Groups Cry Foul Over State Ag Producer Security Payouts
Wisconsin Ag Connection - 08/25/2014
A couple of Wisconsin farm groups are asking the state's agriculture department to make changes to its Agricultural Producer Security program and fund, which were designed to protect dairy, grain, and vegetable producers from the financial defaults of their buyers. The request comes after an out-of-state
contractor's nonpayment wiped out over half of the fund to reimburse 19 vegetable producers.
Prior to an APS program overhaul in 2002, APS securities and payments were held within each industry. The new program included a new fund intended to replace individual security and supplement with bonds in the event that a buyer's default exceeded the fund's capacity.
In a joint memo presented to DATCP last week, Cooperative Network and the Wisconsin Cheese Makers Association said it was originally concerned about the changes because of the unfulfilled promise that individual security would be replaced by blanket industry bonds.
"We have asked in the past for changes to the law that would protect dairy contractors from the impacts that a default such as Allens Inc. will have on the dairy industry," the memo said. "We continue to insist that such a change is appropriate."
The dairy sector had $7.6 million invested in the APS fund at the time of the $6.7-million Allens Inc. default in 2013. The last dairy industry default was in 2005 and resulted in APS payments totaling $130,000.