). lows the market to set values for these factors that will send signals throughout the system for Use of minimum quality specifications could also solve or contribute to the resolution of prob- quality improvement, if warranted. To a limited lems elsewhere in the system. Desirable vari- degree, this structure will provide information important to end-users, who will establish the eties or intrinsic characteristics, if used, would transmit signals to breeders, influencing their limits that best suit their needs. Until new technology is developed for measuring intrinsic objectives and release criteria. In addition, to some extent, the role and function of grain quality and several sanitary quality attributes, however, the standards cannot begin to reflect standards in measuring intrinsic quality in the marketing system could be reduced. many of the objectives. To comply with the objective of certifying Grain Standards grain quality as accurately as practicable, the USGSA provided several legislated mandates. The United States Grain Standards Act First, it authorizes the Federal Grain Inspec- (USGSA), states that it is Congress’ intent to tion Service (FGIS) Administrator to establish, promote the marketing of high-quality grain to amend, or revoke standards whenever their both domestic and foreign buyers and that the usage by the trade may warrant or permit. Sec- primary objective for grain standards is to cer- ond, whenever standards are in effect, the tify grain quality as accurately as practicable. standard must be used to describe the grain be- Embedded in this policy are four basic objec- ing sold in interstate or foreign commerce. tives for grain standards: Third, the FGIS Administrator is authorized to 1. to define uniform and accepted descrip- provide for a national inspection system. Fi- tive terms to facilitate trade, nally, whenever standards are in effect, the 2. to provide information to aid in determin- grain must be inspected by FGIS as it is being ing grain storability, exported from the United States. As pointed 3. to offer users of such standards the best out in chapter 8, even though the standards possible information from which to deter- must be used to describe grain being sold over- mine end-product yield and quality, and seas, no requirement exists for inspecting grain 4. to provide the framework necessary for moving in domestic markets. Therefore grain markets to establish grain quality improve- can move domestically without inspection and, ment incentives. when inspected, can be checked by FGIS or a FGIS-licensed inspector, private inspection Chapter 8 assessed the ability of the grain companies, individuals employed by a grain- standards to meet these objectives. In several handling facility, or individuals licensed by the areas the current standards fall short. However, Warehouse Division of USDA’s Agricultural an ideal grain standard that encompasses all Stabilization and Conservation Service. four objectives may be difficult to achieve, and trade-offs between objectives may be necessary. Several important ramifications for grain The criteria for standards laid out in chapter quality result from this policy. Since no single 8 in terms of the number of grades and what agency is responsible for testing grain accord- should constitute grade-determining, non- ing to the standards or any other set of speci- grade-determining, and official criteria provide fications, no agency is responsible for devel- a framework for incorporating the four objec- oping the equipment and procedures used to tives into grain standards. sample and measure these factors or for over- 264 seeing the equipment, methods, and accuracy In addition, the USGSA allows FGIS to use of results. For the market to properly assess delegated and designated agencies to perform premiums and discounts for quality character- inspections on its behalf. Designated agencies istics, testing results for these attributes must are independent businesses that rely on fees be measured as accurately and consistently as generated by performing inspections. Since measurement technology will allow. End-users designated agencies perform inspection serv- rely on accurate measurement of important ices on request, the potential exists for these quality characteristics in purchasing and pro- agencies to perform less than accurate inspec- duction decisions, and inaccurate results can tions because of the need to keep their custom- lead to quality complaints and product yield ers satisfied. This places USDA-approved agen- and quality below expectations. (Ch. 8 describes cies in the same position as independent, the integral components for developing, main- nongovernment businesses whose sole aim is taining, and standardizing testing procedures, to satisfy the paying customer. and discusses testing accuracy and sources for testing errors.) Other potential conflicts arise from not specifying how the standards will be implemented. Since the grain standards serve as the basis Since inspections on domestic grain shipments for marketing grain and providing information are performed on request, they can also be dis- on important quality characteristics to all users, missed. The potential impact on grain quality the factors selected for measurement by the is that a request can be dismissed and the grain standards are important. Even more important shipped if it is discovered during the course is the way they are measured and the consis- of the inspection that the quality is not up to tency of measurement. As new tests are added specification. For example, if sour grain is to the standards, there is no requirement that found and reported to the elevator manager dur- the testing technology developed and approved ing the sampling of a barge being loaded, the by FGIS as the basis for the standard must be elevator manager can dismiss the inspection used to measure the attribute. request. If the sales contract calls for an “offi- In other instances, no requirement exists for cial grade, ” the manager can call for the barge how samples will be obtained, who will per- to be sampled at rest. In this instance, the por- form the tests, or even whether any test con- tion of sour grain that was previously discov- tained in the standard will be performed. Chap- ered during loading will be commingled in the ter 8 identifies problems associated with ob- barge and probably not found during sampling. taining samples and the impact on accuracy Several policy alternatives exist for develop- of the type of equipment and amounts obtained. ing a program to reduce the potential for test- With regard to obtaining inspection, the recent ing inaccuracies and provide consistently ac- inclusion in the wheat standard of the Food and curate results—mandatory USGSA inspection Drug Administration (FDA) defect action limit on domestic grain moving in interstate com- of 32 insect-damaged kernels per 100 grams of merce, the creation of a single agency to ap- wheat restricts the amount of insect-damaged prove and oversee testing equipment and pro- kernels in the various grades to a level that coin- cedures, or a combination of these two cides with the FDA limits. This change has approaches. caused a decrease in the number of requests for inspection under the USGSA because many Mandatory USGSA Inspection.—As noted, shipments exceed the FDA defect action limit FGIS establishes standards, which includes de- and FGIS must report any such cases to FDA. veloping technology to measure the factors con- Therefore, the change has not provided FDA tained in the standard. The agency also de- with the information it requires to act on such velops and publishes sampling and inspection shipments, and wheat that exceeds the limits procedures, evaluates and approves equipment is still handled to some degree as it was before for use during inspection, monitors inspection the change. accuracy of its employees and licensed inspec- -. . .

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tors, and periodically tests sampling and inspec- Single Agency to Approve Testing.—As dis- tion equipment for accuracy. Therefore, a basic cussed in chapter 8, the National Bureau of structure is in place for approving and over- Standards (renamed the National Institute of seeing all equipment and procedures used for Standards and Technology* (NIST)), through measuring grain quality characteristics. the National Conference of Weights and Meas- . . ures, standardizes weights and measures by de- At one time mandatory inspection was re- veloping specifications for instrument preci- quired on all grain moving in interstate sion and accuracy along with scale tolerances, commerce. This provision was deleted from the and maintains national standards. Currently, USGSA by Congress in the late 1960s because NIST addresses neither grain measures other of the difficulties in enforcing it on truck ship- than weights nor sampling equipment. In some ments. It was at that time that the provision instances, individual States have taken it upon requiring the use of the standards for merchan- themselves to develop criteria for approving in- dising grain was included in the USGSA. spection equipment and monitor the equipment accuracy. (Moisture meters and mechanical The implications of requiring mandatory in- truck probes are prime examples.) In addition, spection on interstate grain shipments, includ- the grain-industry-sponsored Grain Quality ing adoption of the best possible sampling tech- Workshops recommended that NIST take the nology, are as follows: lead in developing and overseeing moisture meter calibrations. ● a reinforcement of the policy that standards must be used to describe grain being NIST, in consultation with FGIS, could take bought and sold and that the factors cov- the lead in developing and maintaining equip- ered by standards are tested using ap- ment specifications and maintenance toler- proved equipment and procedures as the ances. These actions could be in conjunction basis for the test; with FGIS developing new tests to be included ● consistency in test results in that identical in the standards. NIST approval could be the procedures are used for each inspection basis for approving equipment (including sam- in the marketplace and are performed by pling equipment) for use by FGIS when per- independent government-sponsored forming inspections and could be administered agencies; by the individual States for testing not per- ● primary responsibility for grain quality formed under the USGSA. Many States cur- measurement focused on one government rently have agencies responsible for grain- agency; handling facilities (country as well as terminal ● use of the existing basic framework elevators) within their jurisdiction. And several through the delegated and designated agen- States have already established procedures for cies who already own approved equipment approving and testing moisture meters and and have trained employees that use FGIS- sampling devices. The basic framework is in published procedures; place for establishing a central body to approve and oversee the equipment used in conjunction ● applicability to railcar and barge shipments only, as the ability of delegated and desig- with grain quality testing. nated agencies to cover the wide areas re- The need for standardized testing procedures quired to meet the needs of country eleva- for sampling devices, moisture meters, and near tors receiving trucks is severely limited; infrared reflectance (NIR) equipment is appar- and ent. As more uses for NIR and other sophisti- ● increased costs associated with obtaining cated tests are found to provide important qual- inspection on grain that would otherwise *The National Bureau of Standards was recently renamed the not need to be inspected (i.e., grain mov- National Institute of Standards and Technology (NIST) with the ing from one facility to another owned by passage of the Omnibus Trade and Competitiveness Act of 1988 the same company). (Public Law 100-418) as of August 1988.

