NGFA Newsletter

Volume 51, Number 3, February 11, 1999

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Contents

Clinton Budget Proposes Increased User Fees

Important Mailings Sent to NGFA Members

NGFA Rail Policy Task Force to Meet Feb. 23-24

Rail Shippers Lose Appeal of STB Bottleneck Decision

USDA Considers Advocating 40-Million-Acre CRP

U.S. Appeals Court Rules Against USDA in `Bird Grain' Case

USDA Has `Secret Weapon' to Prevent Loan Forfeitures

New Official Moisture Meter Readings Suspect at Colder Temperatures

House Ag Committee Approves Embargo Bill, Debates Ag Consolidation

Seminars on `Optimal Grain Marketing: Balancing Risks and Revenue' Scheduled for April 7, 8, 9

Clinton Budget Proposes Increased User Fees

The proposed fiscal year 2000 budget unveiled by President Clinton on Feb. 1 calls for major increases in user fees for a wide array of federal services affecting the grain, feed and processing industry.

Meanwhile, the $55 billion budget proposed for the U.S. Department of Agriculture failed to provide any of the estimated $1-billion-plus funds for what USDA termed the "centerpiece" of its "farm safety net" proposals -- the expansion and reform of the federal crop insurance program.

Instead, Secretary of Agriculture Dan Glickman issued a separate "white paper" containing the administration's "principles and preliminary proposals for reforming crop insurance," and said that he would work with Congress to identify acceptable funding sources. Among the administration's proposals are to: 1) increase the amount of the crop covered and the market price at which crops are insured; 2) increase "incentives" for farmers to buy more comprehensive insurance at higher buy-up levels; 3) develop policies that cover multi-year, as well as single-year, losses; 4) increase the minimum level of catastrophic coverage and the non-insured assistance program; 5) expand the range of crops covered; and 6) provide coverage for livestock, including a pilot revenue program.

As expected, another Glickman "safety-net" proposal (which was not included in the president's budget) was to reinstate the farm storage facility loan program, used most recently in the late 1970s to grant low-interest loans to encourage producers to build or renovate on-farm storage facilities. "…[A]lthough crop insurance is the centerpiece of the safety net, we need to look at a broad range of ideas to help farmers manage risk," Glickman said in a statement issued at a Feb. 1 press conference on the budget. "…[T]wo ways that we can increase farmers' flexibility in their day-to-day decisions…(is to) allow farmers to extend due dates on market assistance loans which will ease the pressure on cash flow…and help(ing) pay for on-farm storage facilities which will enable farmers greater latitude in choosing when to sell their product," he said.

The release of the proposed budget sets in motion a series of hearings by congressional appropriations and budget-related committees that will ultimately determine the shape of the final budget, which requires congressional enactment.

User fees contained in the administration's fiscal 2000 budget proposal include the following:

Grain Inspection Standardization User Fees: USDA proposes to increase user fees by $3.56 million to cover the cost of standardization activities for its Grain Inspection, Packers and Stockyards Administration. These activities include the costs of developing, reviewing and maintaining the official U.S. grain standards, which USDA's budget states are "used by the entire grain industry." The proposal to shift the costs of the federal grain inspection service's standardization activities to user fees dates back to the mid 1980s and has been proposed by Democratic and Republican administrations alike. But this year, there is a new wrinkle. GIPSA officials told the NGFA's Grain Grades and Weights Committee on Feb. 9 that the agency has submitted a proposal to the White House Office of Management and Budget that the fee be implemented in the form of a "nominal cents-per-thousand-bushel charge" assessed from producers at the first point of sale to a grain elevator, processor, feed mill or other merchant -- in effect, a GIPSA checkoff assessed against producers by grain handlers. Previous budget proposals have suggested that the cost of the agency's standardization activities be financed through increases in official inspection and weighing fees.

Clinton's budget also proposes that $4.551 million be appropriated from tax revenues to finance GIPSA's compliance activities, as well as $3.41 million for its methods development activities, which include developing new and improved tests and procedures for determining grain quality, as well as grain inspection instrumentation.

