BILL ANALYSIS �
SENATE COMMITTEE on AGRICULTURE
Senator Cathleen Galgiani, Chair
BILL NO: AB 1871 HEARING: 06/17/14
AUTHOR: Dickinson FISCAL: Yes
VERSION: 06/11/14 CONSULTANT: Anne Megaro
Agricultural products: direct marketing: certified farmers'
markets.
SUMMARY :
This bill would revise provisions related to certified farmers'
markets (CFM) by increasing fees and penalties and expanding
requirements, enforcement, and violations.
BACKGROUND AND EXISTING LAW :
Existing law authorizes the secretary of the Department of Food
and Agriculture (CDFA) 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.
Existing law provides for the creation of certified farmers'
markets (CFMs), a form of direct marketing. Currently, there
are nearly 800 CFMs in California with 3,350 certified farmers
directly marketing to consumers (Food and Agricultural Code
�47000 et seq.).
CDFA is responsible for administering and regulating CFMs and
county agricultural commissioners are 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 (Food and
Agricultural Code �47020).
Existing law 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
Department of Food and Agriculture Fund to be used to cover the
reasonable costs to carry out CFM administration, inspection,
and enforcement (Food and Agricultural Code �47021).
Existing law exempts certified producers selling at CFMs from
certain packing, size, and labeling requirements under the
Fruit, Nut, and Vegetable Standards Law. These producers are
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instead subject to conditions and regulations specific to direct
marketers, which include packing and labeling requirements (Food
and Agricultural Code �47002).
Existing law 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. CDFA 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. Existing law provides for a hearing and an appeal
process before the civil penalty is levied (Food and
Agricultural Code �47022 et seq.).
Existing law establishes the Certified Farmers' Market Advisory
Committee, composed of 17 members appointed by the secretary of
CDFA. The committee shall make recommendations to the secretary
on all matters pertaining to direct marketing, including
administration, enforcement, inspections, fees, civil penalties,
and an annual budget (Food and Agricultural Code �47011).
Existing law provides a sunset date for provisions regarding
CFMs, set to expire January 1, 2018.
PROPOSED LAW :
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 CDFA 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.
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4. Creates the Direct Agricultural Marketing Penalty
Account within CDFA 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, 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, 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
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property only at the time of harvest.
12. Authorizes the secretary of CDFA 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.
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 CMFs to establish
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 certified farmers' markets as California
agricultural point of sale locations that are registered
and certified with CDFA 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
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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 Certified Farmers'
Market Advisory Committee to promote 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 Certified Farmers'
Market Advisory Committee from17 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 CDFA
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 CDFA 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 CDFA.
27. Authorizes the secretary of CDFA 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.
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29. Requires that all vendors, not just agricultural
vendors, pay a $2 fee per market day to the CFM operator,
who remits payment to CDFA on a quarterly basis.
30. Allows CFMs to petition the secretary of CDFA to reduce
the $2 vendor fee if the CFM 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.
COMMENTS :
Need for this bill: 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."
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" (7 USC Sec. 3001).
Shortly following, CDFA 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 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: CDFA convened the Direct Marketing Ad Hoc
Committee to assess the role of direct marketing in California
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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."
The current bill utilizes task force recommendations and
components of AB 996 from 2013. Specifically, this bill would
increase stall fees and require all vendors to pay this fee,
prohibit false or misleading marketing, create and expand
penalties and violations, and require producers to make a
statement that "We Grow What We Sell."
Opposition concerns: 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."
Agricultural products: This bill excludes from the definition
of agricultural product a product characterized as "foraged."
This term may be confusing as all other excluded products are
listed in noun form. The author may wish to consider amending
this term from a verb to a noun, such as to say "foraged foods,"
"foraged wild foods," or other appropriate term.
Local laws: The author may wish to consider amending the term
"local laws" to "local ordinances" on page 10, line 2.
AB 1871 - Page 8
RELATED LEGISLATION :
AB 996 (Dickenson) of 2013. Would have expanded requirements,
raised fees, and increased penalties for provisions relating to
certified farmers' markets. This bill was held under submission
in the Assembly Committee on Appropriations.
AB 654 (Hall), Chapter 409, Statutes of 2013. Extends from
January 1, 2014 to January 1, 2018, the sunset date for the
collection of certified farmers' market fees and related penalty
and enforcement 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 certified farmers' market fees and related penalty
and enforcement provisions.
AB 2676 (Agriculture), Chapter 440, Statutes of 2006. Extends
from January 1, 2007 to January 1, 2012, the sunset date for the
collection of certified farmers' market fees and related penalty
and enforcement provisions.
AB 1726 (Agriculture), Chapter 444, Statutes of 2004. Extends
from January 1, 2005 to January 1, 2007 the sunset date for the
collection of certified farmers' market fees and related penalty
and enforcement provisions. 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.
PRIOR ACTIONS :
Assembly Floor 71-5
Assembly Appropriations 12-0
Assembly Agriculture 6-0
SUPPORT :
Beverly Hills Certified Farmers Market
California Agricultural Commissioners and Sealers Association
California Farm Bureau Federation
California Federation of Certified Farmers' Markets
City of Beverly Hills
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City of Santa Monica
City of Torrance
Community Alliance with Family Farmers
Crane Creek Growers
Harbor Area Certified Farmers Markets
Mar Vista Farmers' Market
Marin Country Mart Farmers' Market
Model Neighborhood Program
Sustainable Economic Enterprises of Los Angeles
OPPOSITION :
Agricultural Institute of Marin - Oppose unless amended