Relates to the milk producers security fund

The purpose of this bill is to provide increased payment protection to New York's dairy farmers.

Summary of provisions:

Section 1 of this bill would amend AML §258-b(3)(b) to raise, from 7.5 percent to 15 percent, the percent of the value of milk purchases covered by the Milk Producers Security Fund (MPS Fund), as determined by the Commissioner, that results in a reduction, from one and one-half tenths of one percent to one-tenth of one percent, of the maximum rates established by AML §258-b(3)(a).

Section 2 of this bill would amend AML §258-b(4)(b) to increase, from $7.5 million to $12 million, the cap on the MPS Fund; and to increase, from 7.5 percent to 15 percent, the cap on the value of milk purchases covered by the MPS Fund.

Section 3 of this bill provides that the bill would take effect on the thirtieth day after it becomes law.

Existing law:

AML §258-b(3)(b) establishes 7.5 percent as the percent of value of milk purchases covered by the MPS Fund, as determined by the Commissioner, that results in a reduction, from one and one-half tenths of one percent to one-tenth of one percent, of the maximum rates established by AML §258-b(a).

AML §258-b(4)(b) establishes $7.5 million, or such greater or lesser amount up to 7.5 percent of the value of milk purchases to be covered by the MPS Fund, as the Commissioner may determine is sufficient to protect producers' interests, as a cap on the MPS Fund.

Legislative history:

This is a new bill

Statement in support:

New York maintains the MPS Fund as part of its Milk Security Program for the purpose of protecting milk producers against loss of income in the event a milk dealer defaults in paying for milk received. Milk dealers who have not filed a bond or other required security and who buy, receive or otherwise handle milk received from producers, are generally required to pay into the MPS Fund an amount up to one and one-half

tenths of one percent of a price per hundredweight of milk, or set pursuant to an alternative formula, as determined by the Commissioner.

Whenever the Commissioner determines that the balance in the MPS Fund exceeds 7.5 percent of the value of milk purchases covered by the fund, the maximum rates paid by milk dealers pursuant to AML § 258-b(3) (a) are reduced. See AML § 258-b(3)(b). The Fund is capped at $7.5 million, or such greater or lesser amount, up to 7.5 percent of the value of milk purchases to be covered by the fund, calculated upon the basis of the average value of the milk covered by the fund during the preceding calendar year, as the Commissioner may determine is sufficient to protect producers' interests.

The dollar value of monthly milk purchases by the largest volume dealers participating in the MPS Fund has increased in recent years, raising concerns that a default by a large volume dealer could exhaust or seri- ously deplete the MPS Fund, thereby depriving milk producers of payment protection.

This bill addresses this concern by amending AML §258-b(4)(b) to increase, from $7 million to $12 million, the cap on the MPS Fund and to increase, from 7.5 percent to 15 percent the cap on the value of milk purchases covered by the MPS Fund. This bill also amends AML §258-b(3)(b), governing the maximum rates of MPS Fund assessments paid by milk dealers, to reflect the increase in the MPS Fund cap. The increases will provide the Commissioner with flexibility to maintain the MPS Fund at a level sufficient to protect producers.

Budget implications:

None.

Effective Date:

This bill would take effect on the thirtieth day after it becomes a law.