The State of Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) announces that it will hold public hearings on a proposed amendment to chapters ATCP 99, 100, and 101, Wis. Adm. Code, relating to the Agricultural Producer Security.
DATCP will hold three public hearings at the times and places shown below. DATCP invites the public to attend the hearings and comment on the proposed rule. Following the public hearings, the hearing record will remain open until Wednesday, October 31, 2008 for additional written comments.
Hearing impaired persons may request an interpreter for these hearings. Please make reservations for a hearing interpreter by August 6, 2007, by writing to Kevin LeRoy, Division of Trade and Consumer Protection, P.O. Box 8911, Madison, WI 53708-8911, telephone (608) 224-4928. Alternatively, you may contact the DATCP TDD at (608) 224-5058. Handicap access is available at the hearings.
Submission of Comments and Copy of Rule
You may obtain a free copy of this rule by contacting the Wisconsin Department of Agriculture, Trade and Consumer Protection, Division of Trade and Consumer Protection, 2811 Agriculture Drive, P.O. Box 8911, Madison, WI 53708. You can also obtain a copy by calling (608) 224-4928 or emailing
kevin.leroy@wisconsin.gov. Copies will also be available at the hearings. To view the proposed rule online, go to:
To provide comments or concerns relating to small business, please contact DATCP's small business regulatory coordinator Keeley Moll at the address above, by emailing to
Keeley.Moll@datcp.state.wi.us or by telephone at (608) 224-5039.
Hearing Dates and Locations
Thursday, August 16, 2007, 2:00 p.m.
DATCP Northwest Regional Office
3610 Oakwood Hills Pkwy
Eau Claire, WI 54701-7754
Tuesday, August 21, 2007, 2:00 p.m.
DATCP Northeast Regional Office
Room 152A
200 N Jefferson St.
Green Bay, WI 54301
Wednesday, August 22, 2007, 10:00 a.m.
Department of Agriculture, Trade and Consumer Protection
2811 Agriculture Dr.
Board Room (CR-106)
Madison, WI 53718-6777
Analysis Prepared by the Department of Agriculture, Trade and Consumer Protection
Wisconsin's agricultural producer security program helps protect agricultural producers against catastrophic financial defaults by grain dealers, grain warehouse keepers, milk contractors and vegetable contractors (collectively referred to as “contractors").
Contractors must be licensed by the Department of Agriculture, Trade and Consumer Protection (“DATCP") and pay license fees. Most contractors must also pay assessments to an agricultural producer security fund (“fund"). In the event of a contractor default, DATCP may compensate producers from the fund.
This rule changes current grain dealer, grain warehouse keeper and vegetable contractor license fees. This rule changes current fund assessments for grain dealers (deferred payment assessment) and grain warehouse keepers, and changes required minimum fund assessments for grain dealers, grain warehouse keepers, milk contractors and vegetable contractors. This rule does not make any other significant changes in current contractor regulations.
Statutory authority
Statutes interpreted
Agency authority
DATCP has broad authority, under s.
93.07(1), Stats., to adopt rules needed to implement laws under its jurisdiction. DATCP also has authority, under ss.
126.81 and
126.88, Stats., to establish license fees and fund assessments under the agricultural producer security program. Chapter
126, Stats., establishes license fees and fund assessments, but authorizes DATCP to change those license fees and fund assessments by rule.
Under current law, DATCP must modify fund assessments whenever fund balances fall outside a specified range. The fund balance attributed to the grain warehouse keeper sector currently falls below the required minimum of $200,000. Therefore, DATCP must modify fund assessments for grain warehouse keepers. DATCP is authorized, but not required, to modify fund assessments for other contractors.
Background
DATCP administers the agricultural producer security program under ch.
126, Stats. DATCP has adopted rules to implement the program. The rules are contained in chs.
ATCP 99-
101, Wis. Adm. Code. Under current law:
• Licensed contractors must pay license fees to fund DATCP administration of the agricultural producer security program. Administration includes grain warehouse inspections, review of contractor financial statements, license administration and response to contractor financial defaults and law violations.
• Most contractors (“contributing contractors") must pay fund assessments to finance the agricultural producer security fund. The fund is held in trust, for the benefit of producers. If a contractor defaults on payments to agricultural producers, DATCP may reimburse producers from the fund. Fund assessments are like insurance premiums, and are based on contractor size, financial condition and risk practices.
Prior to 2003, DATCP administrative costs were paid by a combination of general tax revenue (“GPR") and contractor license fees. However, the 2003-2004 Biennial Budget Act eliminated virtually all GPR funding for program administration. That made it necessary to transfer staff from GPR funding to license fee funding. Partly as a result of that change, current license fee funding is no longer adequate to cover administrative costs. There has been a gradual growth in administrative costs, due to factors (such as statewide union contracts for accountants and auditors) that are outside DATCP control.
Funding shortfalls are especially severe in the grain dealer and grain warehouse keeper programs. Administrative costs now annually exceed license fee revenues by over $200,000 in each of those programs, and each program has a negative cash balance of more than $350,000. In the vegetable contractor program, administrative costs now annually exceed license fee revenues by over $20,000, and the program has a negative cash balance (January 1, 2007) of more than $50,000.
