AB630: Bill Text

This bill makes numerous changes in the laws regulating fruit and vegetable contractors, known as the fruit and vegetable producer security program. A fruit and vegetable contractor is a person who buys fruit or vegetables that are grown in this state for use in food processing or who contracts with a producer to grow fruit or vegetables in this state for use in food processing.

This bill eliminates persons who buy or contract to buy fruit from regulation under the current fruit and vegetable security program.

Under current law, a fruit and vegetable contractor is required to obtain an annual registration certificate from the department of agriculture, trade and consumer protection (DATCP). The registration certificate expires on March 31. Under this bill, a vegetable contractor annual registration certificate expires on January 31.

Under current law, a contractor must file an annual financial statement with DATCP as a condition of renewal or continuation of the contractor's registration certificate. This bill requires that all annual financial statements be audited or reviewed by a public accountant. The bill also requires a vegetable contractor to file, with each application for renewal, an interim financial statement as of the quarter that ends closest to November 30.

Under current law, a contractor generally must either meet minimum financial requirements or file security with the DATCP. Under current law, the financial requirements are that the contractor's ratio of current assets to current liabilities be at least 1.2 to 1.0 and that the contractor's total assets exceed total liabilities. Under this bill, the financial requirements are:

1. The contractor's ratio of current assets to current liabilities must be at least 1.2 to 1.0 on its annual financial statement.

2. The contractor's ratio of current assets to current liabilities must be at least 1.0 to 1.0 at all times other than the end of the contractor's fiscal year.

3. The contractor must have equity equal to at least 25% of total assets at all times.

The bill phases in the amount of security that must be provided by a vegetable contractor who does not meet the financial standards as changed by this bill but who does meet the financial standards under current law.

This bill also eliminates the method of providing financial security under which processed farm products equivalent to not less than 30% of the raw farm products received from producers are set aside in trust for producers.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB630, s. 1 Section 1. 20.115 (1) (gm) of the statutes is amended to read:

AB630,3,2 20.115 (1) (gm) (title) Dairy trade regulation; dairy and farm product and vegetable producer security. The amounts in the schedule for the regulation of farm product vegetable procurement under s. 100.03, of dairy plant financial condition under s. 100.06 and of dairy trade practices under s. 100.201. All moneys received under ss. 100.03 (3) (a) 3., 100.06 (9) and 100.201 (6) shall be credited to this appropriation, but any balance at the close of a fiscal biennium that exceeds 20% of the previous fiscal year's expenditures under this appropriation shall lapse to the general fund.

AB630, s. 2 Section 2. 97.29 (4) of the statutes is amended to read:

AB630,3,12 97.29 (4) (title) Food processing plants buying farm products vegetables from producers. The department may not issue or renew a license to operate a food processing plant to any applicant who is a contractor, as defined in s. 100.03 (1) (f), unless the applicant has filed all financial information and any security that is required under s. 100.03. If an applicant has not filed all financial information and any security that is required under s. 100.03, the department may issue a conditional license under s. 93.06 (8) that prohibits the licensed operator from procuring farm products vegetables from a producer or a producer's agent, but allows the operator to procure farm products vegetables from other sources.

AB630, s. 3 Section 3. 100.03 (title) of the statutes is amended to read:

AB630,3,15 100.03 (title) Farm product Vegetable procurement; financial security; grading and tare.

AB630, s. 4 Section 4. 100.03 (1) (a) (intro.) of the statutes is amended to read:

AB630,3,18 100.03 (1) (a) (intro.) "Affiliate" means any of the following persons or business entities that procures farm products vegetables for use by an operator:

AB630, s. 5 Section 5. 100.03 (1) (e) of the statutes is renumbered 100.03 (1) (bm) and amended to read:

AB630,4,2 100.03 (1) (bm) "Certified Audited financial statement" means a financial statement that, in the accompanying opinion of an independent certified public accountant or a public accountant holding a certificate of authority under ch. 442, fairly and in all material respects represents the financial position of the contractor, the results of the contractor's operations and the contractor's cash flows in conformity with generally accepted accounting principles.

