Scope statements
Agriculture, Trade and Consumer Protection
The Department of Agriculture, Trade and Consumer Protection (DATCP) gives notice, pursuant to s.
227.135, Stats., that it proposes to modify an administrative rule as follows:
Subject
Agricultural Producer Security Program; Contractor Assessments and Related Issues.
Administrative code reference
Chapters
ATCP 99,
100, and
101, Wis. Adm. Code (Existing). DATCP may reorganize portions of these rules.
Preliminary objectives
Allow for partial refund of annual contractor assessments that are drastically inflated by a temporary change in financial condition caused by a merger or acquisition. Clarify other technical issues related to the agricultural producer security program.
Preliminary policy analysis
DATCP currently administers an agricultural producer security program under ch.
126, Stats. (“producer security law"). This program is designed to protect agricultural producers from catastrophic financial defaults by contractors (grain dealers, grain warehouse keepers, milk contractors and vegetable contractors) who procure agricultural commodities from producers.
Under the producer security law, contractors pay annual assessments to an agricultural producer security fund ("the fund"). If a contractor defaults in payments to producers, DATCP may compensate producers from the fund. A contractor's annual fund assessment is based on the contractor's size, financial condition and risk practices.
Financial condition is determined on the basis of an annual financial statement filed by the contractor. Other things being equal, contractors with weaker financial statements pay higher annual fund assessments. Fund assessments are calculated according to a formula spelled out in the producer security law. However, DATCP may modify fund assessments by rule.
In some cases, a merger or acquisition may temporarily affect a contractor's financial statement. This temporary change may in some cases cause a disproportionate increase in annual fund assessments (based on the current statutory assessment formula).
DATCP proposes to do the following by rule:
•Authorize a partial refund of a contractor's annual fund assessment, if the contractor's assessment is drastically inflated because of a temporary change in financial condition caused by a merger or acquisition.
•Make other changes to clarify and update current rules, as necessary.
Policy alternatives
If DATCP takes no action, the current statutory assessment formula will remain in effect. Under that formula, fund assessments may be unduly affected by legitimate mergers and acquisitions. That may have an undue impact on business decisions, and may impose unnecessary costs on affected contractors.
Statutory authority
DATCP proposes to revise chapters ATCP 99, 100 and 101, Wis. Adm. Code, under authority of ss.
93.07 and
126.81, Stats.
Staff time required
DATCP estimates that it will use approximately 0.5 FTE staff to develop this rule. This includes time required for investigation and analysis, rule drafting, preparing related documents, coordinating advisory committee meetings, holding public hearings and communicating with affected persons and groups. DATCP will use existing staff to develop this rule.
