Soybeans, Soybean Meal and Fullfat Soya

QUALITY CONTROL HANDBOOK

R. H. Kohlmeier, Ph.D., D.V.M. Consultant, International Animal Nutrition Chesterfield, Missouri 63017-4912 USA

TABLE OF CONTENTS

1. INTRODUCTION 3

2. GENERAL GUIDELINES FOR SAMPLING AND ANALYSIS PROCEDURES 5

3. SOYBEANS 14 OFFICIAL U.S. STANDARDS 14

GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION 18

STANDARD CONTRACTS 20

METHODS OF ANALYSIS 64

4. SOYBEAN MEAL 84 U.S. STANDARDS 84

EUROPEAN STANDARDS 88

STANDARD CONTRACTS 89

METHODS OF ANALYSIS 109

5. FULLFAT SOYA 144 RECOMMENDATIONS FOR QUALITY 144

METHODS OF ANALYSIS 146

6. REFERENCE LABORATORIES 155

7. USEFUL ADDRESSES 160

8. COMMENTS 163

1. INTRODUCTION The United States produced yearly an average of 57.3 million metric tons of soybeans during the crop years 1990-1995. This represented almost half (48.6%) of the world's total production. During this six-year period, an average of 18.4 million metric tons of soybeans or 32.1% of the total U.S. harvest were exported (1997 Soya Bluebook Plus). During the above time frame (1997 Soya Bluebook Plus), the U.S. processed an average of 27.8 million metric tons of soybean meal. Of this total, 80.5% was used domestically and 19.5% was exported. The U.S. is a reliable supplier of quality soybean products (FGIS, 1997; Dudley-Cash, 1997). The U.S. soybean farmer has established an international marketing goal of increasing U.S. soy exports and to increase U.S. market share to 60% of the worldwide export market by 2005. There has been a small linear increase (average of

REFERENCES Dudley-Cash, W. A. 1997. Soybean meal quality varies widely in many parts of the world. Feedstuffs Vol. 69, No. 5, pp. 15, 17. Feedstuffs. 1997. Farmers plan shift to soybeans in 1997. Vol. 69, No. 14, p. 31. FGIS. 1997. 1996 U.S. Grain Exports: Quality Report. Federal Grain Inspection Service of the U.S. Department of Agriculture Grain Inspection, Packers and Stockyards Administration. Washington, DC. Soya Bluebook Plus. 1997. Soyatech, Inc., Bar Harbor, ME. Sources: Counselor and Attach reports, USDA, FAS, ERS.

2. GENERAL GUIDELINES FOR SAMPLING AND ANALYSIS PROCEDURES

GAFTA (1995) has published an excellent overview on this subject. Select rules for bulk shipments purchased using GAFTA contracts are listed below: l. GENERAL 1:1 For the purpose of these Rules, the words "Buyers" and "Sellers" shall be deemed to be the parties to the contract and their respective superintendents at the port where the cargo is loaded and/or discharged, and/or transhipped. 1:2 The word "sealed" shall mean jointly sealed by the Buyers and Sellers or their superintendents. Samples shall be sealed in such a manner as to prevent any access to the sample without breaking or removing the seal. The seal's mark should be clearly identifiable and clearly visible. 1:3 SAMPLE LABELS Every sample shall be sealed and shall bear the name of the ship, the quantity represented by the sample and the date the sample was sealed, and any other pertinent information which may be required on the label. 2. METHOD OF DRAWING SAMPLES 2:1 GENERAL Samples shall be taken as required by the contract in accordance with the following provisions of the Rules, during the discharge, and/or loading and/or transhipment operations. In the event that the operations preclude access to the hold or a mutually agreed acceptable point, the superintendents may stop the operation in order to draw samples as required by these Rules. The parties are deemed to have agreed to this procedure. If samples are to be drawn outside of natural daylight they must be drawn under full and properly adequate ship's lighting and/or installation lighting. Irrespective of the time or place of sampling, the quartering, classification and sealing of contractual samples shall always be carried out in daylight or, in artificial light if considered adequate and mutually agreed by the superintendents. SAMPLING POINTS Sampling points have to be carefully selected, and agreed by the superintendents, at a point where the samples drawn are representative of the goods loaded/discharged.

INCREMENT SAMPLES According to the rate of discharge/loading, increment samples shall be taken uniformly and systematically in order to achieve a representative sample of the consignment, and placed in mutually agreed suitable container(s). As many increment samples as practically and physically possible shall be taken in relation to the discharge/loading, and where possible, each increment sample should not exceed l kilogram. For contractual tonnage over 500 tonnes a minimum of 20 kilogram bulk sample of increments shall be taken for each 500 tonnes, but if the contractual tonnage is less than 550 tonnes, the bulk sample of increments drawn shall be not less than 40 kilograms. 2:3 BULK 2:3:1 For goods in bulk at loading; increment samples shall be drawn uniformly and systematically, concurrently with loading at the nearest practicable point to the vessel. If samples are drawn from conveyor, or ex-vehicle, or ex-silo overside to vessel, samples shall be drawn from a moving stream. If loading is by grab, samples shall be drawn from the quay or barge from the bulk, excluding the run. Where samples are required to be taken from rail wagons or vehicles, the increment samples drawn shall be taken from not less than 3 sampling points from each wagon or vehicle. Increment samples shall be taken by ordinary hand-scoop or by other mutually agreed equipment throughout loading. 2:3:2 For goods in bulk at discharge; increment samples shall be drawn uniformly and systematically, concurrently with discharge, from various parts of the hold in a fair proportion, excluding the run. If for any reason samples cannot be drawn from the hold, increment samples shall be drawn uniformly and systematically, concurrently with discharge, at the nearest practicable point to the hold, preferably from a moving stream when discharging overside, or to silo, to craft or other means of transport. Increment samples shall be taken by ordinary hand scoop or by other mutually agreed equipment throughout discharge. 2:4 SECURITY At any cessation of work, and when full, the containers containing the increment samples must be sealed by the superintendents, and for safe custody, placed in a mutually approved secure place. 2:5 DIVIDING/QUARTERING Upon completion of sampling the increment samples in the mutually agreed suitable containers shall be emptied on to a well cleaned and flat surface (or for PP/PE bags into the approved mechanical division system - see Rules 3:3), in an area free from any possible contamination. The increment samples representing the total contractual quantity shall be thoroughly mixed into a bulk sample. The bulk sample shall then be divided, quartered and reduced to the required quantity needed for the contractual samples.

3. SAMPLE BAGS AND SAMPLE CONTAINERS 3:1 CB. (CONTAINING BAGS) "CB" means the containing bags shall be new, made of non-toxic, odourless, unglazed, insewn, man-made or natural fibre or a mixture thereof, sufficiently tightly woven to retain all dust and/or foreign matter and prevent the moving apart of the warp and the weft of the material. They shall be tightly filled and securely tied before sealing. 3:2 MPC. (MOISTURE PROOF CONTAINERS) "MPC" means the containers shall be bottles, jars or tins with close fitting lids, or strong polythene of a minimum 250 gauge bags securely tied, and that such containers are labelled and shall be sealed, and if required by either superintendent, enclosed in sealed cotton bags. 3:3 PP/PE. (POLYPROPYLENE/POLYETHYLENE) When the Council of GAFTA has given prior approval in writing to an operator to use an electrical/mechanical system for quartering down, packing and sealing samples, bags of sufficiently ventilating foil of PP/PE polypropylene/polyethylene material may be used in place of CB referred to in 3:1 above, or bags of non-ventilating foil of PP/PE polypropylene/polyethylene material may be used in place of containers MPC referred to in 3:2 above. 4. OFFICIAL SAMPLES REQUIRED FOR ANALYSIS TESTS AND ARBITRATION PURPOSES 4:1 Official sets of samples are required for every 500 tonnes, or for any balance or contract for a lesser quantity, except where such balance does not exceed 50 tonnes, in which event a further sample is not required and this shall be recorded on one of the sample labels. All official samples (except for natural weight tests, See Rules No: 65) for any purpose shall be not less than l kilogram. 4:2 SOYBEANS Unless the contract stipulates otherwise, sets of samples are required as follows: 4:2:1 For Soybeans 1 set of samples consisting of the following: CB - arbitration CB - analysis MPC - moisture when required by the contract CB - FAQ standard CB - Natural Weight Tests - See Rules, Form No: 65. These samples to be sent to the offices of GAFTA without delay, unless otherwise stated in the contract, and shall be mixed and quartered as required by the Association's analysts or arbitrators.