88-378 - 89 - 10 266 ity information to buyers and sellers, the need is responsible for grain testing as well as stand- for standardized testing will become more crit- ards development. The inability to perform ical, especially on farmer-owned grain at the USGSA testing on trucks and at country eleva- country elevator level. tors can be compensated for to some extent by involving NIST and its related support systems The implications of giving NIST responsibil- in the grain-testing area. Even though USGSA ity for approving and overseeing inspection inspection would not be performed, those equipment are: groups that do perform testing would be re- ● Standardized equipment to measure grain quired to use approved equipment and to fol- quality attributes that could be traced back low the user requirements spelled out in the to national standards. Variations in test- NIST approval. This would be the same require- ing results introduced by a wide range of ments that USGSA inspectors follow, since equipment accuracies is reduced. FGIS would also be using NIST-approved ● Use of only approved equipment to pro- equipment and user guidelines. vide testing results, with NIST oversight This policy alternative allows country eleva- to ensure accurate testing. ● tors to continue to perform their own tests on Use of the existing basic framework. NIST grain received from the farmer, thus reducing already has established approval proce- the potential increase in costs associated with dures, publishes user requirements, and en- mandatory USGSA inspection. But it would forces its provisions through State organi- create more uniform testing since anyone per- zations. ● forming grain quality testing will be required Placing responsibility for approving grain to use NIST-approved equipment and follow testing equipment in an agency that does published user requirements. Coupled with the not have a vested interest in the equip- NIST State support systems already in place ment’s use. ● to oversee equipment accuracy and ensure that An inability to cover tests that are subjec- user requirements are followed, NIST involve- tive in nature, such as odor, wheat class- ment would provide oversight in areas not pre- ing, and determination of damaged kernels. viously subjected to it. ● A lack of experience in basing a national standardization program on reference methods that are defined rather than proven. Interactions Between Standards, ● Increased costs for those that have to dis- Variety Control, and Market pose of unapproved testing equipment and Intervention purchase approved equipment. ● The policy alternatives outlined in the vari- Avoidance of the issues of who will use the ety control section address intrinsic quality equipment and when it will be used. characteristics, since physical and sanitary Mandatory USGSA Inspection in Conjunction quality cannot be addressed through such pro- With NIST Equipment Approval.--A policy that grams. The policy choices discussed in the mar- requires mandatory USGSA inspection on ket intervention section can address the easily grain moving in interstate commerce and a measurable factors for physical and sanitary broadening of NIST involvement into grain quality, and can be expanded to deal with in- sampling and testing equipment captures the trinsic quality attributes once technology is de- advantages of the last two options while mini- veloped to measure them in the marketplace. mizing many of the disadvantages. Each section cited examples of the expected impacts on grain quality and standards. The advantages of mandatory inspection on railcars and barges moving in interstate In both the variety control and market inter- commerce ensures that consistent sampling vention sections, an option for no change in and testing is performed on both subjective as present policies has been provided. Such an ap- well as objective factors and that one agency proach places the responsibility for physical, -. . . -

267 sanitary, and intrinsic quality solely on grain fore signals begin to be transmitted back standards. For the physical and many of the through the system. sanitary quality concerns, relying on the grain standards is a relatively simple matter that does In addition to identifying what factors the not involve the adoption of new technology. It standards should measure and whether factors are grade-determining, non-grade-determining, involves taking existing factors and applying or official criteria, the way the standards are the criteria developed in chapter 8. Several factors could be combined (as is the case of for- implemented can also have a dramatic impact eign material and dockage in wheat, as many on grain quality. One of the major problems fac- have suggested, as either grade-determining or ing the United States in terms of grain quality— non-grade-determining) or factors could be sep- whether physical, sanitary, or intrinsic—is that arated (as is the case with broken kernels and all grain, no matter the quality, is accepted into foreign material in corn) to describe quality the system and marketed. This places enormous more accurately. In addition to rearranging strain on the system’s handling and inspection existing factors into grade-determining, non- capabilities and is the cause for most of the grade-determining, or official criteria, fixed per- blending controversies. Adding new tests to the centages could be established for certain fac- standards or applying the criteria developed tors that transcend all grades (e.g., maximum in chapter 8, including limiting the number of level of dockage in wheat or maximum mois- grades, will not resolve the problems associ- ture levels in corn and soybeans). Limits for ated with blending extremely high-quality with current factors (e.g., live insects or stones) could extremely low-quality grain. also be tightened. As discussed in chapter 8, limiting the spread Making no change to variety control systems between grades will reduce the opportunity for blending. On the surface this appears to be a or market intervention has a dramatic impact viable option. But the expected impacts from on the grain standards, however, in that they must be able to address the buyer’s desire for such a change assume that the grades being information on important intrinsic character- traded will remain the same. If the spread be- istics and take the lead in establishing the sig- tween grades is reduced and the trading grades nals regarding quality for the entire system. are lowered, the opportunity for blending will remain the same. Even removing factors from Presently, technology to easily measure intrinsic attributes in the marketplace is not avail- being considered grade-determining does not able. If the standards are to be the vehicle for in and of itself remove the incentive for blend- providing information on intrinsic and many ing. An example of this is provided by the re- new sanitary quality characteristics (e.g., pes- cent change whereby moisture was removed ticide residue), resources must be provided to as a grade-determining factor, forcing limits to develop the technologies needed to accurately be established in contracts. The change has not removed the incentive for blending wet and dry and easily measure them before the market can respond. It will take years to research and de- grain in order to meet contract specifications. velop new tests that could be put on-line be-

SUMMARY AND CONCLUSIONS The U.S. production and marketing system component—grain standards. But a properly is a highly interdependent system of activities. functioning market can solve many of the grain Any policy designed to enhance grain quality quality problems. Therefore, a fundamental pol- (physical, sanitary, or intrinsic) must address icy alternative would be one that creates an this interdependence. Traditional policy dis- environment that would improve market effi- cussions, however, have focused on only one ciency. In addition, appropriate quality infor- 268 mation must be provided so that relevant in- selected tests. The increased information re- centives and disincentives can be established sulting from variety identification would raise to improve market efficiency. the efficiency of the market, resulting in incentives/disincentives being transmitted to produc- Just as there is system interdependence, there ers, breeders, handlers, and end-users. Variety is interdependence of policy alternatives. Con- identification alone, however, does not address trolling variety release, for example, could im- physical or sanitary quality concerns, so these prove market efficiency and act as a surrogate concerns must be addressed by other areas. for intrinsic quality measurement. This reduces the impact of forcing grain standards to meas- Removing the distortion created by the cur- ure intrinsic quality characteristics in order to rent administration of premiums and discounts provide incentives. Market incentives can reg- for loan forfeitures and applying the same rules ulate physical, sanitary, and easily measurable to country and terminal elevators storing gov- intrinsic quality characteristics. The market can ernment grain would allow the market—which provide incentives in variety development has already established premiums and dis- while policies applied to grain standards affect counts—to function properly. Grain of lower both the market and variety development. value would be forced onto the market as opposed to entering government programs. To the Given the interdependence of the system, pol- extent that intrinsic quality characteristics are icy could be focused on any one component. included, variety development would be af- However, if grain quality is truly a result of the fected. Signals from government programs, total system, then the success of policy changes directly transmitted to farmers, would affect to any one component must be assessed in their decisions on varieties planted, thus influ- terms of this interdependence. If existing pol- encing breeders’ objectives and release criteria. icies for variety control and/or market intervention remain unchanged, the entire respon- Setting minimum quality specifications for sibility for improving quality will be placed on loans places an additional constraint on entry grain standards. For contrast, policy changes into the loan program. These could easily be to variety control will improve the information applied to physical and sanitary quality char- for intrinsic quality characteristics needed by acteristics as well as measurable intrinsic char- the market and reduce the need for grain stand- acteristics and, along with the variety identifi- ards to shoulder the entire burden. cation scheme, would reinforce signals being transmitted throughout the system. Farmers Policy alternatives for enhancing grain qual- would be required to obtain testing of grain that ity have been divided into three general cate- was in the loan program and being stored on gories for the purpose of this assessment— farm, rather than self-certifying quality as is variety controls, market intervention, and grain presently the case. standards. One possible policy path that maximizes the strengths of the various options as Implementing such policies on government well as minimizes their weaknesses is to adopt programs and minimum quality specifications variety identification/categorization, increase will force lower quality grain into the export the differentials in loan policy and specify min- market. Therefore, minimum quality specifica- imum quality for farm loans, and introduce tions established for entry into government pro- mandatory USGSA inspection in conjunction grams could be applied to grain entering ex- with NIST equipment approval. port elevators. This would transmit signals for improved quality throughout the system and Introducing a variety identification scheme would reduce the spread of qualities available would improve information on intrinsic qual- for blending at export locations. ity characteristics, thus reducing the pressure on grain standards to measure intrinsic per- The need for accurate measurement of im- formance in the market. For most grains, vari- portant characteristics—whether physical, sani- ety is a better indicator of quality than are tary, or intrinsic—is crucial to providing infor- 269 mation for the market to function properly. The approving grain sampling and testing equip- vehicle by which quality information is trans- ment would ensure that all parties testing grain mitted throughout the system is grain stand- quality use approved equipment and follow ards. Incentives and disincentives cannot be basic user requirements. established unless accurate, consistent, and As discussed throughout this chapter, the in- timely information is provided in the market. terdependence between variety control, mar- This can be accomplished by continued efforts ket intervention, and grain standards is com- to incorporate the four objectives of grain stand- plex. Grain quality is a function of the variety ards, by implementing mandatory inspection, planted, farmer practices, environment and and by increasing NIST involvement in approv- geographic location, handling practices, end- ing grain sampling and testing equipment. user preferences, marketing, government pol- Mandatory inspection of railcars and barges icies, and the ability of grain standards to pro- would ensure that consistent sampling and test- vide information on important quality charac- ing is performed. Used in conjunction with teristics, Policy changes, therefore, must create minimum quality specifications on grain en- an integrated policy for enhancing grain qual- tering export elevators, this would ensure that ity. Potential conflicts, overlapping benefits, one government agency is responsible for qual- and limitations of certain policy options must ity testing. The increased presence of NIST in be recognized and addressed. Appe.dlxes — —

