○ Other costs which the Department allows in writing.
STEP 2: Calculate the operator's average total cost, per producer per pay period, for milk collection and hauling services. An operator may calculate a separate average cost for producers with every-other-day pickup versus producers with every-day pickup. An operator may not include:
○ Collection or hauling costs which are charged to a producer.
○ Costs which the hauler incurs before the first farm and after the last farm on the hauling route.
STEP 3: Add the above costs. To obtain the procurement cost per hundredweight for each producer, divide the sum by the producer's average milk production in hundredweights per pay period. When comparing procurement costs between volume pay classes, each class member's production is considered to be the same as the class average.
Dairy Plant Operator May Charge Procurement Costs to Producers
Nothing in this rule prohibits a dairy plant operator from charging each producer for the full cost of procuring that producers' milk. For example, a dairy plant operator may charge each producer the actual cost, per hundredweight, of hauling that producer's milk; however, a dairy plant operator may not shift hauling charges between producers in order to discriminate in the milk price paid to those producers.
Producer Payroll Statements
Under current rules, a dairy plant operator must give each milk producer a written payroll statement for each pay period. The payroll statement documents the amount of milk received from the producer during the pay period, the amount paid for that milk, and the basis on which the pay price was determined. Among other things, the payroll statement identifies the nature and amount of any price adjustments, including any premiums or deductions.
Effective January 1, 1996, federal milk marketing orders changed the way that many dairy plant operators pay milk producers. The milk marketing orders provide for a multiple component pricing method to calculate the price paid for milk.
This rule repeals and recreates current rules related to milk producer payroll statements, so that payroll statement requirements will be consistent with the new multiple component pricing method. This rule also spells out alternative payroll statement requirements for dairy plant operators who continue to use the traditional straight fat pricing method or the 3.5% butterfat differential pricing method.
Fiscal Estimate
The proposed rule interprets s. 100.22, Stats., relating to price discrimination in milk procurement. The rule:
○ Prohibits a dairy plant operator from discriminating between milk producers if the discrimination is based on a difference in milk quality, is justified by a difference in procurement costs, or is justified in order to meet competition;
○ Establishes standards which a dairy plant operator must meet in order to establish a defense based on milk quality, cost-justification or meeting competition;
○ Spells out enforcement standards and procedures; and
○ Makes technical changes in current rules related to milk producer payroll statements.
This rulemaking will not increase DATCP's costs of administering this program, but will facilitate compliance and enforcement of s. 100.22, Stats. There will be a one-time cost of approximately $700 associated with printing, mailing and holding hearings on the rule.
Initial Regulatory Flexibility Analysis
This rule amends ch. ATCP 100, Wis. Adm. Code. Specifically, it repeals and recreates s. ATCP 100.75, relating to payroll statements of milk producers, and creates s. ATCP 100.76 (3m) and subchapter VI of ch. ATCP 100, prohibiting price discrimination in milk procurement.
This rule applies to approximately 180 dairy plants that purchase milk from Wisconsin's approximately 27,000 dairy farmers. Some of the dairy plants and virtually all of the dairy farmers are defined as “small businesses” under s. 227.114 (1) (a), Stats.
This rule prohibits a dairy plant operator from discriminating between milk producers in the amount paid for milk unless the discrimination is based on a difference in milk quality, is justified by a difference in procurement costs, or is justified in order to meet a competitor's price. It establishes standards which a dairy plant operator must meet in order to establish a defense based on milk quality, cost-justification or meeting competition. Justification of discriminatory prices is already required by s. 100.22, Stats.
This rule also spells out enforcement standards and procedures. The Department may require a dairy plant operator to file documentation justifying discriminatory prices, and may take enforcement action against an operator who fails to provide adequate justification. The Department may ask the Attorney General or a district attorney to prosecute a violator in court, and may take action against a violator's dairy plant license.
This rule makes technical changes in existing rules related to milk producer payroll statements. These changes are intended to accommodate the multiple component pricing method used under federal milk marketing orders since January 1, 1996. Effective enforcement of s. 100.22, Stats., and this rule may result in a reduction of milk volume premiums to large dairy farmers, most of whom fall within the statutory definition of small businesses; however, effective enforcement may also result in increased payments to small dairy farmers, most of whom are also small businesses.
Agriculture, Trade &
Consumer Protection
The state of Wisconsin Department of Agriculture, Trade and Consumer Protection announces that it will hold public hearings on a proposed rule, relating to grain warehouse keepers and grain dealers. This rule amends ch. ATCP 99, Wis. Adm. Code.
Written Comments
The Department will hold the hearings at the dates and places shown below. The public is invited to attend the hearings and comment on the proposed rule. Following the public hearings, the hearing record will remain open until March 20, 1996 for additional written comments.
Copies of Rule
A copy of the rule may be obtained, free of charge, from:
Division of Trade & Consumer Protection
Telephone (608) 224-4970
Dept. of Agriculture, Trade & Consumer Protection
2811 Agriculture Dr.
P.O. Box 8911
Madison, WI 53708-8911
Copies will also be available at the public hearings.
An interpreter for the hearing-impaired will be available upon request for these hearings. Please make reservations for a hearing interpreter by contacting Judy Jung (608) 224-4972 or by contacting the TDD at the Department at (608) 224-5058.
