Bill Text: CA AB2730 | 2013-2014 | Regular Session | Amended

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Bill Title: Alternative milk marketing agreements.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed - Dead) 2014-08-25 - Read second time. Ordered to third reading. Re-referred to Com. on RLS. pursuant to Senate Rule 29.10(c). [AB2730 Detail]

Download: California-2013-AB2730-Amended.html

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BILL NUMBER: AB 2730	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 22, 2014
	AMENDED IN ASSEMBLY  MARCH 18, 2014

INTRODUCED BY    Committee on Agriculture  
(   Assembly Members Eggman (Chair), Olsen (Vice
Chair), Atkins, Dahle, Pan, Quirk, and Yamada   )
  Assembly Member   Eggman 
    (   Principal coauthor:   Senator 
 Galgiani   ) 

                        FEBRUARY 24, 2014

   An act to  add Article 7 (commencing with Section 9190) to
Chapter 1 of Part 1 of Division 5 of   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,  the Food and
Agricultural Code, relating to  animals   market
milk  .



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2730, as amended,  Committee on Agriculture 
 Eggman  .  Animal disease planning.  
Alternative milk marketing agreements.  
   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.  
   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.
 
   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. 
    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 
 '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.  
   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.  
   This bill would provide that no reimbursement is required by this
act for a specified reason.  
   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.  
   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. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program:  no   yes  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 61832.5 is added to the 
 Food and Agricultural Code   , to read:  
   61832.5.  (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. 
   SEC. 2.    Article 9.5 (commencing with Section
62080) is added to Chapter 2 of Part 3 of Division 21 of the 
 Food and Agricultural Code   , to read:  

      Article 9.5.  Alternative Milk Marketing Agreements


   62080.  (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.
   62081.  (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.
   62082.  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.
   62083.  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.
   62084.  (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.
   62085.  (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.
   62086.  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.
   62087.  (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. 
   SEC. 3.    Section 62509 is added to the  
Food and Agricultural Code   , to read:  
   62509.  (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. 
   SEC. 4.    Section 62564 of the   Food and
Agricultural Code   is amended to read: 
   62564.   Any   (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  or from the price established under an alternative mi
  lk marketing agreement pursuant to Article 9.5 (commencing
  with Section 62080) of Chapter 2  . 
   (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.  
   (c) This section is repealed if the secretary makes a finding in
accordance with subdivision (c) of Section 62087. 
   SEC. 5.    Section 62564 is added to the  
Food and Agricultural Code   , to read:  
   62564.  (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. 
   SEC. 6.    Section 62623 of the   Food and
Agricultural Code   is amended to read: 
   62623.   (a)    For purposes of this chapter,
the amounts owed to the producers shall be calculated as follows:

   (a) 
    (1)  Only shipments  which   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.

   (b) 
    (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. 
   (c) 
    (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. 
   (d) 
    (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. 
   (e) 
    (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. 
   (f) 
    (6)  Deductions shall be made for those items 
which   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.

   (g) 
    (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. 
   (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:  
   (A) The value established under the alternative milk marketing
agreement.  
   (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.  
   (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.  
   (c) This section is repealed if the secretary makes a finding in
accordance with subdivision (c) of Section 62087. 
   SEC. 7.    Section 62623 is added to the  
Food and Agricultural Code   , to read:  
   62623.  (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. 
   SEC. 8.    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.  
  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.