Usda Investigates Conagra's Grain Watering

WASHINGTON - The Agriculture Department has been trying to determine whether agribusiness giant ConAgra raised the price of grain at its elevators by soaking it with more water than needed to control dust.

Constant Chevalier, regional inspector general for the Agriculture Department in Chicago, said a report of the yearlong investigation may be complete within the next two weeks. The report will then go to the Justice Department to determine whether laws were broken.

In a related matter, Agriculture Secretary Mike Espy may propose banning the use of water to control grain dust. Neil Porter, director of compliance for the Federal Grain Inspection Service, said the rules have been drafted and Espy is reviewing them.

The investigation and possible ban follow complaints by ConAgra competitors and foreign and domestic buyers of grain that the use of water to control grain dust lends itself easily to abuse.

Grain dust can build up in elevators, causing fatal explosions. It can also pollute the air and water. Water is one of the cheapest ways to control it.

But the grain can soak up water, adding to the weight. Although grain is sold by the bushel, the bushels are measured by weight - about 60 pounds for soybeans and wheat, and 56 pounds for corn.

Proving criminal intent may be difficult. Porter said one of the reasons for proposing the ban is that "there's no line drawn right now" between proper use and abuse.

The department examined grain handling at about 80 elevators owned by Peavey Co., a division of ConAgra, in a number of states, including Illinois, Indiana, Louisiana and Nebraska.

The company confirmed the investigation, which it says began because of complaints about four elevators in and near Terre Haute, Ind. Lynn Phares, spokeswoman for Omaha-based ConAgra, said the company had corrected problems at those elevators.

"We know there was a problem in Indiana, and we've taken steps to correct it," she said, adding that inspectors gave no indication that they found problems at other Peavey elevators.

The elevators handle a billion bushels of grain a year, and the four Indiana elevators handle about 5 percent of that amount, the company said.

News of the investigation appeared in yesterday's edition of The Wall Street Journal, which reported a growing use of water nationwide to increase grain weight.

Peavey President Tom Racciatti said that as a result of the investigation, the company cut off the water-based dust suppressors at the Indiana elevators. But he said the company is still using water at other locations.

"We think it's the best way," he said. Other methods include applying a light coating of mineral oil on grain and using suction to remove dust.

Racciatti said many millers object to mineral oil because it gums up their equipment.