BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 1871 (Dickinson) - Agricultural Products: Direct Marketing: Certified Farmers' Markets Amended: August 4, 2014 Policy Vote: Agriculture 5-0 Urgency: No Mandate: Yes Hearing Date: August 4, 2014 Consultant: Robert Ingenito This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 1871 would modify provisions related to certified farmers' markets (CFM) by (1) increasing fees and penalties, and (2) expanding requirements, enforcement, and violations. The bill would also delete the current January 1, 2018 sunset provisions, making this program permanent. Fiscal Impact: The California Department of Food and Agriculture (CDFA) indicates that, under the bill, costs relating to oversight of county programs and enforcement would be about $1.35 million annually (special fund), reflecting (1) new oversight and enforcement personnel, and (2) reimbursement to counties for investigative work at the local level. However, the bill's increased fee authority would generate revenues roughly equal to the higher costs (See Staff Comments). Background: 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." Shortly thereafter, 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. Currently, there are nearly 800 CFMs in California with 3,350 certified farmers directly marketing to consumers. .As CFMs AB 1871 (Dickinson) Page 1 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. Nevertheless, fraudulent marketing is still of great concern to vendors and consumers, as highlighted by a Los Angeles television station broadcasting an undercover story a few years ago, which exposed a certified producer who was selling things he did not produce. Proposed Law: This bill would allow for additional marketing methods to be considered CFM. Specifically, this measure would allow CDFA to contract funding back to the counties for services rendered and direct marketing misrepresentation would become a misdemeanor offense or be subject to civil penalties. This measure would also allow anyone to register as a direct marketing producer provided they submit information about crops they intend to harvest, and a self-certification that they are following good agricultural practices, which would then allow exemptions from size, standard pack, container, and labeling requirements. Specifically, this bill would do the following: Creates and modifies crimes for misleading statements or representations with respect to the area of production, identity of producer, or manner of production, or use of the term "California Grown," punishable by a fine of up to $2,500 or six months in county jail. Provides that, in lieu of prosecution, the Secretary of the California Department of Food and Agriculture (CDFA) or county agricultural commissioner (CAC) may levy a civil penalty against violators of not less than $500 and not more than $5,000 for each violation. Additionally allows the CDFA or CAC to modify, suspend, revoke, or refuse, or condition the issuance of a permit, registration, or certification issued under this chapter. Creates the Direct Agricultural Marketing Penalty Account (DAMPA) and requires all penalties collected under this chapter to be deposited into DAMPA for use in investigations and enforcement actions related to this chapter; authorizes a continuous appropriation of DAMPA funds without regard to fiscal year. AB 1871 (Dickinson) Page 2 Increases the CFM vendor fee from $0.60 per day per stall to $2.00 per day per stall and expands the payment base from CFM vendors to all vendors selling goods under authority of the CFM operator; allows CFM operator to recover those fees from vendors. 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. Staff Comments: Over the last five years, the CDFA has collected between $240,000 and $270,000 per year in vendor fees under the current $0.60 fee. Assuming the number of markets and vendors remain consistent, the $2.00 vendor fee would generate revenue between $800,000 and $900,000 per year to the CDFA. Given that the universe of vendors paying fees will expand to include all vendors selling goods under authority of the CFM operator, however, total fee revenue to the CDFA (Agriculture Fund) is expected to be $1.35 million. The bill would result in additional personnel-related costs, estimated to be $382,000 annually. In addition, approximately $725,000 would be used for county cooperative agreements for enforcement activities. The total costs to the program, including the $240,000 annual budget for the current program, would be approximately $1.35 million.