Appendix A Glossary of Acronyms

AMA —Agricultural Marketing Act HRS —Hard Red Spring wheat ASCS —Agricultural Stabilization and Conser- HRW —Hard Red Winter wheat vation Service (USDA) NAEGA—North American Export Grain Associ- ASW —Australian Standard White wheat ation Inc. BCFM —broken corn and foreign material NIRS —near-infrared reflectance spectroscopy CCC —Commodity Credit Corporation NIST —National Institute of Standards and CIF —cost, insurance, and freight Technology (Department of CSRS —Cooperative State Research Service Commerce) CWRS —Canadian Western Red Spring wheat OSHA –Occupational Safety and Health Ad- cwt –hundredweight ministration (Department of Labor) DNA –deoxyribonucleic acid OTA —Office of Technology Assessment D/T –diverter-type (U.S. Congress) EC —European Community PVRC —Plant Variety Review Committee ELISA —enzyme-linked immunosorbent assay (University of Illinois) ESCOP —Experiment Station Committee on SAES —State Agricultural Experiment Station Policy SMV —soybean mosaic virus FAQ –fair average quality SRW —Soft Red Winter wheat FDA –Food and Drug Administration (PHS, SWQAC—Spring Wheat Quality Advisory Com- DHHS) mittee FDCA —Food, Drug and Cosmetic Act UGSA —Uniform Grain Storage Agreement FGIS —Federal Grain Inspection Service USDA —U.S. Department of Agriculture (USDA) USGSA —U.S. Grain Standards Act FOB —free on board U.S.S.R.—Union of Soviet Socialist Republics GAFTA —Grain and Feed Trade Association VRC —Variety Release Committee (UK)

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Appendix B Glossary of Terms

Adulterated grain: According to the Food, Drug and Broken corn and foreign material (BCFM): Any ma- Cosmetic Act, grain is deemed to be adulterated terial passing through a 12/64 inch sieve, plus if it contains an added or naturally occurring poi- non-corn material remaining on top, sonous or deleterious substance that may render Bromus Secalinus (cheat): Any of several grasses, it injurious to health (e.g., aflatoxin-contaminated especially the common chess. This weed is a ma- corn). jor problem for winter wheat producers in the Aeration: The passage of air over or through grain central Plains. to control the adverse effects of excessive mois- Callus: Unorganized tissue formed from organized ture, temperature, and humidity. This is usually plant tissue. done by moving air with fans or through ducts. Carbohydrate: Any of various neutral compounds Aflatoxins: Any of several mycotoxins that are of carbon, hydrogen, and oxygen (such as sugars, produced, especially in corn or oil seeds, by molds starches, and cellulose) most of which are formed (e.g. aspergillus flavus). by green plants. Agronomy: A branch of agriculture dealing with Chromosome: A thread-like structure contained in field crop production and soil management. the nucleus of a cell that carries the genes that Allele: One of several possible alternate forms of convey hereditary characteristics. a given gene. Cleaning: For purposes of this assessment, clean- Amino acid: A group of 20 molecules that bind to- ing is the removal of dockage, insects, and to a gether to form proteins. Each type of protein is degree shrunken and broken kernels from grain made up of a specific sequence of amino acids by means of mechanical screening and scalping coded for in the DNA. devices, Cleaning practices vary from country to Amylase: Any of the enzymes that accelerate the country. See precleaning. hydrolysis of starch and glycogen. Combination dryers: On-farm dryers, mainly used Amylopectin: A component of starch characterized for corn, that combine the best characteristics of by its heavy molecular weight, its branched struc- bin and non-bin systems (i.e., high quality and ture of glucose units, and its tendency not to gel high capacity), but are more complicated and ex- in aqueous solutions. The starch of normal corn pensive. is made up of amylopectin and amylose. Combine: A machine that harvests grain. The first Amylose: A component of starch characterized by combine was patented in 1836, since then self- its straight chains of glucose units and the ten- propelled combines of either conventional or dency of its aqueous solutions to set to a stiff gel, rotary design have evolved and come into use The starch of normal corn is made up of throughout the United States and in other amylopectin and amylose. countries. Backcross: The crossing of a first-generation hybrid Concurrent-flow dryers: Off-farm commercial with either parent. dryers in which grain and air flow vertically. The Bin-dryers: On-farm dryers that are generally low- gentle drying and cooling methods used in these capacity, low-temperature systems, capable of dryers results in grain of superior quality, Their producing excellent quality grain. main disadvantage is their high initial cost. Biochemistry: A branch of chemistry that deals with Corn: The seed of a cereal grass and the only im- the chemical compounds and processes occur- portant cereal plant indigenous to America. Corn ring in living organisms, is used mainly for animal feed, but it is also used Biotechnology: Techniques that use living organ- for oils, starches, and syrups for human consump- isms or substances to make or modify a product. tion, and in some industrial products. It is grown See genetic engineering and recombinant DNA. extensively in the United States, the six Corn Belt Blending: For purposes of this assessment, blend- States are Iowa, Illinois, Indiana, Nebraska, Min- ing refers to the mixing of two or more grain lots nesota, and Ohio. to establish an overall quality that may or may Cotyledon: The seed leaf of an embryo plant that not be different from any one individual lot. serves as nourishment for the elementary plant. Blending is done for economic reasons, to achieve Crossflow dryers: The most prevalent type of off- uniformity for improved handling, or to meet a farm commercial grain dryers in the United particular quality specification. States, in which grain and air flow in a perpen- 274 275

dicular direction. This type of dryer tends to dry Elevator leg: Part of the belt-bucket system used in the grain non-uniformly, causing stress-cracking commercial grain facilities. It consists of an end- of the kernels. less vertical belt with buckets spaced evenly along Cross-pollination: The transfer of pollen from one it. The buckets scoop up the grain at the bottom plant to another plant. (boot) of the leg and discharge it at the top. Cultivar: An international term denoting certain Endosperm: A nutritive tissue in seed plants con- cultivated plants that are clearly distinguishable tained in the inner bulk of the kernel that con- from others by one or more characteristics, and sists primarily of complex carbohydrates. It also that when reproduced retain those distinguish- contains protein, riboflavin, and B vitamins. In ing characteristics. In the United States “variety” corn, the quantity of vitreous or horny endosperm is considered to be synonymous with cultivar (de- relative to floury endosperm in the kernel deter- rived from cultivated variety). See variety, mines the hardness of the grain. Cytoplasm: The protoplasm of a cell outside the nu- Environment: The complex of climatic, edaphic, cleus consisting of an aqueous solution, which and biotic factors that act upon an organism or is the site of most of the chemical activity of the an ecological community and determine its form cell. and survival. The environment in which it grows Deficiency payments: Payments to farmers based greatly influences the productivity and quality of on actual planted acres, which makeup the differ- grain. ence between a politically acceptable target price, Enzyme: Any of a group of catalytic proteins that and the average market price or loan rate, which- are produced by living cells and that mediate and ever is higher. provide the chemical processes of life without Determination: The process whereby the corn ker- themselves being destroyed or altered. nel is broken apart into endosperm, germ, and Enzyme-linked immunosorbent assay (ELISA): A pericarp. test that is used to identify proteins and plant Deoxyribonucleic acid (DNA): The nucleic acid in pathogens by using antibodies to identify proteins chromosomes that codes for genetic information. rapidly. A protein-antibody complex is incubated The molecule is double stranded, with an exter- with an enzyme-coupled antibody that recognizes nal “backbone” formed by a chain of alternating and binds to the protein, The reaction is meas- phosphate and sugar (deoxyribose) units and an ured spectrophotometrically to identify the pres- internal ladder-like structure formed by nucleo- ence of the specific protein that is attached to the tide base-pairs held together by hydrogen bonds. antibodies. Dockage: The foreign material in market grain (such European Economic Community (EC): A group of as stems, weeds, and dirt), which is readily remov- twelve European nations, consisting of Belgium, able by ordinary cleaning devices. the Federal Republic of Germany (West Ger- Drying: For purposes of this assessment, drying is many), France, Italy, Luxembourg, the Nether- the removal of moisture from grain by various lands, the United Kingdom (UK), Ireland, Den- methods in both commercial and on-farm dryers. mark, Greece, Spain, and Portugal that have Air temperature, grain velocity, and airflow rate banded together for economic and political during the drying process have a greater influ- reasons. ence on grain quality than all the other grain han- Federal Grain Inspection Service (FGIS): A branch dling operations combined. of the U.S. Department of Agriculture that estab- Dry milling: The basic process used to mill wheat lishes grain standards and develops the technol- and corn, involving the cleaning, conditioning, ogy to measure the factors contained in such grinding, and sifting of the grain. standards. This agency also develops and pub- Electrophoresis: A technique used to separate lishes sampling and inspection procedures, evalu- molecules (such as DNA fragments or proteins) ates and approves equipment, monitors inspec- from a mixture of similar molecules. By passing tion accuracy, and oversees mandatory export an electric current through a medium contain- inspection of grain by FGIS or FGIS-licensed in- ing the mixture each type of molecule travels spectors. through the medium at a rate corresponding to Feed grains: Grains, especially corn, characterized its electric charge and size. Separation is based as high-energy grains due to their relatively high on differences in net electrical charge and in size levels of nitrogen-free extract and low levels of or arrangement of the molecule. This technique crude fiber. can be used to identify grain varieties. Flaking grits: A product of dry-milled hard corn. 276

