BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1871
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          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.








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          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  







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            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  







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               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)  







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            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. 







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          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  







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          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.







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          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