4:3 ALL CONTRACTS - GOODS SOLD TALE QUALE Where goods, or part thereof, under a tale quale contract, are damaged by water, oil and/or other liquids, and where no payment is to be made for increase in weight by water, oil and/or other liquids, at the request of either party one sample shall be taken for each of the following: MPC - Sound Goods MPC - Water/Liquid/Oil damaged goods. These samples shall be sent to the offices of GAFTA, or local public or independent analyst to be mutually agreed, for the determination of excess water, oil and/or liquids, the cost to be shared equally by Buyers and Sellers and the result to be final and binding. 4:4 ALL CONTRACTS - GOODS DAMAGED OR OUT OF CONDITION OTHER THAN RYE TERMS Sellers' Superintendent at Buyers' request shall jointly seal samples of goods damaged or out of condition, but without prejudice to Sellers' rights and responsibilities under the contract. Each type of damage shall be sampled separately. Lumpy goods if in bags shall be sampled by cutting from top to bottom and withdrawing samples by hand, if necessary The sealed samples shall be a fair and true indication of the degree of damage and the sample labels shall show the proportion of the tonnage so affected. 1 sample to be taken for each classification as follows: CB - Sound Goods - For Buyers CB - Sound Goods - For Sellers CB - Lumpy/Damaged Goods - For Buyers CB - Lumpy/Damaged Goods - For Sellers MPC - Liquid and/or Chemical Damaged Goods - For Buyers MPC - Liquid and/or Chemical Damaged Goods - For Sellers 4:5 ALL CONTRACTS - GOODS DAMAGED OR OUT OF CONDITION TRADED ON RYE TERMS Goods arriving damaged or out of condition, shall be sampled on board the vessel at time of discharge, but in cases where both parties agree that it is not practicable for the classification and sampling to be carried out on board, then goods damaged or out of condition shall be landed on the quay or discharged to lighter for the purpose of such classification and any sampling shall take place within the port area as soon as possible after the damaged goods are landed or discharged into lighter, always provided that all the damaged or out of condition and sound goods be classified. In the event of such agreement not being reached, either party or both parties shall, after giving notice to the other party, apply to a competent organisation at the port for the appointment of an independent superintendent to act on behalf of the other party and samples shall be drawn jointly under all reserves. 1 sample to be taken for each classification as follows: CB - Sound Goods - For Buyers CB - Sound Goods - For Sellers CB - Damaged/Out of Condition - For Buyers CB - Damaged/Out of Condition - For Sellers

MPC - Liquid and/or Chemical Damaged Goods - For Buyers MPC - Liquid and/or Chemical Damaged Goods - For Sellers The samples (held by the Sellers and held by the Buyers) shall be forwarded to GAFTA within 7 consecutive days of discharge from the vessel or on completion of classification and sealing, whichever happens later. The expenses incurred in sealing and forwarding of classified samples of damaged goods shall be paid half by Buyers and half by Sellers. Should Buyers incur additional lighterage or other expenses in the application of this Clause, Sellers shall refund to Buyers the whole of such proportion as may be recovered from the ship or underwriters. In the event of it being proved to the satisfaction of the arbitrators that one set of sealed samples, in part or whole, has been lost, damaged or destroyed prior to the expiration of the period for forwarding permitted under this clause, or that the said set having been forwarded in accordance with this cause has been lost, damaged or destroyed during transit, then either party shall be entitled to proceed to arbitration on the other complete set of sealed samples. 4:6 SOYBEAN MEAL SOLD ON GAFTA CONTRACT NO: 100. Unless the contract stipulates otherwise, samples of each parcel shall be drawn in accordance with these Rules, sealed in not less than a set of 6 samples as follows: A set consists of the following: MPC - 1st analysis and where moisture is guaranteed CB - For castorseed and/or castorseed husk, sand and/or silica analysis CB - 2nd analysis CB - 3rd analysis CB - 2nd castorseed and/or castorseed husk, sand and/or silica analysis CB - Arbitration purposes 4:6:1 First Analysis Test The sample(s) or the first analysis shall be drawn in moisture proof containers and the analysis result for moisture from this ample will be reported on the certificate of analysis and used as the calculating factor for a second and third analysis test. If required by Buyers, the sealed samples in a MPC shall, within 14 consecutive days of sealing be despatched to: AGER, Bologna, or to Arbitrage-en Verzoeningskamer voor Granen en Zaden van Antwerpen/Chambre Arbitrale et de Conciliation de Grains et Graines d'Anvers, or to Institut Europeen de I'Environnement de Bordeaux, (I.E.E. Bordeaux), or to LabCo, Rotterdam, or to Salamon & Seaber, London, or to Jordi Vidal, Tarragona, for analysis. In the event that this option is not decided at the time of the contract, the choice of analyst shall be that of the instructing party. Within 14 consecutive days of receipt of the certificate of analysis of this sample

Buyers shall send a true copy thereof to Sellers stating whether they accept this analysis or whether they require a second analysis. 4:6:2 Second Analysis Test Sellers have the right, within 14 consecutive days of receipt by them of the true copy of the certificate of analysis, to give notice to Buyers that they require a second analysis. If a second analysis is required another of the sealed samples shall be despatched without delay to Dr. Bernard Dyer for analysis. The mean of the two analyses shall be accepted as final if the variation does not exceed 0.5%. 4:6:3 Third Analysis Test If the variation stated in Rule 4:6:2 above does exceed 0.5% then at the request of either party, made within 14 consecutive days of receipt (by them) of the true copy of the certificate of the second analysis, and on notice being given to the other party a third sealed sample shall be despatched without delay to Dr. Aug Voelcker for analysis, and the mean of the two analyses nearest to each other shall be accepted as final and binding on both parties. 4:6:4 Arbitration Sample Any one of the sealed samples shall be retained for arbitration purposes if required. 4:6:5 Despatch of Samples and Instructions The party requiring any of the respective analyses shall be responsible for the despatch of the relative sample(s) and shall give directly, or through an agent or representative acting on their behalf, to the analyst concerned, instructions specifying what analyses are to be carried out, both to be done within the time limit stated hereinbefore, and shall send to the other party a true copy of the relative certificate of analysis within 14 consecutive days of receiving it from the analyst. Should the Buyers or any representatives acting on their behalf fail to both despatch samples and to instruct the analyst within 14 consecutive days of their sealing as above provided, or fail to forward the certificate in the said 14 days, then any claim for rejection or for an allowance in respect of any matters dealt with under the contract shall be deemed to be waived and absolutely barred. Should either party require further analysis but fail to make application therefore and to send samples within the time limit as above, then the analysis or the mean of the two analyses then existing shall be deemed to be final. 4:8 FOR SOYBEAN MEAL SOLD ON GAFTA CONTRACT NO: 119 One set of samples in containing bags (CB), shall be drawn, for analysis by Salamon & Seaber. 4:15 GENERAL 4:15:1 Methods of Analysis; to be as prescribed by the Grain and Feed Trade Association, being the GAFTA Regulations, Form No: 130, for the time being in force. Analysts shall state on the certificate of analysis what methods they have used.

4:15:2 Certificates; irrespective of which party to the contract submits samples and gives instructions to the analysts, the analysts are entitled to supply to the other party a copy of the certificate upon application. Each analysis certificate shall state on it the relevant information from the sample label. 4:15:3 Mixing; when the contractual quantity is represented by more than one sample, the analyst shall mix the samples together in proportion to the weight represented by each sample. 4:15:4 Costs; the cost(s) of the analysis(es) for each separate warranty shall be borne by Buyers in cases where no allowance is payable, but by Sellers if Buyers are entitled to an allowance. 4:15:5 Notices; in case of resales the notices clause in the contract shall apply, except that the certificates of analysis shall be passed by mail by the next business day following receipt. 5. CERTIFICATES PROVIDED AT LOADING Where the contract requires a superintendent to certify and report their findings, they shall draw sample increments in accordance with the provisions for drawing samples laid down in these Rules. Samples may be submitted where appropriate to an analyst, laboratory or authority for tests. 6. STANDING-IN PROVISIONS FOR SAMPLING FEEDINGSTUFFS AND CEREAL BY-PRODUCTS 6:1 GENERAL - FOR ALL PORTS EXCLUDING FRENCH AND BELGIAN PORTS 6:1:1 If the goods concerned in the contract are sold under a standing-in clause and form part of a larger quantity in a hold, Buyers are deemed to have agreed, for their proportion, to abide by the samples drawn and sealed from that hold, for the purposes of analysis and/or arbitration. Goods from each hold shall be sampled and samples analysed separately in accordance with these Rules. If the goods are discharged simultaneously from more than one hold, but not more than two holds, through one discharging unit only, the standing-in quantity shall be the total tonnage of those two holds for any receiver taking delivery from them. 6:1:2 Samples shall be drawn and sealed conjointly by the first CIF seller(s) and the CIF receiver(s) or their respective agents. 6:1:3 The CIF receiver(s) or their agents shall be responsible for forwarding samples and analytical instructions to both Salamon & Seaber and LabCo and obtaining from each of these analysts a certificate of analysis. When sending instructions to the analysts the instructing party shall advise the analysts of the following: the hold number, the bill of lading number, the delivery order number, the name of the vessel and the date of sealing, as well as the names of all receivers who have agreed to stand-in, together with their individual tonnages. Copies of the certificates of analysis showing the relevant details of his proportion shall be sent to any CIF receiver who has contractually requested an analysis. The mean of the two tests shall apply for the

