BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1871|
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THIRD READING
Bill No: AB 1871
Author: Dickinson (D)
Amended: 8/19/14 in Senate
Vote: 21
SENATE AGRICULTURE COMMITTEE : 5-0, 6/17/14
AYES: Galgiani, Cannella, Berryhill, Lieu, Wolk
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/4/14
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 71-5, 5/29/14 - See last page for vote
SUBJECT : Agricultural products: direct marketing: certified
farmers markets
SOURCE : Author
DIGEST : This bill revises provisions related to certified
farmers markets (CFMs) by increasing fees and penalties and
expanding requirements, enforcement, and violations.
Senate Floor Amendments of 8/19/14 clarify what activities may
be reimbursed under cooperative agreements between the
Department of Food and Agriculture (DFA) and county agricultural
commissioners.
ANALYSIS :
Existing law:
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1. Authorizes the Secretary of DFA 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.
2. Provides for the creation of CFMs, a form of direct
marketing. Currently, there are nearly 800 CFMs in
California with 3,350 certified farmers directly marketing to
consumers.
3. Authorizes DFA with administering and regulating CFMs and
county agricultural commissioners 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.
4. 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 DFA
Fund to be used to cover the reasonable costs to carry out
CFM administration, inspection, and enforcement.
5. Exempts certified producers selling at CFMs from certain
packing, size, and labeling requirements under the Fruit,
Nut, and Vegetable Standards Law. These producers are
instead subject to conditions and regulations specific to
direct marketers, which include packing and labeling
requirements.
6. 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. DFA 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. Provides for a hearing and an appeal process
before the civil penalty is levied.
7. Establishes the Certified Farmers' Market Advisory Committee
(Committee), composed of 17 members appointed by the
Secretary of DFA. The Committee shall make recommendations
to the Secretary on all matters pertaining to direct
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marketing, including administration, enforcement,
inspections, fees, civil penalties, and an annual budget.
8. Provides a sunset date for provisions regarding CFMs, set to
expire January 1, 2018.
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 DFA 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.
4. Creates the Direct Agricultural Marketing Penalty Account
within DFA 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,
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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 foods, 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 property
only at the time of harvest.
12.Authorizes the Secretary of DFA 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. Clarifies that
reimbursement to the county agricultural commissioner for
associated costs is required to be exclusive of the costs of
certification and minimum inspections, as specified.
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 CFMs to establish
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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 CFMs as California agricultural point of sale
locations that are registered and certified with DFA 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 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 Committee are to promote
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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 Advisory Committee from
17 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 DFA 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 DFA 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 DFA.
27.Authorizes the Secretary of DFA 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.
29.Requires that all vendors, not just agricultural vendors,
pay a $2 fee per market day to the CFM operator, who remits
payment to DFA on a quarterly basis.
30.Allows CFMs to petition the Secretary of DFA for a vendor
fee of $1 if the CFM is located in a county with a population
of less than 400,000, and 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.
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Comments
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." Shortly following,
DFA 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 (Strom-Martin, Chapter 833, Statutes 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 . DFA convened the Direct Marketing Ad Hoc
Committee to assess the role of direct marketing in California
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."
Prior Legislation
AB 654 (Hall, Chapter 409, Statutes of 2013) extends from
January 1, 2014 to January 1, 2018, the sunset date for the
collection of CFM fees and related penalty and enforcement
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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 CFM fees and related penalty and enforcement
provisions.
AB 2676 (Assembly Agriculture Committee, Chapter 440, Statutes
of 2006) extends from January 1, 2007 to January 1, 2012, the
sunset date for the collection of CFM fees and related penalty
and enforcement provisions.
AB 1726 (Assembly Agriculture Committee, Chapter 444, Statutes
of 2004) extends from January 1, 2005 to January 1, 2007 the
sunset date for the collection of CFM fees and related penalty
and enforcement provisions. The bill 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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee, DFA indicates
that, under this 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, this bill's increased fee
authority would generate revenues roughly equal to the higher
costs.
Over the last five years, the DFA 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 DFA. 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 DFA (Agriculture Fund) is
expected to be $1.35 million.
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SUPPORT : (Verified 8/20/14)
Beverly Hills Certified Farmers Market
California Farm Bureau Federation
Community Alliance with Family Farmers
Harbor Area Certified Farmers Markets
Model Neighborhood Program
Sustainable Economic Enterprises of Los Angeles
California Agricultural Commissioners and Sealers Association
OPPOSITION : (Verified 8/20/14)
Agricultural Institute of Marin
ARGUMENTS IN SUPPORT : 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."
ARGUMENTS IN OPPOSITION : 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."
ASSEMBLY FLOOR : 71-5, 5/29/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
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Calderon, Campos, Chau, Chesbro, Conway, Cooley, Dababneh,
Dahle, Daly, Dickinson, Eggman, Fong, Frazier, Beth Gaines,
Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove,
Hagman, Hall, Roger Hernández, Holden, Jones-Sawyer, Levine,
Linder, Lowenthal, Maienschein, Medina, Melendez, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Williams, Yamada, Atkins
NOES: Chávez, Donnelly, Fox, Jones, Wilk
NO VOTE RECORDED: Harkey, Logue, Mansoor, Vacancy
JL:k 8/20/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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