BILL ANALYSIS Ó AB 1871 Page 1 Date of Hearing: March 26, 2014 ASSEMBLY COMMITTEE ON AGRICULTURE Susan Talamantes Eggman, Chair AB 1871 (Dickinson) - As Introduced: February 19, 2014 SUBJECT : Agricultural products: direct marketing: certified farmers' markets. SUMMARY : Recasts and expands Certified Farmers' Market (CFM) law by increasing fees and penalties, and creating new requirements and violations. Specifically, this bill : 1)Creates a crime to any person, entity, or their employee or agent, to make any statement, representation or oral assertion by any means that is false, deceptive, or misleading related to the sale or availability of agricultural products regarding the following: a) Area of production; b) Identity of producer; and, c) Manner and method of production. 2)Provides that violations are a misdemeanor punishable by a fine not to exceed $2,500, or county jail not to exceed six months, or both a fine and county jail. 3)Provides in lieu of prosecution, the Secretary of the California Department of Food and Agriculture (CDFA) or a county agricultural commissioner (CAC), may levy a civil penalty of not less than $500 and not more than $5,000, for each violation. Requires the assessed penalty be based upon the scope of the violation, seriousness of the deception, and the impact on the violator, including the deterrent effect for future violation. Provides provisions for appeal. 4)Additionally, or in lieu of provisions 2) or 3), CDFA or CAC may modify, suspend, revoke, or refuse or condition the issuance of a license, permit, registration, or certification issued under provisions of the CFM statute. Actions taken shall be based upon scope of the violation, seriousness of the deception, and the corrective or deterrent effect on future violations. These actions are subject to due process and applicable civil remedies of CFM statutes. AB 1871 Page 2 5)Creates the Direct Agricultural Marketing Penalty Account, with CDFA, requiring all penalties from violations of this chapter be deposited, to be used for investigations and enforcement actions, as well as to contract with CAC for services related to this chapter, including investigation and enforcement. Provides that this account be continuously appropriated. Provides civil penalties for enforcement collected by CAC remain with CAC. 6)Precludes duplicative actions by the state or county brought for a violation of 1) above for the same violation. 7)Deletes the term "fraudulent" in the California Grown statute and replaces it with the terms "false, deceptive, or misleading" regarding the use of "California Grown" adding "or similar terms," and deletes the current penalties for such use, conforming them with the penalties in 2) and 3) above. 8)Adds to the direct marketing legislative findings that by the "permitting, regulation and operating" of CFMs, creates the essential core and foundation for ancillary, but contiguous, nonagricultural vending activities. Makes further technical and conforming changes. 9)Defines "agricultural product" to mean fresh or processed products produced in California, including raw vegetative and animal items, and, other homemade, processed, or manufactured products are not agricultural products for purposes of this chapter, as specified. 10)Defines "practice of the agricultural arts" to mean the undertaking of responsibility for the various phases of producing and harvesting a vegetative or animal agricultural product. 11)Defines "producer" to mean a person, partnership, corporation or other legal farm or ranch producing agricultural products by the practice of the agricultural arts upon legally possessed land that can be documented. Declares a person or entity that possesses property only for the limited period or harvest is not a producer under provisions of this chapter. 12)Permits CDFA to contract with any CAC to carry out provisions of this chapter, including, but not limited to, assistance pertaining to direct marketing producers and outlets; to AB 1871 Page 3 categorize contracts, set compensation, fees, and rates for contracts; and, require them to be paid from assessments and fees collected pursuant to this chapter not otherwise covered by this chapter. 13)Permits, upon reasonable suspicion of a violation of this chapter, a CFM operator to contract with CAC for verification inspections of fields or storage sites of a producer selling at the operator's CFM. 14)Exempts from size, standard pack, container, and labeling requirements, entities registered or certified under this statute, and operating at an outlet or location regulated by this statute or by local laws. 15)Makes conforming deletions of statutes where similar authorities are added elsewhere. 16)Establishes that CFMs are registered points of sales under provision of this chapter, operated in accord with this chapter and regulations adopted pursuant to CFMs. 17)Requires a CFM operator to define specifically the market area where only farmers may sell products; permitting only a producer or authorized agent to sell agricultural products; prohibits agricultural products purchased from another entity to be sold; prohibits a producer or product dealer from selling product to an entity with the knowledge that the products will be resold in a CFM; and, requires all CFM producers to be in compliance with provisions of this chapter. 