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September 7, 2007
TANNER ASKS FTC TO EVALUATE
FARM TRANSPORTATION COSTS
In Letter, Says Some High Bases Fees Are Unfair
WASHINGTON – U.S. Rep. John Tanner has asked the Federal Trade Commission to evaluate the amount of money grain elevators are charging Tennessee farmers for transportation of their commodities, a fee also known as “basis.” Tanner expressed his concerns in a letter to Deborah Plat Majoras, chair of the Federal Trade Commission.
“I have been visiting with agricultural producers in the 8th District of Tennessee and many are concerned this year with the basis they are charged on their commodities at time of the sale,” Tanner wrote in his Sept. 6 letter. “The basis charged my producers is extremely higher this year than years past, and this causes me great concern.”
Basis is the per-bushel charge a granary deducts from a farmer’s crop value. Unfair, high basis prices hurt family farmers already facing a tough harvest season, Tanner said.
“I strongly suggest that the FTC provide an immediate evaluation of this situation to ensure that fair prices for transportation to market are being charged at grain elevators,” Tanner’s letter said. “Unreasonably high basis costs that are unnegotiable are devastating to the farming community. Having suffered both drought and freeze in the South this year, my office has had to twice seek federal government relief.”
Tanner represents Tennessee’s 8th Congressional district in West and Middle Tennessee. He serves on the House Ways and Means Committee, on the House Committee on Foreign Affairs and as chairman of the U.S. delegation to the NATO Parliamentary Assembly.
The full text of Tanner’s letter follows.
September 06,
2007
The Honorable Deborah Plat Majoras
Chairman of Commissioners
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Dear Chairwoman Majoras:
I have been visiting with agricultural producers in the 8th District of Tennessee and many are concerned this year with the basis they are charged on their commodities at time of the sale. As you know, the basis is the difference between the prices paid to farmers and the price of a contract at the Chicago Board of Trade. The basis charged my producers is extremely higher this year than years past, and this causes me great concern.
I strongly suggest that the FTC provide an immediate evaluation of this situation to ensure that fair prices for transportation to market are being charged at grain elevators. It appears to me that basis varies greatly between elevators, and I would like an explanation as to why this occurs. I am told by some granaries that because of the large amount of corn planted this year they are having to pay more for barges. In order for granaries to keep their margin of profit about the same, they are adding this cost onto the basis. Therefore, this cost is coming directly from the producers’ profit. However, if there are only a few granaries moving the majority of the commodities in the U.S., I don’t see it getting any better for farmers. Unreasonably high basis costs that are unnegotiable are devastating to the farming community. Having suffered both drought and freeze in the South this year, my office has had to twice seek federal government relief.
Please do not hesitate to contact me if I can provide additional information on this problem or be of assistance in any way in facilitating an investigation and/or a solution.
Sincerely,
John Tanner, M. C.
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Contact: Randy Ford, 202.225.4714