Low-fat, large flaking grits are used primarily in isms and that transmits these properties from par- the manufacture of breakfast food, and coarse and ents to progeny. The expression is also used in regular grits are used in the brewing industry. a broad sense to refer to the total hereditary Flour: Finely-ground meal derived from wheat. makeup of organisms. There are four major flour types, hard wheat Gliadin: Simple proteins obtained from alcoholic flour, whole wheat flour, soft wheat flour, and extraction of gluten from wheat or rye. semolina. Flour is classified according to Glume: Hull or husk. strength. Strong flours, derived from hard wheat Gluten: A tenacious, elastic protein substance, and used mainly for bread-baking, are high in pro- found especially in wheat flour, that gives cohe- tein and elastic gluten (these include semolina, siveness to dough. which is made from Durum wheat and used to Grade-determining factors: Factors selected as in- manufacture pasta). Weak flours, derived from dicators of value and quality that help set the nu- soft wheat, are used for biscuits and pastries and merical grade of grain. are low in protein and gluten. Grading: The numerical grading of grain (e.g., Num- Flour stream: Flour resulting from each separate ber 2 Hard Red Winter wheat) according to grade- process of dry milling. Flour from each point of determining factors. the process has different characteristics and bak- Grain: The seeds or fruits of various food plants, ing properties. In large flour mills 30 or more including the cereal grasses (e.g., wheat, corn, separate flour streams of varying composition barley, oats, and rye) and other plants in commer- and purity may be collected, grouped, and mercial and statutory use (e.g., soybeans). Grain is chandised. a living organism, and as such is a perishable Fumigation: For purposes of this assessment, fumi- commodity that can be adversely affected by im- gation is the destruction of pests infesting grain proper harvesting, handling, storage, and trans- by professional personnel, trained in the appli- portation. cation of fumigants, i.e., chemicals that at re- Grain breakage: Mechanical damage to grain that quired temperature and pressure can exist in a results in broken grain and fine material. This is gaseous state in sufficient strength and quanti- caused by the harvesting of grain that is too dry ties to be lethal to a given pest organism. Fumi- and the cumulative damage inflicted on grain dur- gants are some of the most toxic and unique pes- ing repeated handling. Grain breakage causes de- ticides, methyl bromide and hydrogen phosphide creased quality, greater storage problems, and in- are the fumigants most commonly used on grain. creased rates of mold and insect infestation. Fungus: Any of a major group (fungi) of parasitic Grain quality: There is no single definition of grain lower plants that lack chlorophyll. Fungi include quality. For purposes of this assessment grain molds, rusts, mildews, and mushrooms. Asper- quality is defined in terms of the physical, sani- gillus flavus is a fungus that grows on corn. tary, and intrinsic characteristics of grain. See Gene: The portion of a DNA molecule that is made intrinsic quality, physical quality, and sanitary up of an ordered sequence of nucleotide bases quality. and constitutes the basic functional unit of Grain standards: Legislation (the Grain Standards heredity. Act) was passed in 1916 in an attempt to estab- Genetic engineering: Technologies (including re- lish official standards for wheat, corn, and soy- combinant DNA methods) used by scientists to beans that would describe a level of quality and isolate genes from one organism, manipulate provide a basis for marketing grain. This Act re- them in the laboratory, and then insert them sta- mained intact until the passage of the Grain Qual- bly in another organism. See biotechnology and ity Improvement Act in 1986, which provided recombinant DNA. new criteria as a basis for grain standards. Meas- Genome: A term used to refer to all the genetic ma- uring grain quality is difficult to standardize and terial carried by a single germ cell. there is a lack of clear objectives, goals, and cri- Genotype: The hereditary makeup of an individual teria concerning the form and function of such plant or animal, which, with the environment, standards. controls the individual’s characteristics. Grain storage: Grain is stored in three basic ways. Genotypic variability: The range of expression for Vertically, in upright metal bins or concrete silos; a specific trait (e.g., the protein percentage in horizontally, in flat warehouses; and in on-ground wheat, which can range from 7 to 30 percent). piles. See vertical storage, horizontal storage, and Germplasm: The living stuff of the cell nucleus that on-ground pile storage. determines the hereditary properties of organ- Handling technologies: Technologies and equip- 277

ment that are used in the receiving, drying, clean- Micro-organisms: Minute, microscopic, or sub- ing, storage, conveying, and transportation of microscopic living organisms Examples are bac- grain. teria, mycoplasma, and viruses, They are para- Hard wheat: Wheat varieties that are high in pro- sites that gain their sustenance from the mate- tein (especially hard spring and winter wheats rial that they grow on, such as grain. and Durum wheat), Millfeed: The material remaining after all the usa- Harvesting: The process whereby grains and oil ble flour is extracted from grain. The material is seeds are removed from a plant, gathered, and used by the feed industry to make animal feed physically removed from a field. and feed supplements. Hexaploid: Having six times the monoploid chro- Milling: A process by which grain kernel compo- mosome number. Wheat is a hexaploid plant nents are separated either physically or chemi- species. cally, and grain is ground into flour or meal. Homozygous: True breeding for a specific heredi- Mixed-flow dryers: The most prevalent type of large, tary characteristic. A plant that breeds true for continuous-flow, off-farm dryer used in countries a specific characteristic (such as flower color) is outside the United States. In these dryers, grain called homozygous for this characteristic. is dried by a mixture of crossflow, concurrent Horizontal storage: Grain storage in buildings con- flow, and counterflow drying processes, which structed of metal, wood, or concrete, which have dry grain more uniformly and produce a higher flat floors and are filled by means of a portable quality grain. These dryers are expensive to man- incline belt or conveyors in the roof. These stor- ufacture and require extensive air-pollution age facilities are more difficult to load, unload, equipment, aerate, and fumigate than vertical storage fa- Moisture: Moisture content and uniformity is a crit- cilities. ical factor in grain quality. If grain is too wet or Hybrid: An offspring of a cross between two genet- too dry at harvest damage occurs. Moisture also ically unlike individual plants or animals. Hybrid interacts with temperature and relative humid- corn varieties have produced increased yields in ity in grain storage centers and during shipping, some parts of the United States, and progress is when too much moisture can spur mold growth, being made in developing techniques for the com- increase insect activity, and cause other quality mercial production of hybrid wheat, losses. Incline belt: An endless belt, used to convey grain, Mold: A superficial growth produced on damp or which is supported by rollers and driven by a decaying matter. Molds draw their sustenance shaft-mounted speed reducer motor. from the material they grow on. Mold growth on Insecticides: Chemicals used to destroy insect pests, grain creates damaged kernels, deposits toxic sub- The insecticides most commonly used on grain stances in the grain, and results in a loss of dry are pyrethrins, malathion, and the more recently matter. As they grow, molds produce heat and introduced pirimphos-methyl, chlorpyrifos-methyl, moisture, which encourages their further prolif- and bacillus thuringiensis (BT). eration. Insects: Insects create numerous problems causing Monogastric: An animal that has one digestive loss and damage in stored grain. Grain is lost cavity (for example, swine, poultry, humans). when consumed by the insects, insect wastes are Near-infrared reflectance spectroscopy (NIRS): A left behind in the grain, and insect fragments are new analytical technique that can determine the found in finished grain products, increased heat structure of compounds and the composition of and moisture resulting from insect metabolic substances by examining them with a spectro- processes can lead to mold growth, and the use scope that is designed to operate in the infra-red of insecticides can leave pesticide residues in the region of the spectrum, One application of this grain. technique is the measurement of moisture and Intrinsic quality: Characteristics critical to the end protein percentages in wheat. See spectropho- use of grain. These are nonvisual and can only tometer. be determined by analytical tests. For example, Non-bin dryers: The most popular on-farm dryers, the intrinsic quality of wheat is determined by these are generally high-capacity, high-tempera- characteristics such as protein, ash, and gluten ture systems, that frequently overheat and over- content; the intrinsic quality of corn by its starch, dry the grain, causing serious deterioration in protein, and oil content; and the intrinsic quality grain quality. of soybeans by their protein and oil content, Non-grade-determining factors: Factors that influ- Isoglucose: A sweetener and sugar substitute de- ence the quality of grain, but which are not taken rived from wheat starch. into account in the grading of grain, and which -- — —

