The Role and Reauthorization of the U.S. Grain Standards Act

For over a century, the United States Grain Standards Act (USGSA) has been a cornerstone of the U.S. grain industry, providing the framework for quality assurance in the marketing of grains and oilseeds. With key provisions of the Act set to expire on September 30, 2025, its reauthorization has become a critical topic of discussion among stakeholders, including farmers, grain handlers, exporters, and government bodies.

The reauthorization process presents an opportunity to modernize and refine aspects of the Act, ensuring it remains effective in a rapidly evolving agricultural landscape.

Historical Context and Overview

Enacted more than 100 years ago, the USGSA was established to create uniform standards for grain quality and inspection in the U.S. market. It has since been instrumental in fostering trust in U.S. agricultural exports, known globally for their reliability and transparency.

The Act mandates that most exported grains and oilseeds undergo official inspection and weighing by the Federal Grain Inspection Service (FGIS). This system provides grades and official certificates for shipments, which serve as benchmarks for quality and value.

The standards cover a range of factors, such as damaged kernels, foreign material, and moisture content. These measurements play a vital role in ensuring that buyers and sellers can determine fair prices and maintain confidence in the supply chain. While official inspection is mandatory for exports, domestic shipments are subject to these services only upon request.

Key Provisions and Funding Mechanisms

A unique aspect of the USGSA is its dual funding system. Official inspection services are funded by user fees, with the revenue maintained in a trust fund. However, broader activities like developing grain standards and quality measurement procedures are financed through congressional appropriations. This split funding structure ensures that the program operates sustainably while maintaining government oversight for critical research and development activities.

Despite the program’s success, certain provisions are not permanently authorized. The looming expiration of these elements could disrupt inspection and weighing programs, creating uncertainty for farmers, handlers, and exporters. The National Grain and Feed Association (NGFA) and other advocacy groups have outlined key priorities to address these challenges.

The Importance of Reauthorization

The potential expiration of critical provisions threatens to upend a system that has been the backbone of U.S. grain marketing. Farmers, grain handlers, and exporters rely on the accuracy, timeliness, and impartiality of FGIS-administered inspection services. These services provide market transparency and valuable information across the value chain.

The reauthorization process offers an opportunity to modernize the Act to better address current and future challenges. For instance, integrating advanced grain grading technology can enhance efficiency and reduce costs. Similarly, revising the calculation methods for user fees and ensuring their alignment with market conditions can improve the program’s sustainability.

Challenges in User Fee Structures

A significant portion of FGIS operations – approximately 70% – is funded through user fees, with only 30% covered by congressional appropriations. However, the user fee structure has become increasingly burdensome, with costs escalating in recent years. This situation is unsustainable.

NGFA and the North American Grain Export Association (NAEGA) have advocated for a revision to the fee calculation process. It calls for decoupling Schedule A user fees from the five-year rolling average for tonnage fees. By aligning the calculation methodology with other Agricultural Marketing Service (AMS) agencies, the industry can ensure more predictable and market-aligned costs.

Modernizing Grain Grading Technology

As the agricultural industry faces growing competition and shifting export trends, adopting cutting-edge grain grading technologies is essential. These advancements can reduce inspection costs, enhance speed, and improve accuracy, benefitting both FGIS and the broader grain industry. Embracing innovation not only addresses immediate challenges but also positions the U.S. as a leader in agricultural technology on the global stage.

Improving the Advisory Committee’s Functionality

The FGIS Grain Inspection Advisory Committee plays a critical role in representing the interests of grain producers, exporters, and handlers. However, inefficiencies in the nomination and approval processes hinder the committee’s effectiveness.

To address this, the NGFA has recommended streamlining these procedures and implementing contingencies for delays. Ensuring the committee has a quorum to conduct official business is vital for maintaining robust oversight and guidance.

Addressing Port Disruptions

Port disruptions pose a significant risk to the grain export system. The 2015 USGSA Reauthorization Act included provisions to mitigate these risks by requiring notification and reporting in cases where FGIS fails to provide inspection services. However, current regulations under 7 CFR 800 are inconsistent with the statute. Revising these rules to allow waivers during non-emergency situations – when agreed upon by buyers and sellers – can provide greater flexibility and minimize disruptions.

The User Fee Cap and Its Implications

Another area of concern is the annual cap on user fees, currently set at $55 million. This cap applies to commodities covered by both the USGSA and the Agricultural Marketing Act (AMA), such as rice and pulses. NGFA and NAEGA argue that AMA crops should be excluded from this cap, as most fees fund USGSA-related services. Adjusting the scope of the cap would ensure that funds are allocated more equitably and effectively.

The Path Forward

Reauthorizing the USGSA requires collaboration among stakeholders, including government agencies, industry groups, and legislators. Organizations like NGFA and NAEGA are actively advocating for changes that reflect the industry’s needs and challenges. Priorities include:

Embracing advanced grain grading technology to reduce costs and improve inspection efficiency.

Revising user fee structures to align with market conditions and enhance transparency.

Improving the Advisory Committee’s functionality to ensure timely decision-making.

Excluding AMA crops from the user fee cap to focus resources on USGSA commodities.

Providing flexibility in inspection requirements during service disruptions.

Conclusion

The U.S. Grain Standards Act has been a cornerstone of American agriculture for over a century, fostering trust and reliability in domestic and international markets. As the agricultural landscape evolves, reauthorizing and modernizing the Act is crucial to maintaining its relevance and effectiveness. By addressing challenges in funding, technology, and regulatory flexibility, stakeholders can ensure that the USGSA continues to support the industry and its global reputation.

The 2025 reauthorization process is not just an opportunity to extend the Act’s provisions but also a chance to innovate and adapt to the future. Through strategic collaboration and forward-thinking policies, the U.S. can strengthen its position as a leader in agricultural standards and technology.

As the process unfolds in Congress, please be on the lookout for opportunities to express your support for this critical program.

Jess McCluer, NGFA senior vice president-Safety and Regulatory

Source: Grain Journal