BILL ANALYSIS                                                                                                                                                                                                    



SENATE RULES COMMITTEE                           SB 1334  
Office of Senate Floor Analyses
1020 N Street, Suite 524
(916) 445-6614         Fax: (916) 327-4478
                                                              
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                        THIRD READING
                                                              
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Bill No:  SB 1334
Author:   Costa (D), et al
Amended:  As introduced
Vote:     21
                                                              
                                                             
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  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
                                                              
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SUBJECT  :    Department of Food and Agriculture

  SOURCE  :     Author
                                                              
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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
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