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RCED-94-66R 1 (1993-11-01)

handle is hein.gao/gaobacklb0001 and id is 1 raw text is: iscizi United States G 4J) General Accounting Office Washington, D.C. 20548 Resources, Community, and Economic Development Division B-255567 November 1, 1993 The Honorable Kent Conrad United States Senate Dear Senator Conrad: Heavy rains in eastern North Dakota and parts of Minnesota this summer severely damaged portions of this year's small-grain (spring wheat, durum wheat, barley, and oats) crop. This damage included widespread contamination by vomitoxin, a fungal toxin. In your August 31, 1993, letter, you asked us to investigate why producers in these states were forced to accept steep and inconsistent discounts in the prices paid for their commodities. As agreed with your office, we addressed the following questions: -- Did market conditions justify deep discounts in grain prices or did buyers use crop conditions as an excuse for large discounts? -- Do the large grain companies use a systematic discount system for low-quality grain? If so, what are the components of that system? -- Are large grain buyers blending lower-quality grain with higher-quality grain and then reselling it at more normal prices? In addressing these questions, we focused our review primarily on wheat because it accounts for about 75 percent of the small-grain acreage planted in North Dakota in 1993. We also identified ongoing or planned research aimed at determining whether there were pricing distortions in the grain markets. In summary, we found the following: -- Several market factors, including buyers' uncertainty concerning grains' quality and supply and a change in GAO/RCED-94-66R, Midwest Grain Quality

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