If you sell grain, or anything else the buyer grades on delivery, get a written copy of the standard he grades against and set your last lot’s result beside it, factor by factor. That standard is a list of quality factors, such as moisture, foreign material and test weight, each with a limit, and it was on paper before your load reached the scale. The buyer takes money off for each factor where your lot misses its limit. Without a copy, you see the deduction only as a smaller total at the bottom of the settlement.
The settlement comes back and the figure is under the board price. The money went to moisture, foreign material, test weight or damage, and even when each deduction is itemized on the settlement, you cannot tell whether it was applied correctly without the limits it was measured against. So the loss is accepted without anyone checking it, because the buyer’s standard was never copied down next to the last lot’s result.
The work here is one sheet in three columns: the buyer’s standard factor by factor, your last lot’s grading result beside it, and the difference on each line. With it you can see what the buyer measures, what your lot measured and where the two parted.
Why is a grade a written table, not a verdict?
A grade is a set of named factors, each with a limit, written down by whoever set it. It is not one person’s opinion of your lot. The US Department of Agriculture’s standard for corn, published as 7 CFR 810.404, sets five numbered grades, and each grade is a row of four limits: a minimum test weight and maximums for heat-damaged kernels, for total damaged kernels, and for broken corn and foreign material.
| Grade | Minimum test weight (pounds per bushel) | Heat-damaged kernels, max (percent) | Total damaged kernels, max (percent) | Broken corn and foreign material, max (percent) |
|---|---|---|---|---|
| U.S. No. 1 | 56.0 | 0.1 | 3.0 | 2.0 |
| U.S. No. 2 | 54.0 | 0.2 | 5.0 | 3.0 |
| U.S. No. 3 | 52.0 | 0.5 | 7.0 | 4.0 |
| U.S. No. 4 | 49.0 | 1.0 | 10.0 | 5.0 |
| U.S. No. 5 | 46.0 | 3.0 | 15.0 | 7.0 |
The weight is in US units: 56 pounds per bushel is roughly 72 kg/hl, and 46 is roughly 59 kg/hl.
Rurivia calculation from 7 CFR 810.404, with 1 pound = 0.4536 kg and 1 bushel = 35.24 liters.
Read down any column. As one factor gets worse, the grade steps down, and each step was fixed in advance for every farm, not decided about yours. This is one country’s national grade, shown as an example of what a written standard looks like. Your buyer may grade against it, against a stricter version, or against a schedule of his own with factors this table does not carry, and the first job is to find out which.
Why does the buyer dock you but rarely pay extra?
The buyer docks you when a factor misses its limit, and rarely pays extra when a factor beats it. Two agricultural economists, Espinosa and Goodwin, studied Kansas wheat prices in a paper published in 1991 and described how the buyers behaved: buyers typically apply discounts for test weight under a given level and for moisture content which exceeds a certain level. Conversely, premiums are not usually paid for higher-than-average test weights or lower-than-usual moisture content measures. The standard works as a limit you lose money for missing, not a target you are paid to beat.
Each factor is priced on its own. For the wheat sales they studied, the same authors measured roughly a three-cent discount per bushel for each additional percentage point of total defects, and about five and a half cents per bushel for moisture above 12.86 percent. Protein in hard red spring wheat is a known exception that pays both ways: a 2004 model by Dahl and two co-authors, agricultural economists, starts from a base price for 14 percent protein, with a premium above that mark and a discount below it.
Those figures are for US wheat, in cents per bushel, and they are not your discounts. What carries over is the structure: money leaves per factor, at a threshold fixed before your lot was weighed. That is why the deduction has to be split back out, factor by factor, before you can understand it.
Whose standard is it, the buyer’s or the government’s?
What you are docked by is the schedule your buyer applies, and it changes from buyer to buyer. Penn State Extension, in its guide to how grain discounts are calculated, notes that the price paid for grain will vary depending on how a buyer handles moisture and contaminants. Two elevators can dock the same lot differently, because each works from its own schedule.