purpose of allowances or arbitration and shall be accepted as final if the variation does not exceed 0.5%. Copies of the certificate of analyses shall be sent no later than 14 consecutive days from receipt of the last certificate by the Buyers to the Sellers. In case of resales the notices clause shall apply, except that the certificates of analysis shall be passed by mail by the next business day following receipt. If the variation stated, exceeds 0.5% then at the request of either party within 14 consecutive days of receipt by them of the last certificate of analysis the third test shall be carried out by Dr. Bernard Dyer and the mean of the two analysis test nearest to each other shall be accepted as final. The average of the 1st and 2nd moisture test results shall be used as the calculating factor for the 3rd test. 7. RETENTION OF SAMPLES 7:1 Whilst GAFTA will make every effort to protect all samples entrusted to its care, neither the Association nor any of its servants or agents shall be under any liability whatsoever to any party having any interest in any samples received by it in pursuance of these Rules for any loss or damage to any such sample. The samples when delivered to GAFTA shall become its absolute property. 7:1:1 All samples sent to the Association for arbitration, analysis, natural weight and/or other purposes shall become and be the absolute property of the Association. 7:1:2 The Association shall not be responsible for the safe custody of any samples lodged. The Association shall be at liberty to dispose of samples at the expiry of 6 months from the date of receipt. The Association, however, may retain samples for a longer period upon written request. 7:1:3 All standard samples made up by and in the possession of the Association shall be the property of the Association, and may from time to time be inspected by Members at the premixes of the Association on payment of the prescribed fee. 7:2 The parties' superintendents shall dispose of samples drawn by them at the expiry of 3 months from the date of sealing. They may however retain samples for a longer period upon written request by either party to the contract.

REFERENCES GAFTA. 1995. Rule No. 124. Rules for Sampling and Analysis Instructions for Grain, Feedingstuffs Raw Materials, Cereal By-Products, Pulses, Seeds and Rice. London, U.K.

3. SOYBEANS

OFFICIAL U.S. STANDARDS

Standards for soybeans were established under the U.S. Grain Standards Act and are listed in Official United States Standards for Grain (1996). Terms used are defined as follows: 810.1601 Definition of soybeans. Grain that consists of 50 percent or more of whole or broken soybeans [Glycine max (L.) Merr.] that will not pass through an 8/64 round-hole sieve and not more than 10.0 percent of other grains for which standards have been established under the United States Grain Standards Act. 810.1602 Definition of other terms. (a) Classes. There are two classes of soybeans: Yellow soybeans and Mixed soybeans. (l) Yellow soybeans. Soybeans that have yellow or green seed coats and which in cross section are yellow or have a yellow tinge and may include not more than 10.0 percent of soybeans of other colors. (2) Mixed soybeans. Soybeans that do not meet the requirements of the class Yellow soybeans. (b) Damaged kernels. Soybeans and pieces of soybeans that are badly ground-damaged, badly weather-damaged, diseased, frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, stinkbug-stung, or otherwise materially damaged. Stinkbug-stung kernels are considered damaged kernels at the rate of one-fourth of the actual percentage of the stung kernels. (c) Foreign material. All matter that passes through an 8/64 round-hole sieve and all matter other than soybeans remaining in the sieved sample after sieving according to procedures prescribed in FGIS instructions. (d) Heat-damaged kernels. Soybeans and pieces of soybeans that are materially discolored and damaged by heat. (e) Sieve. 8/64 round-hole sieve. A metal sieve 0.032 inch thick perforated with round holes 0.125 (8/64) inch in diameter. (f) Soybeans of other colors. Soybeans that have green, black, brown, or bicolored seed coats. Soybeans that have green seed coats will also be green in cross section. Bicolored soybeans will have seed coats of two colors, one of which is brown or black, and the brown or black color covers 50

percent of the seed coats. The hilum of a soybean is not considered a part of the seed coat for this determination. (g) Splits. Soybeans with more than one-fourth of the bean removed and that are not damaged. Principles governing the application of standards are listed below: 810.1603 Basis of determination. Each determination of class, heat-damaged kernels, damaged kernels, splits, and soybeans of other colors is made on the basis of the grain when free from foreign material. Other determinations not specifically provided for under the General Provisions are made on the basis of the grain as a whole.

810.1604 - Grades and Grade Requirements Grading Factors

Grades U.S. Nos.

1 2 3 4

Minimum limits of:

Test weight lbs/bu 56.0 54.0 52.0 49.0

Maximum percent limits of:

Damaged kernels Heat (part of total) Total Foreign material Splits Soybeans of other colors 1

0.2 2.0 1.0

10.0 1.0

0.5 3.0 2.0

20.0 2.0

1.0 5.0 3.0

30.0 5.0

3.0 8.0 5.0

40.0 10.0

Maximum count limits of:

Other materials Animal filth Castor beans Crotalaria seeds Glass Stones2

Unknown foreign substance Total3

9 1 2 0 3 3

10

9 1 2 0 3 3

10

9 1 2 0 3 3

10

9 1 2 0 3 3

10 U.S. Sample grade Soybeans that: (a) Do not meet the requirements for U.S. Nos. 1, 2, 3, or 4; or (b) Have a musty, sour, or commercially objectionable foreign odor (except garlic odor); or (c) Are heating or otherwise of distinctly low quality. 1 Disregard for Mixed soybeans. 2 In addition to the maximum count limit, stones must exceed 0.1 percent of the sample weight. 3 Includes any combination of animal filth, castor beans, crotalaria seeds, glass, stones, and unknown foreign substances. The weight of stones is not applicable for total other material.

810.1605 Special grades and special grade requirements. (a) Garlicky soybeans. Soybeans that contain five or more green garlic bulblets or an equivalent quantity of dry or partly dry bulblets in a 1,000-gram sample. (b) Purple mottled or stained. Soybeans with pink or purple seed coats as determined on a portion of approximately 400 grams with the use of an FGIS Interpretive Line Photograph.

GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION

The Grain Inspection, Packers and Stockyards Administration (GIPSA) was established on October 20, 1994, under the Department of Agriculture Reorganization Act of 1994. GIPSA's Federal Grain Inspection Service (FGIS) serves producers, handlers, processors, exporters, importers, and end-users of U.S. grain by providing consistent and professional grain inspection and weighing services. Every customer receives consistent, accurate service. This is facilitated by every official service provider operating under uniform, official U.S. grain standards and procedures. Only official agencies--Federal, State and private agencies authorized by FGIS--can provide an official grain inspection certificate. This certificate provides more than just information on the quality and quantity of the grain inspected. It assures... Consistency. All official agencies are strictly guided by the United States Grain Standards Act. This ensures consistency of test results and services, from elevator to elevator, and State to State. Official inspections of grains, oilseeds, and other agricultural and processed commodities are based on established standards, and on sound, proven, and standardized procedures, techniques, and equipment. Verifiable Accuracy. The accuracy of officially approved equipment is verified--and reverified--by FGIS technicians using finely calibrated master instruments and official reference methods. The work of official inspection personnel is reviewed and monitored by an extensive quality assurance program. And, every official private or State agency is backed by the resources and expertise of the FGIS Technical Center in Kansas City, MO. Information. Official tests provide a wealth of information about important sanitary, physical, food safety, and intrinsic quality characteristics. These tests provide the grain industry with reliable information on foreign material, insect infestation, moisture content, protein and oil content... to name a few. Responsiveness. Official U.S. grain standards are continuously reviewed and revised to meet the needs of a dynamic, competitive, and quality-conscious worldwide marketplace. New tests and procedures are continually being developed to offer the latest information needed by buyers, sellers, and end-users of U.S. grain. These services are available from all of the official agencies. Professionalism and Integrity. Official inspectors pass rigorous tests and undergo extensive and continuous training. Systemwide quality control requirements ensure that official personnel consistently provide high-quality, accurate services and information. Credibility. U.S. and international buyers rely on official inspection certificates to provide ac- curate, official descriptions of the grade, class, and condition of grain. Official grain inspection certificates are legal documents that are admissible in court. Appeals and Reviews. The official system provides for the reinspection and appeal inspection of original inspection results. This allows customers to resolve differences or discrepancies. The FGIS Board of Appeals and Review renders final appeal decision. The basic services fall into four broad categories: Sampling--The official system uses accurate and statistically sound methods to obtain representative samples of grain.

