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Committee
Approves Madigan Proposal to
Protect Dairy Farmers from Bankruptcy
HARRISBURG -- The
Senate Agriculture and Rural Affairs Committee today approved legislation that
would help to protect farmers from bankruptcy by ensuring that milk dealers pay
their debts in a timely manner. Senator Roger Madigan (R-Bradford) amended
House Bill 2512 to provide the added protections to dairy farmers, who in many
cases have faced financial hardship because of payment problems. He has
sponsored similar legislation in the Senate.
Madigan said the measure would
require all new milk dealers to post a 75% bond (30 days average milk shipments)
to prevent lapses in coverage. This complements a provision in current law that
allows dealers to bond only 30% (12 days milk) and pay into the milk security
fund. Currently, milk dealers can remain below 30 days coverage for a dozen or
more years -- causing a financial hardship for farmers if the milk dealer runs
into bankruptcy problems.
Madigan’s legislation would
also authorize the Milk Marketing Board to require an increase in overall bond
requirements more than once per year to provide dairy farmers with protection
from the volatile prices of milk.
The Milk Marketing Board would
also be authorized to conduct a periodic review of a dealer’s security and
overall financial situation to determine if additional security is required.
“This will help to ensure that
rapid changes to a dealer’s financial status are not also exposing dairy farmers
to additional risk,” he said. “Agriculture is a major industry in Pennsylvania,
and we need to protect milk producers to keep it strong.”
Madigan also added a
requirement that existing fully bonded dealers must meet minimum conditions if
they would like to lower their bond amount at a later date and participate in
the Milk Security fund. These include:
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Making more frequent payments
to producers;
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Making higher per
hundredweight contributions to the Milk Security Fund and;
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Providing a bond higher than
30% of 40 days milk payments.
Dealers would be required to
petition the Milk Marketing Board in order to change their status and must
provide financial justification to the board.
House Bill 2512 now goes to the
full Senate for consideration.
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