The Department and the Agricultural Producer Security Council, a statutory council that advises the Department on the administration of the program, identified the need to evaluate the entire agricultural producer security program, so that changes can be made to mitigate the impact of large defaults in the future. In December 2015, the Department received the completed actuarial study and is developing recommendations for permanent changes to the agricultural producer security program.
The proposed emergency rule would alleviate a financial burden otherwise placed upon licensed grain dealers. Without this change, grain dealers would not be eligible for fund assessment exemptions which have been granted to milk and vegetable contractors during this transitional period.
The proposed emergency rule would make consistent changes to exemption eligibility requirements for both grain dealers and grain warehouse keepers; however, grain warehouse keeper licensees will not likely be effected by the change for approximately ten years, as they will not meet the minimum balance requirement for funds attributable to grain warehouse keepers.
Policy Alternatives
Do nothing. If the Department fails to adopt this emergency rule the grain dealer industry will not be eligible for fund assessment exemption until the producer security overall fund balance exceeds $11 million, which is estimated to take five to six years. If the Department fails to adopt this emergency rule before September 1, 2016, no grain dealers will be eligible for exemption during the next license year.
4. Statutory authority for the rule (including the statutory citation and language):
Wis. Stat. § 93.07 (1) directs the Department to make such regulations as are necessary for the discharge of all the powers and duties of the Department. Wis. Stat. § 126.81 (1) (a) allows the Department to promulgate rules to interpret and implement Wis. Stat. ch. 126. Wis. Stat. § 227.24 allows the Department to promulgate a rule as an emergency rule without complying with the notice, hearing, and publication requirements under Wis. Stat. ch. 227. 5. Estimate of the amount of time that state employees will spend to develop the rule and of other resources necessary to develop the rule:
The Department estimates that it will use approximately 0.10 FTE staff to develop this rule. This includes time required for the investigation and analysis, financial assistance criteria, rule drafting, preparing related documents, and communicating with affected persons and groups. The Department will use existing staff to develop this rule.
6. Description of all entities that may be impacted by the rule:
The proposed rule will allow grain dealers who meet fund assessment exemption requirements under Wis. Admin. Code §§ ATCP 99.126 (5) (a) and (b) to not pay fund assessments if the APSF balance is at least $5 million on May 31 of the preceding license year. The grain dealer industry would otherwise be required to pay an additional $200,000 - $250,000 annually, until the APSF balance reaches a minimum of $11 million. Milk, grain, and vegetable producers could potentially be impacted by the lower agricultural producer security overall fund balance, in the event of future large defaults.
7. Summary and preliminary comparison of any existing or proposed federal regulation that is intended to address the activities to be regulated by the rule:
There is no existing or proposed federal regulation that is intended to address the activities regulated by this rule.
8. Anticipated economic impact
The proposed rule will slow the growth of the overall fund balance, as the grain dealer industry would otherwise be required to pay an additional $200,000 - $250,000 annually, over the course of an estimated five to six years. The impact to milk, grain, and vegetable producers will be minimal if there are no large defaults during the next five to six years.
Contact Person: David A. Woldseth, DATCP; Phone (608) 224-5164
