BILL ANALYSIS                                                                                                                                                                                                    Ó



                           SENATE COMMITTEE on AGRICULTURE
                          Senator Cathleen Galgiani, Chair

          BILL NO:    AB 1871                   HEARING:  06/17/14
          AUTHOR:   Dickinson                   FISCAL:  Yes
          VERSION:  06/11/14                    CONSULTANT:  Anne Megaro
          

             Agricultural products: direct marketing: certified farmers'  
                                      markets.


           SUMMARY  :

          This bill would revise provisions related to certified farmers'  
          markets (CFM) by increasing fees and penalties and expanding  
          requirements, enforcement, and violations.
           
           
           BACKGROUND AND EXISTING LAW  :

          Existing law authorizes the secretary of the Department of Food  
          and Agriculture (CDFA) to regulate and encourage the direct sale  
          of agricultural products to consumers.  These regulations may  
          include provisions to ensure product quality and to prevent  
          fraud, deception, or misrepresentation in the marketplace.   
          Existing law provides for the creation of certified farmers'  
          markets (CFMs), a form of direct marketing.  Currently, there  
          are nearly 800 CFMs in California with 3,350 certified farmers  
          directly marketing to consumers (Food and Agricultural Code  
          §47000 et seq.).

          CDFA is responsible for administering and regulating CFMs and  
          county agricultural commissioners are responsible on the local  
          level for issuing producer and operator certificates and  
          conducting onsite inspections to verify that all agricultural  
          products sold at the CFM are grown by the producer (Food and  
          Agricultural Code §47020).

          Existing law requires each agricultural producer selling at a  
          CFM to pay a stall fee not greater than $0.60 per marketing day.  
           Fees are collected by the CFM operator and deposited into the  
          Department of Food and Agriculture Fund to be used to cover the  
          reasonable costs to carry out CFM administration, inspection,  
          and enforcement (Food and Agricultural Code §47021).

          Existing law exempts certified producers selling at CFMs from  
          certain packing, size, and labeling requirements under the  
          Fruit, Nut, and Vegetable Standards Law.  These producers are  




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          instead subject to conditions and regulations specific to direct  
          marketers, which include packing and labeling requirements (Food  
          and Agricultural Code §47002).

          Existing law prohibits any person engaged in direct marketing  
          from mislabeling or deceptively packing any product or having  
          any false or misleading statement on any label or as part of any  
          display.  CDFA and county agricultural commissioners are  
          authorized to levy a civil penalty against those in violation  
          ranging from $50-$1,000, depending on the severity of the  
          violation.  Existing law provides for a hearing and an appeal  
          process before the civil penalty is levied (Food and  
          Agricultural Code §47022 et seq.).  

          Existing law establishes the Certified Farmers' Market Advisory  
          Committee, composed of 17 members appointed by the secretary of  
          CDFA.  The committee shall make recommendations to the secretary  
          on all matters pertaining to direct marketing, including  
          administration, enforcement, inspections, fees, civil penalties,  
          and an annual budget (Food and Agricultural Code §47011).

          Existing law provides a sunset date for provisions regarding  
          CFMs, set to expire January 1, 2018.


           PROPOSED LAW  :

           This bill:

              1.   Prohibits any person or entity from engaging in false,  
               deceptive, or misleading marketing regarding the sale or  
               availability of agricultural products at CFMs;  
               specifically, where, how, and by whom the product was  
               produced. 

             2.   Provides that a violation of false, deceptive, or  
               misleading marketing is a misdemeanor punishable by  
               imprisonment in county jail by not longer than six months,  
               and/or by a fine not exceeding $2,500.

             3.   Authorizes the secretary of CDFA or county agricultural  
               commissioners, in lieu of prosecution, to levy a civil  
               penalty between $500 and $5,000 per violation, and  
               authorizes them to take a separate action in regards to  
               licenses and permits.  The severity of the penalty shall be  
               based on the seriousness of the deception and impact of the  
               penalty on the violator.





