Amended in Senate August 22, 2014

Amended in Assembly March 18, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2730

Introduced by begin delete Committee on Agriculture (Assembly Members Eggman (Chair), Olsen (Vice Chair), Atkins, Dahle, Pan, Quirk, and Yamada) end delete begin insert Assembly Member Eggman end insert

begin insert

(Principal coauthor: Senator Galgiani)

end insert

February 24, 2014

An act to begin delete add Article 7 (commencing with Section 9190) to Chapter 1 of Part 1 of Division 5 of end delete begin insert amend, repeal, and add Sections 62564 and 62623 of, to add Article 9.5 (commencing with Section 62080) to Chapter 2 of Part 3 of Division 21 of, and to add and repeal Sections 61832.5 and 62509 of, end insert the Food and Agricultural Code, relating to begin delete animals end delete begin insert market milk end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 2730, as amended, begin delete Committee on Agriculture end delete   begin insert Eggman end insert . begin delete Animal disease planning. end delete begin insert Alternative milk marketing agreements. end insert

begin insert

Existing law empowers the Secretary of Food and Agriculture to formulate stabilization and marketing plans that establish the prices to be paid by milk handlers for specified classes of market milk. Existing law requires the secretary to take relevant economic factors into consideration in establishing the price to be paid for class 4a market milk and class 4b market milk. Existing law imposes various requirements related to the stabilization and marketing of market milk and makes a violation of these provisions a crime.

end insert begin insert

This bill would authorize class 4a and class 4b market milk to be marketed under an alternative milk marketing agreement, as specified, if certain conditions are met, including if the secretary, before July 1, 2015, takes specified regulatory action that establishes class 4a and class 4b market milk prices that are indexed to the respective federal prices. The bill would require that an alternative milk marketing agreement, and any amendments to the agreement, be filed by the producer with the secretary. The bill would require a handler to provide the secretary on a monthly basis with prescribed information regarding alternative milk marketing agreements between the handler and a market milk producer and would exempt the information contained in alternative marketing agreements from the California Public Records Act. By adding to the requirements imposed on producers and handlers through the use of an alternative milk marketing agreement, this bill would expand the scope of a crime, thereby imposing a state-mandated local program. The bill would prescribe conditions under which a referendum would take place, where producers will vote on whether these provisions shall be repealed.

end insert begin insert

Existing law, the Gonsalves Milk Pooling Act, provides for equalization pools and milk pooling to govern the production and distribution of fluid milk and fluid cream. The act authorizes the Secretary of Food and Agriculture to develop a pooling plan, with specified items required to be included in the pooling plan, under which producers of milk are assigned a pool quota that determines the amount of class 1 milk the producer can sell to handlers within the pooling system and the prices to be paid by handlers to producers. Existing law confers upon the secretary the ability to establish and administer the Milk Producers Security Trust Fund to protect producers against loss of payment for bulk milk through the collection of a security charge from handlers.

end insert

begin insert This bill would require that milk purchased under an alternative milk market agreement be valued based on the announced minimum class price, as though the minimum class price had applied to the milk, for the collection of security charges and handler end insert begin insert ’s average monthly milk purchases. The bill would limit the value established for the Milk Producers Security Fund under an alternative milk marketing agreement to the value established under the alternative milk marketing agreement or the value determined using the minimum class price under the stabilization and marketing plan, whichever is lower. end insert

begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

Existing law provides for the regulation of pest control and diseased animals. Existing law requires the Department of Food and Agriculture to develop and maintain a list of invasive pests, as defined, that have a reasonable likelihood of entering the state and for which a detection, exclusion, eradication, control, or management action by the state might be appropriate. Existing law requires the department, based on available funding, to develop and maintain a written plan on the most appropriate options for detection, exclusion, eradication, control, or management of the higher priority invasive pests on the list. Existing law requires the department to consult with certain state and federal agencies and departments and others in the scientific and research community in the preparation of the plan.

end delete begin delete

This bill would require the department to develop and maintain a similar list of animal diseases by July 1, 2015, and, to the extent funding is available, require the department to develop and maintain a similar written plan on the most appropriate options for detection, exclusion, eradication, control, or management of the higher priority animal diseases on the list.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 61832.5 is added to the end insert begin insert Food and
Agricultural Code end insert begin insert , to read: end insert

begin insert

begin insert 61832.5. end insert   

(a) “Minimum price” means the class price
established for market milk used in various classes pursuant to
this chapter. Minimum prices do not apply to market milk
purchased under an alternative milk marketing agreement, as
defined in Article 9.5 (commencing with Section 62080).

