ATCP 99 – Grain
As of April 30, 2018, the Fund balance attributable to grain dealers is approximately $6,758,000, which exceeded the previous maximum threshold by $758,000. The Fund balance attributable to grain warehouse keepers is approximately $256,000, which is just above the previous minimum. The combined balance of approximately $7,014,000 is over the new statutory maximum of $7 million and almost entirely a result of the grain dealer portion of the Fund.
Pre-Act 155 Balances
| Minimum Statutory Balance | Actual Balance as of 3/31/18 201820187 | Maximum Statutory Balance |
Grain Dealers | $ 1,000,000 | $ 6,788,914.73 | $ 6,000,000 |
Grain Warehouse Keepers | $ 200,000 | $ 283,878.32 | $ 1,000,000 |
Milk Contractors | $ 3,000,000 | $ 6,579,940.89 | $ 12,000,000 |
Vegetable Contractors | $ 800,000 | ($ 4,296,714.61) | $ 3,000,000 |
Entire Fund | $ 5,000,000 | $ 9,356,019.33 | $ 22,000,000 |
Act 155 Implementation Balances
| Minimum Statutory Balance | Actual Balance as of 3/31/18 | Maximum Statutory Balance |
Grain Dealers and Warehousehouse Keepers | $ 1,200,000 | $ 7,072,793.05 | $ 7,000,000 |
Milk Contractors | $ 3,000,000 | $ 6,579,940.89 | $ 12,000,000 |
Vegetable Contractors | $ 800,000 | ($ 4,296,714.61) | $ 3,000,000 |
Entire Fund | $ 5,000,000 | $ 9,356,019.33 | $ 22,000,000 |
By the time Act 155 became law, the grain dealer portion of the Fund had already exceeded its individual statutory maximum of $6 million. As a result, DATCP enacted an emergency rule and a proposed permanent rule to lower assessments until that portion of the fund fell back below $6 million.
The Fund balance attributable to grain warehouse keepers is approximately $256,000 and is expected to grow by approximately $50,000 each year, and therefore, is not projected to reach the proposed assessment exemption threshold of $500,000 for about another five years and would not reach the proposed automatic assessment reduction threshold of $1 million for about another 15 years. To ensure that the grain warehouse keeper program assessments are equitable and proportionate to their respective exposure, this rule proposes that a reduction in assessments will not be implemented for grain warehouse keepers until the Fund balance attributable to grain warehouse keepers exceeds $1 million.
ATCP 100 – Milk
Act 155 allows a portion of producers’ milk checks to be deferred beyond the current statutory requirement. Previously, milk contractors were required to pay producers by the 4th and 19th of each month for the prior month’s milk. The Act requires DATCP to establish a milk contractor deferred payment assessment rate to be applied to deferred payment contracts to cover the additional risk they pose to producers and the Fund. Similar provisions are already in place for the grain industry and were considered while developing the milk deferred payment assessment rate.
Like the new deferred payment contract provisions for milk contractors, the grain dealer program permits grain dealers to enter in to contracts with grain producers to defer payments for up to 120 days. The deferred payment assessment rate applied to these contracts in the grain program is 0.0035. Deferred payments in the milk program pose a similar risk; therefore, DATCP proposes to use the same deferred payment assessment rate of 0.0035 for milk contractors. That is to say, $100,000 of deferred milk payments would equal a $350 deferred payment assessment.
The amount of increased revenue is unknown and will depend on the amount of milk paid for under deferred payment contracts.