          AB 1871 - Page 3



             4.   Creates the Direct Agricultural Marketing Penalty  
               Account within CDFA to be funded by civil penalties  
               collected pursuant to the above provisions and to be used  
               for investigations and enforcement.

             5.   Specifies that a false, deceptive, or misleading use of  
               the term "California Grown" or similar term with identical  
               connotations is subject to the penalties above.

             6.   States findings and declarations that CFMs provide the  
               foundation for additional nonagricultural vending  
               activities that are separate but contiguous with the CFM,  
               thereby creating a larger community event and additional  
               revenue for operators of CFMs.

             7.   Defines "agricultural product" to mean a fresh or  
               processed product produced in California, including fruits,  
               nuts, vegetables, herbs, mushrooms, dairy, shell eggs,  
               honey, pollen, unprocessed bees wax, propolis, royal jelly,  
               flowers, grains, nursery stock, livestock meats, poultry  
               meats, rabbit meats, and fish including farmed shellfish.

             8.   Excludes from the definition of "agricultural product"  
               those products that are characterized as services, arts,  
               crafts, bakery, candies, soaps, balms, perfumes, cosmetics,  
               pottery, clothing, fabrics, pastas, compost, fertilizers,  
               candles, ceramics, foraged, types of wares, and any product  
               that combines an agricultural product with a  
               nonagricultural product or service that materially  
               increases the purchase price of the product.

             9.   Defines "practice of the agricultural arts" to mean  
               being predominantly responsible for the decisions and  
               actions of producing an agricultural product, such as  
               planting, growing, feeding, fertilizing, irrigating,  
               cultivating, controlling pests and diseases, and  
               harvesting.

             10.  Defines "producer" to mean a person, partnership,  
               corporation, or otherwise legally formed farm or ranch that  
               produces agricultural products upon land that the producer  
               owns, rents, leases, sharecrops, or otherwise legally  
               controls.

             11.  Excludes from the definition of producer a person or  
               entity that rents, leases, or otherwise legally possesses  





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               property only at the time of harvest.

             12.  Authorizes the secretary of CDFA to enter into  
               cooperative agreements with county agricultural  
               commissioners, funded by CFM assessments and fees, to carry  
               out provisions related to CFMs, including administration,  
               investigation, inspection, registration, and assistance to  
               producers. 

             13.  Authorizes a CFM operator, upon reasonable suspicion, to  
               contract with a county agricultural commissioner for a  
               special field or storage verification inspection of a  
               producer selling in the operator's CFM.

             14.  Repeals the authority for individual CMFs to establish  
               governing bodies and enforce all rules and procedures  
               pertaining to CFMs.

             15.  Repeals provisions related to certified producer  
               aggrievances with individual CFM rules or procedures.

             16.  Redefines certified farmers' markets as California  
               agricultural point of sale locations that are registered  
               and certified with CDFA and the county agricultural  
               commissioner.  CFMs must have clearly defined marketing  
               areas where only authorized producers may sell agricultural  
               products they have grown.

             17.  Requires CFM vendors to post a conspicuous sign at the  
               point of sale that states the name and county location of  
               the vendor's farm/ranch and a statement that "We Grow What  
               We Sell" or such similar statement.

             18.  Requires CFM vendors to ensure that all processed  
               agricultural products offered for sale are made from  
               agricultural products exclusively grown or raised by the  
               farm/ranch, less incidental flavorings or preservatives,  
               and requires vendors to provide a registration number or  
               other identification to indicate the processing facility  
               plus all currently required health and nutrition labeling  
               statements.
             19.  Requires CFM vendors to ensure all products represented  
               as organic are clearly labeled.

             20.  Prohibits CFM operators who operate other  
               non-agricultural marketing events in close proximity or  
               contiguous to a CFM from allowing the sale of fresh whole  





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               fruits, nuts, vegetables, and flowers outside of the CFM  
               area. 

             21.  Requires CFM operators to keep accurate records and  
               submit a quarterly report of registration numbers and  
               producer participation frequency.

