BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 264|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 264
Author: Dahle (R)
Amended: 7/16/15 in Senate
Vote: 21
SENATE AGRICULTURE COMMITTEE: 3-0, 6/30/15
AYES: Galgiani, Cannella, Pan
NO VOTE RECORDED: Berryhill, Wolk
SENATE JUDICIARY COMMITTEE: 7-0, 7/14/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,
Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/17/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 80-0, 5/14/15 - See last page for vote
SUBJECT: Farm products: processors: produce dealers: seeds
SOURCE: California Seed Association
DIGEST: This bill removes seeds from the definition of "farm
product" under market enforcement provisions regarding produce
dealers, thus removing seed dealers from these provisions;
retains one market enforcement provision in regards to the use
of product liens for seed owned and grown by a seed producer and
sold to a seed dealer under contract; and adds to the California
Seed Law the authority for the California Department of Food and
Agriculture (CDFA) to establish methods and procedures to settle
disputes regarding financial terms and lack of payment by a seed
dealer to a seed grower.
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ANALYSIS:
Existing law:
1) Authorizes the secretary of CDFA, through the Market
Enforcement Branch (MEB), to enforce produce dealer marketing
laws through licensing, fees, bonds, liens, audits,
investigations, violations, and penalties (Food and
Agricultural Code § 56101 et seq.).
2) Defines "farm product" to mean every agricultural,
horticultural, viticultural, and vegetable product of the
soil, poultry and poultry products, livestock products, bees
and apiary products, hay, dried beans, honey, and cut
flowers. It excludes timber, milk, aquaculture, cattle, and
flower or agricultural or vegetable seed purchased from
someone other than a producer.
3) Defines "dealer" to mean any person who obtains, buys, or
agrees to buy any farm product from a producer at a
designated price for the purpose of resale.
4) Requires that all produce dealers apply for and obtain
licenses from CDFA. The application includes business
information, type of farm products handled, an authorization
for CDFA to access and obtain financial information, a notice
that CDFA may obtain criminal records, and other requirements
as specified.
5) Requires up to four years' financial documentation as part
of the license application. If the secretary is not
satisfied that an applicant/licensee is financially
responsible (able to pay in full for future farm product
purchases), the applicant/licensee may be required to
maintain a surety bond that is a minimum of $20,000 or 20% of
the annual dollar volume of business.
6) Authorizes CDFA to deny, condition, suspend, or revoke a
dealer's license under specified conditions.
7) Authorizes the secretary of CDFA to regulate seed sold in
California to ensure that agricultural and vegetable seed is
properly and accurately identified on the product label (Food
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and Agricultural Code § 52251 et seq.).
8) Defines "labeler" to mean any person whose name and address
appears on a seed label for sale and distribution in
California and requires labelers to annually register with
CDFA, with exceptions.
9) Establishes the Seed Advisory Board to make recommendations
to the secretary of CDFA in regards to seed law and
regulations, enforcement, seed laboratory diagnostics and
annual budgets. Advisory board members are appointed by the
secretary and consist of registered seed labelers
representing seed production, conditioning, marketing and
utilization; persons who receive or possess seed for sale in
California; and two members of the public.
10)Authorizes CDFA to establish methods and procedures for the
conciliation, mediation, or arbitration of disputes between
labelers and any person concerning label statements,
advertisements, or disputes regarding seed quality or
performance.
This bill:
1) Expands CDFA regulatory authority within the California Seed
Law (CSL) to establish methods and procedures to settle
disputes regarding financial terms and lack of payment by a
seed dealer to a seed grower.
2) Authorizes CDFA, should the dispute end in favor of the
grower, to require compensation to the grower for the
estimated value of the seed production services a grower
provides to a dealer. If a dealer fails to comply, CDFA may
revoke the dealer's registration and prevent the dealer from
renewing the registration until the debt has been paid.
3) Excludes flower, agricultural, and vegetable seed from the
definition of "farm product" under market enforcement
provisions regarding produce dealers, but not processors.
4) Authorizes the use of product liens for seed grown by a seed
producer and sold to a dealer under contract, when that seed
was purchased or supplied by the grower and not a separate
entity. The lien includes the costs of labor, care, and
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expense in growing and harvesting the seed and shall be to
the extent of the agreed price for that seed.
Background
The MEB was established in 1928 to ensure confidence and
stability in the agricultural marketplace and to protect against
unfair business practices among growers, handlers, and
processors of California farm products.
MEB is responsible for the licensing of dealers, buyers, and
processors, conducting audits and investigations; ensuring
timely payment for producers and dealers of farm products;
settling transaction complaints; and enforcing disciplinary
action when appropriate.
MEB is supported by license fees paid by dealers, brokers,
commission merchants, and processors that range from $136 to
$400 annually, plus agent licensing fees ($55 per agent).
The CSL was enacted in 1967 to ensure that agricultural and
vegetable seed is properly and accurately identified on the
product label. Seed is analyzed through the Seed Services
program administered by CDFA. The CSL is locally enforced by
county agricultural commissioners, who enter into cooperative
agreements with the secretary of CDFA and agree to maintain a
statewide compliance level on all seed sold in the county.
Funding for this program is entirely supported through industry
seed assessments and registration fees and is administered by
CDFA. (Food and Agriculture Code §52251, et seq.).
Comments
Seed Law vs. Market Enforcement. The CSL was designed to ensure
that agricultural and vegetable seed is properly and accurately
identified on the product label. The CSL was not designed to
handle financial disputes and does not have historical expertise
in this area. The MEB, however, is designed to handle financial
disputes for nearly every agricultural product in the state with
the exception of products that are highly regulated by other
state and federal laws, such as dairy and beef cattle.
This bill adds the use of product liens for seed sold between
growers and dealers within the MEB but removes all other
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provisions, such as requirements that dealers provide financial
information, surety bonds, and other financial safeguards in
order to be licensed. These proactive measures help to ensure
that producers are conducting business with financially stable
dealers. This bill authorizes CDFA, through the CSL, to handle
disputes regarding financial terms or lack of payment; however,
the additional protections previously described within the MEB
are not carried over.
New protection for growers. This bill provides new protections
for seed growers by authorizing the use of product liens for
seed grown by a seed producer and sold to a dealer under
contract, as specified. The lien includes the costs of labor,
care, and expense in growing and harvesting the seed and shall
be to the extent of the agreed price for that seed.
Producer complaints. There have been no verified complaints
from seed producers to the MEB within the last five years
(2010-2014). The author and the California Seed Association
argue that this is one reason as to why this bill is necessary.
FISCAL EFFECT: Appropriation: No Fiscal Com.:
YesLocal: Yes
According to the Senate Appropriations Committee, CDFA estimates
that the bill would result in a revenue loss of $68,000 (special
funds). CDFA's administrative costs would be minor and
absorbable.
SUPPORT: (Verified8/18/15)
California Seed Association (source)
OPPOSITION: (Verified8/18/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "AB 264 will
harmonize all seed transactions and clarify [that] they are
governed solely by the Seed Labeling Act and federal law and are
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not subject to the oversight and fees of the MEB. The law
provides seed growers substantially the same protections as they
have under the Market Enforcement Branch as well as additional
recovery options for transactions that [are] in dispute. Over
the past five years, there have been zero seed transactions
disputed in the [M]arket Enforcement Branch, therefore, the
double regulation is unjustified and AB 264 provides grower
protections."
ASSEMBLY FLOOR: 80-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by:Anne Megaro / AGRI. / (916) 651-1508
8/18/15 16:54:07
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