AB630, s. 6 Section 6. 100.03 (1) (f) of the statutes is amended to read:

AB630,4,8 100.03 (1) (f) "Contractor" means a person who buys farm products vegetables grown in this state from a producer, or who contracts with a producer to grow farm products vegetables in this state, regardless of whether the contractor is located in this state or is engaged in food processing. "Contractor" does not include any of the following:

AB630,4,11 1. A person who procures fruits and vegetables primarily for unprocessed fresh market use and is licensed under the federal perishable agricultural commodities act, 7 USC 499.

AB630,4,13 2. A restaurant or retail food establishment that procures farm products vegetables solely for retail sale at the restaurant or retail food establishment.

AB630, s. 7 Section 7. 100.03 (1) (n) of the statutes is repealed.

AB630, s. 8 Section 8. 100.03 (1) (v) to (wm) of the statutes are amended to read:

AB630,4,19 100.03 (1) (v) "Payment on delivery" means cash payment of the full agreed price for a farm product vegetable when the farm product vegetable is tendered or delivered to a contractor, or cash payment of the full agreed price within 72 hours after delivery if the farm product vegetable is graded.

AB630,4,23 (vm) "Procurement contract" means an oral or written agreement between a contractor and a producer, under which the contractor buys a farm product vegetable grown in this state from the producer or contracts with the producer to grow a farm product vegetable in this state.

AB630,4,25 (w) "Producer" means a person who produces and sells a farm product vegetable, or who grows a farm product vegetable under contract.

AB630,5,2 (wm) "Producer claim" means a claim held by a producer for his or her farm products vegetables.

AB630, s. 9 Section 9. 100.03 (1) (ym) of the statutes is created to read:

AB630,5,5 100.03 (1) (ym) "Reviewed financial statement" means a financial statement, other than an audited financial statement, that is all of the following:

AB630,5,6 1. Sworn and notarized by the contractor.

AB630,5,9 2. Reviewed according to generally accepted accounting principles by an independent certified public accountant or a public accountant holding a certificate of authority under ch. 442.

AB630, s. 10 Section 10. 100.03 (1) (zm) of the statutes is amended to read:

AB630,5,13 100.03 (1) (zm) "Subsidiary" means a corporation or business entity that is owned, controlled or operated by an operator, and that procures a farm product vegetable for use by the operator.

AB630, s. 11 Section 11. 100.03 (1) (zp) of the statutes is repealed.

AB630, s. 12 Section 12. 100.03 (1) (zs) of the statutes is created to read:

AB630,5,18 100.03 (1) (zs) "Vegetable" means any vegetable that is grown or sold for use in food processing, whether or not that vegetable is actually processed as food. "Vegetable" includes sweet corn, but does not include grain.

AB630, s. 13 Section 13. 100.03 (2) (a) of the statutes is amended to read:

AB630,5,23 100.03 (2) (a) Requirement. No contractor may enter into a procurement contract with a producer unless the contractor holds a registration certificate from the department. A registration certificate expires on March January 31 annually and is not transferable.

AB630, s. 14 Section 14. 100.03 (3) (a) 2. of the statutes is amended to read:

AB630,6,5 100.03 (3) (a) 2. Unless the department by rule establishes a different fee, a fee of one cent for each $100 in the total contractual obligations reported under sub. (4) (a). The fee under this subdivision is not required if all farm product vegetable grading is performed or supervised by the department under contract with the contractor.

AB630, s. 15 Section 15. 100.03 (3) (b) of the statutes is amended to read:

AB630,6,14 100.03 (3) (b) Surcharge for operating without a registration certificate. A contractor who applies for a registration certificate under sub. (2) shall pay a surcharge of $500 if the department determines that, within 365 days before submitting the application, the contractor procured a farm product vegetable from a producer without a registration certificate in violation of sub. (2). Payment of the surcharge does not relieve the contractor of any other civil or criminal liability that results from the procurement of the farm product vegetable, but it does not constitute evidence of any law violation.