             22.  Recognizes nonprofit entities and other qualified CFM  
               operators as private entities and allows them to take  
               actions, adopt rules, and impose requirements for market  
               operation, subject to the application of any state or other  
               laws.

             23.  Clarifies that the goals of the Certified Farmers'  
               Market Advisory Committee to promote consumption of fresh  
               agricultural products purchased at CFMs, ensure that future  
               CFMs benefit participating vendors, and ensure honest and  
               fair marketing.

             24.  Reduces the number of members on the Certified Farmers'  
               Market Advisory Committee from17 to 14 by eliminating both  
               positions for representatives of major direct marketing  
               associations and one of two positions for county  
               agricultural commissioners.

             25.  Requires a CFM operator to annually register with CDFA  
               by applying for and obtaining a certificate from the county  
               agricultural commissioner. 

             26.  Requires a producer, prior to selling at a CFM, to  
               register with CDFA by applying for and obtaining a  
               certificate from the county agricultural commissioner,  
               accompanied by a producer declaration that the producer is  
               knowledgeable about good agricultural practices as outlined  
               in the Small Farm Food Safety Guidelines published by CDFA.

             27.  Authorizes the secretary of CDFA to promulgate  
               regulations specifying the information a producer is  
               required to submit regarding specific crops intended for  
               sale at a CFM.

             28.  Requires a county agricultural commissioner, at the time  
               of producer or market certification, to provide a schedule  
               of fees estimating expenses for inspections, and a  
               statement that the commissioner may charge a fee equal to  
               actual expenses incurred.






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             29.  Requires that all vendors, not just agricultural  
               vendors, pay a $2 fee per market day to the CFM operator,  
               who remits payment to CDFA on a quarterly basis.

             30.  Allows CFMs to petition the secretary of CDFA to reduce  
               the $2 vendor fee if the CFM only allows the sale of  
               agricultural products produced solely within the same  
               county as the CFM location.

             31.  Repeals the sunset date for provisions related to CFMs.

             32.  Makes technical amendments.
           COMMENTS  :

           Need for this bill:  According to the author, "Concerns over  
          fraud, food safety, and traceability have emerged.  News reports  
          have indicated that cheating, misrepresentation, and fraud at  
          CFMs has become widespread.  The California Department of Food  
          and Agriculture currently lack clear definitions, penalties, and  
          appropriate funding in order to enforce them.  Unless these  
          concerns are dealt with, a lack of consumer confidence could  
          hamper this growing economic sector."

           Creation of CFMs:   The federal Farmer-to-Consumer Direct  
          Marketing Act of 1976 was enacted to promote "the development  
          and expansion of direct marketing of agricultural commodities  
          from farmers to consumers" in order to "lower the cost and  
          increase the quality of food to such consumers while providing  
          increased financial returns to the farmers" (7 USC Sec. 3001).   
          Shortly following, CDFA enacted regulations exempting certified  
          producers from specified packing and labeling requirements under  
          the Fruit, Nut, and Vegetable Standards Law in order to sell  
          agricultural products directly to consumers.  The required  
          certification issued by the county agricultural commissioner  
          offered assurance that the produce sold was grown by the  
          producer.  

          As CFMs gained popularity, concerns of fraud grew in the  
          marketplace.  AB 593 of 1999 addressed these concerns by  
          authorizing individual CFMs to adopt more restrictive rules and  
          procedures and required that each vendor pay a stall fee of  
          $0.60 per market day to pay for program costs.  Today,  
          fraudulent marketing is still of great concern to vendors and  
          consumers.

           Ad Hoc Committee:   CDFA convened the Direct Marketing Ad Hoc  
          Committee to assess the role of direct marketing in California  





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          and identify opportunities to improve regulatory control to  
          prevent fraudulent selling activities at farmers' markets.  The  
          Ad Hoc Committee published a report in December 2012 with their  
          findings, which confronted the long-term health of direct  
          marketing, funding and enforcement, and potential regulatory  
          frameworks and program designs.  Reaching a consensus proved to  
          be challenging for some of these issues; however, the report  
          stated that "the biggest issue confronting the long-term health  
          of the direct marketing industry is the 'buying and reselling'  
          of agricultural products."  "However, without appropriate  
          funding, CDFA and county agricultural commissioners are unable  
          to provide an adequate level of enforcement expected by  
          consumers and the direct marketing industry."  

