ALBERT R. MANN LIBRARY AT CORNELL UNIVERSITY Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013849017 UNITED STATES as- FOOD ADMINISTRATION CEREAL DIVISION Plan of Wheat and Flour Control FOR THE 1918 Wheat Crop iJEW YORK July, 1918 PLAN OF WHEAT AND FLOUR CONTROL FOR THE 1918 WHEAT CROP It is of course generally known that the value of wheat of various grades and varieties depends upon three factors: First: the relative distance from the consuming markets, because of the differences in freight rates to the points named below. Second : the variety of the wheat and its relative value for flour production. Third : the grade of the wheat as to quality and impurities within the various varieties. These differences have been established by years of custom and experience, and it is the object of the Food Administration, in giv- ing effect to the law, to equably reflect these differences in values as far as physically possible. In order to simplify accounting and to avoid "red tape," flie President authorized the creation of the United States Food Ad- ministration Grain Corporation, as an instrument of the Food Administration, to carry out the financial details of buying and selling wheat and various cereal commodities. Therefore contracts and payments are made in the name of the Food Administration Grain Corporation, which operates without profit, charging such differentials as will cover risks, storage and insurance. Likewise the United States Department of Agriculture, acting under the Grain Standards Act, has endeavored to establish wheat grade definitions according to relative merits of various qualities and varieties of wheat. The following are the fair price bases, and wheat classes and grades, on which the Food Administration Grain Corporation will buy wheat in elevators at the points named : 3 BASIC WHEATS. No. 1 Northern Spring No. 1 Hard Winter No. 1 Red Winter 1 Durum 1 Hard White No No, 1. The wheat grades are those adopted by the United States Department of Agriculture, under the Grain Standards Act. 2. The Food Administration "fair prices" are named below, for "basic" wheats, and the market relations fixed as follows: New York $2.39J^ 1 Philadelphia 2.39 Baltimore 2.38J4 Newport News 2.38?4 Duluth 2.22^ Minneapolis 2.2154 Chicago 2.26 St. Louis 2.24 Kansas City 2.18 Omaha 2.18 New Orleans 2.28 Galveston 2.28 Tacoma 2.20 Seattle 2.20 Portland 2.20 Astoria 2.20 San Francisco 2.20 Los Angeles 2.20 Intermountain basis f.o.b. loading point outgo- ing car 2.00 The above are for "basic" wheats. Certain other classes and varieties of wheat will be dealt in at premiums over, and other at di.'scounts under, the above prices. The "premium" wlieats are as follows : Premium No. 1 Dark Hard Winter 2c No. 1 Dark Northern Spring 2c No. 1 Amber Durum 2c The "discount" wheats are as follows: Discount No. 1 Yellow Hard Winter 2c INo. 1 Red Spring Sc No. 1 Red Walla 7c No. 1 Red Durum 7c No. 1 Soft White 2c No. 1 White Club 4c 4 Discounts for other grades than No. 1 : iNo. 2 Wheat 3c under No. 1 No. 3 Wheat 7c under No. 1 Grades below No. 3 will be dealt in on sample on merit. Note: The grade discounts for No. 2 and No. 3 are made with the expectation that mills and dealers will absorb the better quali- ties of these grades at a premium over these fixed differences at which the Government will buy, and with the expectation that the qualities tendered to the Government will approach the minimum of the grade. It is also expected that the character of the wheat going into No. 4 and No. 5 grades will be of such wide range that it would not be fair to the producer to name a fixed price at which the Gov- ernment will buy. It haSj therefore, been left to the discretion of the Government representatives to buy the wheat which is repre- sented by the No. 4 and No. 5 grades, as well as wheat which is represented by "sample," on the basis of their judgment as to its proper value. Where the term "primary markets" is used in this statement it refers to points at which the Grain Corporation maintains buying agencies, as named above. DETAILS OF BUYING PLAN: The Food Administration Grain Corporation will buy on the above fair price bases at the principal primary markets as named. The Food Administration Grain Corporation will buy ware- house receipts in approved elevators at the principal primary mar- kets as named above. In the Intermountain territory, where there are no public storage facilities available, an adjustment will be made to make effective the $2.00 minimum for the No. 1 grade f.o.b. at loading station, outgoing car, available for transportation to a public terminal elevator. The Intermountain region comprises southern Idaho, western Montana, western Wyoming, Nevada, Utah, western, Colorado, New Mexico, and Arizona. Further de- tails can be obtained at Grain Corporation offices. 