(b) This section shall only be operative if the requirements of
Section 62080 are met.

(c) This section shall no longer be operative and shall be
repealed if the secretary makes a finding in accordance with
subdivision (c) of Section 62087.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Article 9.5 (commencing with Section 62080) is added
to Chapter 2 of Part 3 of Division 21 of the end insert begin insert Food and Agricultural
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 9.5. end insert   Alternative Milk Marketing Agreements

 

begin insert 62080. end insert   

(a) It is the intent of the Legislature to transition the
dairy industry to self-regulating marketing practices that
incorporate methods, other than the minimum pricing provisions
set forth in this chapter, for establishment of prices for milk
purchased for class 4a and class 4b uses.

(b) This article and the powers granted in this article shall only
become effective if the secretary takes regulatory action pursuant
to Article 8 (commencing with Section 62031) before July 1, 2015,
that establishes class 4a and class 4b milk prices indexed to
Federal Class IV and III prices, respectively, and that meets both
of the following conditions:

(1) The indexing shall be phased in beginning July 1, 2015, with
the class 4b price equal to the Federal Order Class III less one
dollar ($1.00) per hundredweight and the class 4a price shall be
equal to the Federal Order Class IV less thirty-five cents ($0.35)
per hundredweight.

(2) Commencing July 1, 2016, the class 4b price shall be equal
to the Federal Order Class III less fifty cents ($0.50) per
hundredweight and the class 4a price shall be no greater than the
Federal Order Class IV less fifty cents ($0.50) per hundredweight.

(c) On or after July 1, 2017, if the conditions set forth in
subdivision (b) are met, both class 4a and class 4b milk prices
may be adjusted through the hearing process described in Section
62031 to an amount that is equal to, or no more than fifty cents
($0.50) less than, the Federal Order Class IV and III, respectively.

begin insert 62081. end insert   

(a) Milk classified as either class 4a or class 4b shall
be marketed under an alternative milk marketing agreement in
accordance with the phase-in period described in Section 62082.
Milk marketed under an alternative milk marketing agreement
shall not be subject to any regulated minimum price outlined in
Sections 62077, 62078, and 62079, or any obligation or inclusion
in the pool value described in subdivision (d) of Section 62712
and Section 62720.

(b) For the purpose of this article, the following terms have the
following definitions:

(1) “Cooperative handler” means a cooperative that acts as a
handler.

(2) “Handler” means the entity that has contracted with the
producer for the purchase of milk.

(3) “Proprietary handler” means a handler that is not a
cooperative.

(4) “Proprietary plant operator” means the operator of a plant
with class 4a or class 4b usage that is not a cooperative.

(c) An alternative milk marketing agreement may be executed
between any of the following:

(1) A cooperative and its members.

(2) A cooperative and producers that are not members of the
cooperative.

(3) A cooperative and a proprietary plant operator.

(4) A proprietary handler and individual producers.

(5) A proprietary handler and a cooperative handler.

(d) At the end of a month, a handler may elect, at its discretion,
to pool milk marketed under an alternative milk marketing
agreement. If a handler elects to pool milk under an alternative
milk market agreement, the milk shall be obligated to the pool at
class prices based on the class of the handler’ usage. A milk plant
that receives market milk from either a cooperative handler or a
proprietary handler is not obligated to pay regulated minimum
prices for any market milk received, regardless of whether or not
the market milk is pooled by the handler. If the handler elects to
pool market milk, the producer of the market milk shall be paid
the higher of either (1) the applicable pool price or (2) the price
established in the alternative milk marketing agreement for the
milk that is pooled. A payment by a cooperative handler to its
producer member is governed solely by the producer’s agreement
with the cooperative and any associated members.