Harbor Maintenance User Fees: As expected, the proposed budget calls for garnering $980 million annually by assessing a harbor maintenance user fee, even though only $500 million currently is used annually to finance the U.S. Army Corps of Engineers' port maintenance dredging activities. Joseph Westphal, assistant secretary of the army for civil works, on Feb. 10 told the House Transportation and Infrastructure Committee's Subcommittee on Water Resources and Environment that the administration's proposal on how to collect the fee would be sent to Congress by mid- to late- March. The fee is designed to replace the harbor maintenance tax, which was ruled to be an unconstitutional tax on exports by the U.S. Supreme Court in March 1998. The NGFA has strongly opposed the harbor maintenance fee proposal because it could have a disproportionately adverse impact on vessels containing bulk agricultural commodities like grain and processed commodities. Further, the NGFA has argued that funding for port dredging justifiably should be financed through general tax revenues, since it generates trade that benefits the entire economy. [See Committee Action, Jan. 28, 1999.]

STB User Fees: Disregarding the recent recommendations of the Department of Transportation's own inspector general, the Clinton budget for the fourth consecutive year proposes that legislation be enacted by Congress to totally finance the projected $15.821 million cost of the federal Surface Transportation Board through user fees. STB Chairman Linda Morgan had proposed to the White House Office of Management and Budget that the administration support $15.821 million in general appropriations to finance the agency's rail and surface transportation oversight activities, with only $1.2 million in user fees -- a proposal consistent with current arrangements. However, the administration's budget proposes the collection of an additional $14.4 million in user fees. The NGFA has strongly opposed increased STB user fees, arguing that it would make it economically prohibitive for virtually all rail grain users to seek resolution of disputes before the STB.

Rail Safety User Fees: The proposed $653 million budget for the Federal Railroad Administration proposes to raise $88 million through two new rail safety user fees to be paid by carriers. The fees would pay for general safety and research and development projects, including high-speed rail safety and potential improvements in railroad track and structural safety.

`Navigational-Assistance' User Fee: The budget contains a legislative proposal to assess a new "navigational-assistance" user fee amounting to $55 million in fiscal 2000 and to $179 million annually in subsequent years. The fee would be assessed against U.S. and foreign commercial cargo carriers to pay for services provided by the U.S. Coast Guard and the National Oceanic and Atmospheric Administration (NOAA). The types of Coast Guard activities proposed to be funded under this user fee are placement and maintenance of buoys and other short-range aids to navigation, radio navigation, and vessel traffic services, as well as nautical charting and related assistance provided by NOAA. Fishing, military and recreational vessels would be exempt from the fee.

Tax on Trade Associations: In an effort to generate $1.44 billion during the next five years, the Clinton budget proposes to tax so-called "investment income" of trade associations -- like the NGFA -- that currently are tax-exempt under Section 501(c)(6) of the Internal Revenue Code. Subject to the new tax would be income received from interest, dividends, rents, capital gains and royalties. Under the proposal, the first $10,000 that an association earns from such sources would not be taxed. But all income earned that exceeds $10,000 would be subject to the unrelated business income tax.

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Important Mailings Sent to NGFA Members

In the past week, NGFA members were mailed two extremely important packets under separate cover:

Annual Meeting Materials: A 15-page flyer announcing the NGFA's annual business meeting to be conducted at 9 a.m. on March 23 in conjunction with the 103^rd annual convention in San Francisco, Calif., was mailed on Feb. 10. This packet contains the agenda for the annual business meeting, as well as proposed amendments to the NGFA Grain Trade Rules, Feed Trade Rules and Barge Freight Trading Rules. It also contains amendments to the NGFA's Bylaws, Arbitration Rules and Rail Arbitration Rules that are subject to ratification or adoption during the annual business meeting. Copies of this material was sent to the primary contact at all companies that are NGFA Active, Rail Associate/Trading or Affiliated Association members. If you are among these classes of members and did not receive a copy, please contact Jackie Congress at the NGFA at (202) 289-0873. The document also is available under the "What's New" section of the NGFA's web site at: http://www.ngfa.org. The "user's name" is: ngfa. The "password" is: soybean.

Confidential Questionnaire on Phosphine: A three-page confidential questionnaire on the potential impact of the Environmental Protection Agency's proposed restrictions on aluminum and magnesium phosphide (which produce phosphine gas) used as a fumigant in grain, feed and processing operations. The questionnaire was mailed on Feb. 5 from the office of NGFA's outside legal counsel, Marc L. Fleischaker of Arent Fox Kintner Plotkin & Kahn, Washington, D.C. Importantly, responses to the survey are requested by Feb. 19. Information provided in response to the survey will be held in strictest confidence; only aggregated summary information will be shared with the NGFA for use in responding to EPA's proposal on behalf of the industry. If you operate a grain-handling facility that uses phosphine and did not receive the survey, please contact Fleischaker's office at (202) 857-6053 for a copy.

