Assembly Bill A7266

                                BILL NUMBER:A7266

TITLE  OF  BILL:    An  act to amend the agriculture and markets law, in
relation to the milk producers security fund

Purpose:

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.