BILL NUMBER:  S4404

 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 a 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 seriously 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.