(e) Milk marketed under an alternative milk marketing
agreement shall be covered by a mutually agreeable contract
between a handler and producer that specifies payment terms,
duration, and price or contract pricing formula such as a pool
price contract, class price contract, or a forward price contract.
A spot purchase contract may be implemented on milk volumes
that would exceed the volumes specified in the contracts already
in force. The secretary has authority to enforce these contracts,
as well as alternative milk marketing agreement terms and
conditions.

begin insert 62082. end insert   

Notwithstanding any other law, upon regulatory action
taken by the secretary, class 4a and class 4b milk purchases shall
be marketed under an alternative milk marketing agreement as
follows:

(a) From July 1, 2015, through December 31, 2015, inclusive,
up to 50 percent of a handler’s daily market milk purchases shall
be a part of an alternative milk marketing agreement.

(b) From January 1, 2016, through June 30, 2016, inclusive,
up to 75 percent of a handler’s daily market milk purchases shall
be a part of an alternative milk marketing agreement.

(c) Commencing July 1, 2016, and thereafter, 100 percent of a
handler’s daily market milk purchases shall be a part of an
alternative milk marketing agreement.

begin insert 62083. end insert   

The secretary may adopt regulations in a stabilization
and marketing plan for market milk, or in a pooling plan for market
milk, or both, the purpose of which are to accomplish the intent
of this article, including the orderly marketing of milk, as described
in subdivision (e) of Section 61802.

begin insert 62084. end insert   

(a) A valid alternative milk marketing agreement to
purchase market milk for class 4a utilization, class 4b utilization,
or both, shall be covered by a mutually agreeable, written contract
between a handler and producer and shall include all of the
following:

(1) The type of alternative milk marketing agreement, including,
but not limited to, fixed price contracts, marketing contracts,
forward marketing arrangements, and forward contracts entered
into voluntarily between handlers and producers, including
producer-handlers.

(2) Names and signatures of all parties involved, including, but
not limited to, handlers and producers, including
producer-handlers.

(3) The execution date of the alternative milk marketing
agreement.

(4) The time period for which market milk is to be received.

(5) The formula or method for calculating the final price to be
paid for all market milk received, including any base price to be
paid for all market milk received.

(6) The amount of market milk which is to be received for any
period.

(7) A provision requiring that charges for transportation, if
hauled by the handler, shall be in compliance with Section 62073.

(8) The date and method of payment for market milk. Payment
shall be made for the amount of the market milk delivered during
the first 15 days of any calendar month not later than the first day
of the next following month and for the amount delivered during
the remainder of the month not later than the 15th day of the next
following month.

(b) The alternative milk marketing agreement may contain
additional provisions that are not in conflict with this article.

(c) A signed copy of the alternative milk marketing agreement
shall be filed by the producer with the secretary within five days
from the date it’s agreed upon and signed by a handler and a
producer.

(d) Any amendments to the alternative milk marketing agreement
shall be filed by the producer with the secretary within five days
from the date the amendment is agreed upon and signed by both
the handler and the producer.

(e) Alternative milk market agreements do not include
membership agreements between producers and their cooperatives.

begin insert 62085. end insert   

(a) On a monthly basis each handler shall provide the
secretary with a list of the name, address, and date of every current
alternative milk marketing agreement between the handler and a
market milk producer. Monthly thereafter, the handler shall report
to the secretary the same information on all terminated, new, and
amended alternative milk marketing agreements that have not been
previously reported.

(b) The information contained in alternative milk marketing
agreements is exempt from the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code).

(c) On a monthly basis, the secretary shall publish the total
amount of milk sold using alternative milk marketing agreements
and the weighted average price paid under those agreements.

begin insert 62086. end insert   

The secretary shall have authority to enforce any
mutually agreeable contracts executed pursuant to Section 62081
and any alternative milk marketing agreement contract terms and
conditions.

begin insert 62087. end insert   

(a) The secretary may hold a public hearing after
January 1, 2020, to consider whether this article, Sections 61832.5
and 62509, and the amendments to Sections 62564 and 62623 as
amended by the act that added this article, shall be repealed, and
shall hold a public hearing to review a petition requesting the
repeal of this article, Sections 61832.5 and 62509, and the
amendments to Sections 62564 and 62623 as amended by the act
that added this article, signed by not less than 25 percent of the
producers who produced not less than 25 percent of the total
amount of fluid milk produced in this state during the preceding
calendar month.

(b) The secretary shall establish a period of 60 days in which
to conduct the referendum. The secretary may extend the
referendum period an additional 30 days if he or she determines
that the additional time is needed to adequately conduct the
referendum, and may prescribe additional procedures necessary
to conduct the referendum.

