SENATE BILL REPORT

ESSB 6344

BYSenate Committee on Agriculture (originally sponsored Senators Barr, Hansen, Bailey and Anderson; by request of Department of Agriculture)

Revising provisions relating to agriculture.

Senate Committee on Agriculture

Senate Hearing Date(s):January 21, 1988

Majority Report:  That Substitute Senate Bill No. 6344 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Barr, Chairman; Anderson, Vice Chairman; Bailey, Hansen, Rinehart.

Senate Staff:Tom McDonald (786-7404)

                  March 7, 1988

House Committe on Agriculture & Rural Development

Rereferred House Committee on Ways & Means

AS PASSED SENATE, FEBRUARY 12, 1988

BACKGROUND:

Agricultural Local Fund:  Several agriculturally related statutes comprise the Agricultural Local Fund.  Under the authority of each statute, the Department of Agriculture deposits in the fund all the fees and fines collected in administering and enforcing the requirements and obligations directed by the statute.  Each statute also specifies the manner in which the monies collected under its authority are to be distributed.  An appropriation is not required for disbursement.

The fund is considered an efficient means of collecting the fees and distributing the money needed to carry out the duties of the department.  Several other fee generating statutes, however, are not in the fund and remain as appropriated funds in the state treasury.  These include the Seed Act, the Fertilizer, Agricultural Mineral and Limes Act, the Animal Remedy Act, and the Commercial Feed Act.

 Controlled Atmosphere Storage Business Licensing:  A controlled atmosphere storage is a storage warehouse in which the atmospheric gases and the temperature are regulated to control the condition and maturity of fresh fruit and vegetables.  Under current statute, the department may charge a $5.00 annual licensing fee for controlled atmosphere storage businesses.  This fee, however, does not cover the costs of administering this law.

Horticulture District Inspector:  Each county may establish a horticulture pest and disease board to more effectively control and prevent the spread of pests and diseases.  The board is comprised of four members appointed by the county commissioners and one member who is to be the "inspector at large" for the horticulture district.  However, the "inspector at large" position no longer exists in the department, and the language of statute has become obsolete.

Frozen Products Labeling:  A retailer must label specific food fish and meat products as "frozen" if the products have been frozen "subsequent to being offered for sale or distribution to the ultimate consumer."  The time at which labeling must occur has been confusing and inconsistent with the poultry "frozen" labeling requirements.

Certificates to Food Processors:  The department has no statutory authority to issue and charge a fee for sanitary certificates for food processors.  However, food processors, including the entire agri-business food processing community, are required to have a sanitary certificate by foreign countries for exported process foods.  Although the department is now issuing the certificates, it is unable to recoup its costs.

 Commission Merchants Act:  The Commission Merchants Act requires businesses to be licensed and bonded.  Retail business activities are specifically exempt from this requirement.  Some businesses are attempting to avoid licensure and bonding by claiming that the retail portion of their business exempts them from the requirements for their wholesale activities.

Commission merchants are required to list and post a schedule of commissions and an itemized list of all charges for services to be rendered to a consignor.  Producers who consign their products to commission merchants have been having problems with knowing the specific charges of a consignor.

Washington Wine Commission:  The Wine Commission is an agricultural commodity commission composed of eleven voting and one nonvoting members.  Although the department's director, or the director's designee, is a member on all other commodity commissions, the Wine Commission does not include the director as a member.

Agricultural Financial Distress:  Agricultural communities throughout the country are experiencing tougher financial conditions.  For many farmers, financial conditions are deteriorating to the point that creditor institutions see no choice but to foreclose on mortgaged equipment and land.  For the farmer, foreclosure usually precludes a chance to pay off other loans and obligations through continued operations.  For the creditor, foreclosure is a decision of last resort as it usually results in a financial loss.

Several states have enacted legislation to alleviate these financial pressures and keep as many farmers as possible in the farming business.  These legislated programs include financial counseling, peer counseling, interest buydowns, and mandatory or voluntary mediation between the farmer and creditor prior to foreclosure.

SUMMARY:

 Agricultural Local Fund:  An agricultural local fund is established and will consist of money collected pursuant to specific statutory authority.  The money deposited in the fund may only be expended in accordance with restrictions in the law.  No appropriation is required for disbursements from the fund.  The fees, fines and other monies collected under the Seed Act, the Fertilizer, Agricultural Minerals and Limes Act, the Animal Remedy Act and the Commercial Seed Act are placed into the Agricultural Local Fund.

Controlled Atmosphere Storage Business Licensing:  The increased fee provisions for licensing controlled atmosphere storage businesses are made by the rule making process.

 Horticulture District Inspector:  The Director of the Department of Agriculture has authority to appoint the fifth member of the board.

 Frozen Products Labeling:  Any food fish or meat products, as defined in law, must be labeled in a "frozen state" before sale if the product has been frozen "at any time."

 Certificates to Food Processors:  The department has authority to issue and charge for sanitary certificates to food processors.  The sanitary certificate is not mandatory and has a fee charge of $20.00.

Commission Merchants Act:  A retailer is exempt from the licensing and bonding requirements of the Commission Merchants Act only for the retail business conducted at the place of business.  Commissioner merchants must distribute to each consignor with every contract the itemized list of the merchant's charges.  A merchant who fails to itemize and distribute a list of charges is guilty of civil infraction.

Wine Commission:  The Director of the Department of Agriculture is added as an ex officio, nonvoting member to the Wine Commission.

Agricultural Financial Distress:  An agricultural assistance and consultation program to aid financially distressed farmers is established by the State Board for Community College Education, through the community college system.

Individual community colleges shall submit proposals for their mediation process to the board for approval.  The mediation process shall make available to farmers:  financial consulting, farm management consulting, voluntary debt mediation, and referral services for mental health assistance and support counseling.

Individual farmers in danger of foreclosure on agricultural property may initiate the mediation process by filing an application with the closest community college offering a program of financial consulting.  After the farmer has received financial counseling and if mediation is desired by the farmer and recommended by the financial consultant, the college shall direct a mediator to meet with the farmer and creditor to assist in mediation.  Mediation is only voluntary and will be terminated with any creditor who does not agree to participate.

Any decision reached through mediation by the farmer and a creditor will be considered a legally binding contract.  The state and designated financial consultants will be released from civil liability for activities associated with the financial counseling program.

The board shall provide training for financial consultants and mediators to work on this program and shall also compile a directory of services available through the program.  The board may establish reasonable fees to defray the cost of the program and shall apply to the United States Secretary of Agriculture for a matching grant under Title V, Substitute A of the Agricultural Credit Act of 1987.

The act is to take effect immediately and is to expire on April 1, 1991.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Senate Committee - Testified: Mike Schwisow, Deputy Director, State Department of Agriculture

HOUSE AMENDMENTS:

The farmer financial counseling and mediation program is stricken from the bill.  A consignor of agricultural products will still have to make a request to the commission merchant if the consignor wishes to receive, by the end of the next day following the sale of products, a report of the sale, the amount sold and the selling price.  Commission Merchants are also to keep records on the quality and quantity of agricultural products sold and proof of payments received on behalf of the consignor.  Only those agricultural products listed in the statute or similar products listed by the department by rule are defined as "agricultural commodities" for the purpose of the state Grain Warehouse Act.  Unfired pressure vessels that are exempt from inspection will include those vessels that are part of fertilizer applicator rigs in agricultural operations.