Agriculture Secretary Dan Glickman announced today that USDA will provide approximately $2 million in compensation to certain growers, handlers, seed companies, owners of grain storage facilities, and flour millers for losses and expenses incurred because of Karnal bunt in the 1997-98 crop season.

"We recognize that for many wheat growers and related businesses, Karnal bunt has created a significant economic hardship," said Glickman. "This compensation will help reduce the economic burden of Karnal bunt on farmers and will help foster cooperation between USDA and those individuals affected by Karnal bunt."

Karnal bunt is caused by the smut fungus Tilletia indica and is spread by spores, primarily through the movement of seeds. While the fungus does not threaten human health, flour made from heavily infected wheat has an unpleasant odor and taste, jeopardizing its marketability; the disease also reduces crop yields.

USDA will compensate growers, handlers, and seed companies with wheat grown in the regulated area for the loss in value of their 1997-98 crop only if the wheat is tested by USDA's Animal and Plant Health Inspection Service and found positive for Karnal bunt.

For growers, handlers, and seed companies in previously regulated areas, compensation for positive-testing wheat will equal 60 cents per bushel. For growers, handlers, and seed companies in areas that became regulated for Karnal bunt after the 1997-98 crop was planted, compensation for positive-testing wheat will not exceed $1.80 per bushel, and will be based on the difference between the contract price (if sold under contract) or the estimated market price and the actual price received by the grower, handler, or seed companies.

Owners of grain storage facilities are eligible for compensation under this rule if they were required to clean and disinfect their facility because it contained positive-testing wheat. They will be compensated on a one-time basis for up to 50 percent of the cost of decontamination, not to exceed $20,000 per grain storage facility.

Participants in the national Karnal bunt survey whose wheat tests positive for Karnal bunt are also eligible for compensation. USDA will regulate the facility and, if an extraordinary emergency has been declared in that state, will compensate the owner for up to 50 percent of the direct cost
of decontaminating the facility up to $20,000 per facility on a one-time basis. USDA will also compensate the owner for the loss in value based on the estimated market price minus actual price received for the wheat. Compensation will not exceed $1.80 per bushel of positive-testing wheat.

Flour millers are eligible for compensation if they heat-treated millfeed that came from wheat that tested positive for Karnal bunt. The compensation rate is $35 per short ton of millfeed.

The final rule on compensation is scheduled to appear in the June 25, 1999, Federal Register and becomes effective upon publication.

USDA news release
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