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Rails, Rivers and Roads by David C. Barrett Jr., Counsel for Public Affairs

NGFA Rail Policy Task Force to Meet Feb. 23-24

The NGFA's newly established Rail Policy Task Force will meet with top congressional, regulatory and rail officials during its first meeting on Feb. 23-24 in Washington.

The 10-member task force, chaired by Rail Shipper/Receiver Committee Chairman John Bratten, is charged with developing recommendations on the NGFA's positions on various rail-related policy issues, including competitive access, that are expected to arise this year when Congress considers legislation to reauthorize the Surface Transportation Board. As part of its information-gathering function, the task force will meet with the president of the Association of American Railroads, Edward R. Hamberger, who has been asked to specifically address what constitutes competitive access issues from the rail industry's perspective, as well as other matters. It is the first time in recent memory that the AAR president has accepted an invitation to meet with the NGFA on rail policy matters. The task force also will meet with Surface Transportation Board Chairman Linda Morgan to examine the agency's stand on various rail-related policy issues, and what, if any, additional authority it needs to balance the needs of shippers/receivers and carriers. The task force also will meet with key congressional staff members whose committees have jurisdiction over rail legislation to discuss agriculture's perspective on rail issues.

The issues addressed by the task force are scheduled to be discussed during a meeting of the Rail Shipper/Receiver Committee on Sunday afternoon, March 21, as well as during an open forum on rail transportation scheduled for Monday, March 22 during the NGFA's 103^rd annual convention in San Francisco. All members are encouraged to attend!

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Rail Shippers Lose Appeal of STB Bottleneck Decision

The U.S. Court of Appeals for the Eighth Circuit on Feb. 10 issued a ruling upholding the Surface Transportation Board's so-called "bottleneck" decisions on the standards for asserting rate complaints against railroads. The STB had ruled that railroads can refuse to provide common-carrier rates to shippers seeking a rate to a point where service could be provided by a second rail carrier. A bottleneck segment is a portion of a route served by a single carrier.

The appellate case involved two decisions rendered by the STB on Dec. 31, 1996 and April 28, 1997. In both cases, electric utilities had sought orders mandating that rail carriers provide them unit-train or trainload rates for coal transportation on "bottleneck" segments to points with competing carriers. The bottleneck carriers argued that they "could not be forced to artificially sever what is clearly `through' traffic and provide separately priced `local' service over the bottleneck segments."

Key findings made by the three-judge appeals panel included the following:

The STB did not misconstrue federal law by ruling that bottleneck carriers satisfy their common-carrier duties, and thus comply with the law, by providing origin-to-destination service that includes the bottleneck, or by providing joint or proportional service with other carriers that includes transportation over the bottleneck.

A rail "carrier generally may provide common-carrier service in a manner that protects its long `hauls.'" Further, the court said that "[n]othing in the (law) explicitly requires carriers to provide separate local rates for bottleneck service."

The court deferred to the STB's decisions that "an important part of achieving revenue adequacy [for rail carriers] is differential pricing…by which carriers charge a higher mark-up on rail segments where demand elasticity is low, such as bottlenecks, to compensate for low mark-ups on competitive segments."

The court said that "[b]ecause Congress has entrusted the (STB) with interpreting and administering the (law), in reviewing its decisions we ask only whether they are `based on a permissible construction of the statute.'"

"The (STB's) considerable expertise in the economic underpinnings of the railroad industry is entitled to great deference, and its decision to allow carriers to determine how they wish to fulfill their duties under the (law) is consistent with the current national railroad policy of maximizing carrier discretion in setting routes and rates."

The court acknowledged that while shippers in some cases could seek relief from "anticompetitive" conduct engaged in by a rail carrier, "[a]dmittedly, invoking these rules has proved difficult for shippers."

