Fiscal Impact
As the milk industry begins paying deferred payment assessments, the proposed rule will increase revenue into the Fund. The amount of increased revenue is unknown and will depend on the amount of milk paid for under deferred payment contracts.
Business Impact
This emergency rule will establish a deferred payment assessment rate that will cover the additional risk to the milk producers and the Fund associated with deferring payments by milk contractors to milk producers by up to 120 days. Milk contractors entering into deferred payment contracts with producers will pay higher assessments; however, the statute permits these assessments to be passed on to the producers whose payments are being deferred.
Milk, grain, and vegetable producers are all protected against financial defaults by contractors who contribute to the overall Fund. All producers could potentially benefit from a higher Fund balance.
Federal and Surrounding State Programs
Federal Programs
No federal programs currently exist that offer milk producer security from contractor payment defaults.
Surrounding States
Minnesota requires any wholesale dealer or food processor who contracts with other Minnesota dealers or farmers of milk, cream, or products made from milk or cream, to be licensed as a Wholesale Produce Dealer. Dealers are required to obtain a surety bond and required to maintain trust assets so that assets are freely available to satisfy outstanding obligations. There is no exemption to this requirement.
Michigan requires producer security for all manufacturing and Grade A dairy plants that are a first receiving point for raw milk that will be processed at that facility. Security can be in one or more of several forms including bond, letter of credit, certificate of deposit, or pre-payment. There is no exemption to this requirement.
Illinois, Indiana, and Iowa do not require dairy producer security.
DATCP Contact
David A. Woldseth
Department of Agriculture, Trade and Consumer Protection
P.O. Box 8911
Madison, WI 53708-8911
telephone: (608) 224-5164
Finding of emergency
2017 Wisconsin Act 155 (Act 155) directs the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) to promulgate rules establishing an annual assessment rate for milk contractors entering into deferred payment contracts. Furthermore, Act 155 directs DATCP to promulgate these rules as emergency rules until the permanent rule takes effect. Notwithstanding Wis. Stat. § 227.24 (1) (a) and (3), Act 155 waives the requirement to provide evidence that promulgating this rule is necessary for the preservation of the public peace, health, safety, or welfare and waives the requirement to provide a finding of emergency. Act 155 became effective April 28, 2018, and requires DATCP to establish a milk contractor deferred payment assessment rate by emergency rule that may remain in effect for up to 24 months while permanent rules are being developed. Emergency rule
Section 1. EmR1803 Section 3. ATCP 100.135 (1) is amended to read: (1) General. A contributing milk contractor shall pay an annual fund assessment for each license year. The annual fund assessment shall be calculated under this section, rather than under s. 126.46, Stats. Except as provided in sub. (6) or (10), or s. ATCP 100.13, the annual fund assessment amount is the sum of the deferred payment assessment in sub. (1m) and the greater of the minimum assessment amount listed in sub. (9) or the sum of the following multiplied by 0.8, whichever is greater: Section 2. ATCP 100.135 (1m) is created to read:
ATCP 100.135(2)(1m) Deferred payment assessment. A contributing milk contractor shall pay a deferred payment assessment under s. 126.485 (5), Stats., equal to the amount the milk contractor reports under s. 126.41 (6) (ag), Stats., in the milk contractor’s license application for that license year, multiplied by 0.0035. (10) Exemption. A contributing milk contractor is not required to pay any fund assessment under this section for a license year, other than a deferred payment assessment required under sub. (1m), if all of the following apply:
Section 4. Effective date: This emergency rule takes effect on August 1, 2018, and remains in effect for two years. The department implements this emergency rule as provided in Wis. Stat. § 126.81 (2m) (b) and 2017 Wisconsin Act 155. Dated this ____ day of _________, 2018.
WISCONSIN DEPARTMENT OF AGRICULTURE, TRADE AND CONSUMER PROTECTION
By: _______________________________
Sheila Harsdorf
Secretary