18)Requires all vendors of agricultural products selling at CFMs to do the following: a) Post an obvious sign or banner at point of sale stating the name of the farm or ranch, and the county where products sold were produced, and a statement to the affect "We grow what we sell." Requires vendors selling a different farm's products at the same stand to separate the products of each farm and correspondingly post the signage requirements. b) Identify all processed agricultural products by package or container label, or bulk sales signage that the products consist only of agricultural products grown or raised by AB 1871 Page 4 the farm or ranch selling them, except for minor exceptions as specified, including the farm or ranch name, city where located, plant registration number of who processed the product, and any other identity references as specifically required or by the Cottage Food Operations statute. In the case of meat products, identity of facility where it was cut and wrapped, or in the case of dairy products, the identity of the facility where it was manufactured or processed. c) Clearly identify organic products with point of sale signage. 19)Vendors selling at CFMs are subject to provisions and penalties described in 1). 20)Requires the operator of a CFM that operates, manages, or otherwise controls a separate sales activity or vending event or marketing area, next to the CFM, not to allow the sale or distribution of fresh whole produce by those vendors. 21)Requires an operator of a CFM to keep accurate records and report quarterly to CDFA the participating individual direct marketing producers, their registration number, and number of days they participated, and requires CDFA to create and maintain online reporting capability. 22)Permits operators of CFMs to establish rules and procedures that are more restrictive and stringent than state statutes for CFMs, but cannot be in conflict with state statutes. 23)Requires nonprofit and other qualifying CFM operators, except for CFMs operated by a government agency, to be considered private entities that are permitted to take actions, adopt rules and impose other requirements they need for proper and honest operation of their CFM. Government agencies operating CFMs are subject to their agencies conduct and actions requirements. All CFMs are subject to applicable state and other laws. 24)Deletes provisions for a producer to appeal a grievance of a rule or procedure of a CFM, the informal hearing process by CDFA, and to employ a mediator to settle the dispute. 25)Requires CDFA to establish a CFM Advisory Committee (CFMAC) AB 1871 Page 5 whose primary goals are to do all of the following: a) Promote the direct purchase of agricultural products from producers at CFMs; b) Ensure that CFMs are primarily maintained for the benefit of producers selling their products; and, c) Ensure honest and fair marketing of products at CFMs and in the ancillary vending activities under the control of a CFM operator. 26)Reduces the membership of CFMAC from 17 members to 14 members and alternatives; eliminates the requirement for industry's list of nominees of active certified producers, and instead requires CDFA to appoint six producers or representatives of agricultural organizations that represent producers, and six CFM operators, and endeavor to have them be geographically diverse and produce diverse products; and, make appointment terms two years, serving at the pleasure of CDFA. 27)Deletes existing appointment requirements; the authority for the CFMAC chair to call a meeting; term of office provisions, conforming to earlier changes; and, the requirement of CFMAC to appoint its officers, making it permissive. Makes further technical and conforming changes to the duties of CFMAC. 28)Deletes existing provisions for CFM operators and producers to become certified along with current set fees for CAC and recasts them, requiring CAC to provide an estimate for various inspection costs and certification costs; requires producers to acknowledge they are using good agricultural practices as described by CDFA; and, other conforming changes. 29) Deletes the existing $0.60 per day per stall fee for CFM operators, replacing it with a $2 per day per stall fee; expands the payment base from CFM vendors to all vendors selling goods under the authority and management of the CFM operator; and, maintains a CFM operators' ability to recover part or all of the $2 fee directly from vendors. 30)Deletes the authority for CDFA to review rules and procedures of CFMs; requires CDFA to maintain a current list of CFMs and certified producers; and makes conforming changes. 