Weighing--A range of weighing services is available based on clients' needs. In addition, FGIS tests and calibrates scales used to weigh grain. Inspection--Official inspections result in the issuance of official certificates, which report the grade of the grain based on characteristics such as test weight, moisture, cleanliness, and damage. In addition to full official inspection services, FGIS also offers Official commercial inspection service which allows users to tailor official services to meet their needs. Stowage Exams--Official inspectors ensure that shipholds are clean, dry, and fit for loading. The above was reported by the Grain Inspection, Packers and Stockyards Administration (1997). FGIS (1997) reported that they inspected during 1996 1074 export lots of soybeans which represented 23.64 million metric tons of soybeans. Of the total number of soybean lots inspected, almost 93% or 996 lots were U.S. No. 2 soybeans which represented over 94% or 22.3 million metric tons of soybeans. Their inspection results of the U.S. Grade No. 2 soybeans inspected are found in the following table:

Summary of 1996 U.S. Soybean Grade No. 2 Export Quality

Factor Grade Limit

N of Lots Avg. Low High

Test weight (lb/bu) Test weight (kg/hl) Moisture (%) Heat damaged kernels (%) Damaged kernels (total) (%) Foreign material (%) Splits (%) Soybeans of other colors (%) Protein adjusted to 13 % moisture (%) Oil adj. to 13% moisture (%)

54.0 N/A N/A 0.5 3.0 2.0

20.0 2.0

N/A N/A

996 996 996 996 996 996 996 996 555 560

56.2 72.4 12.2 0.1 1.1 1.7 7.5 0.0

35.1 18.5

54.1 69.7 9.8 0.0 0.0 0.0 0.1 0.0

33.0 16.9

58.1 74.8 14.0 0.5 2.9 2.0

16.2 0.3

37.7 20.0

STANDARD CONTRACTS

There are a number of contracts that may be used to purchase soybeans. GAFTA has several CIF contracts. The one listed below is a CIF cargo contract (GAFTA, 1995a): Effective 1st October 1995

No: 27

Gafta

Copyright THE GRAIN AND FEED TRADE ASSOCIATION

CONTRACT FOR CANADIAN AND UNITED STATES OF AMERICA GRAINCARGOES

TALE QUALE - CIF TERMS Date..................... SELLERS........................................................................................................ INTERVENING AS BROKERS............................................................................ BUYERS......................................................................................................... have this day entered into a contract on the following terms and conditions. A cargo of....................................................................................................... 1. QUANTITY - including dockage..................................................5% more or less. Sellers shall have the option of shipping a further 5% more or less on contract quantity, excess or deficiency over the above 5%, shall be settled at the c.i.f. price on the date of the last bill of lading, and on the quantity thereof; the value to be fixed by arbitration, unless mutually agreed. 2. PRICE - At.................................................................................................. * per tonne of 1000 kilograms cost, insurance, freight to............................ * per ton of 1016 kilograms or 2240 lbs. .....................................................................................................................

Freight payable on discharge less advances for the ordinary ship's disbursements at Port of Loading or at Sellers' option prepaid in whole or in part. 3. BROKERAGE - .......................................................................................per tonne, to be paid by Sellers on the mean contract quantity, goods lost or not lost, contract fulfilled or not fulfilled unless such non-fulfilment is due to the successful application of the Prohibition Clause. Brokerage shall be due on the day shipping documents are exchanged or, if the goods are not appropriated then the brokerage shall be due on the 30th consecutive day after the last day for appropriation. 4. QUALITY - * Official..............................................................................................certificate of inspection at time of loading into the ocean carrying vessel shall be final as to quality. On sales of Canadian produce Sellers shall have the option of delivering the Official Canadian Inspection Certificate issued in the United States. Buyers shall not be entitled to reject a tender of a higher grade of grain of the same colour and description. * At time and place of shipment about as per sealed sample marked.................................. in the possession of..................................................................the word "about" shall mean the equivalent of 0.50% on contract price. Difference in quality shall not entitle Buyers to reject, except under the award of Arbitrator(s) or Board of Appeal, as the case may be, referred to in accordance with the Arbitration Rules No. 125. Shipment to be made in good condition but should the grain arrive out of condition, due allowance shall be made for the time of the year in which the shipment took place; the fact of the grain so arriving shall not necessarily be sufficient proof of an improper shipment. 5. PERIOD OF SHIPMENT - As per bill(s) of lading dated or to be dated....................... The bill(s) of lading to be dated when the goods are actually on board. Date of the bill(s) of lading shall be accepted as proof of date of shipment in the absence of evidence to the contrary. In any month containing an odd number of days, the middle day shall be accepted as being in both halves of the month. 6. SALES BY NAMED VESSELS - For all sales by named vessel(s), the following shall apply: (a) Position of vessel is mutually agreed between Buyers and Sellers; (b) The word "now" to be inserted before the word "classed" in the Shipment and Classification Clause; (c) Appropriation Clause cancelled if sold "shipped".

7. SHIPMENT AND CLASSIFICATION - Shipment to be made in good condition, direct or indirect, by first class steamer(s) and/or power engined ship(s) classed not lower than 100 A1 in Lloyd's Register or British Corporation B.S. or top classification of other equal Registers, or ships not inferior to these classifications. In the event of goods shipped in Tankers or in the oil compartments of vessel(s) which are either classified in Lloyd's Register or described in Lloyd's Shipping Index as "Ore/Oil" Vessels arriving at destination damaged by seawater or otherwise Buyers shall take delivery with an allowance for deterioration (except for country damaged grain) calculated on a percentage based on contract prices to be fixed by arbitration in London, according to the Arbitration Rules specified in the Arbitration Clause hereinafter appearing. Slight dry warmth not to be objected to. Samples to be taken and sealed at port of discharge jointly by the Agents of the Shipper, and of the Holders of the bill of lading or delivery order. In the event of Buyers receiving an allowance from Sellers under this clause, Sellers and Buyers shall give all reasonable assistance to each other in the prosecution of claim for recovery from Shipowners and/or other parties, any such recovery in respect of such allowance made by Sellers to Buyers under this clause to be for the benefit of Sellers. 8. EXTENSION OF SHIPMENT - The period herein specified within which bills of lading must be dated shall be deemed to include an additional period of not more than 8 days, when so desired by the Shipper, provided he gives Buyers notice of his intention to claim additional days, sent not later than the business day following the last day included in the originally stipulated period of shipment. Such notice need not state the number of additional days claimed by Sellers and Sellers may ship at any time within the 8 additional days. Sellers however, shall make an allowance to Buyers, to be deducted in the invoice from the contract price, based on the number of days by which the originally stipulated period is exceeded, as follows: for 1, 2, 3 or 4 additional days, 0.50% of the gross c.i.f. price; for 5 or 6 additional days, 1% of the gross c.i.f. price; for 7 or 8 additional days, 1.50% of the gross c.i.f. price. If, however, after having given notice to the Buyers as above, the Sellers fail to make shipment within such 8 days, then the contract shall be deemed to have called for shipment during the originally stipulated period plus 8 days, at contract price less 1.50%, and any settlement for default shall be calculated on that basis. If any allowance becomes due under this clause, the contract price shall be deemed to be the original contract price less the allowance and any other contractual differences shall be settled on the basis of such reduced price. 9. APPROPRIATION -

(a) Notice of Appropriation stating the vessel's name, port of shipment, date of the bill(s) of lading and the approximate quantity loaded shall, within 8 consecutive days from the date of the bill of lading be despatched in accordance with sub-clause (e) by or on behalf of the Shipper direct to the first Buyers or to the Representative or Selling Agent or Brokers named in the contract. The Non-Business Days Clause shall not apply. Should the Shipper's Notice of Appropriation be delayed beyond the said 8 days through any cause beyond his control, the Shipper's Representative or Agent or Brokers, shall pass on the notice to Buyers in due course after receipt by in no case later than 24 hours after receiving the shipping documents.

(b) Notice of Appropriation shall, within the period stated in sub-clause (a) above be despatched in

accordance with sub-clause (e) by or on behalf of subsequent Sellers to their Buyers or to the

Representative or Selling Agent or Brokers named in the contract, but if Notice of Appropriation is received by subsequent Sellers on the last day or after the period stated in sub-clause (a) from the date of the last bill of lading, their Notice of Appropriation shall be deemed to be in time if despatched:

(1) On the same calendar day, if received not later than 1600 hours on any business day, or (2) Not later than 1600 hours on the next business day, if received after 1600 hours or on a non-

business day. (c) Buyers, on receiving a Notice of Appropriation shall, on demand, give a written receipt there- fore, and if required, Sellers shall give to Buyers a copy of the particulars contained in the notice received by them and the time and date of its receipt.

(d) The Shipper's Notice of Appropriation and every subsequent Sellers' Notice of Appropriation shall state the date or the presumed date of the last bill of lading and port of shipment which shall be for information only and shall not be binding, but in fixing the period laid down by this clause for despatching Notices of Appropriation the actual date of the bill of lading shall prevail. (e) Notices of Appropriation shall be despatched by telegram, telex or other method of rapid written communication, or by letter if delivered by hand on day of writing. Every such Notice of Appropriation shall be open to correction of any errors occurring in transmission, provided that the sender is not responsible for such errors, and for any previous error in transmission which has been repeated in good faith. Should the vessel arrive before receipt of the appropriation and any extra expenses be incurred thereby, such expenses are to be borne by Sellers. (f) When a valid Notice of Appropriation has been received by Buyers, it shall not be withdrawn except with their consent. (g) A Notice of Appropriation despatched to the Representatives, or Selling Agent, or Brokers named in the contract shall be considered an appropriation despatched to the Buyers. (h) An appropriation shall not be deemed invalid if the date of the last bill of lading is within the contract period and if on that date the vessel named is at the port of loading and carrying goods of the contractual description and quantity.

