BILL ANALYSIS Ó
AB 1625
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Date of Hearing: April 11, 2012
ASSEMBLY COMMITTEE ON AGRICULTURE
Cathleen Galgiani, Chair
AB 1625 (Allen) - As Amended: April 9, 2012
SUBJECT : Transition to Organics Act.
SUMMARY : Creates a fund and program, as specified, to financially
assist farmers with the first year of certification costs who have
transitioned from conventional farming practices to certified
organic farming practices. Specifically, this bill :
1)Cites this as the "Transition to Organic Act (Act) of 2012," and
requires it be interpreted in accordance with the National
Organic Program (NOP) and the California Organic Products Act of
2003 (COPA).
2)Provides the following definitions for purposes of this Act:
a) "Conventional farm" meaning any farm or portions of a farm
that is not certified under the rules of NOP and COPA, and has
submitted a pesticide use report in accordance with statute
prior to January 1, 2013; and,
b) "Person" means an individual, group or individuals,
corporation, association, organization, cooperative or other
entity.
3)Creates the Transition to Organics Fund (Fund) in the State
Treasury and permits moneys to be deposited in the Fund. The
Fund may be located in the State Treasury or in a state
depository bank approved by the State Treasury, and shall be
appropriated by the Legislature.
4)Requires the Fund to consist of moneys from industry, and citizen
sources and prohibits deposits from the state general fund.
5)Requires the Fund to be administered by the Secretary (Secretary)
of the California Department of Food and Agriculture (CDFA) and
permits the adoption of regulations to carry out this Act.
6)Requires expenditures by the Secretary from the Fund do only the
following:
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a) Provide financial assistance to farmers that have
transitioned from conventional farms to certified organic
farms, for the first year of organic certification, pursuant
to the following procedures:
i) For the first year a farmer is certified to sell
organic products, on or after January 1, 2013, the Act
permits them to apply and receive up to a 25% reimbursement
of the costs to obtain organic certification, including
inspection fees, application fees and annual fees; and,
ii) Provides a maximum payment to any such transitioning
farm of $250.00 and a maximum payment to any one person per
year of $1,000. Reimbursement will be made on a first come,
first serve basis, contingent upon sufficient funds being
available in the Fund.
b) Provides that the Director of Finance is to annually
determine if sufficient moneys are available in the Fund to
pay the expenses incurred by the Secretary in the
administration of the Act.
7)Permits the Secretary to administer the Fund in coordination with
the procedures associated with the federal Organic Certification
Cost-Share Program.
8)Requires the Secretary to receive and accept moneys on behalf of
the Act from any combination of persons, state agencies, and
deposit said moneys to the Fund.
9)Requires persons applying for moneys, to be solely responsible
for the accuracy and truthfulness of information provided to
CDFA, including but not limited to, a description of the
qualifying property, prior land use, and certification costs.
Permits the Secretary to levy a civil penalty, in accordance with
existing statute, upon persons who provide false information to
CDFA.
10)Requires the Secretary to keep records of contributions and
disbursements of the Fund; these records are to be publicly
available, and available to the California Organic Products
Advisory Committee (Advisory Committee).
EXISTING LAW established the state organic program in 1990 for the
purpose of protecting the consumers, producers, handlers,
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processors and retailers by the establishment of standards under
which fresh agricultural products and foods may be labeled and sold
as "organic." It provides definitions, enforcement, program
procedures, an advisory board, inspections, penalties, a
certification process, fees, and regulations. Enforcement
activities are coordinated with the Advisory Committee, the U.S.
Department of Agriculture and the California County Agricultural
Commissioners. The scope of the Act was expanded in 1992 to
include seed fiber, and horticultural products sold or labeled as
organic. In 2002, it was amended to conform to NOP and renamed
COPA.
Current statutes provide that the Secretary may, in lieu of
prosecution, levy a civil penalty per violation of up to $5,000, as
specified. Further, if it is found that the violation was not
intentional the penalty shall not exceed $2,500 per violation.
Statutes provide for due process.
EXISTING FEDERAL LAW provides for the establishment of regulations
of food for humans, food for pets, livestock feed and raw
agricultural products when using, on a principal display panel
(label), the word "Organic." The enabling NOP regulations were
finalized and adopted in December 2001 under the authorization of
the federal Organic Foods Product Act, which was created in 1990.
Regulations provide definitions, enforcement procedures,
registration fees for certification and procedures, requirements
for becoming a certifier, and listing of allowed and prohibited
substances that are updated annually. The federal Organic
Certification Cost-Share program provides up to 75% of the
certification cost, up to a maximum of $750.
FISCAL EFFECT : Unknown. Legislative Counsel has keyed this bill
fiscal.
COMMENTS : Transition from conventional to organic farming creates
many challenges; it takes at least three years to become certified
organic. Organic or transitioning farmers cannot use synthetic
fertilizers and can only use approved pesticides, and such products
are often more expensive and less familiar to the farmer. During
this time, the farmer must comply with organic growing requirements
but cannot sell products as organic. The author states that these
financial challenges discourage many farmers from converting to
organic practices. It is estimated that California has 22% of the
nation's certified organic growers.
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Currently, CDFA has an agreement with NOP to administer the federal
Cost-Share program, which can provide to organic farmers,
processors and handlers who are eligible, up to 75% or a maximum of
$750 of their costs to be certified as organic per year. CDFA
receives $1 million annually to operate the federal program. Last
fiscal year they sent cost-share applications to 3,276 organic
registrants, 1,481 responded (45%) and 1,475 received
reimbursements totaling $925,027.68 for an average of $625 each.
Six applicants did not have operations within California and were
redirected to the appropriate state in which they were located. AB
1625 proposes to create a similar program to the federal cost-share
program to encourage farmers interested in transitioning to organic
practices and provide an economic incentive once they have reached
certification status.
The federal Cost-Share program has annual caps, but no lifetime
caps, for applicants to receive reimbursement. This subsidy can be
requested year after year as long as the funds continue to be
appropriated in the federal budget. As written, AB 1625 will only
allow reimbursement of certification costs, up to 25%, for the
first year of certification, limiting the funding needs of the
program.
The committee may wish to consider if it is good policy to pay
growers to convert to organic now, when those who pioneered the
industry did not have financial assistance, giving new growers a
potential advantage in the market, albeit small.
Previous Legislation : AB 1401 (Ma), 2009, vetoed by the Governor,
which created the "Transition to Organics Fund" and the "Transition
to Organic Act," to assist farmers who are transitioning from
conventional farming practices to certified organic practices, and
provide specified definitions and related authority to operate the
program. Governor Schwarzenegger's veto message stated:
"While I support the author's goal to assist individuals
converting to organic farming, I cannot support establishing
an assistance program and expanding the workload of the
California Department of Food and Agriculture when there is no
guarantee of a funding mechanism."
REGISTERED SUPPORT / OPPOSITION :
Support
AB 1625
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American Federation of State, County and Municipal Employees,
AFL-CIO
California State Grange
Sierra Club of California
Opposition
None on File.
Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084