Dockage Rates Rile Wheat Growersby Scott Yates
New York Times, September 22, 2006
Farmers say they have no incentive to deliver ‘super-clean’ grain
SPOKANE - It used to be wheat farmers were discounted for their dirty grain, but for the past several years exporters have been discounting their cleaner grain, too.
The fact that discounts are being levied on wheat beginning at two-tenths of a percent is not sitting well with several members of the Washington Wheat Commission who voiced their concerns at the commission's Sept. 14 board meeting. Although the discount schedule has been in effect for several years, growers are becoming more outspoken about its cost as rising input and fuel prices cut further into their bottom line.
Tom Mick, the commission's chief executive officer, said there is no incentive for growers to deliver clean wheat under the current discount schedule and that he expects farmers will ratchet up the dockage they deliver unless things change.
"Except for personal pride, there is no incentive to deliver clean grain. When you are looking at your bottom line and there's no difference between six-tenths (of a percent dockage) and two-tenths, why should you try to obtain two-tenths?" he said.
Mick said it makes sense to reward farmers who make adjustments to their machinery or the herbicide control in their fields to deliver a cleaner product.
"In a true economic world, if you deliver high dock you should be discounted more, or at least on a graduated scale," he said.
Part of farmers' ire over the dockage schedule has to do with the fact that Japan and Taiwan, countries with the world's tightest dockage specs, demand only three-tenths of a percent dockage in the cargoes they receive. With soft white wheat a particularly clean class in the first place, and this year a particularly good one for harvest, many farmers delivered two-tenths dockage and still got discounted.
"Everybody is harvesting super-clean wheat and you are taking a 2-cent hit. It seems like three-tenths should be a push and anything under that a premium, but I know we won't go down that road," said Randy Suess, chairman of the Washington Wheat Commission. "I don't know what can be done. We have a huge amount of clean wheat out there. They're just taking money out of my pocket when every penny counts."
Two pennies on 100,000 bushels is $2,000 the grower never sees.
Mark Hausinger, a grain merchandiser for CLD Pacific and the exporters' ex officio member on the commission, argued the investment in cleaners at export locations is at least partly behind the discount schedule. He pointed out that low-dockage wheat is often blended with higher dockage in order to market it effectively.
"Do you want the 1 percent dockage (wheat) to be rejected?" he asked.
Although Hausinger said white wheat is much cleaner than red, cleaning any wheat slows down exporters' productivity.
"Exporters are not making windfall profits on discounts," he said. "Our market is over-capitalized and highly competitive, with razor-thin margins."
That statement brought a mild rebuke from Hal Johnson, a commissioner from Reardan, who said farmers know all too well what razor-thin margins are about.
"That's why we are talking about this," he said.
The commission agreed to put the discount issue on the agenda to discuss during a tri-state wheat commission meeting. Efforts to get exporters to change the discount schedule have not yielded fruit in the past.
In 2003, a letter sent under the Washington Wheat Commission letterhead called the discount schedule a tax being imposed by the export trade.
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