The court's decision to uphold the STB's ruling is certain to revitalize efforts by coal shippers and others seeking changes in the federal law applicable to rail carriers. Sens. Jay Rockefeller, D-W.Va., Byron Dorgan, D-N.D., Conrad Burns, R-Mont., and Pat Roberts, R-Kan. sponsored rail shipper protection legislation last year, and are expected to do likewise during the current congressional session.

Obtaining a Copy: A copy of the appellate court's bottleneck decision can be accessed in the "What's New" section of the NGFA's web site at: http://www.ngfa.org. The "user's name" is: ngfa. The "password" is: soybean.

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Country/Terminal Corner by Randall c. Gordon Vice President, Communications/Government Relations

USDA Considers Advocating 40-Million-Acre CRP

…7.1 Million Acres Offered in Latest Sign-Up…

The NGFA has learned that the U.S. Department of Agriculture is considering urging Congress to authorize an increase in the ceiling for the Conservation Reserve Program to 40 million acres.

A 40-million-acre CRP is being advocated strongly within USDA by its Natural Resource Conservation Service. The NGFA has learned that NRCS's proposal is being evaluated within the office of Secretary of Agriculture Dan Glickman, which has not made a decision yet on whether to submit a request to Congress to amend current law to exceed the current 36.4-million-acre CRP limit.

In a separate development, Rep. Collin Peterson, D-Minn., on Jan. 19 introduced a bill (H.R. 408) that would increase the CRP to 45 million acres. Peterson's bill has no co-sponsors.

7.1 Million Acres Offered in Latest Sign-Up: Meanwhile, USDA announced on Feb. 5 that it had received approximately 90,000 offers to enroll about 7.1 million acres into the CRP during the 18^th sign-up, which was conducted from Oct. 26 through Dec. 11. Notification of successful offers is to occur in early March, USDA said.

USDA's proposed budget for fiscal year 2000 assumes that 5.8 million acres will be enrolled as a result of the 18^th sign-up. [See related article on page 1.] In addition, USDA continues to enroll acres in the CRP under the continuous sign-up begun in September 1996, which is targeted at buffer strips, riparian buffers and similar conservation practices. USDA's proposed budget for fiscal 2000 assumes that acreage enrolled in the CRP will reach 31.1 million acres in 1999, 34.4 million acres in 2000 and 36.4 million acres by 2002.

Of the land offered for enrollment in the CRP during the 18^th sign-up, more than 1 million acres were in North Dakota. Montana offered 855,645 acres, while 655,877 acres were offered in Texas and 583,160 acres were offered in Minnesota. Other states whose CRP offers exceeded 500,000 acres were South Dakota (569,530) and Kansas (544,093).

When announcing the latest CRP sign-up last October, USDA officials pledged not to ease the environmental benefits index or other criteria used to evaluate CRP bids, and said the program would not be transformed into a supply management or income support program.

Approximately 30.3 million acres were enrolled in the CRP as of Sept. 30, 1998, about 6.1 million acres less than the 36.4-million-acre-cap authorized under current law. Slightly more than 3.5 million acres subject to CRP contracts are scheduled to expire on Sept. 30. Contracts awarded in response to the latest sign-up are scheduled to take effect on Oct. 1.

The quantity of acres offered during the 18^th sign-up, by state, is shown in the accompanying table. These data are based upon preliminary returns from USDA Farm Service Agency field offices, and may be adjusted slightly when final calculations are completed. 

U.S. Appeals Court Rules Against USDA in `Bird Grain' Case

The U.S. Court of Appeals for the Eighth Circuit on Jan. 15 filed its long-awaited decision in the so-called "Bird Grain" court case [Appley Brothers, et. al., v. United States], upholding the liability finding against the U.S. Department of Agriculture made by a South Dakota federal district court.

The case involved the claim of several depositors (collectively referenced as Appley Brothers) against USDA for an alleged deficient examination of a federally licensed warehouse in South Dakota that subsequently became insolvent. The plaintiff-depositors alleged that a federal warehouse examiner had failed to follow the procedures in USDA's Warehouseman's Handbook when he conducted a "special exam" in August 1988 to check on the status of corn previously placed in temporary storage that had been discovered to be out-of-condition in a previous regular exam.

In a subsequent exam conducted in November 1988, the warehouse examiner discovered what the court termed "massive shortages" of grain against obligations that at one point had reached 475,689 bushels -- representing nearly half of the facility's total obligations -- which caused USDA to suspend the warehouse's federal license. The plaintiff-depositors sued, claiming that USDA's negligent inspection of the warehouse had delayed its closing, and that they had deposited grain at the facility during the intervening period.