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must be reported as information whenever an foreign material that detracts from the overall official inspection is made. value and appearance of the grain, including the Off-farm dryers: High-capacity, high-temperature, presence of dust, broken grain, rodent excreta, commercial grain dryers that are used away from insects, residues, fungal infection, and nonmilla- the farm. These fall into three categories, cross- ble matter. flow, concurrent-flow, and mixed-flow dryers. Screw augur conveyor: A round tube with a contin- On-farm dryers: Grain dryers used by farmers to uous screw on a spiral inside. The principal dry grain. At least 80 percent of the United States means of moving grain on farms where inexpen- corn crop is dried on-farm. On-farm dryers fall sive portable equipment is needed. into three categories, bin-dryers, non-bin dryers, Sedimentation test: A test that measures the qual- and combination dryers. ity of protein content in wheat. Ground wheat is On-ground pile storage: Storage of grain placed in suspended in water and treated with lactic acid. piles directly on the ground or on pads, either The portion that settles to the bottom of a gradu- covered by a tarp or left uncovered. Piles can be ated cylinder within 5 minutes is the sedimen- contained by fixed or movable sloping walls or tary value. circular rings. Grain stored by this method is dif- Shrink: The loss of weight in grain due to the ficult to load, unload, aerate, and fumigate. removal of water. Pericarp: The covering of a seed that is derived from Single-cross hybrid: A first generation hybrid be- the ovary wall. tween two selected and usually inbred lines. Physical quality: Grain characteristics associated Soft wheat: Varieties of wheat that contain low with the outward appearance of the grain kernel, amounts of protein. including kernel size, shape, color, moisture, Sorghum: A cultivated plant derived from a genus damage, and density. of Old World tropical grasses, similar to Indian Plant breeding: The development of plants with cer- corn. tain desirable characteristics. Grain breeding pro- Soybeans: A hairy annual Asiatic legume, widely grams generally aim to improve yield and har- grown for its oil rich proteinaceous seeds and for vestability, increase disease resistance, and forage and soil improvement. Soybeans are used satisfy apparently desirable intrinsic quality mainly for oil and for high-protein meal for ani- goals. mal feed. The principal soybean-producing states Precleaning: The removal of foreign material such are Illinois, Indiana, Iowa, Missouri, Mississippi, as weeds, seeds, dirt, stems, and cobs from the and Ohio. The United States produces 60 percent grain before it is dried. This results in a more uni- of the world supply of soybeans. form moisture content in the dried grain and elim- Spectrophotometer: An instrument that measures inates the drying of material that detracts from the relative intensities of light in different parts grain quality. Precleaning is not generally prac- of the spectrum. See near-infrared spectroscopy. ticed by dryer operators in the United States. See Steepwater: Water used to soak corn during the wet cleaning. milling process. Protein: The total nitrogenous material in plant or Stress-cracks: Cracks in the horny endosperm of animal substances. Proteins occur naturally and corn caused by the rapid drying of kernels with are complex combinations of amino acids. heated air. Stress-cracking causes increased Recombinant DNA: Techniques involving the incor- breakage during handling and reduces flaking grit poration of DNA fragments, generated with the yields. use of restriction enzymes, into a suitable host Tempering: The addition of moisture to wheat and organism. The host is then grown in a culture to corn during the dry milling process to aid the produce clones with multiple copies of the incor- removal of bran from the endosperm. porated DNA fragment. This and other genetic Tissue culture: A technique in which portions of engineering techniques hold future promise for a plant or an animal are grown on artificial cul- altering the genetic makeup of plants to enhance ture medium in an organized state (e.g., as plant- various desirable characteristics, but they are not lets) or in an unorganized state (e.g., as callus). yet widely used. See biotechnology and genetic Triticale: A hybrid between wheat and rye that has engineering. a high yield and a rich protein content. Rheology: The study of the flow of materials, par- Unit trains: A train of 50 or more railcars depart- ticularly the plastic flow of solids. ing from the same point for the same destination Sanitary quality: Grain characteristics associated with one bill of lading. This is an efficient way with cleanliness. They include the presence of of transporting grain. —

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U.S. Grain Standards Act: This Act, administered Wet milling: Processes using water in which corn by the FGIS, requires that uniform standards be is tempered and steeped and converted into developed and used when marketing grain. Test- starches. More than half of these starches are con- ing is provided for, but no requirement exists as verted into corn syrups and corn sugars. Corn to what tests should be performed on grain mov- oil is also extracted during starch recovery. ing domestically within the United States. Man- Wheat: Any of various grasses high in gluten that datory testing of grain for export is required. are cultivated in various temperate areas for the Variety: Any of various groups of plants of less than grain that they yield, which is used in a vast ar- specific rank. See cultivar. ray of products. In the United States the main Vertical Storage: The storage of grain in upright con- wheat-producing states are Kansas, Oklahoma, crete silos or metal bins that can range in size Texas, Nebraska, and Colorado. Hard Red Win- from as little as 3,000 bushel farm bins to 500,000 ter wheat is the main wheat variety grown in the bushel commercial bins, They are easy to load, United States, unload, aerate, and fumigate. Wheat starch: The portion of the wheat kernel re- Vital wheat gluten: A wheat product containing 75 maining after the gluten has been extracted. to 80 percent protein, used as a flour fortifier, the product of new advances in wheat processing technologies. —

Appendix c Commissioned Papers and Authors

This report was possible in part because of the valuable information and analyses contained in the background reports commissioned by OTA. These papers were reviewed and critiqued by the advisory panel, workgroups, and outside reviewers. The papers are available through the National Technical Infor- mation Service. * The Genetics of Grain Quality Technologies Affecting Quality

Editor/Compiler Marvin R. Paulsen Jack F. Carter University of Illinois ‘North Dakota State University Hard Red Winter Wheat Rollin G. Sears Mark D. Schrock Kansas State University Kansas State University Paul J. Mattern University of Nebraska Hard Red Spring Wheat David B. Sauer Bert L. D’Appolonia Harry H. Converse North Dakota State University U.S. Department of Agriculture Hard Red Spring Wheat Manhattan, KS Richard C. Frohberg North Dakota State University Durum Wheat Roy G. Cantrell Charles R. Hurburgh North Dakota State University Iowa State University Durum Wheat Joel W. Dick Charles R. Hurburgh North Dakota State University Iowa State University Soft Red Wheat and White Wheat Patrick L. Finney U.S. Department of Agriculture Fred W. Bakker-Arkema Wooster, OH Michigan State University Howard L. Lafever Ohio State University Molecular Biology Hagen B. Gillenwater Karl A. Lucken Robert Davis North Dakota State University U.S. Department of Agriculture Stephen P. Baenziger Savannah, GA University of Nebraska

Joe W. Burton U.S. Department of Agriculture C. Phillip Baumel Raleigh, NC Iowa State University

A. Forrest Troyer Marvin R. Paulsen DeKalb-Pfizer Genetics University of Illinois 280 281

Tilden W. Perry Purdue University Lowell D. Hill University of Illinois Thomas E. Weidner Consultant Charles R. Hurburgh Iowa State University Robert A. Zortman U.S. Department of Agriculture Economic and Institutional Analysis Mary J. Schultz Michigan State University

Quality William W. Wilson William W. Wilson Jean Riepe North Dakota State University North Dakota State University Lowell D. Hill Paul Gallagher University of Illinois Kansas State University Robert A. Zortman U.S. Department of Agriculture William W. Wilson Michael J. Phillips Craig Anderson Office of Technology Assessment North Dakota State University E. Wesley Peterson Paul Gallagher Texas A&M University Kansas State University

Colin A. Carter Rhond Rudolph Roth University of California-Davis Washington, DC Andrew Schmitz University of California-Berkeley Lowell D. Hill David M. Orr University of Illinois Office of Technology Assessment Robert A. Zortman Major U.S. Grain Competitors U.S. Department of Agriculture

A William W. Wilson Lowell D. Hill North Dakota State University University of Illinois David M. Orr Thomas E. Weidner Office of Technology Assessment Consultant Robert A. Zortman Robert A. Zortman U.S. Department of Agriculture U.S. Department of Agriculture Michael J. Phillips Michael J. Phillips Office of Technology Assessment Office of Technology Assessment James G. McGrann Texas A&M University *These commissioned papers will be available in spring of 1989 from the National Technical Information Service, Springfield, VA 22161, telephone (703) 487-4650. Volume 2: Commissioned Papers Part A: The Genetics of Grain Quality Part B: Technologies Affecting Quality Part C: Economic and Institutional Factors of Grain Quality Part D: Major U.S. Grain Competitors - —. --- . . . .

