AB 698

This bill makes changes to the Agricultural Producer Security Program, which

is administered by the Department of Agriculture, Trade and Consumer Protection.

The program is designed to minimize the risk that certain persons who buy

vegetables from producers for processing, who buy milk or grain, or who store grain

in a warehouse (contractors) will default on their financial obligations to vegetable,

dairy, or grain producers. Under the program, contractors are required to be licensed

by DATCP, and most contractors must pay into the agricultural producer security

fund. If a contractor defaults, the fund reimburses a producer for a portion of the

losses that the producer incurs as a result of the default.

Small vegetable processor exemption

Except for restaurants, other retail food establishments, and certain federally

licensed persons, current law requires a person who procures vegetables grown for

use in food processing from a vegetable producer, or the producer's agent, to satisfy

certain requirements including payment of fees and assessments, holding a license

granted by DATCP, and filing annual financial statements. The bill exempts a

person who procures vegetables that are grown for use in food processing from a

vegetable producer, or the producer's agent, from those requirements if the person

spends less than $15,000 per year on procuring vegetables.

Milk deferred payment contracts

The bill allows a person who buys milk from a milk producer to enter into a

contract to pay the producer for that milk up to approximately five months after the

person receives the milk. Under the bill, a deferred payment contract for milk must

be in writing, contain certain notices, and meet certain other requirements. Current

law requires that a person who buys milk from a milk producer make certain portions

of the payment for that milk by the 4th and the 19th days of the next month. The

bill also requires DATCP to promulgate rules that establish an additional license

assessment that a milk producer must pay for entering into a deferred payment

contract, and requires a person who buys milk under a deferred payment contract

to file and maintain security with DATCP, in certain situations, until it is eligible to

be released.

Grain dealer and grain warehouse keeper fund balances

The bill also combines the agricultural producer security fund balance

attributable to grain dealers and the fund balance attributable to grain warehouse

keepers into a single fund balance attributable to both. Current law establishes a

threshold for each fund balance attributable to a particular type of contractor, at

which DATCP is required to reduce certain fees paid by contractors who have

contributed to the fund by a portion of the amount that the fund balance exceeds the

threshold. The bill adds together the threshold for the fund balance attributable to

grain dealers and the threshold for the fund balance attributable to grain warehouse

keepers to create a single threshold for certain fee reductions for both grain dealers