(c) The secretary shall find that producers have assented to the
repeal of this article and Sections 61832.5 and 62509 and the
restoration of Sections 62564 and 62623 to as those sections
existed on January 1, 2014, if the secretary finds on a statewide
basis that not less than 51 percent of the total number of eligible
producers in the state have voted in the referendum and that 51
percent or more of the total number of eligible producers who
voted in the referendum and who produced 51 percent or more of
the total amount of fluid milk produced in the state during the
calendar month next preceding the month of the commencement
of the referendum period by all producers who voted in the
referendum, approve the repeal of this article and Sections 61832.5
and 62509 and the restoration of Sections 62564 and 62623 to as
those sections existed on January 1, 2014.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 62509 is added to the end insert begin insert Food and Agricultural
Code end insert begin insert , to read: end insert

begin insert

begin insert 62509. end insert   

(a) Milk purchased under an alternative milk marketing
agreement pursuant to Article 9.5 (commencing with Section
62080) of Chapter 2 shall be valued based on the announced
minimum class price, as if they had applied to such milk, for the
collection of security charges and handler’s average monthly milk
purchases pursuant to Section 62560.

(b) This section shall only be operative if the requirements of
Section 62080 are met.

(c) This section shall no longer be operative and shall be
repealed if the secretary makes a finding in accordance with
subdivision (c) of Section 62087.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 62564 of the end insert begin insert Food and Agricultural Code end insert begin insert is
amended to read: end insert

62564.  

begin delete Any end delete begin insert (a) end insert begin insert   end insert begin insert A end insert handler receiving milk not subject to any
pooling plan in effect pursuant to Chapter 3 (commencing with
Section 62700) shall be obligated to remit to the secretary any
security charges in effect pursuant to Section 62561 for class 1,
class 2, class 3, class 4a, and class 4b products produced from the
milk and may deduct the security charges from the minimum prices
required to be paid to producers begin insert or from the price established under
an alternative milk marketing agreement pursuant to Article 9.5
(commencing with Section 62080) of Chapter 2 end insert .

begin insert

(b) The amendments to this section made by the act adding this
subdivision shall become operative only if the requirements of
Section 62080 are met.

end insert begin insert

(c) This section is repealed if the secretary makes a finding in
accordance with subdivision (c) of Section 62087.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 62564 is added to the end insert begin insert Food and Agricultural
Code end insert begin insert , to read: end insert

begin insert

begin insert 62564. end insert   

(a) A handler receiving milk not subject to any pooling
plan in effect pursuant to Chapter 3 (commencing with Section
62700) shall be obligated to remit to the secretary any security
charges in effect pursuant to Section 62561 for class 1, class 2,
class 3, class 4a, and class 4b products produced from the milk
and may deduct the security charges from the minimum prices
required to be paid to producers.

(b) This section shall only be operative if the secretary makes
a finding in accordance with subdivision (c) of Section 62087.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 62623 of the end insert begin insert Food and Agricultural Code end insert begin insert is
amended to read: end insert

62623.  

begin insert (a) end insert begin insert   end insert For purposes of this chapter, the amounts owed to
the producers shall be calculated as follows:

begin delete

(a)

end delete

begin insert (1) end insert  Only shipments begin delete which end delete begin insert that end insert occur during the first 35 days
from the date of the earliest shipment for which a producer has
not been paid shall be used.

begin delete

(b)

end delete

begin insert (2) end insert  The minimum prices established in the stabilization and
marketing plans applied to the usage assigned under the pooling
plan shall be used for cooperative marketing associations.

begin delete

(c)

end delete

begin insert (3) end insert  The price specified in the contract with the handler shall be
used for manufacturing milk producers unless a lower price is
contained in the stabilization and marketing plans, in which case
the lower price shall be used.

begin delete

(d)

end delete

begin insert (4) end insert  The minimum prices established in the stabilization and
marketing plans shall be used for direct market milk producers
who are not shipping their milk under the pooling plan.

begin delete

(e)

end delete

begin insert (5) end insert  The quota, base, and overbase prices, as provided for in the
pooling plan, shall be used for producers, other than cooperative
marketing associations, who ship their milk directly to a handler.

