80 



that FGIS has had reviewed and has concluded is the best avail- 

 able to provide timely analysis. So this is what the industry has 

 come to rely on and has come to value grain on and has come to 

 trade grain on. It has become commercially acceptable. 



Mr. POMEROY. I believe the public confidence in the grain han- 

 dling system in North Dakota has been shaken a bit by, first of all, 

 the terribly steep discounts applied during this period of uncer- 

 tainty you spoke of earlier. Unfortunately, those producers forced 

 to market during that period of time were those without any oper- 

 ating margins whatsoever, or those who had forwarded contracts 

 and were compelled to put their product into the market at that 

 time. 



Isn't it true that elevators that accepted grain under very steeply 

 discounted prices during that period of uncertainty now stand to 

 come out very well in light of the market price that has rebounded 

 for that product? 



Mr. Keith. It depends on the situation. 



Mr. Campbell. I think you have to balance that out with the 

 premiums that were being paid which have come down. I mean, 

 these things work at both ends. So you theoretically maybe have 

 picked up a little on the bottom, but you have lost some on the top; 

 it is like a balloon. 



Mr. Gordon. Mr. Pomeroy, could I add to that for a moment. To 

 give you an idea of the kind of uncertainty that the market was 

 operating under at the time, the announcement that FDA made on 

 September 16 was immediately followed by a wire service report 

 that misinterpreted what FDA was doing, and was basically saying 

 that the raw wheat number was being reduced by half. 



We got a call from a cooperative elevator that is a member of 

 ours in South Dakota that said, please do something to correct 

 that, because all buyers are pulling their wheat bids for the next 

 day. I think that is reflective of the kind of environment and uncer- 

 tainty that you have alluded to correctly. 



Mr. Campbell. You know the thing that I need some help under- 

 standing is that our own people, the Extension Service, everyone 

 anywhere close to the industry was telling people, don't sell, hold 

 ofT, wait until this thing settles out. We were saying that because 

 we didn't know how to deal with it yet. There are a few instances 

 where you might have to deliver against a contract. But you did 

 have the recourse loan program available, you could have used the 

 recourse loan program, and you could have gotten money from the 

 loan program, paid off the contract and sat out the actual market- 

 ing of the physical commodity, or you could have bought in some 

 other product. So I think there were some tools out there provided 

 by the Government that may have not been used when they could 

 have been. 



Mr. Pomeroy. I think the uncertainty that has existed in the dis- 

 tribution system has existed at least as great at that level, and 

 even greater in the producer level, which certainly led to a good 

 deal of confusion and maybe a lack of awareness in terms of other 

 alternatives. 



The other thing that has shaken the confidence, I think, of the 

 public a bit in the grain handling system is the consequence of the 

 discount and testing measures that will produce different results 