That schedule is written down, and it is specific. A sample soybean schedule in the same guide takes foreign material between 1.0 and 3.0 percent straight off the gross weight. Above 3.0 percent the deduction grows in steps: a load with 3.1 to 4.0 percent foreign material loses 4 percent of its weight, and so on up, until a load with more than 7 percent foreign material can be rejected. The guide’s table sets 15.5 percent as the standard moisture for corn, so corn delivered wetter is paid on the lighter weight it would have once dried to that figure.
The US corn grade table is what a government publishes. The schedule is what the buyer keeps, and the two are different documents. If the buyer also asks for a certification seal, such as organic, its requirements are a third list, and checking what the seal asks you to document against your own records, before you pay for the audit, is a separate job with its own article.
The Food and Agriculture Organization of the United Nations, in its marketing text, gives the reason grades exist: grades and standards contribute to operational and pricing efficiency by providing buyers and sellers with a system of communicating price and product information. The grade is how the buyer tells you what your load is worth, and without his standard in writing you hear only half of that message. The other half, the price itself, is the subject of the other marketing articles in this library.
Why put the last lot beside it?
The sheet has three columns: the buyer’s standard, your last lot’s result, and the difference on each line. Copy the buyer’s factors and limits into the first column, from his discount schedule, his contract specification or the legend printed on the settlement. Copy the last lot’s measured numbers into the second, from the grading result, the weigh ticket or the settlement. Subtract, line by line, into the third.
This sheet stays with one buyer and his standard. Judging your own quality over several seasons against a neutral reference, such as the official grade, is a separate record with its own sources.
The last lot’s result usually arrives on a document you already have, the buyer’s settlement, with the date, the price applied and the factors read on your load. The lot is identified on the settlement too, which is where you start if a buyer asks you to trace that lot back to the field it came from. Filed with its date and price, it is also one line in a price record with a source, a log of what each sale actually paid, and the grade result belongs on that line.
If you worked out the break-even price before selling, the lowest price that still covers your costs, compare it with the price after these discounts, not with the board price.
Where the buyer measures a factor you hold no written limit for, leave the line open, marked unknown, instead of writing a guess. A sheet with three known lines and two blanks is worth more than a full sheet with two invented limits: the blanks are your next questions for the buyer, while an invented limit will lead you to misread the next settlement.
With the same standard in hand before the truck leaves, you can measure a sample against it, which is the pre-shipment quality check, so you catch a miss on your own sheet before it costs you on the settlement. When a load comes back docked or refused anyway, log what the buyer rejected and read it against this same standard.
What does the difference tell you, and what does it not?
From the difference you can see where the money left and how much, and nothing more. You can see that the lot missed on moisture by two points and on foreign material by half a point. You cannot see why the moisture was high, which is a question about drying and the field, and you know that ground better than any article can. With this sheet you find where the loss happened; fixing its cause is a production question, and the answer is yours.
A grade result covers one lot, on one day, at one buyer. It is not a verdict on the farm or a forecast of the next load, so do not read a single result as a pattern.
You can also use the sheet to check the buyer. With his standard in one column and your result in the next, you can spot an arithmetic error or a mis-grade on his side, because you hold the same document he graded against. Checking one delivery this way is a small, concrete part of managing the farm as a business, and one you can do this week.
A grade result you cannot set beside the standard is not a check. It is a receipt for a loss you accepted without reading it. Accepting that settlement was a decision someone on the farm made, and if you have written down who decides the sale, and who only recommends it, you know whose it was.
Where to start
Thirty minutes, with the last settlement and whatever the buyer has given you in writing on the table.
With the standard only in memory, you have nothing to point at when the settlement comes back low: no line, and no number the buyer wrote that you can set beside your own. The national grade and the elevator’s schedule were both written by someone else, before your lot was weighed. The three-column sheet is the one you write yourself, and with it you can question the settlement line by line.