BILL ANALYSIS Ó SB 250 Page 1 Date of Hearing: August 21, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 250 (Wolk) - As Amended: August 5, 2013 Policy Committee: AgricultureVote:7 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill establishes the Olive Oil Commission of California (OOCC) to engage in olive oil quality and nutritional research and to recommend grades and labeling standards. Specifically, this bill: 1)Creates the Olive Oil Commission of California to engage in olive oil quality and nutritional research, and to recommend grades and labeling standards to the Secretary of the California Department of Food and Agriculture (CDFA). 2)Creates a board of directors composed of six producers, three handlers and one public member appointed by the Secretary. 3)Requires that 40% of the total number of producers cast a referendum vote to begin operation of the commission. 4)Establishes an assessment rate to be paid by producers of not more than $0.25 per gallon of olive oil. An increase in this rate must be approved by a referendum vote, and a penalty shall be paid on any past due assessment. 5)Authorizes the commission to serve as the advisory body to the Secretary on all matters pertaining to olive oil quality standards. FISCAL EFFECT 1)If the maximum assessment of $0.25 per gallon is leveled on 2.4 million gallons of olive oil, the commission would receive $600,000 in operating revenue. SB 250 Page 2 2)Start up costs for CDFA would be approximately $40,000 with ongoing costs between $15,000 and $20,000 per year. All costs would be reimbursed by the commission. COMMENTS 1)Purpose . The intent of this legislation is to create the OOCC in order to support the California olive oil industry and combat what the author has found to be fraudulent practices in the labeling of olive oil. California's olive oil industry has been growing rapidly over the past five years. The author asserts that the industry believes it is time to support a coordinated effort to provide for olive oil research and standards to promote the sustainability and success of this agricultural product. 2)California's Olive Oil Industry . Currently, California accounts for 99% of national olive production, and has roughly 400 growers on approximately 30,000 acres dedicated to the production of olive oil. With over 50 varieties of olives grown in California, it is estimated that the 2013 harvest will produce over 2.4 million gallons of oil. According to supporters of the bill, the California olive oil industry faces fierce global competition from producers who reportedly do not adhere to the same high quality standards as California producers. The UC Davis Olive Center released a study based on laboratory and sensory testing that found that 69% of imported extra-virgin olive oils bought off the shelves of California supermarkets failed to meet international standards. The nationally-reported study concluded that many of these products were falsely labeled as extra-virgin grade. 3)Agricultural Commissions . 16 different commissions for various commodities ranging from avocados to walnuts have been established under Division 22 of the Food and Agriculture Code. Typically, these state-established commissions and councils are authorized by statute to engage in various activities covering promotion, education, production or post-harvest research, and quality standards and inspections, with some variation in authorization between different commissions. SB 250 Page 3 In recent years, one commission was terminated by the industry and another had an audit by the Secretary, which revealed potential misuse of funds. This bill has language requiring annual audits, and upon a determination of need, the Secretary may conduct a fiscal and administrative audit of OOCC. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081