Division of Agricultural Sciences and Natural Resources / Oklahoma State University

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Making the grain grading grade

By Bob Keating

After all the inputs, labor, and costs that go into producing a wheat crop are over, growers can still face problems at the last point prior to sale: having their grain graded. Errors in this process may have cost Oklahoma wheat growers as much as $13 million in 1997.

The process of sampling and grading each load of wheat throughout the day and far into the night also has been a hectic job for decades. The grain grader reaching into the truckbed knows this is the last step before the wheat is blended in a bin with wheat from hundreds of other fields. It’s also the point where the load of wheat—with its distinct quality and condition—becomes the responsibility of the grain elevator owner. So the initial grading procedure accompanies the first of many marketing steps for the wheat on its way from the field to a dinner table somewhere. It’s also the first determination of the wheat’s value. That initial grain grading at the elevator never has been an exact science. But the process is being fine-tuned across Oklahoma, with persistent nudging from grain industry specialists with Oklahoma State University’s Cooperative Extension Service.

Economic development highlights in this story: • Potential earnings of up to $30 million annually through segregation of wheat on a protein content basis at local elevators. • Error losses of up to nine cents per bushel corrected, resulting in some $13 million in give and take between growers and elevators. • Reduced costs and improved profits in the Oklahoma wheat industry, with a resulting improved position of Oklahoma wheat in the world market.

Grain marketing specialist Kim Anderson and agribusiness specialist Phil Kenkel became increasingly concerned that Oklahoma Grain Grading Schools required for state- and federal grading licenses weren’t preparing participants to perform grading procedures at their local elevators as thoroughly as possible.

Studies showed that, in general, elevator workers tended to underestimate dockage and foreign material in a load of wheat, to underestimate grading factors for other undesirable characteristics such as shrunken or broken kernels, to overestimate the grade assigned to the load, and to overestimate test weight of the wheat.

The research indicated error losses at nine cents a bushel, which translates into some $13 million based on last year’s harvest. People bringing in dirty wheat received as much as 22 cents a bushel more than they should have, while those with clean wheat received as much as five cents less than they should have.

Also, wheat coming into most elevators was graded with hand sieves, while more accurate mechanical dockage testers were used to test grain at sale points beyond the elevator.

Inequities in the pricing structure also were typical under the grading procedures as they were being performed. Elevators procuring wheat under an “average pricing system” wouldn’t adequately discount incoming loads that had higher levels of dockage or other poor-condition factors. Producers who delivered weed-free wheat in good condition didn’t receive a premium price either.

Then, elevator managers who bought wheat for which dockage had been underestimated and grade had been overestimated typically had to absorb price discounts when reselling it to companies that obtained official grades.

“Elevator managers often found they had paid a local producer as much as $100 more for a 500-bushel load of wheat than they could resell it for at the next point of purchase,” Anderson exclaims.

Gale Robinson, center, grain scale operator for the Stillwater Milling Company, demonstrate a newly installed mechanical grain tester to OSU agricultural marketing specialists Phil Kenkel, left, and Kim Anderson.

“We knew that grade and dockage determinations were having significant revenue implications in Oklahoma for both the elevator and wheat producers,” Kenkel says. “As world grain markets focus on end-user quality, grain grades have become increasingly important at the production end. “The market’s call for low-dockage grain with specific characteristics is encouraging all country elevator managers to re-examine the way they sample and grade grain. “Also, the segregation of wheat on the basis of protein could make elevators an extra $30 million a year. These are profits which would eventually be shared with producers through better premiums,” Kenkel notes. In 1993, Anderson and Kenkel put their plan into motion to improve the content and hands-on training activities at Oklahoma’s required workshops for grain graders. First, they put themselves in the learning mode by training at a USDA Federal Grain Inspection Service laboratory.

Then they gained the cooperation of the Oklahoma Department of Agriculture, the Oklahoma Grain and Feed Association (OGFA), and elevator managers in obtaining the equipment and trained instructors necessary to offer redesigned, “hands-on” workshops for demonstrating proper grading factors and procedures. Plus, they emphasized the economic importance of accurate grain grading at the elevator scale-ticket point. The workshops were turned into a “tell me, show me, let me try it” format, Anderson says.