31)Deletes the January 1, 2018 sunset provisions for this chapter, making this permanent. AB 1871 Page 6 EXISTING LAW exempts farmers that market direct to consumers from standard pack and size requirements; establishes requirements for CFMs and producers to be certified; authorizes CDFA to adopt regulations to permit the direct selling of certified agricultural products to consumers; authorizes the collection of up to sixty cents ($0.60) per producer per market day to be used for administration, inspection and enforcement; provides for the appointment of a 17 member advisory committee; permits CFMs to establish rules and procedures that are more restrictive than the state rules; provides for civil penalties for violations of rules; provides for an appeal and decision process by CDFA; creates a crime by establishing a violation and provides enforcement provisions that sunset January 1, 2018; and, allows CDFA to appoint ad hoc advisory committees to assist in the administration of programs under this authority. FISCAL EFFECT : Unknown. Legislative Counsel has keyed this bill fiscal. COMMENTS : Certified farmers' markets have become established in many California communities, as have other outlets for direct marketing, such as farm stands and community supported agriculture. There are roughly 800 farmers' markets in California, a significant number of which operate year-round. Following the enactment of the Federal Farmer to Consumer Direct Marketing Act of 1976, CDFA enacted regulations that exempted farmers from packing, sizing and labeling requirements for fresh fruits, nuts, and vegetables, and enabled them to sell products they grow at farmers' markets, provided they receive certification from a CAC. The certification process is to guarantee the consumer that the product is grown by the seller. The success of CFMs has created community events around them. Many CFMs have adjacent non-agricultural markets selling all types of homemade and commercial products. There have been some non-CFMs that sell agricultural products in competition with the farmers within the CFM. As CFMs have become more popular, the willingness of a few producers to sell whatever they could became a concern to many CFM operators. In 1999, they came to the Legislature and enacted a daily per stall fee of sixty cents, intending it to be used by CDFA and CAC for inspections and enforcement purposes. Due to the growth of the program and reductions in General Fund AB 1871 Page 7 to CDFA and reductions to CACs budgets, the fee has had to be used to administer the program and not for inspection and enforcement, as it was intended. A few years ago a Los Angeles television station did an undercover story, exposing a certified producer who was not producing what he was selling, causing much concern to the publics' confidence in buying from CFMs. CDFA put a task force together to attempt to evaluate the program and develop new requirements for operating and participating in a CFM. AB 1871 uses the task force recommendations to restructure and expand the requirements for CFMs, producers, and adjacent non-agricultural markets. It establishes a specific inspection and enforcement fee, while increasing the amount of the daily stall fee, as well as, broadening the pool of payers to include those that participate in adjacent non-agricultural markets. It prohibits the sale of fresh whole agriculture product being sold at the adjacent market, and it requires the producers to declare that they are "selling what they grow," thereby creating a claim that can be pursued by district attorneys or citizens, being modeled after Business and Professions Code false advertising statutes. The prerequisite of food coming from an approved source is one of the many new food safety requirements to have come from the 2010 passage of the federal Food Safety Modernization Act. CDFA has developed Small Farm Food Safety Guidelines, which are considered to cover "on-farm, food safety, good agricultural practices" for producers to follow. This is an important element for food safety. Last year this committee heard AB 996 (Dickinson), which was substantially similar to this bill. We also heard AB 224 (Gordon). Both bills were passed out of committee but had several conflicts that were addressed after our committee hearing. AB 996 was held in Assembly Appropriations Committee and AB 224 was signed by the Governor. As written, AB 1871 states honey as an agricultural product permitted to be sold. There are other products that come out of a bee hive such as beeswax, pollen, propolis, and royal jelly, in addition to honey. The committee may wish to consider changing the term 'honey" to "honey bee hive products." This would broaden the products that beekeepers could sell at CFMs. AB 1871 Page 8 The committee may wish to consider a technical change on page 10, line 24-25, regarding the reference to "local laws," which typically are referred to as "local ordinances." RELATED LEGISLATION : AB 996 (Dickinson), held under submission in the Assembly Appropriations Committee, died pursuant to Article IV, Section 10(c) of the Constitution, rewrote and expanded CFM laws, requirements, and fees; and, increaseed penalties for violations. AB 224 (Gordon), Chapter 404, Statutes of 2013, created definitions dealing with requirements for Consumer Supported Agriculture (CSA); and, authorized CDFA to establish fees, not to exceed $100, to administer this new program, as specified. AB 654 (Hall), Chapter 409, Statutes of 2013, extended the sunset date to January 1, 2018, for the collection of CFM operator fees and enforcement provisions. SB 513 (Cannella), Chapter 337, Statutes of 2011, extended the sunset date to January 1, 2014, for the collection of CFM operator fees and enforcement provisions. REGISTERED SUPPORT / OPPOSITION : Support Beverly Hills Farmers' Market California Farm Bureau Federation Harbor Area Farmers Markets Model Neighborhood Program Sustainable Economic Enterprises of Los Angeles The Hollywood Farmers' Market Opposition None on file Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084