105 



Here are actuai price quotes tortwo Minnesota elevators at tfie end ai August: Elevator A had 

 disoDunts from 8 to 28 ceras for 55 to SO pound wheal, aevator B had discounts from 8 to 2S 

 cents tor 55 to 50 pound wheal. Eievaror A had a discount of 8 cents tar 4 percent scaD damage 

 and 30 cents for io percent damage. Sevalor B had steeper discounts, wrth 49 cents suWractad 

 for 4 percent scao damage and 65 certts oft tor 10 percent damage. Bevaior A had a disccunt o< 

 15 cents for gram with 3 to 10 parts per million vomrtoxln, and a discount of 25 cants for grain 

 with vomitoxin over 1 1 parts per million. Qevator B had ditferent discounts for different vomrtoxin 

 levels as compared to eievator A. Bevator B had a discount of 20 cents for vomitoxin over 2 

 pans per million, and 3S cents for vomitoxin over 4 parts per mdlion. 



Growers wttti Infeaed wheat generally could expea a pncs in the S2 range at best. Those with 

 severely infected grain faced severe discounts. I know for a fact that a former board member of 

 our association received a bid for some of his infected wheat that was S4 cents per bushel. 

 Fanners who had a commitment to sell wheat under forward contracts were hit hardest by grain 

 discounts. 



Grain discounts are less variable now, particularty after the Food and Drug Administration 

 fiberafized its vomitoxin guidelines. That d'dnt help price mucft, however. Wheal prices and 

 protein premiums dropped after t^e market perceived that mora grain would erter marketing 

 channels following the FDA dedsbn. Discounts for vomitoxin have dropped, although some 

 elevators have kept the same vomitoxin cfiscounts in place to protect themselves against an influx 

 ot infected wheat 



Since scab, vomitoxin, and test weight were interrelaled, we question why grain was triple 

 discounted. Vomitoxin discounts must be particularty questioned, considering that discounts 

 were based on decade-old studies; suggested guidelines, not firm laws; arvj questionable testing 

 procedures. Bdension plant pathologists at North DaJ<ota State University and the University of 

 Minrescta admit that vomioxin tests are not entirely accurate, arxi that the hurried manner in 

 wtnch tests began meant that some inspectors may net have been adequately trained in 

 vomitoxin testing procedures. Consider also that if tfie blending and milling process reduces or 

 eliminates vomitiaxin leveis in grain, then why cfiscount H? 



We appreciate the availabilfty of federal crop insurance and qualfty loss adjustments under the 

 fedoraJ disaster assistance program. Under federal crop Insurance, price adjustments were not 

 consistent Pricing mechanisms and adjustment levels for losses differed in areas. There was 

 no daflnie direction as to what determines numt»ertwo grade wheat, for example, or for 

 determining sample grade wheat value. Further, federal crop insurance doesnt have a 

 dfrtnimus yiefd, such as the ASCS diminimua yield of 4 bushels, that is needed to help 

 producers determine whether to harvest 



A problem under disaster assistance is that a fanner with crop losses may not quafify if he has a 

 lower farm ASCS yield. For example, a producer has a yield average of 40 bushels per acre 

 despite yieW and quality bsses. His average ASCS yield is determined to be 32 bushels per 

 acre, He had cnap losses, but not enough to qualify for disaster. 



There is a problem under quality adjustment factors in that the posted county price doesnl reflect 

 actuai mart<et conditions. The affect of quality pnsblems on the value of wfieat must be fully 

 considered. Further, as it stands the ASCS will not make quality adjustments untii grain is sold. 

 We believe qualfty adjustments should be made on stored wheat. That way federal disaster 

 assistance would be similar to federal crop insurance, and disaster payments based on price and 

 grade could be calculated all at the same time. 