10. PAYMENT - Payment, cash in......................................................................... in exchange for shipping documents....................................................................... ..................................................................................................................... If shipping documents have not been sighted at time of vessel's arrival at port of discharge, Sellers shall provide other documents (such documents to be countersigned if required by Buyers by a recognised bank) entitling Buyers to obtain delivery of the goods, and, without prejudice to Buyers' rights under the contract, payment must be made in exchange for same, provided that if such payment be made, proved additional expenses, if any, incurred by reason of such non-sighting of shipping documents shall be borne by Sellers and allowed for in final invoice. When payment is due on a non-business day, Buyers shall have the option of taking up the shipping documents on the previous business day - payment to be made not later than 12 noon. Should shipping documents be presented with an incomplete set of bill(s) of lading or should other shipping documents be missing, payment shall be made provided that delivery of such missing documents be guaranteed, such guarantee to be countersigned, if required by Buyers, by

a recognised bank. No obvious clerical error in the documents shall entitle the Buyers to reject them or delay payment, but Sellers shall be responsible for all loss or expense caused to Buyers by reason of such error and Sellers shall on request of Buyers furnish an approved guarantee in respect thereto. Costs of collection shall be for account of Sellers, but if Buyers demand presentation only through a bank of their choice, in that event any additional collection costs shall be for the account of the Buyers. Dockage to be allowed for at contract price. Final invoices for monies due may be prepared by either party and shall be settled without delay. If not settled, either party may declare that a dispute has arisen which may be referred to arbitration as herein provided. 11. INTEREST - If there has been unreasonable delay in any payment interest appropriate to the currency involved shall be charged. If such charge is not mutually agreed, a dispute shall be deemed to exist which shall be settled by arbitration. The terms of this clause do not override the parties obligation under the Payment Clause. Otherwise interest shall be payable only where specifically provided in the terms of the contractor by an award of arbitration. The terms of this clause do not override the parties obligation under the Payment Clause. 12. SHIPPING DOCUMENTS - Shipping documents shall consist of: 1. Invoice. 2. Full set(s) of on board Bill(s) of Lading and/or Ship's Delivery Order(s) and/or other Delivery Order(s) in negotiable and transferable form. Such other Delivery Order(s) if required by Buyers, to be certified by the Shipowners, their Agents or a recognised bank. Freight pre-paid Bills of Lading shall be accepted. 3. Policy(ies) and/or Insurance Certificate(s) and/or Letter(s) of Insurance in the currency of the contract. If required by Buyers, Letter(s) of Insurance to be certified by a recognised bank, alternatively by any other guarantor who is acceptable to Buyers. 4. Any other documents as called for under the contract. Buyers agree to accept documents containing the Chamber of Shipping War Deviation Clauses and/or other recognised official War Risk Clause. 13. DUTIES, TAXES, LEVIES, ETC. - All export duties, taxes, levies, etc., present or future, in country of origin, shall be for Seller's account. All import duties, taxes, levies, etc, present or future, in country of destination, shall be for Buyers account, unless otherwise provided. 14. CERTIFICATES OF ORIGIN...................................................................... .................................................................................................................. 15. DISCHARGE - Ship to discharge.................................................................... .................................................................................................................. Ship to discharge afloat. Discharge by grab(s) shall be permitted unless specifically excluded at time of contract. 16. WEIGHING - The whole shipment shall be weighed at time of discharge. Sellers and Buyers shall have the right of supervision both as to weighing and delivery.

Any deficiency on the bill of lading weight shall be paid for by Sellers, and any excess over bill of lading weight shall be paid for by Buyers, at contract price. No payment shall be made for increase in weight occasioned by water and/or oil during the voyage. In case of sea accident causing a deficiency on invoice weight, Provisional Invoice quantity shall be final, except when such deficiency cannot be accounted for by the nature of the accident, and is not recoverable from underwriters. If discharge is carried out by grab, the method of determining the weight shall be mutually agreed between Buyers and Sellers and/or their respective Agents. 17. SAMPLING - If applicable, samples shall be taken at time of discharge in accordance with the GAFTA Sampling Rules Form No. 124 and shall be the only samples used for the purposes of arbitration, determining admixture or natural weight. Where certificates which are final as to quality at loading apply, sampling shall be carried out in accordance with the Form No. 124, unless the government or recognised official authority contractually agreed at loading, decides otherwise. When superintendents are required for the purpose of supervision and sampling of the goods in accordance with these Rules, then the parties agree to appoint from superintendents in the GAFTA Approved Register of Superintendents. 18. LATENT DEFECT - The goods are not warranted free from defect, rendering same unmerchantable, which would not be apparent on reasonable examination, any statute or rule of law to the contrary notwithstanding. 19. INSURANCE - Sellers shall provide insurance on terms not less favourable than those set out hereunder, and as set out in detail in The Grain and Feed Trade Association Form 72 viz: (a) Risks Covered: Cargo Clauses (FPA) - Section 3 of Form 72 War Clauses (Cargo) - Section 4 of Form 72 Strikes, Riots and Civil Commotions Clauses (Cargo) - Section 5 of Form 72 Australian, Canadian, South African and United States of America Acts - Section 6 of Form 72 (b) Insurers - The insurance to be effected with first class underwriters and/or companies who are domiciled or carrying on business in the United Kingdom or who, for the purpose of any legal proceedings, accept a British domicile and provide an address for service of process in London, but for whose solvency Sellers shall not be responsible. (c) Insurable Value - Insured amount to be for not less than 2% over the invoice amount, including freight when freight is payable on shipment or due in any event, ship and/or cargo lost or not lost, and including the amount of any War Risk premium payable by Buyers. (d) Freight Contingency - When freight is payable on arrival or on right and true delivery of the goods and the insurance does not include the freight, Sellers shall effect insurance upon similar terms, such insurance to attach only as such freight becomes payable, for the amount of the freight plus 2%, until the termination of the risk as provided in the above mentioned clauses, and shall undertake that their policies are so worded that in the case of a particular or general average claim the Buyers shall be put in the same position as if the C.I.F. value plus 2% were insured from the time of shipment.

(e) Certificates/Policies - Sellers shall give all policies and/or certificates and/or letters of insurance provided for in this contract, (duly stamped if applicable) for original and increased value (if any) for the value stipulated in (c) above. In the event of a certificate of insurance being supplied, it is agreed that such certificate shall be exchanged by Sellers for a policy if and when required, and such certificate shall state on its face that it is so exchangeable. If required by Buyers, letter(s) of insurance shall be guaranteed by a recognised Bank, or by any other guarantor who is acceptable to Buyers. (f) Total loss - In the event of total or constructive total loss, or where the amount of the insurance becomes payable in full, the insured amount in excess of 2% over the invoice amount shall be for Sellers' account and the party in possession of the policy(ies) shall collect the amount of insurance and shall thereupon settle with the other party on that basis. (g) Currency of Claims - Claims to be paid in the currency of the contract. (h) War and Strike Risks/Premiums - Any premium in excess of 0.50% to be for account of Buyers. The rate of such insurance not to exceed the rate ruling in London at time of shipment or date of vessel's sailing whichever may be adopted by underwriters. Such excess premium shall be claimed from Buyers, wherever possible, with the Provisional Invoice, but in no case later than the date of vessel's arrival, or not later than 7 consecutive days after the rate has been agreed with underwriters, whichever may be the later, otherwise such claim shall be void unless, in the opinion of Arbitrators, the delay is justifiable. Sellers' obligation to provide War Risk Insurance shall be limited to the terms and conditions in force and generally obtainable in London at time of shipment. (i) Where Sellers are responsible for allowances or other payments to Buyers under Rye Terms or other contractual terms, (and which risks are also covered by the insurance provided by Sellers), the Buyers, on receipt of settlement, shall immediately return to Sellers the insurance documents originally received from them and shall, if required, subrogate to Sellers all right of claim against the Insurers in respect of such matters. 20. PROHIBITION - In case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin or of the territory where the port or ports of shipment named herein is/are situate, restricting export, whether partially or otherwise, any such restriction shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfilment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled. Sellers shall advise Buyers without delay with the reasons therefore and, if required, Sellers must produce proof to justify the cancellation. 21. STRIKES - 1. Should shipment of the goods or any part thereof be prevented at any time during the last 28 days of guaranteed time of shipment or at any time during guaranteed contract period if such be less than 28 days, by reason of riots, strikes or lock-outs at port(s) of loading or elsewhere preventing the forwarding of the goods to such port(s) or by reason of riots, strikes or lock-outs on the Great Lakes or the St. Lawrence River preventing the proceeding of the vessel(s) to the Great Lakes or St. Lawrence port(s) of loading, then the Shipper shall be entitled at the resumption of work after termination of such riots, strikes or lock-outs to as much time, not exceeding 28 days, for shipment from such port or ports as was left for shipment under the contract prior to the outbreak of the riots, strikes or lock-outs, and in the event of the time of the time left for shipment under the contract being 14 days or less, minimum

