The Economic Impact of Dockage and Foreign Material on Oklahoma Wheat Producers

The Economic Impact of Dockage and Foreign Material on Oklahoma Wheat Producers

Phil Kenkel

Bill Fitzwater Cooperative Chair

Department of Agricultural Economics

Oklahoma State University

Dockage and foreign material have a significant financial impact on Oklahoma wheat producers. While most producers consider the terms synonymous, dockage and foreign material have different implications under the F.G.I.S. grain standards. In wheat, dockage refers to material that can be easily removed with screening procedures. Dockage is essentially non-wheat material that is a different size or shape from the wheat kernels. Cheat or chess seeds would be a common example of dockage. Foreign material represents the non-wheat material that remains in the sample after the dockage is removed. Rye seeds are a common example of foreign material found in wheat. Both dockage and foreign material have economic implications for wheat producers. Dockage is not a grade factor but is always removed from weight. The presence of dockage can also trigger price discounts. Foreign material is a grade factor which means it can reduce the grade of wheat as well as trigger price discounts. Foreign material in excess of 10% can result in the load being classified as “mixed grain” leading to rejection or severe price discounts.

In recent years Oklahoma wheat has averaged just under 1% dockage and .5% foreign material. Levels in some locations, and certainly some producers, are much higher. The economic impact of dockage and foreign material is difficult to estimate. Price discounts for dockage average 2 cents for every half percent of dockage and 2 cents for every 1/10 percent of foreign material. On average, dockage and foreign material cost producers over .$15/bushels while those with problem fields can see can see the value of their wheat decreased by $.30/bushel or more. These quality factors also have more subtle impacts. The presence of dockage means that producers and elevators are paying to transport material which is removed from weight at the point of sale. Dockage and foreign material increases storage problems which can lead to further quality loss. Purchase contracts from both domestic and foreign wheat processors specify maximum levels of dockage and foreign material. This can limit the market outlets and ultimate decrease the bid price at the local elevator.

Historically, producers were somewhat sheltered from the full economic impacts of dockage and foreign material because elevators were unable to accurately grade grain at harvest and/or the local elevator was reluctant to pass on the full market place price discount. As price discounts at the terminal and export elevators have increased, local elevators have become more aggressive in sampling and grading wheat and in enforcing discount schedules similar to the terminal markets. The only positive aspect to dockage and foreign material price discounts is that they provide the incentive to clean up fields through crop rotation, herbicides and other strategies.