Financial Statements; Disclosures. Under ch.
126, Stats., a grain dealer must file annual financial statements with DATCP if the grain dealer does any of the following:
•Annually pays more than $500,000 for producer grain procured in this state.
• Procures any producer grain in this state under deferred payment contracts.
Grain dealers who are not required to file financial statements with DATCP may choose to file voluntarily. For example, grain dealers with favorable financial ratios may file voluntary financial statements to qualify for lower fund assessments. A grain dealer's financial ratios, including the grain dealer's debt to equity ratio, may affect the following:
• The grain dealer's eligibility to participate in the fund.
•The amount that the grain dealer must contribute to the fund.
•Whether or not the grain dealer must file security with DATCP.
Under this rule, a grain dealer's financial statement must disclose and describe all of the following:
•All notes, mortgages or other long-term liabilities that are not due or payable within one year.
•Any of the following items that are counted as assets in the financial statement:
•Any non-trade note or account receivable from an officer, director, employee, partner, or stockholder, or from a member of the family of any of those individuals.
•Any note or account receivable from a parent organization, a subsidiary, or an affiliate other than an employee.
•Any note or account that has been receivable for more than one year, unless the grain dealer has established an offsetting reserve for uncollectable notes and accounts receivable.
Debt to Equity Ratio; Liability Adjustments. This rule allows grain dealers to make certain liability adjustments when calculating their debt to equity ratio for purposes of ch.
126, Stats. Grain dealers may deduct the following amounts when calculating their liabilities for this purpose:
•Amounts borrowed from a lending institution and deposited with a commodities broker to hedge grain transactions.
•Amounts borrowed from a lending institution to buy grain that has been shipped, if the grain dealer maintains a collectible account receivable on the balance sheet.
•Amounts borrowed from a lending institution to buy grain that is held in inventory and shown as inventory on the balance sheet date.
•Amounts borrowed from a lending institution to buy grain that is held in inventory, if the grain dealer has entered into a contract to sell the grain.
•Amounts borrowed from a lending institution to pay for fertilizer, pesticides, herbicides or seed that the grain dealer holds in inventory on the balance sheet date.
Financial Statement Attachments. Some of the financial disclosures required by ch.
126, Stats., and this rule may be made in notes or attachments to the financial statement. Under this rule, an attachment to a reviewed or audited financial statement must satisfy the following requirements:
• The attachment must be on the letterhead of the certified public accountant who reviewed or audited the financial statement.
•The certified public accountant who reviewed or audited the financial statement must certify, in the attachment, whether the attachment is reviewed or audited.
Security Disclosures to Producers. This rule requires grain dealers to make security disclosures to grain producers, so that producers understand the extent to which grain payments are secured by the agricultural producer security program. This rule specifies the form in which grain dealers must make the disclosures. A grain dealer must make the disclosures to a producer at all the following times:
•When the grain dealer first procures grain from the producer.
•The first time the grain dealer procures grain from the producer in each new license year.
•The first time the grain dealer procures grain from the producer after any change in circumstances that requires a different disclosure (for example, after a grain dealer begins contributing to the fund).
Grain Warehouse Keepers
General. This rule requires grain warehouse keepers to comply with the new law, ch.
126, Stats. This rule supplements the new law, and amends or repeals rules that no longer apply.
Grain Warehouse Licensing. Under ch.
126, Stats., grain warehouse license and fee requirements are based on the grain warehouse capacity. This rule spells out a standard method for calculating grain warehouse capacity, based on the volume of the grain warehouse and a grain “pack factor" specified in this rule.
Under this rule, an applicant for a grain warehouse license must submit a sworn and notarized statement certifying that the information provided in the license application is complete and accurate.
Financial Statements; Disclosure Requirements. Under ch.
126, Stats., a grain warehouse keeper must file a financial statement with DATCP if the grain warehouse keeper has total warehouse capacity of more than 300,000 bushels. Other grain warehouse keepers may file
voluntary financial statements
to qualify for lower fund assessments. A grain warehouse keeper's financial ratios, including the warehouse keeper's debt to equity ratio, may affect the following:
•The warehouse keeper's eligibility to participate in the fund.
•The amount that the warehouse keeper must contribute to the fund.
•Whether or not the warehouse keeper must file security with DATCP.
Under this rule, a grain warehouse keeper's financial statement must disclose and describe all the following:
•All notes, mortgages or other long-term liabilities that are not due or payable within one year.
• Any of the following items that are counted as assets on the financial statement:
- Any non-trade note or account receivable from an officer, director, employee, partner, or stockholder, or from a member of the family of any of those individuals.
- Any note or account receivable from a parent organization, a subsidiary, or an affiliate, other than an employee.
- Any note or account that has been receivable for more than one year, unless the grain dealer has established an offsetting reserve for uncollectible notes and accounts receivable.
•The total number of bushels of grain in the warehouse keeper's warehouse.
• The total number of bushels of grain forwarded to another warehouse keeper.
•The total number of bushels of grain the warehouse keeper is obligated to store for depositors.
•The warehouse keeper's net grain position for each type of grain.
Debt to Equity Ratio; Liability Adjustments. This rule allows grain warehouse keepers to make certain liability adjustments when calculating their debt to equity ratio for purposes of ch.
126, Stats. Grain warehouse keepers may deduct, from their liabilities, the following amounts:
•Amounts borrowed from a lending institution and deposited with a commodities broker to hedge grain transactions.
•Amounts borrowed from a lending institution to buy grain that the grain warehouse keeper has sold and shipped, if the grain warehouse keeper maintains a collectible account receivable on the balance sheet.