Deficits in the grain and vegetable administration accounts are currently being covered by milk contractor license fee revenues and by fund assessment revenues that would normally go to the producer security fund. That unfairly affects milk contractors and reduces fund coverage for all producers (grain, milk and vegetable).
This rule increases annual license fees for grain dealers, grain warehouse keepers and vegetable contractors, to remedy current inequities and provide minimally adequate funding for program administration. This rule also adjusts fund assessments, especially for grain warehouse keepers (for whom an adjustment is required by law).
Notwithstanding this rule, the total of all contractor payments under the producer security (license fees plus fund assessments) will actually decline over the next few years, because of fee credits and declining formula rates that are built into the producer security law itself. This rule will slow, but not reverse, that overall decline. This rule will not have any significant impact on contractors' overall business costs.
Rule contents
Grain Dealer License Fees
Current Fees. Under current law, a grain dealer must pay the following annual license fees and surcharges:
• A license processing fee of $25.
• One of the following fees:
• $500 if the grain dealer purchased at least $500,000 worth of producer grain in this state during the grain dealer's last completed fiscal year.
• $200 if the grain dealer purchased at least $50,000 but less than $500,000 worth of producer grain in this state in the grain dealer's last completed fiscal year.
• $50 if the grain dealer purchased less than $50,000 worth of producer grain in this state in the grain dealer's last completed fiscal year.
• A $225 fee per business location in excess of one location (but only if the grain dealer purchased $500,000 worth of producer grain in this state during the grain dealer's last completed fiscal year).
• A $45 fee per truck, in excess of one truck, that the grain dealer uses to haul grain in this state.
• A $425 surcharge if the grain dealer submits a required financial statement that is not an audited financial statement.
• A $500 surcharge if the grain dealer operated without a license at any time during the preceding year.
• A $100 surcharge if the grain dealer, during the preceding year, failed to file a required financial statement by the required filing deadline.
• A $100 surcharge if the grain dealer failed to file a license renewal application by the license expiration date of August 31.
Proposed fees. This rule changes the calculation of grain dealer license fees. Under this rule, a grain dealer must pay the following fees and surcharges:
• A license processing fee of $25 (same as current law).
• A fee equal to the lesser of the following amounts:
• 0.175 cents per bushel of producer grain that the grain dealer procured in this state during the grain dealer's last completed fiscal year (the grain dealer must report the number of bushels of grain procured).
• $15,000.
• $100 per business location in excess of one location (regardless of the grain dealer's annual grain purchase amount).
• A surcharge of $500 if the grain dealer operated without a license at any time during the preceding year (same as current law).
• A surcharge of $100 if the grain dealer, during the preceding year, failed to file a required financial statement by the required filing deadline (same as current law).
• A surcharge of $100 if the grain dealer failed to file a license renewal application by the license expiration date of August 31 (same as current law).
This rule eliminates the following current grain dealer fees and surcharges:
• $45 fee per truck.
• $425 surcharge for submitting a required financial statement that is not an audited financial statement.
Grain Dealer Fund Assessments
Current Assessments. Under current law, a contributing grain dealer must pay the following annual fund assessments:
• A basic assessment, based on a formula that considers the total dollar value of Wisconsin grain purchased in the grain dealer's last completed fiscal year, the grain dealer's current ratio, and the grain dealer's debt-to-equity ratio. Other things equal, the formula yields declining basic assessments over time.
• A deferred payment assessment, if the grain dealer uses deferred payment contracts (which carry higher financial risk). The assessment equals total deferred payments for Wisconsin grain in the grain dealer's last completed fiscal year, multiplied by the following rate:
• 0.0035 if the grain dealer has contributed to the fund for less than 5 years.
• 0.002 if the grain dealer has contributed to the fund for 5 years or more.
Under current law, there is a minimum total assessment of $20 (basic assessment plus deferred payment assessment).
Proposed Assessments.
• Basic assessment. This rule does not change the calculation of a grain dealer's basic fund assessment (the formula continues to generate declining assessments over time), except that this rule creates a new minimum assessment based on volume (applies only to basic assessment):
• $20 for grain dealers who procured less than $500,000 worth of Wisconsin grain in the preceding license year.
• $200 for grain dealers who procured at least $500,000 but less than $3,000,000 worth of Wisconsin grain.
• $500 for grain dealers who procured Wisconsin grain worth $3,000,000 or more.
• Deferred payment fund assessment. Under this rule, the deferred payment assessment equals the grain dealer's total deferred payments for Wisconsin grain in the grain dealer's last completed fiscal year, multiplied by 0.0035 (regardless of how long the grain dealer has contributed to the fund). There is no minimum deferred payment assessment.
Grain Warehouse Keeper License Fees
Current fees. Under current law, a grain warehouse keeper must pay the following annual license fees and surcharges:
• A nonrefundable license processing fee of $25, plus an additional nonrefundable processing fee of $25 for each separate warehouse in excess of one warehouse.
• An inspection fee based on the combined capacity of the grain warehouse keeper's warehouses:
• A supplemental inspection fee of $275 for each grain warehouse that the grain warehouse keeper operates in excess of one warehouse.
• A surcharge of $500 if the grain warehouse keeper operated without a license at any time during the preceding year.
• A surcharge of $100 if the grain warehouse keeper failed to file an annual financial statement by the applicable deadline.
