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.