Appendix D Acknowledgments

OTA would like to thank the members of the advisory panel who helped guide the direction of this study and who reviewed drafts of this report. OTA also acknowledges the cooperation of the Federal Grain Inspection Service of the U.S. Department of Agriculture in providing staff support and data for this study. In addition, OTA thanks the following individuals for reviewing background papers, reviewing individual report chapters, or providing information to the project staff:

James Allen Arvid Hawk Research Products Company Cargill, Inc. Jim Bair Doris Hoener U.S. Department of Agriculture Moorman Manufacturing Company Fred Bakker-Arkema James Houck Michigan State University University of Minnesota Roy Barrett Harold Hudgins U.S. Department of Agriculture Alabama State Docks Department Ted Bownik T.L. “Sam” Irmen ADM Milling The Andersons Lee Boyd Gail Jackson American Feed Manufacturers U.S. Department of Agriculture Dean Brown Jack Johnston American Farm Bureau Federation Cargill, Inc. William Bullard Kendall Keith National Council of Farmer Cooperatives National Grain and Feed Association Colin Carter Allen Kirleis University of California-Davis Purdue University Jim Frahm Tom Klevay U.S. Wheat Associates Millers National Federation David Fulton Rodman Kober National Council of Farmer Cooperatives Continental Grain Company David Galliart George Kornstad U.S. Department of Agriculture Pestcon Systems, Inc. Kenneth Gilles David Krejci U.S. Department of Agriculture Grain Elevator and Processing Society Kerry Goforth Gerry Krueger National Grain and Feed Association North American Export Grain Association James Guinn John Marshall American Soybean Association U.S. Department of Agriculture R.J. Gustafson Wilda Martinez Ohio State University U.S. Department of Agriculture Larry W. Gutekunst Steve McCoy Deutz-Allis Corporation North American Exporters Grain Association Phil Harein Gary W. McKinney University of Minnesota National Grain Trade Council Marion Hartman Richard McWard National Corn Growers Association Bunge Corporation

282 283

Kirk Miller Larry Schultz U.S. Department of Agriculture Peavey Grain Companies John Barrington Willard Severns Continental, Inc. American Farm Bureau Federation Robert Petersen Henry Shands National Grain Trade Council U.S. Department of Agriculture Beltsville, MD Dale Phillips Union Equity David Shipman U.S. Department of Agriculture John Pitchford U.S. Department of Agriculture Virgil Smail National Association of Wheat Growers Adrian J. Polansky U.S. Wheat Associates James Snitzler U.S. Department of Agriculture Wilson Pond U.S. Department of Agriculture Max R. Spencer Continental, Inc. M.A. Pothoven Moorman Manufacturing Company Lyle Stephens Deere & Company Technical Center Dan Ragsdale National Corn Growers Association Winston Wilson U.S. Wheat Associates Cletus E. Schertz University of Minnesota Index Index

Aflatoxin, testing technologies for, 194, 195-196 Brazil Africa cleaning practices in, 239 U.S. wheat exports to, 35 domestic wheat production’s relationship to income wheat consumption and import trends in, 93 in, 94 wheat preference shifts in, 95, 98 drying practices in, 239 see also Middle East, individual countries in export standards used in, 207 Agricultural Market Act (AMA), 197 grain inspection authority and grade standards of, Agricultural Research Service (ARS)–USDA, 119, 127 244 Agricultural Stabilization and Conservation Service grain storage practices in, 239, 241 (ASCS)–USDA, 43 pricing policy of, 244-245 Allowable Storage Time Table for corn, 180, 183 seed variety control in, 244 American Association of Cereal Chemists, 191 Breakage, interaction between moisture and, 7, 8, 11, American Feed Manufacturers Association, 62 141, 144, 146, 154, 179-183 American Oil Chemists’ Society, 191 Breeders, role of public and private grain, 106-108, American Seed Trade Association, 127 118-122, 127-128 Archway Cookies, Inc., 90 Breeding. See Genetic selection Argentina Broken corn and foreign material (BCFM), 203, 204, dominant class of wheat exported by, 91 205, 211, 213 drying practices in, 239, 241 export standards used in, 207 grain storage practices in, 239, 241 Canada pricing policy of, 244 cleaning practices in, 239, 241, 247 seed variety control in, 244 dominant type of wheat exported by, 91 Asgrow Seed Co., 119 FAQ standard use in, 207 Asia grain market regulation in, 5, 19 end-product preferences of consumers in, 91 grain transport to, 36, 38, 165, 191 wheat preference shifts in, 95, 98 pricing policy of, 94, 244-245 wheat types preferred by countries in, 92-93 seed variety control in, 241, 259 see also Far East; individual countries in soybean cultivars release in, 120 Association Nacional dos Exportadores de Cereais storage incentives in, 246 (Brazil), 244 uniformity in grain quality between shipments Association of American Feed Control Officials, 48 from, 15, 89 Australia Chicago Board of Trade, hedging grain purchases dominant type of wheat exported by, 91 and sales through, 41 drying practices in, 239, 241 China, People’s Republic of, corn grades in, 206 FAQ standard use in, 207 Clark, Paul, 90 grain market regulation in, 5, 19, 246 Cleaning, grain grain storage practices in, 239, 241 technologies of major grain exporting competitors, marketing by variety in, 244 239, 241, 247 pricing policy of, 244-245 technology types and performance for, 9-10, seed variety control in, 241, 247, 259 171-175 uniformity in grain quality between shipments use in grain processing, 51, 54, 57 from, 15, 89 Colorado, wheat production in, 32, 105 Australian Wheat Board (AWB), 239 Columbia River, 167 Combines. See Harvesting, Technologies Barges. See Transportation Commodity Credit Corporation (CCC)–USDA Bean degermer, 54 grain storage agreements made by, 228, 261-262 Biochemical selection, in wheat breeding, 113 inspection policies of, 228-232 Biotechnology, use in grain breeding of, 111-112, 113, loan program workings and objectives of, 14, 42, 122, 123, 129-130 221-224, 254 Blending pilot project on premiums and discounts of, 234 major grain exporting competitors’ use of, 241 policy options regarding loans made by and grains necessity in the United States caused by lack of owned by, 21-22, 254, 261 uniformity in marketing process, 189, 248 Competition reasons for, 175 comparison of U.S. grain quality affecting technology types and performance for, 175-179 institutions and regulations to major grain wheats for various end uses, 15, 68-69, 70, 93, 176 exporting, 241-244, 246-247

287 .. —. .

grain quality attributes important in processing, 13, Licensing. See Regulation 14-15, 63, 66, 67-68, 80-82, 84 Livestock, production of feed for, 33, 34, 49-50, 94-95 marketing system principles and characteristics of Loan rate program, premiums and discounts used in U.S. grain, 4, 40-41 U.S. farm, 14, 42, 221-224 production characteristics and trends in U.S. grain, 29, 31-33 Marketplace quality control standards and methods for U.S. importance of supplying quality attributes in, 89-90 grain, 42-43 importance of uniform quality between grain soybean processing, 50 shipments in, 14, 15, 79-81, 84 storage and handling practices by U.S. grain, 38-39 incentives in the grain, 203-204 technologies used in grain processing, 50-57 quality attributes desired by purchasers of U.S. utilization of grains produced by U.S. grain, 33-35, grain in, 14, 15-16, 67-84, 91-98 92-94 trends for wheat quality characteristics in the Insect management, technology types and international, 93-98 performance for, 10, 11, 158-165 Merchants Exchange of St. Louis, 168 Inspection. See Regulation; Technologies; Testing Mexico International U.S. Wheat End Use Quality export inspection exception for, 191 Conference (1986), 79, 82 U.S. grain transport to, 38, 165 Interrelationship Michigan, performance trial requirement in, 128-129 between grain handling and storage technologies, Middle East 39 end product preference of consumers in, 91, 98 between standards, variety, and market, 16, 23, grain attributes considered important by countries 256-257, 266-267 in, 72 between technologies as related to grain quality, 3, U.S. grain exports to, 35 14, 15, 43, 61, 71-72, 84, 90, 182-183 wheat consumption and import trends in, 93 between technologies regarding moisture and see also individual countries in breakage, 7, 10, 12, 141, 144, 146, 154, 179-182 Milling, grain, 33, 34, 47-49, 50-51, 54-57 between yield and protein, 232-234 Minnesota, grain production in, 32, 33 of environment and genetic variation in grain Mississippi, 115 breeding, 105-106, 116-118, 126 Mississippi River System, grain transport on, 167 of field performance criteria for corn, 129 Missouri, soybean production in, 33 of quality, disease resistance, and yield in grain Moisture breeding, 104-105, 116 interaction between breakage and, 7, 8, 11, 141, of yield, protein, and oil content in soybean 144, 146, 154, 179-183 breeding, 114, 116 levels in grain processing, 51, 54-55, 57 Iowa see also Drying; Grain corn production by, 32 Montana, wheat production in, 32 hybrid seed sales in, 127 soybean production in, 33, 114 Nagao, Seiichi, 79 Israel, U.S. soybean exports to, 35 National Association of State Universities and Land Grant Colleges, 128 Japan National Bureau of Standards. See National Institute grain transportation to, 170 of Standards and Technology U.S. grain exports to, 35, 115 National Conference of Weights and Measures, 191 wheat consumption and import trends in, 93 National Corn Growers Association, 151 wheat type preference shift in, 95, 98 National Grain and Feed Association, 43, 154, 209 National Grain and Feed Dealers Association, 200 Kansas National Institute of Standards and Technology farm programs’ impact on grain marketing in, (NIST)–Department of Commerce 227, 233 policy options involving testing responsibility of, wheat production in, 32, 105 23-24, 26, 265-266 Karl Fisher titration method, 193 weights and measures program coordination by, 191-192 Laguio, Emma B., 79, 82 National Seed Storage Laboratory, Germplasm Bank, Latin America 107 wheat type preference shifts in, 98 National Soybean Processor Association, 62 see also individual countries in Near-infrared-reflectance analyzers (NIR), 109, 192, Legislation 193, 196, 265 evaluation of recent grain quality, 212-213 Nebraska see also individual statutes corn production in, 32 289

