14 January 2008

5 minute read

North America

In a statement submitted to USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA), the NGFA said existing procedures for approving feed ingredients, as well as the NGFA’s own Grain Trade Rules, Feed Trade Rules and Arbitration System, already provide parameters for the trading of distillers grains and other products from biofuels production.

“We believe that the existing government and industry frameworks are working well and provide for the effective trading of these products, and do not believe that any additional involvement by GIPSA is necessary to further enhance the marketing of grain inputs used for ethanol production or the resulting distillers grains products,” wrote NGFA Biofuels Committee Chairman Michael F. Malecha, ethanol manager for NGR Development Co. Inc., a biofuels company headquartered in Minneapolis, Minn.

“In fact, the NGFA believes that additional government standards for the inputs of ethanol production and distillers grains at this time could have the negative impacts of stifling the rewards of innovation, reducing the number and quality of products available in the marketplace and ultimately limiting the opportunities for either buyer or seller to capture optimal value for these products,” Malecha continued. “The opportunity for both buyers and sellers to differentiate products and capture appropriate value is essential in maintaining a market system that fosters the creation of new technologies and products that ultimately benefit all parties affiliated with the inputs and outputs of ethanol production.”

The NGFA’s statement was submitted in response to GIPSA’s request for comments on whether it should develop standards for distillers dried grains with solubles, as well as whether it should develop standardized testing methods for ethanol product quality factors. Established in 1896, the NGFA consists of 900 grain, feed, processing, exporting and other grain-related companies that operate about 6,000 facilities that handle more than 70 percent of all U.S. grains and oilseeds.

As examples of the adequacy of existing regulatory and industry frameworks, the NGFA cited the ingredient definition approval process administered by the Association of American Feed Control Officials (AAFCO), which recently was formalized through a memorandum of understanding with the Food and Drug Administration (FDA). This time-tested AAFCO process includes an assessment by FDA of the safety and effectiveness of each feed ingredient for its intended purpose, and a review of the chemistry involved in manufacturing the product. In addition, the NGFA noted that AAFCO’s existing categorization of distillers grains products and other approved feed ingredients provide meaningful and recognized terms that contribute to the effective trading of such products. AAFCO first adopted official feed ingredient definitions for distillers dried solubles, distillers dried grains and distillers dried grains with solubles in 1964, and subsequently has added new and updated definitions.

Meanwhile, the NGFA noted that state feed laws establish appropriate nutrient labeling requirements for distillers grain products, which typically include required analysis to determine the moisture, protein, fat, fiber, calcium, phosphorus and other nutrient components of such products. Likewise, the NGFA said, GIPSA’s current official grain standards adequately facilitate the trading of raw grain inputs used in biofuels production.

In addition, the NGFA noted that its Grain Trade Rules and Feed Trade Rules reflect current industry practice and address fundamental issues in trading grains, feed and feed ingredients, including distillers grain and other biofuels products. In 2006, an NGFA task force consisting of more than 25 industry members from the biofuels, feed and feeding sectors determined that the existing NGFA trade rules already apply fully to distillers grains products, and that no additional trading rules were warranted at this time. The NGFA task force also concluded that AAFCO’s existing definitions for distillers grains products were accurate and adequately reflected current technology used to produce such biofuels products.

The NGFA also took issue with GIPSA’s assertion that the industry lacks agreement on reference methods for analyzing the quality attributes of biofuels products, and said there is not a need for the agency to develop standardized reference methods of analysis. As justification, the NGFA cited an industry coalition study completed by South Dakota State University in February 2007 that provided recommended guidelines for proximate analysis of moisture, crude protein, crude fat and crude fiber of distillers dried grains with solubles – the most widely-traded form of distillers grain products. In addition, the NGFA cited the National Corn-to-Ethanol Research Center’s current efforts to develop standard equations for using near-infrared spectroscopy calibration to measure nutrient factors in distillers grain products.

“We also believe it is important to allow buyers and sellers of distillers grain products the opportunity to mutually agree contractually to the specific type of analytical method that applies to given transactions,” the NGFA said.

The NGFA did encourage GIPSA to continue administering its current program that validates and issues certificates of performance for commercially available rapid test kits used to determine various grain quality attributes, including those of distillers grains.

But in response to a question posed by GIPSA, the NGFA said it would be inappropriate for the agency to initiate the development of secondary tests for specific traits in grains, such as fermentable starch content, arguing that is a role typically and properly served by commercial companies that introduce such traits to the market.

“We believe it is outside the scope of GIPSA’s mission to independently pursue the development of other types of secondary or rapid methods for use with the inputs of ethanol production or distillers grain products,” the NGFA said. “We believe commercial companies are best positioned to develop secondary or rapid methods in response to market demand. But if such methods are developed, we believe GIPSA has a role in validating the methods through its current evaluation program.”

The NGFA’s membership encompasses all sectors of the industry, including country, terminal and export elevators; feed mills; cash grain and feed merchants; end users of grain and grain products, including processors, flour millers, and livestock and poultry integrators; commodity futures brokers and commission merchants; and allied industries, such as railroads, barge lines, banks, grain exchanges, insurance companies, computer software firms, and engineering and design/construct companies. In addition, the NGFA consists of 35 affiliated state and regional U.S. grain and feed associations, as well as two international affiliated associations. The NGFA also has strategic alliances with the Grain Elevator and Processing Society and Pet Food Institute, and is co-located and jointly operates with the North American Export Grain Association.

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