Grain Interests Oppose Subsidizing Grain Cleaners

January 6, 2000

The National Grain and Feed Association strongly opposes a proposal by USDA to subsidize installation of grain-cleaning systems at wheat export facilities. NGFA says the proposal is based on a faulty premise that U.S. exporters will not invest in cleaning equipment where it's economically justified.

Also, the proposal would set a "troubling precedent" that could discourage future private investment and would contradict the findings of one of its own agencies that additional cleaning of U.S. wheat exports would not be cost-effective, says NGFA.

The statement emphasized that several wheat export facilities in the Pacific Northwest already have installed or are in the process of installing wheat cleaning equipment using private funds and in direct response to market demand from Asian customers, particularly Japan. That is "convincing evidence" that US. wheat exports, without government intrusion, have installed wheat-cleaning systems at facilities where market demand exists and there is a willingness by the importer to pay for such wheat.

USDA subsidies for grain cleaners could create a long-term disincentive for U.S. exporters to make private investments quickly in response to market signals, said NGFA. For companies that already have invested in cleaning equipment, the proposal would be tantamount to "financing the competition" and, in effect, devaluing he early investments made.

"If the government wants to encourage market responsiveness by exporters, it should not be penalizing such behavior with policy shifts," NGFA said.