5 At all these principal primary markets, there is an open market where all classes of buyers are well represented, and the producer and the consumer will be amply protected through the competitive activities of the several interests, the Food Administration Grain Corporation being prepared to buy and protect the "fair price" basis. As the miller is restricted to a "fair price" basis for his flour, he cannot pay more for wheat than the expense of milling and a reasonable profit will allow. The farmer can protect himself by the study of the primary prices, deducting intermediate charges, or he can ship to the Food Administration Grain Corporation, or he may ship to a commis- sion merchant at a terminal market, and through him secure the benefit of competitive buying. There is nothing in the "1918 plan" which prevents a buyer at point of origin from placing his own grade upon the wheat which he purchases. If, by the buyer's act, the grade is raised, it is equivalent to an increase in the price. If the buyer lowers the grade, the producer or dealer's protection is to ship to the Food Administration Grain Corporation. MARKETING DIRECT TO FOOD ADMINISTRATION GRAIN CORPORATION: Producers or dealers have the right to bill cars of wheat direct to the Food Administration Grain Corporation at any of the prin- cipal primary markets named above. When the wheat is unloaded in the elevator, and weight and grade returns are made to the Food Administration Grain Corporation, remittance will be made on the basis of weights and grades so reported, and on the basis of the Government price less one per cent (1%) administration charge for the service. TRANSPORTATION : The Government does not discriminate between shippers in matters of transportation. 6 TRAFFIC BUREAU: The Food Administration maintains a Traffic Bureau for the purpose of assisting shippers of grain and flour in securing their car supply, and also in expediting the movement of shipments to destination. Application for assistance can be made to Food Ad- ministration Grain Corporation offices in each primary market. CHARGES FOR HANDLING: Country elevators and buyers are entitled to receive fair com- pensation for their services in the handling and marketing of wheat, and the charges for such service are necessarily a deduction from the terminal price of wheat. These charges or margins are well established by custom and vary in different sections of the country according to local conditions. INSURANCE: The Government carries no insurance on its property. It does, however, require that the elevator operators shall exercise due dili- gence in protecting grain stored in their warehouses from ordinary hazards. Owners of grain stored in warehouses or elevators should, therefore, protect their grain so stored which has not been delivered to, or paid for, by the Food Administration Grain Corporation. INSPECTION: Shippers to any of the principal primary markets should insist that their grain be inspected and graded by inspectors licensed by the Secretary of Agriculture. Producers and dealers, in shipping grain to said primary mar- kets, should advise their commission man to see that their grain is correctly inspected and graded, and that, if in his judgment the grain has been improperly graded, an appeal should be taken to the Federal Supervisor. 7 It is the policy of the Food Administration and of its agents and representatives to work in entire harmony with the Department of Agriculture in maintaining the integrity of grades as named and defined by them under the Grain Standards Act, in order that the producer, the consiuner and all interests handling grain may be properly protected. The producer or dealer should always keep in mind that, if he is not satisfied with the prices paid by individual buyers, or with the grading of wheat, his protection lies in his being able to ship to the Food Administration Grain Corporation at the various terminal tnarkets named above. FLOUR MILLING PROFIT CONTROL: The plan for the profit control of flour milling for the 1918 crop is formulated on the basis of naming a maximum "fair price" at which any miller may sell flour and feed. This maximum "fair price" is based upon a reasonable allow- ance, above the fair price for basic wheat, for handling, milling and marketing expenses, freight charges on products, and profit. It is anticipated that competition will eventually reflect reductions from these prices. A temporary plan has been published along these lines, which will be supplemented in the near future by the naming of detailed maximum prices, at which it will be considered fair for each mill of the country to sell its flour and feed. This plan, as soon as completed, will be given general publicity. The "1918-19 plan of control" and this statement have been prepared with the approval of the Agricultural Advisory Board, and with their co-operation.