BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 537
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                   AB 537 (Arambula) - As Amended:  April 23, 2009 

          Policy Committee:                              AgricultureVote:8  
          - 0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill requires a farmers' market, a certified farmers'  
          market, or any other open-air market selling fresh produce that  
          does not already have a Food Stamps Electronic Benefits Transfer  
          (EBT) system in place by January 1, 2012, to obtain the system  
          or permit a Food and Nutrition Service (FNS) authorized  
          third-party organization to operate an EBT system on behalf of  
          the produce sellers.

           FISCAL EFFECT  

          1)One-time costs of approximately $1 million ($500,000 GF) for  
            the purchase of the point of sale (POS) devices and the  
            initial activation fee for the 733 certified farmers markets  
            in the state that are currently are not participating in the  
            program.

          2)On-going, annual costs in excess of $600,000 ($300,000 GF) for  
            the transaction fees and monthly charges associated with  
            maintaining the POS devices.

          3)Unknown one-time and on-going costs of several hundred  
            thousand dollars to provide POS devices at an unknown number  
            of open-air markets and farmers' markets that are not  
            certified.  The state does not collect data on how many of  
            those markets exist throughout the state and therefore the  
            fiscal impact cannot be calculated.

           COMMENTS  

           1)Rationale  .  According to the author, the switch from paper  








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            food stamps to electronic benefit transfer (EBT), essentially  
            a debit card, rendered certified farmers' markets inaccessible  
            to individuals using their food stamp benefits for food  
            purchases.  While many farmers' markets throughout the state  
            have begun to use POS devices which allow food stamp  
            recipients to use their benefits to purchase fresh fruits and  
            vegetables at farmers' markets, not all have acquired the  
            necessary equipment.  This bill would require all open air  
            markets selling fresh produce to obtain a POS system or allow  
            a third-party to operate a POS system on behalf of the sellers  
            at the market.

           2)Background  . There has been an on-going national policy  
            discussion concerning the lack of fresh produce available to  
            many people who are living on limited incomes or receiving  
            food stamps or other forms of assistance.  Many poorer urban  
            neighborhoods lack farmers' markets or even grocery stores  
            that sell fresh produce.  An integral part of those  
            discussions and that effort has been to allow people using EBT  
            cards access to farmers' markets. 

            As of the end of 2008, 753 farmers' markets were authorized  
            nationwide to accept Supplemental Nutrition Assistance Program  
            (SNAP) (Food Stamps in California) benefits nationwide, a 34 %  
            increase from 2007. While the percentage of redemptions is  
            low, the amount of funds going to small farmers has increased  
            from about $1 million in 2007 to $2.7 million in 2008,  
            nationwide. Over 250 farmers' markets were operating a scrip  
            or token system nationwide. 

           3)Current Farmers' Market Utilization  . The state has allowed  
            farmers' markets to operate POS EBT devices for close to a  
            decade. Currently, approximately 67 certified farmers' markets  
            in the state allow customers to utilize their food stamp  
            benefits when purchasing produce or other goods at the market.  
            In 2007-08, $633,000 in food stamp benefits were redeemed at  
            these markets, out of a total statewide food stamp benefit  
            redemption of close to $3 billion. 

           4)Third-Party Access to the Federal Financial System  . The bill  
            requires a third party be allowed to provide access to EBT  
            benefits for individuals at farmers' markets.  Preliminary  
            information suggests that it is unlikely that the federal  
            government will allow a contracted third-party to have access  
            to the federal financial system, which is what would likely be  








                                                                  AB 537
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            required for this provision to be operable. 

           
          5)WIC Farmers Market Programs  . The Farmers' Market Nutrition  
            Program was established by Congress in 1992, to provide fresh,  
            unprepared, locally grown fruits and vegetables to  
            participants in the Women, Infants, and Children Nutrition  
            Program (WIC), and to expand the awareness, use of and sales  
            at farmers' markets. Currently, 46 states, including  
            California, participate in the federal program. 

            Eligible WIC participants are issued Farmers' Market Nutrition  
            Program (FMNP) coupons in addition to their regular WIC food  
            instruments. These coupons can be used to buy fresh,  
            unprepared fruits, vegetables and herbs from farmers, farmers'  
            markets or roadside stands that have been approved by the  
            state agency to accept FMNP coupons. The farmers, farmers'  
            markets or roadside stands then submit the coupons to the bank  
            or state agency for reimbursement. The Federal food benefit  
            level for FMNP recipients may not be less than $10 and no more  
            than $30 per year, per recipient.


          6)Healthy Purchase Pilot  . The pilot project is designed to  
            strengthen California's efforts to prevent obesity by  
            increasing access to fresh fruit and vegetables in low-income  
            communities where fruit and vegetables typically are  
            unavailable or costly.   California, like other states, has a  
            growing obesity problem, with approximately 60% of adults and  
            25% of children obese or overweight.  The consequences of  
            obesity are devastating to individuals, and include diabetes,  
            hypertension, heart disease, cancer and other debilitating  
            diseases.  Physicians, nutritionists and other experts  
            recognize the importance of a diet rich in fruit and  
            vegetables as one key strategy in preventing obesity.   

           
           7)Committee Concern  . Should the state focus its energy and  
            resources on supporting farmers' markets that serve low income  
            communities, rather than requiring that markets in all  
            communities (including such places as Beverly Hills,   
            Sausalito, Tiburon, Montecito that may not serve low income  
            families) have an EBT system in place?  In addition, the  
            committee may want to consider targeting resources toward  
            programs like the Healthy Purchase Pilot, which encourage  








                                                                  AB 537
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            store owners in low income areas to carry fresh produce and  
            reward food stamps recipients who purchase fresh produce,  
            rather than investing in POS EBT devices that may not be  
            utilized. 
           
           
           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081