          The current bill utilizes task force recommendations and  
          components of AB 996 from 2013.  Specifically, this bill would  
          increase stall fees and require all vendors to pay this fee,  
          prohibit false or misleading marketing, create and expand  
          penalties and violations, and require producers to make a  
          statement that "We Grow What We Sell."

           Opposition concerns:   Those in opposition state several concerns  
          including: requiring non-agricultural vendors to pay stall fees,  
          transferring enforcement of false or misleading marketing from  
          market management to the county or state level, changing  
          advisory committee membership, requiring signage stating "We  
          Grow What We Sell," removing grievance procedures for certified  
          producers, and authorizing CFM operators to contract with county  
          agricultural commissioners.  As stated by those in opposition,  
          "With limited resources, now is not the time to create more  
          complexity for CDFA by inventing a new crime. Nor should we  
          abandon our commitment to certified producers and disadvantage  
          them by removing grievance procedures, reducing their number of  
          seats on the Certified Farmers' Market Advisory Committee, and  
          saddling them with new signage requirements."

           Agricultural products:   This bill excludes from the definition  
          of agricultural product a product characterized as "foraged."   
          This term may be confusing as all other excluded products are  
          listed in noun form.  The author may wish to consider amending  
          this term from a verb to a noun, such as to say "foraged foods,"  
          "foraged wild foods," or other appropriate term. 

           Local laws:   The author may wish to consider amending the term  
          "local laws" to "local ordinances" on page 10, line 2.







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           RELATED LEGISLATION  :

          AB 996 (Dickenson) of 2013.  Would have expanded requirements,  
          raised fees, and increased penalties for provisions relating to  
          certified farmers' markets.  This bill was held under submission  
          in the Assembly Committee on Appropriations.

          AB 654 (Hall), Chapter 409, Statutes of 2013.  Extends from  
          January 1, 2014 to January 1, 2018, the sunset date for the  
          collection of certified farmers' market fees and related penalty  
          and enforcement provisions.

          SB 513 (Cannella), Chapter 337, Statutes of 2011.  Extends from  
          January 1, 2012 to January 1, 2014, the sunset date for the  
          collection of certified farmers' market fees and related penalty  
          and enforcement provisions.

          AB 2676 (Agriculture), Chapter 440, Statutes of 2006.   Extends  
          from January 1, 2007 to January 1, 2012, the sunset date for the  
          collection of certified farmers' market fees and related penalty  
          and enforcement provisions.

          AB 1726 (Agriculture), Chapter 444, Statutes of 2004. Extends  
          from January 1, 2005 to January 1, 2007 the sunset date for the  
          collection of certified farmers' market fees and related penalty  
          and enforcement provisions.  Imposes a late penalty charge on  
          operators who fail to pay the required fee.

          AB 593 (Strom-Martin), Chapter 833, Statutes of 1999.  Codifies  
          regulations exempting direct marketers from specified packing  
          and labeling standards, amends fee structures, and authorizes  
          farmers' markets to establish rules and procedures. 


           PRIOR ACTIONS  :

          Assembly Floor      71-5
          Assembly Appropriations  12-0
          Assembly Agriculture       6-0

           SUPPORT  :

          Beverly Hills Certified Farmers Market
          California Agricultural Commissioners and Sealers Association 
          California Farm Bureau Federation
          California Federation of Certified Farmers' Markets
          City of Beverly Hills





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          City of Santa Monica
          City of Torrance
          Community Alliance with Family Farmers
          Crane Creek Growers
          Harbor Area Certified Farmers Markets
          Mar Vista Farmers' Market
          Marin Country Mart Farmers' Market
          Model Neighborhood Program
          Sustainable Economic Enterprises of Los Angeles


           OPPOSITION  :

          Agricultural Institute of Marin - Oppose unless amended