99-30909. Installation and Improvement of Grain Cleaning Equipment

[Federal Register Volume 64, Number 228 (Monday, November 29, 1999)]
[Notices]
[Page 66606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30909]



[[Page 66606]]

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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation


Installation and Improvement of Grain Cleaning Equipment

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Notice.

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SUMMARY: The Commodity Credit Corporation (CCC) is soliciting public 
comment on the merits of whether the CCC should finance, in some 
manner, the installation or upgrading of grain cleaning systems at 
wheat export elevators in the United States. The goal of this 
initiative, if undertaken, would be to improve the quality and 
competitiveness of U.S. wheat exports by insuring that foreign buyers 
may readily purchase U.S. wheat with dockage specifications 
substantially lower than currently available from export elevators.

DATES: Written comments on this notice must be received on or before 
December 29, 1999 to be assured of consideration. A public meeting 
concerning the subject matter of this notice will be held. The place, 
date, and time of the meeting will be announced in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Please direct written correspondence 
to: Timothy J. Galvin, Administrator, Foreign Agricultural Service, 
Room 5071, 1400 Independence Ave. SW, Washington, DC 20250. Telephone, 
fax or e-mail correspondence may be directed to: Sam Dunlap, Assistant 
to the Administrator, Foreign Agricultural Service, Phone: (202) 720-
1743, Fax: [phone], e-mail: [e-mail].

SUPPLEMENTARY INFORMATION: U.S. producers of wheat--particularly 
growers of Hard Red Winter Wheat--cite on-going complaints from foreign 
buyers about the cleanliness (and therefore perceived quality) of U.S. 
wheat, especially in comparison to the wheat available from certain 
foreign competitors. Although this complaint has been a long-standing 
theme among some public and private sector buyers, as well as some U.S. 
producers, the increasing trend toward privatization of grain imports 
throughout the world during the 1990's may be giving the issue greater 
importance. The growing ranks of private sector buyers are increasingly 
more discriminating in making their purchase decisions, compared to 
their publicly-owned predecessors.
    While price competitiveness remains central to purchasing 
decisions, major wheat export competitors have apparently capitalized 
on buyers' concerns about U.S. wheat cleanliness in their marketing 
programs. For example, the wheat offered by key export competitors, 
notably Australia and Canada, contains average dockage levels of about 
0.2%. By comparison, dockage levels for U.S. wheat inspected for export 
during 1998 averaged from 0.5% to 0.7% depending on class.
    A 1992 study by the USDA Economic Research Service concluded that 
the mandatory cleaning of all U.S. wheat exports could increase wheat 
exports by 2%, and that voluntary cleaning for selected markets, while 
not likely to attain the export increase projected by mandatory 
cleaning, would nevertheless have positive economic results in the form 
of increased exports. The Economic Research Service concluded that an 
overall reduction in dockage and foreign material could benefit the 
U.S. wheat industry only if cleaner U.S. wheat induces sufficient trade 
benefits to overcome the net domestic cost.
    Public and private importers of wheat, especially in Asia, continue 
to tighten specifications for their imported wheat purchases. For 
example, the changing purchase specifications of one major buyer in the 
Pacific Rim, Japan, has already brought about the installation of wheat 
cleaning systems in the U.S. Pacific Northwest. An apparently growing 
number of smaller buyers in Latin America and other regions are seeking 
cleaner wheat but claim not to be able to secure the wheat from U.S. 
sources. They can, and reportedly have, turned to competitors to fill 
their needs. Yet some in the U.S. private sector apparently conclude 
that the costs of installing and operating grain cleaning equipment in 
many U.S. ports are not justified by the potential returns to private 
firms.
    The CCC is considering providing financial assistance to support 
the installation or upgrading of grain cleaning equipment at export 
elevators. Authority for this activity is section 5(b) and (f) of the 
CCC Charter Act, 15 U.S.C. 714c(b) and (f). These provisions, 
respectively, authorize CCC to ``[m]ake available materials and 
facilities required in connection with the production and marketing of 
agricultural commodities'' and to ``aid in the development of foreign 
markets'' for agricultural commodities.
    The CCC must consider numerous issues before initiating any 
activity to support the installation or upgrading of wheat cleaning 
facilities, including the likely scope and cost of such an initiative 
(with a preliminary cost estimate of approximately $5 million per 
facility); the extent and form of CCC's financing role; and how to 
ensure that those existing elevators, primarily in the Pacific 
Northwest, who have already undertaken such investments are not 
competitively disadvantaged.
    Comments are invited on all aspects of this proposed initiative. 
However, it would be particularly helpful if comments addressed the 
following:
    (1) The size and scope of such an initiative. For example, should 
the program be available to essentially all elevators providing wheat 
for export, or should the program be established on a pilot basis at a 
small number of facilities?
    (2) Impact on those elevators in the United States that have 
already undertaken the expense of installing grain cleaning equipment. 
Should financing be limited largely to those regions of the country in 
which elevators have not yet undertaken such expenditures?
    (3) The CCC's financing role. What is the appropriate role of 
government financing when the private sector declines to invest in 
grain cleaning equipment on its own? What should be the extent of CCC 
subsidy, ranging from guaranteeing loans on commercial terms to cost-
share grants? If cost-share, should the CCC's contribution be 
established at a fixed percentage? Alternatively, should an elevator's 
willingness to finance relatively more of the investment be a 
competitive factor in awarding CCC financing? What costs should be 
financed by the CCC?
    FAS will announce the place, date, and time of the public meeting 
regarding this proposal.

    Signed at Washington DC on November 23, 1999.
Timothy J. Galvin,
Administrator, Foreign Agricultural Service; Vice President, Commodity 
Credit Corporation.
[FR Doc. 99-30909 Filed 11-26-99; 8:45 am]
BILLING CODE 3410-10-P