BILL ANALYSIS Ó AB 1389 Page 1 Date of Hearing: May 15, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1389 (Committee on Agriculture) - As Amended: April 24, 2013 Policy Committee: AgricultureVote:7 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill makes the statutes and regulations governing the San Joaquin Valley Quality Cotton District inoperative effective January 1, 2014, with the exception of the statutes dealing with certified cottonseed and colored cotton, until either of the following occurs: 1)A resolution is approved by the San Joaquin Valley Cotton Board and Secretary of the California Department of Food and Agriculture (CDFA) that calls for a referendum vote of the San Joaquin Valley cotton growers. 2)The CDFA Secretary receives a petition from members of the San Joaquin Valley cotton industry, and determines that due to industry circumstances, it is in the best interest of the state and industry that specific sections of the district's statutes be reactivated. If CDFA makes such a determination, they may establish an advisory committee, made up of cotton growers, handlers of whole cottonseed, handlers of raw cotton fiber, and representatives of cotton ginning organizations. FISCAL EFFECT CDFA estimates that it will cost about $50,000 per year to continue operating the quality enforcement program as it pertains to the certification of cotton seeds and colored cotton. The program has a reserve of approximately $150,000. It is unknown what the funding source will be after program funds are fully expended. The funds could be provided by the California Cotton Ginners and Growers Association or some other AB 1389 Page 2 cotton industry organization, or the San Joaquin Valley Cotton Board (SJVCB) could petition the CDFA Secretary for an assessment. COMMENTS 1)Purpose . As a result of the improved higher quality cotton varieties that can now be grown outside the San Joaquin Valley, reduced market prices, and water shortages, the valley's planted cotton acreage has declined over the last two decades. While cotton hit a high of over 1.6 million acres planted in 1979, in 2013 it is estimated to be planted on 300,000 acres, down 37% from last year. This greatly reduces the concerns among the valley's cotton growers regarding cross contamination of varieties that could affect the overall quality of cotton grown in the state. The industry, in an effort to reduce costs to its producers has asked that the statutes establishing the San Joaquin Valley Cotton district become dormant. However they do ask for ongoing limited enforcement of three specific sections critical to the integrity of cotton varieties and purity. 2)Background . This district was created by statute in 1978 and approved by a referendum of growers and industry-related members to promote and protect the planting and growing of pure, high quality cotton varieties. Due to environmental and economic changes over recent years, the number of acres of cotton planted in the state has declined significantly. 3)San Joaquin Valley Cotton Board (SJVCB) . The SJVCB was created by statute in 1925 and its primary purpose was to encourage the uniformity, quality, and marketability of valley cotton in order to bring the best monetary returns to growers. The board's programs are completely funded by the industry with an annual assessment of less than $1 per acre. The Board is comprised of 11 members elected to serve four year terms: two growers from each of the major growing counties of Fresno, Tulare, Kings, and Kern; one grower each from the counties of Madera and Merced; six members of the cotton industry at large; and one public member appointed by the Secretary of Food and Agriculture. Each member has an alternate. The growers and their alternates are nominated and AB 1389 Page 3 elected by growers from their respective county. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081