Federal Food, Drug, and Cosmetic Act (FDCA), grain flow system in the United States, 36-38 guidelines of, 197 harvesting technologies, 9-10, 137-143 Federal Grain Inspection Service (FGIS) insect management technologies, 10, 158-165 grain standards developed by, 42 inspection and testing procedures in the United inspection and related regulation duties of, 13, 43, States, 189-199 189, 190-191, 192, 193, 196-197, 199, 201-202, marketing system principles and characteristics in 203, 204, 209, 212, 228 the United States, 4, 40-41 policy options involving standards set by, 23-24, production characteristics and trends in the United 263, 264, 265 States, 29, 31-33 Federal Seed Act (1939), 121, 127 quality measurement and standards for, 12-13, Feed, animal, grain used for, 33, 34, 49-50, 94-95 42-43, 62-67, 84 Flour storage and handling technologies, 9-10, 11, 38-39, production in grain milling, 33, 47-48, 51-53, 68-69 151-158, 239, 241, 247-248 quality and baking technologies, 14, 15, 61, 71-72, transportation techniques, 165-171 90 utilization of U.S.-produced, 33-35, 92-94 Food and Drug Administration (FDA) see also Corn; Soybeans; Wheat aflatoxin guidelines set by, 194, 197-199 Grain and Feed Trade Association (GAFTA), 207 defect action limit for wheat of, 264 Grain Quality Improvement Act (1986), 30, 137, 171 Food Security Act (1985], 3, 43, 220 evaluation of, 212-213 France objectives of grain standards specified by, 202, cleaning practices in, 239 209-210, 212 dominant type of wheat exported by, 91 Grain Trade Rules, 43 drying practices in, 239 Greece, 94 grain inspection authority and grade standards of, Guidelines. See Standards 244 grain market regulation in, 5, 19, 241, 244-245, 247, Handling, grain 259 technologies of major grain exporting competitors, grain storage practices in, 239, 241 239, 241, 247-248 marketing by variety in, 244 pricing policy of, 244-245 U.S. technology types and techniques for, seed variety control in, 241, 247, 259 9-10, 151-152 wheat productivity growth in, 4 Harvesting, grain, technology types and performance Fumigation. See Pesticides for, 9-10, 137-143 Funding. See Economics Hatch Act, 119 Hedging, use by U.S. grain trade players, 41 Hybrids, development and performance of grain, Genetic engineering, See Biotechnology 110-111, 123-126, 129 Genetic selection influence on grain quality characteristics of, 104-106, 115-118, 125-127, 130 Illinois, grain production in, 32, 33 objectives for grain, 103-104, 114-115, 123-125, 130 Illinois, University of, 128 variability of grain trait expression using, 105-106, Imports. See Trade 116-118, 125-127, 130 Incentives see also Technologies grain standards provision of market, 203-204 Genotypes. See Environment; Genetic selection for on-farm storage, 246 Gluten provided by the Common Agricultural Policy of the content of wheat, 33, 61, 71 EC, 237 production in grain processing, 47, 48, 53-54, 55, 57 for quality characteristics in U.S. grain marketing Grading. See Standards; Testing; Variety system, 5, 40 Grain V. prohibitions as solution to grain standards applying economic criteria to standards for U. S., problems, 212-213 209-211 India, U.S. wheat exports to, 35 blending technologies, 175-179 Indiana case study in wheat illustrating changing nature of corn production in, 32 markets for, 91-98 soybean production in, 33, 114 cleaning technologies, 9-10, 171-175 Industry drying technologies, 8, 143-151, 239, 241 animal feed manufacturing, 49-50, 94-95 evaluation of standards for U. S., 200-209 export trends and markets of U.S. grain, 30-31, 35 export trends and markets for the United States, farm policy programs and objectives for U.S. grain, 30-31, 35 14, 42, 219, 221, 228, 244, 246, 253-254 farm policy programs and objectives for U. S., flow system of U.S. grain, 36-38 14, 42, 219, 221, 228, 244, 246, 253-254 grain milling, 47-49 — — —-.

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soybean research funding in, 120 increase in implicit value of wheat’s content of, 94 wheat production in, 32 production trade-off between yield and, 232-234 New York State, corn production in, 33 quantity and quality importance in wheat’s end-use North America, See individual countries in suitability, 15, 91, 92, 93 North American Export Grain Association, Inc. (NAEGA), 41, 201 Quality attributes North Carolina congressional policy options to enhance grain, soybean cultivars in, 115 16-26, 254-267 variety release in, 120, 121 debate over U.S. grain, 3, 43 North Dakota factors influencing the demand for differing wheat, corn production in, 33 93-98 farm programs’ impact on grain marketing in, 223, grain processing industries’ perception of decrease 227, 233 in, 81-82 wheat breeding in, 104, 110 grain processing technologies’ relationship to, 13, wheat production in, 32 14-15, 61, 71-72, 84, 90, 182-183 North Dakota State University, 174 harvesting technologies’ effects on, 141-143 impacts of markets, farm programs, and technology Occupational Safety and Health Administration on, 232-233, 234 (OSHA), 197 inverse relationship between yield and, 104-105, Official United States Standards for Grain, 61, 172, 116, 126-127, 130 173 marketing decisions based on the market for, 5, 40 Ohio required by end users of corn, 13, 16, 72-78 corn production in, 33 required by end users of soybeans, 13, 14, 78 soybean breeding research budget in, 120 required by end users of wheat, 13, 15, 68-72 soybean production in, 33 storage technologies’ effects on, 153-158 Oklahoma, wheat production in, 32, 105 types of grain, 3, 44 uniformity of, between shipments of grain, 14, 15, Paddock, Senator, 200 79-81, 84 Pakistan, 94 U.S. awareness of various industries’ requirements Pesticides regarding, 13, 14, 89, 90 used as grain protestants, 159-160 U.S. farm policies’ impacts on, 14, 219-234, 253-254 used for fumigation, 159, 160-162 Pioneer Hi-Bred International, Inc., Plant Breeding Railroads. See Transportation Research Forum sponsored by, 118-119 Regulation Plant Variety Protection Act (1970) comparison of U.S. and competitor grain exporters’ breeding stimulus of, 106, 118, 120 grain quality affecting institutions and, 5, cultivar release procedures and, 121 241-244, 246-247 Policy congressional policy options related to market, comparison of U.S. and competitor grain exporters’ 19-22, 254-256, 259-263 grain quality affecting, 244-246 see also Policy; Standards; Testing government grain storage, 228-232 Research grain quality affected by U.S. Government farm, on differing wheat consumption patterns in 219-233 developing and industrial countries, 93 impacts on quality of U.S. farm, 14, 219-234, on factors determining grain storability, 202-203 253-254 on grain breakage, 10, 182 of major U.S. competitors, 5, 241-246, 254 grain breeding, 109-110, 111-112, 113, 118-119, 120, options for Congress to enhance U.S. grain quality, 126-128 14-25, 254-267 programs and objectives of U.S. Government farm, Ships. See Transportation 14, 42, 219, 221, 228, 244, 246, 253-254 Snake River, 167 U.S. grain inspection, 4-5, 43, 189-190 South Africa, export standards used in, 207 variety release, 121-122, 128-129 South America Premiums. See Deficiency payment/target price grain attributes considered important by countries program; Economics; Incentives; Loan rate in, 72 program see also individual countries in Pricing. See Economics South Dakota, wheat production in, 32 Productivity. See Yield South Korea Protein grain transport and, 170 as ultimate test for wheat quality, 68 U.S. grain exports to, 35 demand shift to wheats with lower content of, 93, Soybeans 95-98 adequacy of standards for, 66-67 — -.. .