In affirming the lower court's ruling, the U.S. appellate court found that:

USDA could not claim the broad waiver of sovereign immunity under the Federal Tort Claims Act -- designed to grant broad discretionary authority to government agencies in implementing federal law -- because the warehouse examiner had not adhered to the written instructions in the Warehouseman's Handbook. The handbook -- which has since been revised and is now known as the Warehouse Operator's Handbook -- stated at the time that when conducting a "special examination," the examiner's report was to be "specific regarding the quantities and location (within the storage facilities) of out-of-condition commodities."

However, in this instance, the federal warehouse examiner simply had observed that the temporary bunkers in which the out-of-condition corn previously had been stored were empty, and failed to inquire as to the whereabouts of the 300,000 bushels previously stored in the bunkers. "…[T]he requirement that the (examiner's) report be specific (regarding the quantities and location of out-of-condition commodities) establishes, at a very minimum, a duty to investigate," the appellate court wrote in its decision. "Had (the warehouse examiner) conducted any investigation about the disposition of the previously reported deteriorating corn, the discretionary exception would likely protect (the examiner's) decisions in conducting the investigation. Here, however, (the examiner) conducted no investigation at all….Accordingly, the district court correctly concluded that (the examiner) had a mandatory duty to investigate the status of the corn noted during the Aug. 5 inspection…."

USDA had a common law duty under the so-called "Good Samaritan" doctrine found in South Dakota law to protect the interests of farmers and other depositors. Again citing the Warehouseman's Handbook, the appellate court ruled that the "reason for the warehouse inspections makes clear that USDA did `undertake to render a service' which was `necessary' for the protection of those who stored grain at Bird Grain" and that the depositors "reasonably relied on the USDA inspection process."

Implications of the Decision: The outcome of this case is significant because USDA has argued that an adverse decision might cause it to propose federal grain merchandising regulations under the U.S. Warehouse Act. USDA's rationale has rested, in part, on the fact that the district court decision referenced a 1978 ruling by the U.S. Court of Appeals for the Seventh Circuit [United States v. Kirby -- a case involving grain inspection at a federally licensed warehouse] that found that regulations issued under the U.S. Warehouse Act "explicitly adopt a broad, non-technical interpretation of `stored' grain to include all grain kept in a licensed warehouse, not merely grain which is held as a bailment and for which warehouse receipts have been issued (e.g., purchased grain)."

However, the federal district court and appeals court decisions in the Bird Grain case focus extensively on the fact that the warehouse examiner and his superior failed to follow USDA's own procedures, as specified in the Warehouseman's Handbook. That brings into question USDA's interpretation with respect to the decision's implications for federal grain merchandising regulations. Government attorneys still are reviewing the appeals court decision, but it is highly unlikely that it will be appealed to the U.S. Supreme Court, and thus will probably stand.

The Country Elevator Committee will be reviewing the decision -- and any policy changes that may be considered by USDA in its aftermath -- during the committee's March 20 meeting at the NGFA's 103^rd annual convention in San Francisco. All convention registrants are encouraged to attend.

Obtaining a Copy of Court Decision: A copy of the appellate court's decision in the Bird Grain case is available under the "What's New" section of the NGFA's web site at: http://www.ngfa.org. The "user's name" is: ngfa. The "password" is: soybean.

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USDA Has `Secret Weapon' to Prevent Loan Forfeitures

There are indications that producers, who may be concerned about reaching the $75,000-per-person payment limitation on marketing loan gains and loan deficiency payments for all crops during a given crop year, have begun making more use of the nonrecourse marketing assistance loan program.

Marketing assistance loans are available for eligible 1998-crop commodities until:

March 31 for wheat, barley, oats, canola, rapeseed and flaxseed; and

May 31 for all other eligible commodities, such as corn, soybeans, rye and minor oilseeds.

Under the nonrecourse loan program, producers who are approaching the $75,000-per-person payment limit on marketing loan gains and loan deficiency payments still have the option of pledging their eligible grain production as collateral for a nine-month marketing assistance loan. While not eligible to receive the marketing loan gain if they exceed the $75,000 payment limit, such producers ostensibly do have the option to forfeit the commodity to the Commodity Credit Corporation if price levels justify doing so.