•Amounts, borrowed from a lending institution, that are secured by grain that the grain warehouse keeper owns, holds in inventory on the balance sheet date, and shows as inventory on the balance sheet.
•Amount borrowed from a lending institution to pay for fertilizer, pesticides, herbicides or seed that the grain dealer holds in inventory on the balance sheet date.
Financial Statement Attachments. Some of the financial disclosures required by ch.
126, Stats., and this rule may be made in notes or attachments to the financial statement. Under this rule, an attachment to a reviewed or audited financial statement must satisfy the following requirements:
• The attachment must be on the letterhead of the certified public accountant who reviewed or audited the financial statement.
•The certified public accountant who reviewed or audited the financial statement must certify, in the attachment, whether the attachment is reviewed or audited.
Security Disclosures to Producers. This rule requires grain warehouse keepers to make security disclosures to grain producers, so that producers understand the extent to which producer grain in storage is backed by the agricultural producer security program. This rule specifies the form in which grain warehouse keepers must make the disclosures. A grain warehouse keeper must give disclosures to a producer at all the following times:
•When the grain warehouse keeper first receives grain from the producer.
•The first time the grain warehouse keeper receives grain from the producer in each new license year.
•The first time the grain warehouse keeper receives grain from the producer after any change in circumstances that requires a different disclosure (for example, after a grain warehouse keeper begins contributing to the fund).
Milk Contractors
General. This rule requires milk contractors to comply with the new law, ch.
126, Stats. This rule supplements the new law, and amends or repeals rules that no longer apply. This rule does
not change current rules related to milk price discrimination.
Financial Statements; Disclosure Requirements. Under ch.
126, Stats., a milk contractor must file a financial statement with DATCP if the milk contractor has more than $1.5 million in annual milk payroll obligations to producers. Other milk contractors may file
voluntary financial statements in order to avoid paying fund assessments or to qualify for lower fund assessments. A milk contractor's financial ratios, including the contractor's debt to equity ratio, may affect the following:
• The milk contractor's eligibility to participate in the fund.
•The amount that the milk contractor must contribute to the fund.
•Whether or not the milk contractor must file security with DATCP.
Under this rule, a milk contractor's financial statement must disclose and describe all of the following:
•All notes, mortgages or other long-term liabilities that are not due or payable within one year.
•Any of the following items that are counted as assets in the financial statement:
- Any nontrade note or account receivable from an officer, director, employee, partner, or stockholder, or from a member of the family of any of those individuals.
- Any note or account receivable from a parent organization, a subsidiary, or an affiliate, other than an employee.
- Any note or account that has been receivable for more than one year, unless the milk contractor has established an offsetting reserve for uncollectable notes and accounts receivable.
Debt to Equity Ratio; Liability Adjustments. This rule allows milk contractors to make certain liability adjustments when calculating their debt to equity ratios, but only for the purpose of determining fund assessments. When calculating their liabilities, milk contractors may deduct amounts borrowed from lending institutions in order to carry “aged cheese" in inventory for the period required by the federal standard of identity for that cheese. “Aged cheese" means cheese for which the federal standard of identity prescribes an aging period of at least 4 months.
Financial Statement Attachments. Some of the financial disclosures required by ch.
126, Stats., and this rule may be made in notes or attachments to the financial statement. Under this rule, an attachment to a reviewed or audited financial statement must satisfy the following requirements:
• The attachment must be on the letterhead of the certified public accountant who reviewed or audited the financial statement.
•The certified public accountant who reviewed or audited the financial statement must certify, in the attachment, whether the attachment is reviewed or audited.
Security Disclosures to Producers. This rule requires milk contractors to make security disclosures to milk producers, so that producers understand the extent to which milk payments are backed by the agricultural producer security program. This rule specifies the form in which the milk contractor must make the disclosures. A milk contractor must give the disclosures to a producer at all the following times:
•When the milk contractor first procures milk from the producer.
•In June of each year.
Custom Processing for Milk Producers; Exemption. This rule clarifies that ch.
126, Stats., does not apply to a dairy plant operator who takes temporary custody of producer milk for the sole purpose of providing
custom processing services to milk producers, provided that all the following apply:
•The producers retain title to the milk and to the processed dairy products made from that milk.
•The operator does not market the milk or processed dairy products, but promptly delivers the processed dairy products to the producers or their agent for consumption or marketing.
•The operator does not commingle producer-owned milk or dairy products with other milk or dairy products.
•The operator provides the custom processing services under a written contract with each producer or the producer's agent. The contract must clearly and conspicuously disclose that:
- The producer retains title to the milk and dairy products.
- The producer's milk shipments are not secured under ch.
126, Stats.
Producer Agents. Chapter
126, Stats., regulates milk contractors who buy producer milk, or who market producer milk as producer agents. A
producer agent is a person who markets producer milk for producers without taking title to that milk. Under ch.
126,
producer agents may have lower security and fund participation requirements than other milk contractors. This rule clarifies that a milk contractor does not qualify as a
producer agent, for purposes of ch.
126, Stats., unless all the following apply:
•The milk contractor procures producer milk in this state solely as the agent of the milk producers.
•The milk contractor does not take title to the producer milk, or to any dairy products made from the producer milk.
•The milk contractor markets the producer milk under a written contract with each milk producer. The contract must clearly and conspicuously disclose all the following:
- That the milk contractor does not take title to the producer's milk, or any dairy products made from that milk.
- That the milk contractor receives payments on behalf of the producer, and holds them in trust for the producer.
- The terms and conditions of payment to the producer.
