Facilitating the Marketing of America

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Facilitating the Marketing of Americas
GrainGrain Inspection, Packers and Stockyards
Administration

• John B. Pitchford
• Director of International Affairs
• Grain Inspection, Packers Stockyards
  Administration

November 15, 2004Berkeley, California
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U.S. Department of Agriculture Grain Inspection,
Packers and Stockyards Administration

• Federal Grain Inspection Service
• U.S. Grain Standards Act
• Agricultural Marketing Act

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Mission

• To facilitate the marketing of livestock,
  poultry, meat, cereals, oilseeds, and related
  agricultural products, and promote fair and
  competitive trading practices for the overall
  benefit of consumers and American agriculture.

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Core Business Practices

• Provide the market with terms and methods for
  quality assessments
• Protect the integrity of U.S. grain and
  related markets
• Provide official grain inspection and weighing
  services for American agriculture

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Service Provision

• Terms (i.e., grades/standards)
• Maintain grading standards for grains,
  rice, beans, peas, and lentils
• Analytical Methods
• Maintain over 1,400 methods of analyses
• Official Inspection System
• Annually certify the quality and quantity of 96.5
  million metric tons of grain exported to more
  than 130 countries around the world

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Grain Oilseed Marketing Channels

Value of product differentiation

Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic
E
E
Market efficiency
The U.S. grain market ranges from the
commodity market to the very high value added
identity preservation system. Between these two
extremes lies an evolving market of greater
product differentiation driven by technology,
consumer demands, and global competition.
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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic
Testing rapid (minutes), accurate (USDA
reference), reliable, inexpensive.
Commodity Market High volume Low margins U.S.
Grain Standards Grain type Class Subclass Qual
ity
Yellow corn White corn Soybeans Hard Red Winter
Wheat Hard Red Spring Wheat Soft Red Winter
Wheat Soft White Wheat Hard White Wheat Grades 1
- Sample
Practical Market Driven Thresholds/Tolerances Mixe
d Grain gt 10 Lower Grade WOCL U.S. 1 lt
2 U.S. 2 lt 5
Multiple commodities coexist in current market
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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic

• Protein
• Oil
• Starch

Technology offers the opportunity to expand the
measurement of attributes. The challenge is to
define the appropriate attributes that reflect
end-use value for the diverse products made from
todays cereals and oilseeds.
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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic

• Farmers contract with handler or processor
• to produce a specific variety for a specific
  quality attribute.
• Premiums
• May specify agronomic practice
• Seed verification (tag, invoice, etc.)
• Testing unlikely (too costly and slow)
• U.S. standards and quality requirements
• Specified delivery time and location

• Trend
• Quality of protein
• Composition of oil
• Starch attributes

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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic

• Market/Customer Defined
• Documentation
• Testing
• Process-based

• New evolving market
• Small volume
• High risk
• Premiums

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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic

• High value specialty market
• U.S. Standards
• Processed-based
• Audit and certification

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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic

• Small very high value market
• Produced and processed under
• government permit and oversight

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Grain Oilseed Marketing Channels
Commodity
Easily Measured Attributes
Variety Specific
Pharmaceuticals
Absence of Attribute
Organic
Facilitate marketing beyond the traditional
commodity markets

• Quality Standards
• Testing Technology
• Process-based systems
• Harmonization

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Quality Standards

• Maintain standards that reflect the evolving
  market needs
• New crops e.g., Hard White Wheat
• New agronomic practices e.g., herbicide
  resistant crops
• New quality attributes e.g., low linolenic
  soybeans
• New ways of measuring existing quality attributes
  e.g., wheat protein quality

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Testing Technology

• Improve the ability to differentiate end-use
  quality
• Identify key quality attributes
• Establish consensus on reference methods
• Transfer reference method to market-relevant
  rapid analytical tool
• Establish consensus (national/international) on
  reporting quality results
• Examples
• Extractable and fermentable starch
• Protein quality
• Amino acid profile
• Wheat baking quality

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Process-based Systems

• Support marketing systems based on quality
  management processes
• Company or organization develops Quality Policy,
  Quality Objectives, and Quality Procedures to
  meet customer demands
• USDA verifies adherence to the Quality Management
  System through third-party audits based on ISO
  9001 requirements
• Company or organization may market their process
  or product as USDA Process Verified

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Harmonization

• Provide technical assistance to minimize market
  disruption due to quality standards and
  regulations
• Ensure that quality assessments are accurate and
  reliable, and that all parties involved
  understand how quality is defined and measured
• Misunderstandings or disagreements about the
  meaning of basic quality terms, or misuse of
  quality terms, can result in costly marketing
  disruptions

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Conclusion

• Quality standards must reflect changing market
  needs
• Testing technology needs to keep pace with new
  quality attributes
• Process verification of quality management
  systems can further facilitate trade
• Harmonization of the terms and measurement of
  quality promotes efficient trade
• Accurate and reliable application of standards
  and technology are essential