But wait! How does this square with the provisions of the 1996 farm law [Section 134] that require that loan rates be set at a level that: 1) minimize potential loan forfeitures; 2) minimize the accumulation of stocks in CCC ownership; 3) minimize storage costs incurred by CCC; and 4) allow the commodity to be marketed "freely and competitively" in domestic and export markets?

What to Do? To address this potential conflict, USDA currently is seriously reviewing county loan rates for wheat, feed grains and oilseeds to determine if adjustments are warranted for the 1999 crop. Current county loan rates for these commodities are believed to be based upon stale 1995-crop cash grain market prices, which result in local loan rates that do not reflect current market conditions. Further, these stale data result in situations in which loan repayment rates may be artificially high -- particularly on wheat in the upper Plains states.

But USDA has another policy alternative available to prevent potential forfeitures -- a "secret weapon" initially embedded in the 1986 farm law. It's called a "cost-reduction option" [Section 1308a] and it allows the secretary of agriculture to settle nonrecourse loans by forgiving part or all of the loan principal and accumulated interest if it is determined that such a reduction in the settlement price of the loan will avoid forfeitures or eliminate storage, handling and carrying charges on the forfeited commodity.

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Tech Talk by Thomas C. O'Connor Director of Technical Services

New Official Moisture Meter Readings Suspect at Colder Temperatures

The NGFA has learned that the new Dickey-john model GAC 2100 moisture meter -- selected by the U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration as the official meter for the federal grain inspection program -- is providing inaccurately high moisture readings at the colder end of the approved temperature range.

Grain handlers are reporting that the new official moisture meter reads as much as 0.5 percent to 1 percent higher on grain at the colder end of the approved temperature range compared to the readings obtained once the grain warms to temperatures at the higher end of the approved range. The alleged deficiency is surprising, since the moisture meter is designed to automatically provide accurate moisture readings as long as the grain and meter are within approved temperature limits. The GAC 2100 is approved to measure moisture when the grain temperature is between 32 degrees and 104 degrees, F. The GAC 2100 replaced the Motomco 919 for official inspections of corn and soybeans on Aug. 1, 1998, and is scheduled to do likewise for official inspections of wheat, sorghum, rice and other small grains on May 1, 1999.

At a Feb. 9 meeting of the NGFA's Grain Grades and Weights Committee, GIPSA officials acknowledged that they were aware of the problem and reported that the agency has developed practical procedures for warming grain quickly to avoid discrepancies caused by cold grain, as well as revisions to meter calibrations that could improve the accuracy of moisture measurements on grain tested at the colder end of the approved temperature range. The effectiveness of both of these solutions are being field tested now, GIPSA said.

In previous meetings with GIPSA officials, NGFA representatives had recommended strongly that the new model moisture meter be fully field tested before being introduced into commercial use.

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On Capitol Hill by David C. Lindsay Director of Legislative Affairs

House Ag Committee Approves Embargo Bill, Debates Ag Consolidation

The House Agriculture Committee began its 1999 legislative session by passing a trade embargo bill and debating the costs and benefits of consolidation in the agricultural economy.

On Feb. 10, the committee passed by voice vote a bill (H.R. 17), introduced by Rep. Tom Ewing, R-Ill., that would require the approval of the House and Senate if the president decided to impose an agriculture-specific embargo on a foreign country. A similar bill (S. 315) has been introduced in the Senate by Sens. John Ashcroft, R-Mo., and Tom Harkin, D-Iowa. During the last Congress, identical legislation was passed by the House but was not considered by the Senate. During consideration of the bill, Rep. John Doolittle, R-Calif., pointed out that agriculture was only one industry adversely affected by embargoes, and said he would like Congress to consider legislation applicable to a broader array of industries.

On Feb. 11, the House Agriculture Committee began what Chairman Larry Combest, R-Texas, pledges will be a comprehensive review of the state of the farm economy by examining the issue of consolidation in U.S. agriculture. Earlier this year, Combest had indicated one of the committee's top priorities would be to address the impact of depressed foreign market demand on commodity prices. Testifying at the hearing were the Center for the Study of Rural America; the American Farm Bureau Federation; the National Farmers Union; the Department of Rural Sociology at the University of Missouri; and Cargill Inc. Committee members attending the hearing appeared to be mostly non-committal on agricultural consolidation. In his opening statement, Rep. Charles Stenholm, D-Texas, ranking minority member of the committee, recognized the role that consolidation and mergers play in enhancing efficiencies in agriculture. But he also expressed concern that care be taken to ensure that market power is not abused.