AB630, s. 16 Section 16. 100.03 (4) (a) of the statutes is amended to read:

AB630,6,19 100.03 (4) (a) The contractor's total paid and unpaid contractual obligations to producers, for farm products vegetables tendered or delivered, that have accrued during the registration year immediately preceding the registration year for which application is made.

AB630, s. 17 Section 17. 100.03 (4) (c) of the statutes is amended to read:

AB630,7,5 100.03 (4) (c) The contractor's anticipated maximum liability to producers during the registration year for which application is made. The application shall state if the contractor anticipates a maximum liability of zero. If so, the application also shall state whether the contractor anticipates a maximum liability of zero because the contractor plans to make cash payment on delivery under every procurement contract, or because the contractor plans to procure all farm products vegetables from another contractor. A contractor shall immediately notify the department in writing if, at any time during the registration year, the contractor has reason to believe that the contractor's maximum liability will exceed the maximum liability previously anticipated and reported to the department.

AB630, s. 18 Section 18. 100.03 (4) (f) of the statutes is amended to read:

AB630,7,10 100.03 (4) (f) Whether the contractor is a producer-owned cooperative or organization doing business on a cooperative pooling basis with its producer owners, and whether the producer-owned cooperative or organization procures any farm products vegetables from producers who are not its producer owners.

AB630, s. 19 Section 19. 100.03 (5) (a) 2. of the statutes is amended to read:

AB630,7,17 100.03 (5) (a) 2. Except as provided under par. (c), a contractor shall file an annual financial statement with the department as a condition to the renewal or continuation of the contractor's registration certificate under sub. (2). An annual financial statement shall be filed by the 15th day of the 4th month commencing after the close of the contractor's fiscal year, except that the department may, for cause, extend the deadline for filing the annual financial statement for up to 30 days.

AB630, s. 20 Section 20. 100.03 (5) (am) of the statutes is created to read:

AB630,7,21 100.03 (5) (am) Interim statement. Except as provided in par. (c), a contractor shall file a interim statement as of the quarter that ends closest to November 30 with each application for renewal.

AB630, s. 21 Section 21. 100.03 (5) (b) of the statutes is amended to read:

AB630,8,2 100.03 (5) (b) (title) Additional or interim financial statement. Notwithstanding par. (c), the department may require a contractor to file a an annual financial statement or interim statement at any time. The department may require that a financial statement required under this paragraph be an audited financial statement or a reviewed financial statement.

AB630, s. 22 Section 22. 100.03 (5) (c) of the statutes is amended to read:

AB630,8,5 100.03 (5) (c) Exemptions. Paragraph (a) does Paragraphs (a) and (am) do not apply to any of the following:

AB630,8,9 1. A contractor who either plans to make payment on delivery for all farm products vegetables tendered or delivered by producers, or to procure all farm products vegetables from another contractor, and who submits a sworn and notarized statement to that effect under sub. (4) (c).

AB630,8,11 2. A contractor who files security with the department under sub. (8), except for a contractor who files security under sub. (8) (cm).

AB630,8,14 3. A producer-owned cooperative or organization that procures farm products vegetables solely on a cooperative pooling basis from its producer owners, and that submits under sub. (4) a sworn and notarized statement to that effect.

AB630, s. 23 Section 23. 100.03 (5) (e) of the statutes is amended to read:

AB630,8,22 100.03 (5) (e) (title) Certified or verified Audited or reviewed financial statement. A financial statement under this subsection may par. (a) shall be a certified or verified an audited financial statement or a reviewed financial statement, except that if during the year to which that financial statement pertains a contractor incurred total contractual obligations to producers, as reported under sub. (4) (a), of more than $250,000, the financial statement under par. (a) shall be certified an audited financial statement.