292

breeders’ influence on development of, 118-122 grain breeding, 108-113, 122-123, 129-130 genetic influences on quality characteristics of, grain quality attributes and processing, 13, 14-15, 115-118 61, 84, 90, 182-183 genetic selection objectives for, 114-115, 130 grain storage, 38-39 historical development of, 114 grain testing, 191-196 processing of, 50, 57 industry acceptance of traditional quality production areas and trends for the United States, measuring, 15, 89-90 33 interaction between moisture and breakage relating quality attributes required by end users for, 13, 14, to, 179-183 78 types and performance of blending, 171, 175-179 technologies used in breeding, 122-123 types and performance of cleaning, 9-10, 171-175 variety release procedures and development time types and performance of drying, 8, 143-151 for, 120-122, 130 types and performance of harvesting, 9-10, 137-143 see also Grain types and performance of insect management, 10, Spring Wheat Quality Advisory Committee (SWQAC), 11, 158-165 107 types and performance of transportation, 165-171 Standards types and techniques of storage and handling, 9-10, adequacy of U.S. grain, 3, 43, 63-67 11, 38-39, 151-158, 239, 241, 247-248 alternatives to present system of U.S. grain, 205-209 used by grain processing industries, 50-57 congressional policy options related to grain, 21-23, Tempering, 51, 54 263-266 Testing economic criteria applied to U.S. grain, 209-211 gene identification, 112-113 economic solutions to problems with U.S. grain, importance to grain processing industries of 212-213 various types of quality, 13, 15, 63, 66, 69, 72, establishing U.S. grain, 196-199 76-78, 80-82 evaluating U.S. grain, 200-209 industry acceptance of traditional quality FDA grain quality, 194, 197-199 measuring, 15, 89-90 FGIS grain, 42 and inspection of U.S. grain, 189-199 history of U.S. grain, 200-201 technologies, 191-196 integrating objectives of U.S. grain, 204-205 see also Quality attributes; Standards major grain exporting competitors’ inspection Texas authority and grade, 244 soybean breeding in, 114 major grain exporting competitors’ use of grain wheat production in, 32 receival, 244, 247 Trade objectives of U.S. grain, 201-204 consumer end-product preferences effect on grain, Official U.S. Grain, 61, 62, 172, 173 91-93 see also Quality attributes; Testing economics of grain, 41 State Agricultural Experimental Stations (SAES) grain inspection in export, 190-191 grain breeding by, 110, 120 grain standards’ facilitation of, 202 grain breeding programs funding by, 106, 127 importance of uniform quality between shipments variety release procedures by, 7, 121 in grain, 14, 15, 79-81, 84 Storage quality attributes desired by buyers in U.S. grain, factors determining quality maintenance for grain 14, 15, 67-84 in, 202-203 standards and quality factors specified in contracts government policies for grain, 228-232 in U.S. grain, 16, 64, 65, 66, 67, 72, 78, 84 technologies of major grain exporting competitors, trends in and dependence on U.S. grain export, 239, 241, 247-248 30-31, 33, 34, 35 U.S. technology types and techniques for, 9-10, 11, see also Marketplace 38-39, 151, 152-158 Traits. See Breeders; Genetic selection Subsidies. See Incentives Transportation Sweden, 94 insect management and, 163 modes of major grain exporting competitors, Taiwan 239-241 grain transportation, 170 U.S. technology techniques and performance for, U.S. soybean exports to, 35 36-38, 165-171, 191 Target price/deficiency payment program, effects on Trucks. See Transportation grain quality of, 42, 219, 220, 225, 228, 232-233, 234 Uniform Grain Storage Agreement (UGSA), 43, 228, Technologies 230 comparison of U.S. and competitor grain exporters’ Union of Soviet Socialist Republics (U.S.S.R.), U.S. handling practices and, 239-241, 247 grain exports to, 35 flour quality and baking, 14-15, 61, 71-72, 90 United Kingdom (U. K.) —

293

Variable Import Levy on dockage imposed in, 255 development time for release of new grain, 109-110, wheat types imported by, 93 122, 130 United States (U. S.) farm programs’ impact on selection of, 225-228 aspiration cleaning equipment in, 175 major grain exporting competitors’ marketing by, awareness of quality requirements of various 244, 247 processing industries by, 13, 14, 89, 90 of U.S.-produced wheat, 32, 64 corn dry mills in, 49 Variety Release Committee (VRC), 107 corn yield, trend in, 124, 129 Variety release procedures economic criteria applied to grain standards of, congressional policy options related to, 17-19, 209-211 258-259 evaluating grain standards of, 200-209 for grain, 106-108, 120-122, 128-129, 130 export trends and markets, 30-31, 35 Virginia, 115 farm policies’ impact on grain quality, 14, 42, 219-234, 253-254 Western Europe fundamental advantages in grain system of, 4-5, U.S. grain exports to, 35 251-252 wheat consumption and import trends in, 93 government grain storage policies in, 228-232 wheat preference shifts in, 95, 98 grain export capability of, 165 see also Europe; European Community; individual grain flow system in, 36-38 countries in grain inspection and testing in, 189-199 Western Hemisphere grain quality affecting institutions and regulations U.S. grain exports to countries in, 35 of competitors compared to, 241-244, 246-247 see also individual countries grain quality affecting policies of competitors Wheat compared to, 244-246 adequacy of standards for, 63-64 grain quality control standards and methods of, breeders’ influence on development of, 106-108 42-43 case study illustrating the changing nature of grain handling technologies and practices of competitors markets, 91-98 compared to, 239-241, 247 factors causing variations in characteristics of, 91 marketing system principles and characteristics in, genetic influences on quality characteristics of, 4, 40-41 104-106 problem areas in grain system of, 5-14, 252-254 genetic selection objectives for, 103-104, 130 production characteristics and trends, 29, 31-33 historical development of, 103 soybean cultivars release and lifetime in, 119, 120 milling processes, 33, 50, 51-54 storage and handling practices in, 38-39 production areas and trends for U. S., 31-32 utilization of grain produced in, 33-35, 94 quality attributes required by end users for, 13, 15, variety of wheats grown and exported by, 91, 93 68-72 United States Grain Standards Act (USGSA)–1916 technologies used in breeding, 108-113 amendment to, 234 trends and shifts in preferences for classes of, grain regulation standards and responsibility 95-98 established by, 13, 42, 189, 190, 191, 196-197, variety release procedures for, 106-108, 130 200, 201, 210 see also Grain policy options involving inspection under, 24, 25, 263, 264-266, 268 Yield United States warehouse Act, 43 influence on wheat class imports of domestic U.S. Wheat Associates, 62 wheat, 93, 95 Utilization interactions in grain breeding of quality, disease quality attributes and local consumer wheat, 89, resistance and, 104-105, 116, 126-127, 130 91-93 as number one criteria in corn field performance, of U.S.-grown corn, 33-34 129 of U.S.-grown soybeans, 34-35 production trade-off between protein and, 232-234 of U.S.-grown wheat, 33, 92-94 U.S. corn, 124, 129 Variety control in major grain exporting competitors, 241, 247 Other Related OTA Reports

● Grain Quality in International Trade: A Comparison of Major U.S. Com- petitors. Assesses the grain systems of Argentina, Brazil, Canada, France, and Australia includes: overview of each country’s production and markets, technologies for producing and handling grain, quality control programs and incentives, and government policy. OTA-F-402, 2/89; 168 p. GPO stock #052-003-01140-9; $7.50 per copy

● Pesticide Residues in Food: Technologies for Detection. Examines existing and emerging techniques for residue analysis of pesticides and their breakdown products in food; addresses Federal research and programmatic issues relevant to the development and adoption of the technologies. OTA-F-398, 10/88; 244 p. GPO stock #052-003-01132-8;$10 .00 per copy NTIS order #PB 89-136 444/AS

● Technology, Public Policy, and the Changing Structure of American Agriculture. Focuses on future and emerging technologies in animal, plant, chemical, mechanization, and information areas and their implications for agricultural structure. Also explores linkages between policy and structure for a clearer understanding of the factors that influence the evolution of the agricultural sector. OTA-F-285, 3/86; 380 p. GPO stock #052-003-01018-6; $13.00 per copy NTIS order #PB 86-184 637/AS Contractor documents are also available from NTIS

● Technology, Public Policy, and the Changing Structure of American Agriculture: A Special Report for the 1985 Farm Bill. Special report focusing on three main policy areas of the reauthorization of the Agriculture and Food Act of 1981: commodity, credit, and research and extension. OTA-F-272, 3/85; 100 p. NTIS order #PB 86-184 637/AS

NOTE: Reports are available through the U.S. Government Printing Office, Superintendent of Docu- ments, Washington, DC 20401-9325, (202) 783-3238; and/or the National Technical Informa- tion Service, 5285 Port Royal Road, Springfield, VA 22161-0001, (703) 487-4650.

U . S . GOVERNMENT PRINTING OFFICE : 1989 - 88-378 : QL 3