During its testimony, the Center for the Study of Rural America indicated that consolidation was beneficial in establishing lower production costs, thus resulting in lower consumer prices and improved competitiveness in overseas markets. However, the American Farm Bureau Federation expressed concern about concentration of production, citing as examples low hog prices and acquisition of Continental Grain Co's grain marketing assets by Cargill Inc. Meanwhile, the National Farmers Union unveiled a report prepared by Dr. William Heffernan of the University of Missouri that it maintained demonstrates that small "clusters" of firms control the decision-making process throughout the U.S. food chain, "…threatening America's systems of independently owned family farms and ranches." Frank Sims, president of the North American Grain Division of Cargill Inc., Minneapolis, Minn., discussed the transformation of grain-based agriculture and the reasons for its acquisition of Continental's grain marketing assets.

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Make Plans to Attend!

Seminars on `Optimal Grain Marketing: Balancing Risks and Revenue' Scheduled for April 7, 8, 9

The National Grain and Feed Foundation will conduct three one-day, back-to-back, seminars in early April to provide elevator operators and others involved in assisting farmers in risk management with a better understanding of how cash grain marketing contracts and strategies can be used most effectively with crop insurance products.

The seminars, each of which will start at 9 a.m. and conclude by 3 p.m. (with lunch provided), are scheduled for:

April 7 in Indianapolis, Ind., at the Marriott Hotel Indianapolis. Sleeping rooms are available for $89 per night by calling (317) 352-1231. Deadline for hotel reservations is March 16.

April 8 in St. Louis, Mo., at the Airport Hilton. Sleeping rooms are available for $65 per night by calling (800) 426-5500. Deadline for hotel reservations is March 24.

April 9 in West Des Moines, Iowa, at the West Des Moines Marriott. Sleeping rooms are available for $89 per night by calling (515) 267-1500. Deadline for hotel reservations is March 8.

The Foundation is holding a block of rooms at each hotel; identify with the Foundation to secure the special low room rate. Make your reservations soon!

During the seminars, an extensive resource notebook will be provided to each registrant that addresses an array of grain marketing and risk-management issues. In addition, seminar participants will receive several copies of summary materials for direct distribution to farmer-customers. The materials will be designed to be used in meetings with groups of farmers or for working one-on-one with individual farmer-customers to develop sound marketing/risk management strategies.

Low Registration Fees: The U.S. Department of Agriculture's Risk Management Agency, under a contract with the National Grain and Feed Foundation, is supporting the developmental costs for the written materials for the seminars and certain other expenses. Consequently, the registration fees are very affordable: Only $85 for NGFA members; $100 for members of state associations affiliated with the NGFA and $125 for non-members of either the state or NGFA.

Seminar Topics: Among topics to be addressed during the seminar are:

an analytical review of the performance of popular cash contracts coupled with insurance strategies;

an overview and demonstration of Internet-based tools that can be used to assist farmer-customers in making decisions on both crop insurance and cash strategies;

educational programs to assist farmers in being rationally responsive to markets rather than trying to predict prices;

behavioral and psychological barriers to objective marketing strategies;

ten common marketing mistakes of farmers and how they can be avoided or managed;

a "decision-tree" approach and other tools to assist farmer-customers in planning and executing "optimal" marketing and risk management strategies.

Outstanding Faculty: Instructors for the meetings will include an outstanding group of industry experts, including: John P. Stewart, president, John P. Stewart Inc., Albuquerque, N.M.; Diana Klemme, vice president, Grain Service Corp., Atlanta, Ga.; Frank Beurskens, president, Frank Beurskens Consulting Inc., Normal, Ill.; and Rod Clark, general manager, Diversified Services, a division of Consolidated Grain and Barge, Mt. Vernon, Ind.; Tom Coyle, vice president, origination, Continental Grain Co., Chicago, will be an instructor for at least one of the seminars.

Program details and a registration form will be posted during the week of Feb. 15 under the "What's New" section of the NGFA's web site at http://www.ngfa.org.

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