Hearing Information
The hearings are scheduled as follows:
March 12, 1996 Company E Room
Tuesday Menasha Public Library
Commencing at 1:00 p.m. 440 First Street
Handicapped Accessible Menasha, WI
March 14, 1996 Room 105
Thursday Eau Claire State Office Bldg.
Commencing at 12:00 p.m. 718 North Clairemont
Handicapped Accessible Eau Claire, WI
March 15, 1996 Room 172
Friday State Agriculture Building
Commencing at 1:00 p.m. 2811 Agriculture Drive
Handicapped Accessible Madison, WI
Analysis Prepared by the Dept. of Agriculture, Trade & Consumer Protection
Statutory authority: ss. 127.02 (3) (d) and 127.15
Statutes interpreted: ch. 127
In order to protect grain producers, the Department of Agriculture, Trade and Consumer Protection currently regulates grain warehouse keepers and grain dealers under ch. 127, Stats. Grain warehouse keepers and grain dealers must be licensed, must file financial statements with the Department, and must file security with the Department if they fail to meet minimum financial standards.
The Legislature recently made substantial changes to the grain security law under ch. 127, Stats. The changes, contained in 1995 Wis. Act 42, took effect on September 1, 1995.
The Department has adopted rules under ch. ATCP 99, Wis. Adm. Code, to interpret ch. 127, Stats. This rule amends the Department's current rules to incorporate the recent legislative changes. This rule also increases license and inspection fees, clarifies financial statement and security filing requirements, simplifies the disclosures which grain dealers must make to producers, and makes other changes designed to clarify the current rules.
Licensing Grain Warehouse Keepers and Grain Dealers
1995 Wis. Act 42 requires warehouse keepers and grain dealers to hold a “license” from the Department, rather than a “registration certificate” as before. This rule incorporates this new terminology.
1995 Wis. Act 42 created a new license category of “class B2” grain dealers. “Class B2” grain dealers are feed mill operators who buy less than $50,000 worth of grain from producers per year, and who use no “deferred payment” or “deferred price” contracts. “Class B2” grain dealers are no longer licensed as class B grain dealers. They will pay lower license fees than class B grain dealers, and will not have to file annual financial statements or meet minimum financial standards. This rule incorporates the new license category.
Financial Statements
Under current law, grain warehouse keepers and certain grain dealers must file annual financial statements with the department. Under 1995 Wis. Act 42, class B grain dealers must now file annual financial statements if they use “deferred payment” or “deferred price” contracts. The Department may require supplementary or interim financial statements, as necessary.
This rule modifies current rules related to financial statements, consistent with ch. 127, Stats.:
○ It updates and clarifies current filing requirements, consistent with ch. 127, Stats.
○ It clarifies current requirements related to the form and content of financial statements. It also clarifies which financial statements must be reviewed or audited by a CPA.
○ It allows sole proprietors to prepare portions of their financial statements on a historical cost basis, thereby saving accounting costs.
○ It allows the Department, for good cause, to extend a filing deadline for up to 30 days.
Minimum Financial Standards
Under current law, grain warehouse keepers and certain grain dealers must meet minimum financial standards. 1995 Wis. Act 42 made the following changes which are incorporated in this rule:
○ It required class B grain dealers to meet minimum financial standards if they use “deferred payment” or deferred price“ contracts.
○ It changed the minimum financial standards for grain dealers to reflect financial risk. Under the new standards:
* Grain dealers must have a current ratio of at least 1.25 to 1.0 at fiscal year end, and at least 1.0 to 1.0 at other times.
* Grain dealers must have total assets which exceed total liabilities by at least $15,000, or by the amount of equity needed to achieve a debt-to-equity ratio of not more than 5.0 to 1.0, whichever is greater. The equity requirement is no longer capped at a maximum of $500,000.
○ It made allowances for normal seasonal fluctuations of certain assets and liabilities. Under 1995 Wis. Act 42 and this rule, a warehouse keeper or grain dealer may offset certain liabilities against certain current assets, so that normal seasonal and operational fluctuations do not have an undue impact on equity requirements.
Security Requirements
Under current law, grain warehouse keepers and certain grain dealers must file security with the Department if they fail to meet minimum financial standards. 1995 Wis. Act 42 made the following changes which are incorporated in this rule:
○ It required class B grain dealers using “deferred payment” or “deferred price” contracts to file security with the Department if they fail to meet minimum financial standards.
○ It changed the method used to calculate the amount of security required of grain dealers. Under 1995 Wis. Act 42 and this rule, a grain dealer must file security equal to the sum of the following:
* The total amount which the grain dealer owed to producers on “deferred payment” contracts as of the last day of the previous month.
* The total amount which the grain dealer owed to producers on “deferred price” contracts as of the last day of the previous month (based on contract pricing formulas and market prices on that day).
* Beginning September 1, 1996, an amount equal to 35% of the dollar amount of the grain dealer's average monthly purchases from producers for the 3 months in which the grain dealer made the largest monthly purchases from producers during the preceding 12 months. (1995 Wis. Act 42 increased this percentage in stages, from 20% in the year ending August 31, 1996, to 35% in the year beginning September 1, 1996.)
