BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2240
                                                                  Page  1

          Date of Hearing:   April 28, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                      AB 2240 (Ma) - As Amended:  April 8, 2010 

          Policy Committee:                              AgricultureVote:8  
          - 0 

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill authorizes the California Department of Food and  
          Agriculture (CDFA) to reevaluate the fee structure of the  
          Marketing Enforcement Branch (MEB) based on actual operating  
          costs. In addition, this bill raises certain fees and deletes  
          the outdated fee structure and reporting provisions. 

           FISCAL EFFECT  

          This legislation could generate between $250,000 and $300,000 in  
          additional revenue for the declining MEB fund. 

           COMMENTS  

           1)Rationale  . The operating revenue of MEB has been declining as  
            expenditures have increased over the past several years.   
            Their current year proposed budget estimates a year-end  
            deficit causing their advisory board to recommend a draw of  
            roughly 26%, or $200,000, from their reserves (known as the  
            trust fund) in order to balance their budget.  Without an  
            increase in license fee revenues, this pattern will continue.   
            The advisory board recommended these fee increases during  
            their December 3, 2009, meeting.  This legislation reflects  
            those recommendations.

           2)The Marketing Enforcement Branch  . The mission of the MEB is to  
            enforce laws enacted to ensure confidence and stability in the  
            agricultural marketplace and to protect against unfair  
            business practices between producers, handlers, and processors  
            of California farm products. 









                                                                  AB 2240
                                                                  Page  2

            MEB duties include:

             a)   Licensing dealers, brokers, commission merchants, cash  
               buyers, and processors that handle California farm products  
               for the purpose of resale or processing.

             b)   Processing complaints filed by producers or licensees.  
               The most common complaints filed are for failure to pay in  
               full, failure to render a true and complete account of  
               sales, and failure to comply with the provisions of a  
               written agreement. 


             c)   Investigating alleged violations by licensed or  
               unlicensed entities to ensure that each is in compliance  
               with the Food and Agricultural Code. 


             d)   Taking disciplinary action when appropriate against  
               licensees, principals, or agents. Actions may range from  
               notices of violation, probation, suspension, or revocation  
               of a license, to the denial of an application for license. 


             e)   Referring certain violators to local law enforcement  
               agencies for civil and/or criminal prosecutions.

           3)Opposition  . In opposition to the bill, the Family Winemakers  
            of California (FWC) note that in their opinion the fee  
            increases are inequitable because processors that only buy up  
            to $20,000 worth of produce will face a $50 increase in fees  
            and a $20 increase in agent fees. According to the FWC, the  
            proposal is inequitable since over 3,000 other processors will  
            not incur an increase even though the branch's enforcement  
            activity is driven more by complaints against licensees in  
            other fee tiers. 

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081