AB630, s. 24 Section 24. 100.03 (6) (b) 1. of the statutes is amended to read:

AB630,9,3 100.03 (6) (b) 1. If a procurement contract does not specify a payment date in writing, the contractor shall pay a liability to a producer by the 15th day of the month immediately following the month in which the producer tendered or delivered the farm products vegetables under the contract, or by an earlier date agreed upon between the parties.

AB630, s. 25 Section 25. 100.03 (6) (b) 3. of the statutes is amended to read:

AB630,9,18 100.03 (6) (b) 3. By January 31 10 of each registration year, a contractor shall pay for all farm products vegetables that were delivered by producers on or before December 31 of that registration year. This requirement does not apply if a written contract specifying a later payment date was approved by a vote of producers who delivered farm products vegetables to the contractor during the preceding registration year. To obtain the approval of producers, a contractor shall give advance written notice to every eligible producer. The notice shall include a copy of the proposed contract and shall announce a meeting at which producers will be asked to vote on the proposed contract. The notice shall also include a mail ballot by which a producer may cast his or her vote without attending the meeting. Voting shall be by secret ballot. The proposed contract shall be approved by a majority of the producers who vote on the proposed contract. The contractor shall file a sworn statement with the department, on a form provided by the department, certifying the results of the balloting.

AB630, s. 26 Section 26. 100.03 (6) (b) 4. of the statutes is amended to read:

AB630,9,24 100.03 (6) (b) 4. If a producer tenders or delivers farm products vegetables to a contractor after December 31 of any registration year, the contractor shall pay the producer for the farm products vegetables by the 15th day of the month following the month in which the farm products vegetables were tendered or delivered, or within 30 days by the 30th day after tender or delivery , whichever is later.

AB630, s. 27 Section 27. 100.03 (7) (a) 1. of the statutes is amended to read:

AB630,10,2 100.03 (7) (a) 1. The contractor's A minimum ratio of current assets to current liabilities shall be at least of 1.2 to 1 1.0 on its annual financial statement.

AB630, s. 28 Section 28. 100.03 (7) (a) 2. of the statutes is repealed and recreated to read:

AB630,10,5 100.03 (7) (a) 2. A minimum ratio of current assets to current liabilities of 1.0 to 1.0 at all times of the year other than the end of the contractor's fiscal year.

AB630, s. 29 Section 29. 100.03 (7) (a) 3. of the statutes is created to read:

AB630,10,7 100.03 (7) (a) 3. Equity equal to at least 25% of total assets at all times.

AB630, s. 30 Section 30. 100.03 (7) (c) (intro.) of the statutes is amended to read:

AB630,10,11 100.03 (7) (c) Exemptions. (intro.) A Paragraph (a) does not apply to a contractor is not required to meet the financial standards under par. (a) if any of the following applies:

AB630, s. 31 Section 31. 100.03 (7) (c) 1. of the statutes is amended to read:

AB630,10,14 100.03 (7) (c) 1. The contractor makes payment on delivery for all farm products vegetables obtained from producers.

AB630, s. 32 Section 32. 100.03 (8) (b) 6. of the statutes is repealed.

AB630, s. 33 Section 33. 100.03 (8) (bm) of the statutes is repealed.

AB630, s. 34 Section 34. 100.03 (8) (cm) of the statutes is created to read:

AB630,10,22 100.03 (8) (cm) Transitional security amounts. Notwithstanding par. (c), a contractor who does not meet the financial standards under sub. (7) but who does have a ratio of current assets to current liabilities of at least 1.2 to 1.0 on its annual financial statement and whose total assets exceed total liabilities shall file security in at least the following amounts for the license years indicated:

AB630,10,25 1. For the first license year beginning after the effective date of this subdivision .... [revisor inserts date], 25% of the contractor's anticipated maximum liability to growers of vegetables.

AB630,11,3 2. For the 2nd license year beginning after the effective date of this subdivision .... [revisor inserts date], 50% of the contractor's anticipated maximum liability to growers of vegetables.