extension of 14 days shall be allowed. In the event of further riots, strikes or lock-outs occurring during the time by which the guaranteed time of shipment has been extended by reason of the operation of the provisions of the foregoing paragraph, the additional extension shall be limited to the actual duration of such further riots, strikes or lock-outs. in case of non-shipment under the above conditions the date of default shall be similarly deferred. 2. The Shipper shall give notice by cable or telex not later than 2 business days after the last day of guaranteed time for shipment if he intends to claim an extension of time for shipment under paragraph 1. Such notice shall state the port(s) from which shipment was intended to be made and if such extension is claimed, the shipment, after expiry of contract period, shall only be made from such port(s). All such notices shall be passed on in due course. 3. If the Shipper gives the notice referred to above, he shall forthwith apply to The North American Export Grain Association and request them to cable or telex to The Grain and Feed Trade Association confirming the existence of such riots, strikes or lock-outs and in due course to cable or telex the dates of commencement and resumption of work after termination thereof. The Shipper further agrees to comply with all requirements of The North American Export Grain Association to ensure such information is sent. 4. As soon as is practicable, a certificate of The North American Export Grain Association confirming the information as per paragraph 3 above and certifying the effective duration of the riots, strikes or lock-outs causing the delay and/or prevention of shipment shall be despatched to The Grain and Feed Trade Association. This certificate or, failing its receipt by The Grain and Feed Trade Association at time of negotiation of documents, the above mentioned communications shall be deemed to be final evidence of such riots, strikes or lock-outs on all contracts where the Shipper has claimed extension as per paragraph 2 above. 22. NOTICES - Any notices received after 1600 hours on a business day shall be deemed to have been received on the business day following. A notice to the Brokers or Agent shall be deemed a notice under this contract. All notices given under this contract shall be given by letter, if delivered by hand on the day of writing, or by telegram or by telex or by other method of rapid written communication. In case of resales all notices shall be passed on without delay by Buyers to their respective Sellers or vice versa. 23. FACSIMILE - Notwithstanding anything in this contract to the contrary, notices despatched under this contract shall NOT be transmitted by means of facsimile machines. 24. NON-BUSINESS DAYS - Saturdays, Sundays and the officially recognised and/or legal holidays of the respective countries and any days which The Grain and Feed Trade Association may declare as non-business days for specific purposes, shall be non-business days. Should the time limit for doing any act or giving any notice expire on a non-business day, the time so limited shall be extended until the first business day thereafter. The period of shipment shall not be affected by this clause. 25. DEFAULT - In default of fulfilment of contract by either party, the following provisions shall apply:

(a) The party other than the defaulter shall, at their discretion have the right, after giving notice by letter, telegram or telex to the defaulter to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price. (b) If either party be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration. (c) The damages payable shall be based on the difference between the contract price and either the default price established under (a) above or upon the actual or estimated value of the goods, on the date of default, established under (b) above. (d) In no case shall damages include loss of profit on any sub-contracts made by the party defaulted against or others unless the Arbitrator(s) or Board of Appeal, having regard to special circumstances, shall in his/their sole and absolute discretion think fit. (e) Damages, if any, shall be computed on the quantity appropriated if any but, if no such quantity has been appropriated then on the mean contract quantity, and any option available to either party shall be deemed to have been exercised accordingly in favour of the mean contract quantity. (f) Default may be declared by Sellers at any time after expiry of the contract period, and the default date shall then be the first business day after the date of Sellers' advice to their Buyers. If default has not already been declared then (notwithstanding the provisions stated in the Appropriation Clause)if notice of appropriation is not passed by the 10th consecutive day after the last day for appropriation laid down in the contract, where the Appropriation Clause provides for 7 or more days for despatch of the appropriation, or if notice of appropriation is not passed by the 4th business day after the last day for appropriation laid down in the contract where the Appropriation Clause provides for less than 7 days for despatch of the appropriation, the Sellers shall be deemed to be in default, and the default date shall then be the first business day thereafter. 26. CIRCLE - Where Sellers re-purchase from their Buyers or from any subsequent Buyer the same goods or part thereof, a circle shall be considered to exist as regards the particular goods so re-purchased, and the provisions of the Default Clause shall not apply. (For the purpose of this clause the same goods shall mean goods of the same description, from the same country of origin, of the same quality, and, where applicable, of the same analysis warranty, for shipment to the same port(s) of destination during the same period of shipment). Different currencies shall not invalidate the circle. Subject to the terms of the Prohibition Clause in the contract, if the goods are not appropriated, or, having been appropriated documents are not presented, invoices based on the mean contract quantity shall be settled by all Buyers and their Sellers in the circle by payment by all Buyers to their Sellers of the excess of the Sellers' invoice amount over the lowest invoice amount in the circle. Payment shall be due not later than 15 consecutive days after the last day for appropriation, or, should the circle not be ascertained before the expiry of this time, then payment shall be due not later than 15 consecutive days after the circle is ascertained. Where the circle includes contract(s) expressed in different currencies the lowest invoice amount shall be replaced by the market price on the first day for contractual shipment and invoices shall be settled between each Buyer and his Seller in the circle by payment of the differences between the market price and the relative contract price in currency of the contract. All Sellers and Buyers shall give every assistance to ascertain the circle and when a circle shall have been ascertained in accordance with this clause same shall be binding on all parties to the circle.

As between Buyers and Sellers in the circle, the non-presentation of documents by Sellers to their Buyers shall not be considered a breach of contract. Should any party in the circle prior to the due date of payment commit any act comprehended in the Insolvency Clause of this contract, settlement by all parties in the circle shall be calculated at the closing out price as provided for in the Insolvency Clause, which shall be taken as a basis for settlement, instead of the lowest invoice amount in the circle. In this event respective Buyers shall make payment to their Sellers or respective Sellers shall make payment to their Buyers of the difference between the closing out price and the contract price. 27. INSOLVENCY - If before the fulfilment of this contract, either party shall suspend payments, notify any of the creditors that he is unable to meet debts or that he has suspended or that he is about to suspend payments of his debts, convene, call or hold a meeting of creditors, propose a voluntary arrangement, have an administration order made, have a winding up order made, have a receiver or manger appointed, convene, call or hold a meeting to go into liquidation (other than for re-construction or amalgamation) become subject to an Interim Order under Section 252 of the Insolvency Act 1986, or have a Bankruptcy Petition presented against him (any of which acts being hereinafter called an "Act of Insolvency") then the party committing such Act of Insolvency shall forthwith transmit by telex or telegram or by other method of rapid written communication a notice of the occurrence of such Act of Insolvency to the other party to the contract and upon proof (by either the other party to the contract or the Receiver, Administrator, Liquidator or other person representing the party committing the Act of insolvency) that such notice was thus given within 2 business days of the occurrence of the Act of Insolvency, the contract shall be closed out at the market price ruling on the business day following the giving of the notice. If such notice be not given as aforesaid, then the other party, on learning of the occurrence of the Act of Insolvency, shall have the option of declaring the contract closed out at either the market price on the first business day after the date when such party first learnt of the occurrence of the Act of Insolvency or at the market price ruling on the first business day after the date when the Act of Insolvency occurred. In all cases the other party to the contract shall have the option of ascertaining the settlement price on the closing out of the contract by re-purchase or re-sale, and the difference between the contract price and the re-purchase or re-sale price shall be the amount payable or receivable under this contract. 28. DOMICILE - Buyers and Sellers agree that, for the purpose of proceedings either legal or by arbitration, this contract shall be deemed to have been made in England, and to be performed there, any correspondence in reference to the offer, the acceptance, the place of payment, or otherwise, notwithstanding, and the Courts of England or arbitrators appointed in England, as the case may be, shall, except for the purpose of enforcing any award made in pursuance of the Arbitration Clause hereof, have exclusive jurisdiction over all disputes which may arise under this contract. Such disputes shall be settled according to the law of England, whatever the domicile, residence or place of business of the parties to this contract may be or become. Any party to this contract residing or carrying on business elsewhere than in England or Wales, shall for the purpose of proceedings at law or in arbitration be considered as ordinarily resident or carrying on business at the offices of The Grain and Feed Trade Association, and if in Scotland, he shall be held to have prorogated jurisdiction against

himself to the English Courts; or if in Northern Ireland to have submitted to the jurisdiction and to be found by the decision of the English Courts. The service of proceedings upon any such party by leaving the same at the office of The Grain and Feed Trade Association, together with the posting of a copy of such proceedings to his address abroad, or in Scotland or in Northern Ireland, shall be deemed good service, any rule of law or equity to the contrary notwithstanding. Where goods forming the subject of this contract are not for consumption in Great Britain or Northern Ireland nothing in the foregoing shall make the sale subject to the provisions of the Agriculture Act for the time being in force. 29. ARBITRATION - (a) Any dispute arising out of or under this contract shall be settled by arbitration in accordance with the Arbitration Rules, No. 125, of The Grain and Feed Trade Association, in the edition current at the date of this contract, such Rules forming part of this contact and of which both parties hereto shall be deemed to be cognisant. (b) Neither party hereto, nor any persons claiming under either of them shall bring any action or other legal proceedings against the other of them in respect of any such dispute until such dispute shall first have been heard and determined by the Arbitrator(s) or a Board of Appeal, as the case may be, in accordance with the Arbitration Rules and it is expressly agreed and declared that the obtaining of an award from the Arbitrator(s) or a Board of Appeal, as the case may be, shall be a condition precedent to the right of either party hereto or of any persons claiming under either of them to bring any action or other legal proceedings against the other of them in respect of any such dispute.