Analysis and Supporting Documents used to Determine Effect on Small Business
Members of the Agricultural Producer Security Council, an advisory council as defined in Wis. Stat. § 15.137 (1), worked with the Department to craft Act 155 and the proposed changes to Wisconsin Administrative Code. Members represent the following: 15.137(1)(a)1.the Farmers' Educational and Cooperative Union of America, Wisconsin Division;15.137(1)(a)2. the Midwest Food Processors Association, Inc.; 15.137(1)(a)3.the National Farmers' Organization, Inc.; 15.137(1)(a)4.the Wisconsin Agri-Business Association, Inc.;15.137(1)(a)5. the Wisconsin Cheese Makers Association;15.137(1)(a)6. the Wisconsin Corn Growers Association, Inc., the Wisconsin Soybean Association, Inc.;15.137(1)(a)7. the Wisconsin Dairy Products Association, Inc.;15.137(1)(a)8. the Wisconsin Farm Bureau Federation;15.137(1)(a)9. Cooperative Network; and 15.137(1)(a)10.the Wisconsin Potato and Vegetable Growers Association, Inc. Effect on Small Business
ATCP 99 - Grain
This rule will not have an immediate impact on grain warehouse keepers. Prior to Act 155, warehouse keepers were not projected to receive an assessment exemption for about five years or an assessment reduction for about 15 years. This proposed rule does not change those projections. Nonetheless, these changes are necessary to harmonize ATCP 99 with statute.
ATCP 100 - Milk
This rule will establish a deferred payment assessment rate that will cover the additional risk posed to milk producers and the Fund associated with milk contractors deferring payments to milk producers for up to 120 days, as permitted by Act 155. Milk contractors entering into deferred payment contracts with producers will pay higher assessments; however, the statute allows these assessments to be passed on to the producers who requested their payments be deferred. Therefore, there will be no effect to milk contractors.
Because Act 155 permits, but does not require, milk contractors to offer deferred payment contracts, any effects will be the result of the decision of the contractor. 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.
DATCP Contact
David A. Woldseth
Department of Agriculture, Trade and Consumer Protection
P.O. Box 8911
Madison, WI 53708-8911
(608) 224-5164
Section 1. ATCP 99.235 (2) is amended to read:
ATCP 99.126(2)(2) assessment amount.
ATCP 99.126(2)(a)(a) A contributing grain warehouse keeper who operates grain warehouses with a combined capacity of less than 500,000 bushels shall pay an annual fund assessment equal to the greater of the following amounts: ATCP 99.126(2)(a)2. 2. If the fund balance attributable to grain warehouse keepers is less than $1 million on May 31 of the last preceding license year, then Tthe sum of the amounts calculated under s. 126.30 (1) (a) and (b), Stats., multiplied by 1.5. ATCP 99.126(2)(b) (b) A contributing grain warehouse keeper who reports at least 500,000 bushels shall pay an annual fund assessment equal to the greater of the following amounts: ATCP 99.126(2)(c)2. 2. If the fund balance attributable to grain warehouse keepers is less than $1 million on May 31 of the last preceding license year, then tThe sum of the amounts calculated under s. 126.30 (1) (a) and (1) (b), Stats. Section 2. ATCP 99.235 (4) (b) is amended to read:
(b) The fund balance attributable to grain warehouse keepers was at least $500,0003 million on May 31 of the last preceding license year.
Section 3. ATCP 100.135 (1) is repealed and recreated 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 shall equal the sum of the assessments in subs. (1e) and (1m). (1e) Basic assessment. A contributing milk contractor shall pay a basic assessment equal to the minimum assessment amount listed in sub. (9) or the sum of the following multiplied by 0.8, whichever is greater:
a. The milk contractor's current ratio assessment. The current ratio assessment for a license year equals the milk contractor's current ratio assessment rate under sub. (2) multiplied by the annual milk payroll obligations reported under s. 126.41 (6) (a), Stats., in the milk contractor's license application for that license year. b. The milk contractor's debt to equity ratio assessment. The debt to equity ratio assessment for a license year equals the milk contractor's debt to equity ratio assessment rate under sub. (4) multiplied by the annual milk payroll obligations reported under s. 126.41 (6) (a), Stats., in the milk contractor's license application for that license year. Section 5. ATCP 100.135 (1m) is created to read:
ATCP 100.135(1)(b)(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. Section 6. ATCP 100.135 (10) (intro.) is amended to read:
(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 7. Effective date: This rule takes effect on the first day of the month following publication in the Wisconsin administrative register, as provided in s. 227.22 (2) (intro.), Stats.
