BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 199
                                                                  Page  1

          Date of Hearing:   May 1, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                 AB 199 (Holden) - As Introduced:  January 29, 2013 

          Policy Committee:                               
          AccountabilityVote:12 - 1
                        Agriculture                             7 - 0 

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill requires state agencies to purchase agricultural  
          products that are grown, manufactured, or produced in California  
          as long as the cost is not more than 5% above the lowest costs  
          of out-of-state products. Specifically, this bill: 

          1)Requires that state-owned and state-run institutions, except  
            for schools, purchase agriculture products that are grown in  
            California instead of those grown elsewhere only if the costs  
            of California products are no more than 5% higher than the  
            costs of the lowest bid or price quoted for out-of-state  
            products.

          2)If no California-grown agriculture products meet the above  
            criteria, the bid shall go to the California company that  
            packs or processes its products in the state, as long as the  
            costs do not exceed the cost of the lowest bid or price quoted  
            for out-of-state products by more than 5%. 

          3)Requires public schools and school districts to purchase  
            agriculture products grown in California instead of  
            out-of-state products if the costs of the California products  
            do not exceed the lowest bid or price quoted for out-of-state  
            products.

           FISCAL EFFECT  

          1)Given all of the state agencies, including the California  
            Department of Corrections and Rehabilitation, University of  
            California (UC), California State Universities (CSU) and  








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            various state hospitals, and the over 1,000 school districts  
            that purchase food, workload costs associated with monitoring  
            the purchase of food, finding vendors that provide California  
            food, ensuring that the quality is comparable to imported food  
            and the cost is no more than 5% more than the cost of imported  
            food would likely cost in excess of $5 million per year. 

          2)Unknown, likely significant costs in excess of $1 million, in  
            on-going costs associated with the potential 5% increase in  
            the cost of food purchased by the state. 

           COMMENTS  

           1)Purpose  . The intent of this bill is to give California  
            businesses that produce agricultural products an advantage  
            over out-of state producers even if the California products  
            are more expensive. According to the author, this pricing  
            advantage would likely mean an increase in the state's  
            purchases of California-grown and California-processed  
            agricultural products.  The author hopes that such an increase  
            would positively impact the state's agricultural economy.

            Supporters state that with the current economic climate, it is  
            important to keep state tax dollars local. Supporters also  
            state that this preference will give local farmers a fair  
            chance to sell their products within the state, and give a  
            boost to the California farming economy. Supporters further  
            note that California farmers are faced with a competitive  
            disadvantage due to subsidized imported produce and  
            regulations that they claim are more restrictive than other  
            states' and countries' regulations.  
           
          2)Agricultural Products  . Under current law, an agricultural  
            product is defined as any fowl, animal, vegetable, or other  
            stuff, product, or article which is customary food, or which  
            is proper for food for human beings (Food and Agricultural  
            Code, Chapter 5, Section 58501 (a)).  As currently written,  
            this bill applies to all agricultural products.

           3)CSU Experience  . Because of the volume of food purchased by the  
            CSU system, they work with several large food service  
            establishments across the state. A cursory review of the  
            produce purchased by CSU shows that most of the produce  
            purchased by the university is not only from out of state, but  
            also outside of the country.  California grown produce tends  








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            to be limited to lettuce, broccoli, and oranges. Given the  
            amount of food purchased, the workload associated with  
            implementing the provisions of this bill within the CSU system  
            alone would be significant. 

           4)Related Legislation  . AB 1960 (Ma), of 2010, encouraged the  
            State of California and its agencies to purchase California  
            produced, or produced and processed, fruit, nuts and  
            vegetables if the price is equal to or less than, imported  
            fruits, nuts and vegetables. This bill was held in the Senate  
            Rules committee.
             

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