30. INTERNATIONAL CONVENTIONS - The following shall not apply to this contract: (a) the Uniform Law on Sales and the Uniform Law on Formation to which effect is given by the Uniform Laws on International Sales Act 1967; (b) the United Nations Convention on Contracts for the International Sale of Goods of 1980; and (c) the United Nations Convention on Prescription (Limitation) in the International Sale of Goods of 1974 and the amending Protocol of 1980. *delete/specify as applicable Sellers.............................................................Buyers........................................

Printed in England and issued by

GAFTA (THE GRAIN AND FEED TRADE ASSOCIATION)

GAFTA HOUSE, 6 CHAPEL COURT, CHAPEL PLACE, RIVINGTON ST, LONDON EC2A 3DQ

GAFTA (1995b) also has a similar contract (No: 30) for parcel quantities. A high percentage of the features are similar to the above contract (No: 27) so it will not be repeated. Arbitration Rules (Form No. 125) are mentioned in both of the above contracts (Gafta, 1997a). The Rules are printed below: Effective 31st January 1997

Gafta

ARBITRATION RULES FORM NO. 125

Copyright

THE GRAIN AND FEED TRADE ASSOCIATION Any dispute arising out of a contract which incorporates these Rules shall be referred to arbitration in accordance with the following provisions: 1. PRELIMINARY 1:1 The provisions of the Arbitration Act 1996, and of any statutory amendment, modification or reenactment thereof for the time being in force, shall apply to every arbitration and/or appeal under these Rules save insofar as such provisions are expressly modified by, or are inconsistent with, these Rules. 1:2 The juridical set of the arbitration shall be, and is hereby designated pursuant to section 4 of the Arbitration Act 1996 as, England. 1:3 Arbitration shall take place at the registered offices of The Grain and Feed Trade Association (GAFTA), London, or (but without prejudice to Rules 1:1 and 1:2 above), elsewhere if agreed by the parties in writing. 2. PROCEDURE AND TIME LIMITS FOR CLAIMING ARBITRATION The claimant shall serve on the respondent a notice stating his intention to refer a dispute to arbitration within the following time limits.

2:1 Disputes as to Quality and/or Condition (a) In respect of disputes arising out of the "Rye Terms" clause not later than the 10th consecutive day after the date of completion of final discharge. (See Rule 6). (b) In respect of claims arising out of certificates of analysis in respect of which allowances are not fixed by the terms of the contract, not later than the 21st consecutive day after the date on which the claimant receives the final certificate of analysis. (c) In respect of all other quality and/or condition disputes, not later than the 21st consecutive day after the date of completion of final discharge, or delivery, or the unstuffing of the container(s), as the case may be. 2:2 Monies Due In respect of disputes relating to monies due not later than the 90th consecutive day after the dispute has arisen. 2:3 Other Disputes In respect of all other disputes relating to the sale of goods. (a) arising out of CIF, CIFFO, C & F and similar shipment contract terms, not later than the 90th consecutive day after (i) the expiry of the contract period of shipment, including extension if any, or (ii) the date of completion of final discharge of the ship at port of destination, whichever period shall last expire, (b) arising out of FOB terms, not later than the 90th consecutive day after (i) the date of the last bill of lading or (ii) the expiry of the contract period of delivery, including extension if any, whichever period shall first expire, (c) on any other terms, not later than the 90th consecutive day after the last day of the contractual delivery, collection or arrival period, as the case may be. 2:4 No award by the tribunal shall be questioned or set aside on appeal or otherwise on the ground that the claim was not made within the time limits stipulated in this Rule if the respondent to the claim did not raise the matter in their submissions so as to enable the tribunal to consider whether or not to exercise the discretion vested in it by Rule 22.

3. APPOINTMENT OF THE TRIBUNAL The dispute shall be heard and determined by a tribunal of three arbitrators (appointed in accordance with Rule 3:2) or, if both parties agree, by a sole arbitrator (appointed in accordance with clause 3:1). The time limits imposed by this Rule for the appointment of the tribunal shall run from the date of service pursuant to Rule 2 of a notice referring a dispute to arbitration. This Rule is without prejudice to Rule 6, which governs the appointment of the tribunal in relation to disputes arising out of the Rye Terms clause, and Rule 5.3, which governs the appointment of a tribunal for examination of samples. 3:1 Procedure for the Appointment of a Sole Arbitrator (a) If he requires the appointment of a sole arbitrator the claimant shall, not later than the 9th consecutive day after service of the notice referring a claim to arbitration, serve a notice on the respondent seeking his agreement to the appointment of a sole arbitrator by the Association. (b) Not later than the 9th consecutive day after service of the notice referred to in (a) above, the respondent shall either; (i) serve a notice on the claimant stating that he agrees to the appointment of a sole arbitrator by the Association, or (ii) appoint an arbitrator to a tribunal of three arbitrators and serve on the claimant a notice of the arbitrator so appointed, in which case Rule 3:2(c) shall apply. (c) Where the parties have agreed to the appointment of a sole arbitrator the Association shall appoint an arbitrator on receipt of the first statements and evidence submitted in accordance with Rule 4, or, where interlocutory or interim decisions are required of the tribunal, upon the application of either party. 3:2 Procedure for the Appointment of a Tribunal of Three Arbitrators (a) The claimant shall not later than the 9th consecutive day after service of the notice referring a claim to arbitration appoint an arbitrator and serve a notice on the respondent of the name of the arbitrator so appointed. (b) The respondent shall, not later than the 9th consecutive day after service of the notice referred to at (a) above, appoint a second arbitrator and serve a notice on the claimant of the name of the arbitrator so appointed. (c) If the respondent does not agree to the appointment of a sole arbitrator and has instead appointed an arbitrator and given written notice thereof pursuant to Rule 3:1(b), the claimant shall not later than the 9th consecutive day after service of such notice of appointment, appoint a second arbitrator and serve a notice on the respondent of the name of the arbitrator so appointed. (d) Where two arbitrators have been appointed, the Association shall appoint a third arbitrator on receipt of the first statements and evidence submitted in accordance with Rule 4, or, where interlocutory

or interim decisions are required of a tribunal, upon the application of either party. The third arbitrator shall be the chairman of the tribunal so formed and his name shall be notified to the parties by the Association. 3:3 Appointments of Arbitrators by the Association If either party fails to appoint an arbitrator or to give notice thereof within the above time limits, the other party may apply to the Association for the appointment of an arbitrator. Notice of such application must be served on the party who has failed to appoint. Upon such application being made, the Association will appoint an arbitrator on behalf of the party who has failed to do so, and give notice of the name of the arbitrator appointed to the parties. Where the claimant has already sought the respondent's agreement to the appointment of a sole arbitrator pursuant to Rule 3:1 then the Association will appoint a sole arbitrator. Where either party has already appointed an arbitrator, pursuant to Rule 3:1(b) or Rule 3:2, then the Association will appoint the second arbitrator of the tribunal. 3:4 Applications to the Association for the appointment of an arbitrator shall be accompanied by, (a) prima facie evidence that the parties have entered into a contract subject to these Rules, (b) copies of the notices (i) claiming arbitration and (ii) stating that an application has been made to the Association for the appointment of an arbitrator, (c) the appropriate fee ruling at the date of application. 3:5 An arbitrator appointed under these Rules shall be a Qualified Arbitrator Member of the Association and shall not be interested in the transaction nor directly interested as a member of a company or firm named as a party to the arbitration, nor financially retained by any such company or firm, nor a member of nor financially retained by any company or firm financially associated with any party to the arbitration. 3:6 An appointment of an arbitrator shall be valid and effective for all purposes provided that he has signified his acceptance of the appointment to the party appointing him, or to the Association, as the case may be, at any time prior to the discharge of any arbitral function. 3:7 (a) If an arbitrator dies, refuses to act, resigns, or becomes incapable of acting, or if he fails to proceed with the arbitration, or is found to be ineligible, or his authority is revoked by the Association pursuant to the Associations's Rules and Regulations, the party, or the Association as the case maybe, who originally appointed that arbitrator shall forthwith appoint a substitute and serve notice thereof on the other party.

