State halts grain inspections in port

Grain inspector Bob Barriere said he feels as though he's staring down a steamroller. For most of his 33-year career, there has been talk of Minnesota closing the book on its grain inspection operations in Duluth.

Now, it's more than just talk. He'll probably fall 1½ years shy of eligibility for full retirement benefits.

Gene Hugoson, commissioner of the Minnesota Department of Agriculture, has sent a letter to the federal government announcing that, as of April 2, the state will no longer grade, inspect and weigh grain being shipped to and from Duluth. The move would eliminate operations that have been a port fixture since 1885.

The state's grain inspection facility on Duluth's Garfield Avenue employs four people full time and another five workers seasonally. At its peak in the late 1970s, the office employed about 120 people in Duluth. As recently as nine years ago, it had a staff of 30.

But declining grain and soybean shipments have spelled the facility's demise. The latest shipping season brought only 36 vessels to Duluth elevators to load grain or beans. That's 15 fewer ships than last year.

In the late 1970s and early 1980s, it wasn't unusual for Duluth inspectors to handle 400 ships a year.

Despite staff reductions and a 25 percent hike in service fees, the Duluth inspections facility posted a net loss of $44,000 in 2006, according to Gier Friisoe, director of the Minnesota Department of Agriculture's plant protection division. That's actually an improvement over past performance. In the previous three years, the grain inspection operations in Duluth averaged an annual loss of $129,000, according to figures Friisoe supplied.

"They were able to make a pretty good case that it was not practical for the state to continue its Duluth grain inspection operations," said Sen. Yvonne Prettner Solon, DFL-Duluth, after meeting with Friisoe and other Ag department staff Friday.

"I'm obviously disappointed," Prettner Solon said. "But on the other hand, I also feel fortunate that we were able to forestall this decision for several years."

Reps. Mary Murphy, DFL-Hermantown, and Tom Huntley, DFL-Duluth, also participated in the meeting.

"We're going to have to wait and see how the USDA answers Commissioner Hugoson's letter," Murphy said. She said she was assured that the USDA will step in to provide Duluth with inspection services in the state's absence. She expressed hope that state employees now on the job in Duluth will be able to land work with the future service provider.

Janet Nelson, a 31-year employee, said it has been difficult to make life decisions -- such as whether to buy a house -- given the uncertain outlook. "We've been in limbo for years," she said.

John Schadl, communications director for U.S. Rep. Jim Oberstar, D-Minn., said his boss continues to monitor the situation. "Congressman Oberstar wants to make sure the port continues to have the resources it needs to move ships through quickly and efficiently," Schadl said.

The USDA plans to provide inspection services using two federal employees already based in Superior.

Any transition will need to occur quickly. A mild winter may mean a March 20 opening of the St. Lawrence Seaway, and Duluth could see its first saltie traffic by March 27, said Dan Sydow, manager of Fedmar International, a Duluth ship agent.

Seasonal staff also could be retained to handle the Duluth workload, said Amanda Taylor, confidential assistant to the administrator of the USDA's Grain Inspection, Packers and Stockyards Administration. It's possible Duluth's services could eventually be delivered by a for-profit firm.

Another possibility could involve partnering with Wisconsin, which maintains grain-inspection operations in Superior. As it is home to more elevators than Duluth, Superior has managed to stay a bit busier, with inspectors handling 77 vessels in 2006.

As a whole, the Twin Ports loaded 2 million metric tons of grain in 2006, about 29 percent less than the prior year, the Duluth Seaway Port Authority said.

Sydow said that if the state is intent to shut down its Duluth office, the best alternative would be to have experienced Wisconsin staff provide service for the whole port.

But Friisoe said engineering such an agreement across state lines could be complicated by the federal Grain Standards, Inspections and Handling Act.

Maintaining the integrity of the inspection services is of paramount concern to Ron Johnson, the Duluth Seaway Port Authority's trade development director. He said USDA-sanctioned inspections conducted by government staff are trusted around the globe.

"Some people will buy grain from us even when it's a little more expensive, because they can trust the quality," said Johnson, adding that he believes the federal government will do nothing to tarnish that reputation.

Sydow said it's also crucial to contain inspection costs. "The thing about grain is that it will flow like water through the cheapest route," he said. "An eighth of a cent per bushel can make it go one way instead of another. We don't have room for any inefficiencies in our system."