They also presented findings from their research that demonstrated the economic implications of inaccurate grading, plus cost-effectiveness of elevators purchasing mechanical dockage testers, grain probes, and other equipment.

“In wheat production areas with high cheat seed content in truckloads of wheat, an elevator manager can recover the cost of a mechanical tester from the more accurate dockage measurements in fewer than 40 loads,” Anderson points out.

Participants at the workshop were required to grade grain samples with hand sieves and dockage testers, then compare not only results, but economic impacts. Individual debriefings allowed participants to analyze their accuracy in assigning grades and to calculate the economic cost of their grading errors.

Accuracy differences between the grading methods also were used to illustrate the payback period for an elevator’s purchase of a mechanical dockage tester.

In 1992, Oklahoma had four grain grading workshops, and attendance totaled 180 graders representing country elevators. With the redesigned format beginning in 1993, the number of workshops increased to 10 or more per year, and total attendance the first three years averaged nearly 400 graders. Yearly participation has continued to total more than 300 graders.

Effects of the changes continue to surface in many ways. Anderson and Kenkel sought evaluations of the modified grading workshops from participants after they used their training through a subsequent wheat harvest rush. All respondents rated the new format as an improvement, and nearly all indicated they would like refresher training prior to each year’s harvest. A substantial percentage of participants indicated they made changes in their wheat grading practices. The OSU team also collected wheat samples from more than 3600 trucks during harvest. Each sample was graded by an official grain inspection agency and compared with scale ticket samples from the same trucks to determine trends in the elevators’ actual grading accuracy. The research allowed the OSU specialists to examine other quality-related issues such as grain cleaning and segregation. It also demonstrated a clearer picture of the economic potential of improved grain grading at the elevators.

OSU researchers collected wheat samples from more than 3600 truckloads of wheat. The samples were graded by an official grain inspection agency and compared with scale ticket samples to determine trends in grading accuracy.

Anderson explains, for example, that two different elevator managers who each handle an average of 1.5 million bushels of wheat each year estimate that the improved grading methods and use of mechanical dockage testers increased their companies’ profit margins five to 10 cents per bushel.

Improving the grain grading process in-state via more hands-on training has substantial financial benefits where they are needed most—in the Oklahoma communities where the elevators are located and where wheat producers make their living.

“As buyers throughout the grain industry have become more quality conscious, the emphasis on accurate systems for grading has had to come down the line to the elevators and producers. The benefits then are spread back up the line into the entire grain industry,” says OGFA executive director Joe Neal Hampton from Enid.

“Better grading techniques offer incentives to producers to deliver cleaner wheat of higher value to the industry. And those producers are the first ones who are rewarded,” he says.

“Any process that allows elevator managers to reduce some of the financial risk of delivering grain into the industry is a positive step forward,” Hampton remarks. “They know that millers and other buyers have implemented more stringent requirements for the grain they need, and the elevators have to adapt to do business.”

Oklahoma’s emphasis on more accurate wheat grading at the country elevator scales now has spread into Kansas, Texas, and other states.

In addition, because of the progress being made in the wheat industry, in 1995 the Oklahoma Department of Agriculture asked Anderson and Kenkel to develop a formal training program for contract peanut graders in the state. They compiled training material, organized movement of grading equipment to three peanut warehouses, and conducted different levels of peanut grading workshops. That type of training program also is being adopted in Texas and Georgia.

One veteran southern Oklahoma contract peanut grader stated after completing the training, “I can grade peanuts with my eyes closed, but this was the first time I understood why I’m grading and what each grade means.”

Formal feedback from both wheat and peanut grading workshop participants and from warehouse inspectors indicate solid accomplishment of the primary OSU objective of improving effectiveness of teaching elevator personnel how to grade more accurately.

“Inaccuracies in grading can hinder communication and increase procurement risk and inspection costs all the way through the industry,” Kenkel says. “Inaccurate grading also can create inequities for producers delivering different qualities of grain.”

“The more efficient grading and pricing system rewards producers who deliver high-quality wheat with a premium price,” Anderson adds. “Likewise, it sends a very clear message to those producers who deliver wheat with dockage and foreign material.”

The large-scale educational effort has reduced costs and improved profits in the Oklahoma wheat industry, and it has improved the position of Oklahoma wheat in the world market, they note.

Agriculture at OSU Spring / Summer 1998
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