(b) If a party fails, contrary to (a) above, to appoint a substitute arbitrator and to give notice thereof within 5 consecutive days of learning of the arbitrator's death, refusal to act, resignation, incapacity, failure to proceed, finding of ineligibility or revocation of authority, as the case may be, the Association shall, upon the application of either party, have the power to appoint a substitute arbitrator. 3:8 Any party making an application to the Association for the appointment of an arbitrator may be required by the Association to pay a deposit of such sum as the Association may require on account of any fees and expenses thereafter arising. In addition the tribunal may call upon either party to deposit with the Association such sum or sums as it considers appropriate on account of fees, costs and expenses prior to the commencement of the arbitration hearing. 4. ARBITRATION PROCEDURE 4:1 The claimant shall draw up a clear and concise statement of his case which, together with a copy of the contract and any supporting documents, shall be served as set out in Rule 4.4. 4:2 The respondent shall, on receipt of the claimant's case and documents, draw up a clear and concise statement of his defence (and counterclaim, if any) which, together with an supporting documents, shall be served as set out in Rule 4.4. 4:3 The claimant may submit further written comments and/or documents in reply, such to be served as set out in Rule 4.4. 4:4 All statements and evidence shall be served by sending them to the other party, with copies to the Association. In the case of a sole arbitrator 2 sets, or in the case of a tribunal of three arbitrators, 4 sets of statements and evidence, shall be delivered to the Association. Failure to send all sets to the Association will render the party responsible liable to the Association for the costs of copying such documents for forwarding to the arbitrators. 4:5 The tribunal may vary or depart from the above procedure in order to give each party a reasonable opportunity of putting his case and dealing with that of his opponent, and shall adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined. 4:6 The timetable for the proceedings, including any steps to be taken pursuant to Rule 4 and/or determined by the tribunal, will be advised to the parties by the Association. It shall be the duty of the tribunal to ensure the prompt progress of the arbitration, including the making of orders where appropriate. Any delay in the proceedings may be notified to the Association. 4:7 Nothing in this Rule shall prevent the respondent from delivering his statement and documentary evidence before receiving documents/statements from the claimant.

4:8 Where the tribunal considers that an oral hearing is necessary, the date, time and place will be arranged by the Association. 4:9 Lapse of Claim If neither party submits any documentary evidence or submissions as set out in this Rule or as ordered by the tribunal, within 1 year from the date of the notice claiming arbitration, then subject only to Rule 22, the claimant's claim shall be deemed to have lapsed on the expiry of the said period of 1 year unless before that date the claim is renewed: (a) by a notice served by either party on the other, such notice to be served during the 30 consecutive days prior to the expiry date, or (b) by the service of documentary evidence or submissions by either party, in which case the claim and counterclaim are each renewed for a further year. The claim may be thus renewed for successive periods of 1 year. Wherever a claim is renewed any counterclaim is also deemed to be renewed. 4:10 If the arbitration is abandoned, suspended or concluded, by agreement or otherwise, before the final award is made, the parties shall be jointly and severally liable to pay to the Association the tribunal's and the Association's costs, fees and expenses. 5. SAMPLES 5:1 If either party wishes to submit samples for examination by the tribunal, those samples shall be drawn, sealed and despatched to the Association in accordance with the provisions of the Sampling Rules Form No: 124, and shall be held at the disposal of the tribunal. 5:2 As soon as possible after receipt (and if necessary prior to the completion of the exchange of submissions and documents pursuant to Rule 4 and/or the order of the tribunal), the samples shall be examined by the tribunal. In particular, (a) in the case of claims arising out of the "rye terms" clause, the samples shall be examined not later than 21 consecutive days after the date of completion of final discharge of the ship at port of destination, and (b) where the claim involves comparison with a f.a.q. (fair average quality) standard, the samples shall be examined not later than 21 consecutive days after the date of publication by the Association that the standard has been or will not be, made.

5:3 Upon the joint application of both parties, the Association may arrange for the examination of the contract goods to take place at the port of destination, by a sole arbitrator or (in the case of a dispute arising out of the "rye terms" clause) three arbitrators, such arbitrator or arbitrators to be appointed by the Association. This provision does not over-ride the parties' obligations to take, seal and despatch samples where required by the Sampling Rules Form No: 124. The tribunal so appointed shall determine all matters in dispute between the parties. 5:4 All samples sent to the Association for arbitration, testing and/or other purposes shall become and be the absolute property of the Association. 6. ARBITRATION PROCEDURE FOR CLAIMS ARISING OUT OF THE "RYE TERMS" CLAUSE 6:1 When the claimant has served on the respondent notice of its intention to refer the dispute to arbitration in accordance with Rule 2:1(b), he shall send a copy of the notice to the Association, together with sufficient information to identify the samples relating to the claim. 6:2 Notwithstanding anything to the contrary in these Rules, upon receipt of the notice as above, the Association shall appoint a tribunal of three arbitrators. 6:3 Any documentary submissions or evidence to be submitted by the parties shall be provided in accordance with Rule 4. 6:4 An award made pursuant to this Rule shall be final and binding and no appeal shall lie to a board of appeal. 7. STRING ARBITRATIONS - CONSOLIDATED ARBITRATIONS AND CONCURRENT HEARINGS 7:1 Quality and Condition If a contract forms part of a string of contracts which contain materially identical terms (albeit that the price may vary under each contract), a single arbitration determining a dispute as to quality and/or condition may be held between the first seller and the last buyer in the string as though they were parties who had contracted with each other. Any award made in such proceedings shall, subject only to any right of appeal pursuant to Rule 10, be binding on all the parties in the string and may be enforced by an intermediate party against his immediate contracting party as though a separate award had been made pursuant to each contract.

7:2 Other Cases In all other cases, if all parties concerned expressly agree, the tribunal may conduct arbitral proceedings concurrently with other arbitral proceedings, and, in particular, concurrent hearings may be held, but separate awards shall be made pursuant to each contract. 8. ISSUES OF SUBSTANTIVE JURISDICTION, PROVISIONAL ORDERS AND AWARDS ON DIFFERENT ASPECTS 8:1 Issues of Substantive Jurisdiction (a) The tribunal may rule on its own jurisdiction, that is, as to whether there is a valid arbitration agreement, whether the tribunal is properly constituted and what matters have been submitted to arbitration in accordance with the arbitration agreement. (b) In the event that the tribunal determines it has no jurisdiction, the Association will notify the parties of the tribunal's decision. Such decision shall be final and binding upon the parties subject to any right of appeal to a board of appeal pursuant to Rule 10. The Association will invoice the claimant for any costs, fees and expenses incurred. In the event that the tribunal determines that it has jurisdiction, no appeal shall lie to a board of appeal. (c) If the board of appeal upholds the tribunal's determination that it has no jurisdiction, the board of appeal shall order accordingly and the Association shall notify the parties and the tribunal and will invoice the appellants for any costs, fees and expenses incurred. (d) If the board of appeal reverses the tribunal's determination that it has no jurisdiction, the board of appeal shall order accordingly and shall notify the parties, the tribunal and the Association, and shall order that the dispute be referred to arbitration afresh, whereupon: (i) The dispute shall be deemed to be one arising out of a contract embodying these Rules. (ii) The tribunal formerly appointed shall thereupon cease to act and shall not be reappointed when the dispute is referred as aforesaid. (iii) The provisions of Rule 3 shall apply, the time limits for appointment running from the date of the board of appeal's order. (iv) The board of appeal may in its absolute discretion extend the time limits in these Rules, and no objection that time has expired shall be taken if the requirements of Rules were previously complied with. 8:2 Provisional Orders

Where the tribunal decides at any time to order on a provisional basis any relief which it would have power to grant in a final award, no appeal shall lie to a board of appeal until the tribunal has issued a final award determining the issues between the parties. 8:3 Awards on Different Aspects Where the tribunal decides during the course of an arbitration to make an award dealing finally with one or more aspects of the dispute, but which leaves to be decided by it other aspect(s) of the dispute, it may make an award which shall be final and binding as to the aspect(s) with which it deals, subject to any right of appeal pursuant to Rule 10. 9. AWARDS OF ARBITRATION 9:1 All awards shall be in writing and shall be signed by the sole arbitrator or, in the case of an award made by a three-man tribunal, by all three arbitrators. The tribunal shall have the power to assess and award the costs of and connected with the reference, including the Association's fees and/or expenses (which shall be those for the time being in force as prescribed by the Council) and also the fees and/or expenses incurred by the tribunal. The tribunal will assess and award costs at the conclusion