77 



Mr. Campbell. It is easier to see this than it is to explain it. The 

 heading is Duluth Wheat, 14 percent minus Minneapohs nearby 

 wheat. 



Mr. Johnson. Yes, we have it. 



Mr. Campbell. As you can see, in 1993, the premiums for milling 

 quality wheat have gone off the chart. And this is with two parts 

 per million vomitoxin. 



Now, the other interesting chart is the chart on page 8. All the 

 numbers are basically the backup for the charts, and you can see 

 Duluth wheat there, and that is the combination of the premium 

 plus the futures close. 



Anyway, the point is that for milling quality wheat, with two 

 parts per million vomitoxin, prices are historically very high, and 

 the discounts or lower premiums are counted from this very high 

 basis. 



These premiums are being paid because there is not much wheat 

 of that high a quality. Most producers don't have wheat with less 

 than two parts per million, and so the high premiums are irrele- 

 vant to most of them. 



The other thing is that most farmers ended up with a broad 

 array of quality problems, not just vomitoxin. They had low test 

 weights, damaged kernels, and all of these factors go into the mix 

 to end up with a final price for the producer, not just vomitoxin 

 content. 



But, again, getting back to the facts — last Thursday, the Duluth- 

 Minneapolis market for five parts per million vomitoxin wheat was 

 offering a 15 to 65 cent premium over the nearby futures. So if you 

 take a 30 or 40 cent average, something like that, and the futures 

 closed at $3.27 per bushel, so banking it off to something that is 

 relevant to the farmer, say, if he was on the border or between 

 Minnesota and North Dakota. I just used 50 cent per bushel trans- 

 portation and elevation charge. That backs up to $2.90 per bushel 

 to $3.50 per bushel price range, and that is for five parts per mil- 

 lion vomitoxin wheat. 



Now, what does that mean? Well, if you look at pages 14 and 15, 

 you will see the documentation both from Minnesota and from 

 North Dakota, about both the monthly and the yearly average 

 prices. Just looking at North Dakota, which is page 15 of the testi- 

 mony, and looking at August, you will see that if you average the 

 last 5 years' selling price, this is the wheat that has been marketed 

 times the dollars that have been paid for it, what we have is a situ- 

 ation where the average is $3.07 per bushel for those 5 years. That 

 is for vomitoxin-free wheat. 



This year we have a situation where five parts per million 

 vomitoxin wheat is selling for about the same price or even more 

 than nonvomitoxin wheat has sold for in the past, and that is true 

 both if you look at the monthly and the yearly and you look at both 

 North Dakota and Minnesota. So although producers are not get- 

 ting the fabulously high premiums, when 80 percent of the wheat 

 is between two and eight parts per million vomitoxin, most produc- 

 ers are receiving a price back at the farm that is consistent with 

 what historically wheat has been marketed for, even without 

 vomitoxin. 



