Public Notices
NOTICE OF HEARING
Agriculture, Trade and Consumer Protection
Informational Hearings On The Agricultural Producer Security Law
The State of Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) announces that it will hold public hearings related to Wisconsin's Agricultural Producer Security Law. DATCP seeks public comment on the possible need for changes to the law. Changes, if any, will require legislative action.
Wisconsin's Agricultural Producer Security Law helps protect agricultural producers against catastrophic defaults by grain dealers, grain warehouse keepers, milk contractors and vegetable contractors (collectively referred to as “contractors"). Contractors must be licensed by DATCP, and most contractors must contribute to an agricultural producer security fund (“fund"). If a contributing contractor fails to pay producers, DATCP may reimburse producers from the fund (up to specified limits).
Contributing contractors must pay annual fund assessments based on risk (contractors with large producer obligations, poor financial ratios or risky practices pay higher assessments). Grain, milk and vegetable contractors pay into a single fund (DATCP tracks contributions by industry sector). Fund contributions comprise a very small share (considerably less than 1/10 of one percent) of contractor procurement costs.
The fund has a current balance of approximately $7.5 million. No more than 60% of the fund balance (about $4.5 million) can be paid out in any individual contractor default. That is enough to cover most, but not all, potential contractor defaults (the largest default to date was the $2.5 million Kasson cheese default in 1987). A default by a very large contractor could overwhelm the current fund, and leave producers largely unpaid (a handful of large contractors have default exposures of $20-30 million each).
Current law directs DATCP to purchase backup security to supplement the fund (combined default coverage up to $20 million). However, DATCP has not been able to purchase any backup security because there are no willing providers. DATCP will therefore ask the Legislature to repeal the (unworkable) backup security requirement. The lack of backup security leaves a continuing “hole" in security coverage (for producers who ship to certain very large contractors).
Under current DATCP rules, contractors must make annual disclosures to producers, to help producers assess their financial risk. Each contractor must disclose, in brief general terms, whether the fund will provide full compensation, partial compensation, or no compensation to producers if the contractor defaults. Large contractors with default exposure in excess of fund capacity may file voluntary security to avoid making unfavorable disclosures (but few large contractors have chosen to do so). Under current law, DATCP cannot ordinarily require contractors to file supplementary security.
DATCP seeks public comment on possible legislative changes to the producer security law. DATCP seeks public input on the following issues, among others:
• Is there a continuing need for a producer security law?
• If so, what is the appropriate level of coverage for producers? If that amount exceeds coverage currently available in the fund, how should that coverage be provided?
• In most cases contractors currently pay directly into the fund based on overall size and financial risk. Should contractors continue to cover the cost of providing coverage? Should producers contribute to the fund directly?
• Do producers clearly understand disclosures about the extent of their security coverage and financial risk? Do security disclosures actually influence producer decisions?
Hearing Dates and Locations
DATCP will hold 3 public hearings at the times and places shown below. DATCP invites the public to attend the hearings, and to comment on the producer security law (including the issues noted above).
Thursday, August 16, 2007
The hearing will begin at 2:30 PM or at the conclusion of the rulemaking hearing on chs.
ATCP 99-
101, Wis. Adm. Code, whichever time is later.
DATCP Northwest Regional Office
3610 Oakwood Hills Pkwy
Eau Claire, WI 54701-7754
Tuesday, August 21, 2007
The hearing will begin at 2:30 PM or at the conclusion of the rulemaking hearing on chs.
ATCP 99-
101, Wis. Adm. Code, whichever time is later.
DATCP Northeast Regional Office
Room 152A
200 N Jefferson St.
Green Bay, WI 54301
Wednesday, August 22, 2007
The hearing will begin at 10:30 AM or at the conclusion of the rulemaking hearing on chs.
ATCP 99-
101, Wis. Adm. Code, whichever time is later.
Department of Agriculture, Trade and Consumer Protection
2811 Agriculture Dr.
Board Room (CR-106)
Madison, WI 53718-6777
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.
