BILL ANALYSIS
SENATE RULES COMMITTEE SB 1334
Office of Senate Floor Analyses
1020 N Street, Suite 524
(916) 445-6614 Fax: (916) 327-4478
.
THIRD READING
.
Bill No: SB 1334
Author: Costa (D), et al
Amended: As introduced
Vote: 21
.
SENATE AG. & WATER RESOURCES COMMITTEE : 8-0, 4/1/97
AYES: Costa, Ayala, Johannessen, Kelley, Kopp, Monteith,
Thompson, Peace
NOT VOTING: Craven, Johnston, Wright
SENATE APPROPRIATIONS COMMITTEE : 12-0, 4/21/97
AYES: Johnston, Alpert, Burton, Calderon, Dills, Johnson,
Karnette, Kelley, Lee, Leslie, McPherson, Mountjoy
NOT VOTING: Vasconcellos
.
SUBJECT : Department of Food and Agriculture
SOURCE : Author
.
DIGEST : This bill requires the Department of Food and
Agriculture to prepare an economic analysis of the impact
of false or disparaging statements about California
agricultural products have had on the state's economy over
the past 10 years.
The bill also makes related findings, such as the
importance of agriculture to the state's economy.
ANALYSIS : Existing law provides that one who
intentionally disparages the quality of property, resulting
in a financial loss to an injured party, may be open to the
tort of "trade libel". Some states, such as Alabama,
Arizona, Colorado, Florida, Georgia, Idaho, Louisiana,
Mississippi, and South Dakota, have enacted special
protections for perishable agricultural commodities.
Efforts to do so in California (SB 492 of 1995) were met
with skepticism as to the scope of the problem in this
state.
Comments (according to the Senate Agriculture and Water
Resources Committee analysis):
Those dependent on agricultural income are more susceptible
to injury from false claims than many other industries
because of the perishable nature of their product (market
demand may recover after a crop has decayed). Annual crop
cycles, when combined with a short-term erosion of the
market at harvest time, may mean loss of all income for the
year. This damage would then be aggravated by the loss of
year-long financial inputs such as labor, seed, water,
equipment, fertilizers, and packaging.
Anecdotal evidence supplied by industry suggests a
significant financial impact to the economy as a result of
false or misleading statements made about perishable
products. Apple growers in California and Washington
estimate $500 million in recent losses as a result of what
they perceive as unfounded allegations about a crop
protection product. Grape growers cite similar experience
from unsubstantiated reports that their product was tainted
by chemicals, while strawberry and egg producers have
recently lost markets to claims of bacterial
contamination. The industry estimates these losses to be
quite high, but to date there has been no comprehensive
government study of this issue in California.
Assembly bill is AB 1311 (Bordonaro), which is in the
Assembly Appropriations Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 1997-98 1998-99 1999-2000 Fund
Department $36 to $75 one time
General
Food and
Agriculture report
The Senate Appropriations Committee analysis indicates that
the Department of Food and Agriculture indicates it cannot
absorb the cost of the report. One cost estimate developed
by the Agricultural Issues Center at the University of
California, Davis identified a cost of $36,000 for such a
report. However, this estimate is based on staffing costs
e.g., undergraduate assistants at $8.00 an hour (10 hours a
week) for 25 weeks and graduate assistants at $5,000 per
quarter for two quarters, that are unavailable to the
department and are inconsistent with the report deadline.
It is unclear what record of events is available for the
Department of Food and Agriculture that can be used to
determine the number of false or disparaging statements
made over the past 10 years about California agricultural
products and the impact of those statements on the state's
economy.
Due to the short time-line between the effective date of
the bill and the due date of the report increases the cost
of the report by forcing a more intensive staffing effort.
Authorizing the department to issue a contract for the
report would, in part, address this impact. If it is the
intent of the Legislature that the department author the
report, the Appropriations Committee may wish to consider
extending the due date for the report to June 30, 1998 as a
way of reducing this impact and making an appropriation to
cover the department's costs.
SUPPORT : (Verified 4/23/97)
Agricultural Council of California
California Cattlemen's Association
California Citrus Mutual
California Cotton Growers Association
California Egg Commission
California Farm Bureau Federation
California Fisheries and Seafood Institute
California Grain and Feed Association
California Grape and Tree Fruit League
California Rice Industry Association
California Seed Association
California State Floral Association
California Strawberry Commission
Pacific Egg and Poultry Association
Western Growers Association
Western United Dairymen
OPPOSITION : (Verified 4/23/97)
Department of Finance
ARGUMENTS IN SUPPORT : The Western Growers Association
states, "Over the years, producers of perishable
agricultural commodities have been periodically battered by
scientifically unsupported claims about the safety of food
products they produce. Perishable good products are at the
greatest risk if false statements are made about them as
these commodities, by their very nature, have a fixed and
often short window of time in which they can be marketed at
their peak quality. More often than not here is no time to
sort out the veracity of allegations prior to significant
negative market impact, and the producers of the commodity
have no recourse but to absorb the losses. In addition,
twelve other states, including California's major
competitors, already have in place laws which provide
protection against false and disparaging statements. This
bill does not go that far."
Other supporters state, "The primary differences with this
proposal and SB 492 is two-fold. First, it calls for a
thorough and independent analysis of the problem prior to
asking the Legislature to approve SB 492-type legislation.
(As you may recall, this is the same approach used to
obtain approval of the methyl bromide bill, where the
California Department of Food and Agriculture was charged
with having a similar economic analysis done on the loss of
that product.)"
ARGUMENTS IN OPPOSITION : The Department of Finance is
"opposed to this bill for the following reasons:
1. There is no appropriation in the bill.
2. There is no funding source identified.
3. It remains unclear whether DFA can redirect existing
resources.
4. The need for the study is unclear.
"A related bill, AB 1311 (Bordonaro), contains identical
provisions."
TSM:ctl 4/23/97 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****