begin delete

(f)

end delete

begin insert (6) end insert  Deductions shall be made for those items begin delete which end delete begin insert that end insert the
handler customarily deducts from the payments, unless the
deductions are in violation of Chapter 1 (commencing with Section
61301), Chapter 2 (commencing with Section 61801), or Chapter
3 (commencing with Section 62700), or the deductions are for
voluntary assignments made by the producer.

begin delete

(g)

end delete

begin insert (7) end insert  The producer’s share of any bond recovery under Chapter
1 (commencing with Section 61301) or Chapter 2 (commencing
with Section 61801) shall be deducted.

begin insert

(8) For the terms and prices to be paid for milk purchased from
producers under an alternative milk marketing agreement, pursuant
to Article 9.5 (commencing with Section 62080) of Chapter 2, the
value established for the Milk Producers Security Trust Fund under
an alternative milk marketing agreement shall be limited to the
lower of the following:

end insert begin insert

(A) The value established under the alternative milk marketing
agreement.

end insert begin insert

(B) The value determined using the minimum price, as though
the minimum class price had been applied to the milk, under the
stabilization and marketing plan.

end insert begin insert

(b) The amendments to this section made by the act adding this
subdivision shall become operative only if the requirements of
Section 62080 are met.

end insert begin insert

(c) This section is repealed if the secretary makes a finding in
accordance with subdivision (c) of Section 62087.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 62623 is added to the end insert begin insert Food and Agricultural
Code end insert begin insert , to read: end insert

begin insert

begin insert 62623. end insert   

(a) For purposes of this chapter, the amounts owed to
the producers shall be calculated as follows:

(1) Only shipments that occur during the first 35 days from the
date of the earliest shipment for which a producer has not been
paid shall be used.

(2) The minimum prices established in the stabilization and
marketing plans applied to the usage assigned under the pooling
plan shall be used for cooperative marketing associations.

(3) The price specified in the contract with the handler shall be
used for manufacturing milk producers unless a lower price is
contained in the stabilization and marketing plans, in which case
the lower price shall be used.

(4) The minimum prices established in the stabilization and
marketing plans shall be used for direct market milk producers
who are not shipping their milk under the pooling plan.

(5) The quota, base, and overbase prices, as provided for in the
pooling plan, shall be used for producers, other than cooperative
marketing associations, who ship their milk directly to a handler.

(6) Deductions shall be made for those items that the handler
customarily deducts from the payments, unless the deductions are
in violation of Chapter 1 (commencing with Section 61301),
Chapter 2 (commencing with Section 61801), or Chapter 3
(commencing with Section 62700), or the deductions are for
voluntary assignments made by the producer.

(7) The producer’s share of any bond recovery under Chapter
1 (commencing with Section 61301) or Chapter 2 (commencing
with Section 61801) shall be deducted.

(b) This section shall only be operative if the secretary makes
a finding in accordance with subdivision (c) of Section 62087.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

begin delete

SECTION 1.  

Article 7 (commencing with Section 9190) is
added to Chapter 1 of Part 1 of Division 5 of the Food and
Agricultural Code, to read:

 

Article 7.  Animal Disease Planning

 

9190.  

The Legislature finds and declares both of the following:

(a) Global travel, global trade, and climate change introduce
invasive animals, plants, and insects, and plant and animal diseases
to California.

(b) Humans are susceptible to the transfer of animal diseases
because 85 percent of all human diseases are zoonotic, meaning
the disease is communicable from animals to humans.

9191.  

On or before July 1, 2015, the department shall develop
and maintain a list of animal diseases that have a reasonable
likelihood of entering California for which a detection, exclusion,
eradication, control, or management action by the state might be
appropriate.

9192.  

The department, to the extent funding is available, shall
develop and maintain a written plan on the most appropriate options
for detection, exclusion, eradication, control, or management of
the higher priority animal diseases on the list prepared pursuant
to Section 9191. In determining which animal diseases are the
higher priority and in developing the most appropriate options for
detection, exclusion, eradication, control, or management, the
department shall consult with the United States Department of
Agriculture, the University of California, other state agencies and
departments, and others in the scientific and research community.

9193.  

In implementing this article, the department may
undertake or contract for scientific research with the University
of California or other institutions of higher learning.

end delete