Legislature(2003 - 2004)
04/09/2003 01:24 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 226-ORGANIC FOOD CHAIR FATE announced that the next order of business would be HOUSE BILL NO. 226, "An Act relating to the sale, offer for sale, representation, and labeling of food or other agricultural products as organic, and to the state organic certification program; and providing for an effective date." Number 2872 REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, sponsor, explained that HB 226 will help many farmers in his district, particularly those in the "niche" portion of the agricultural industry, by helping them participate in compliance with federal requirements under a state organic program. He noted that this bill has features of legislation sponsored by Representative Harris the previous year; Representative Harris had asked him to help take the lead on this along with Representative Gatto, a cosponsor, who is from Palmer. He deferred to Ms. Bitney for further explanation. Number 2958 BARBARA BITNEY, Staff to Representative Bill Stoltze, Alaska State Legislature, addressed information in the committee packet and offered details. Referring to a sectional analysis [dated April 7, 2003, from Legislative Legal and Research Services], she said the bill is to bring Alaska in line with the National Organic Program (NOP) that was passed in [2001] and that allowed 14 months for states to come in line; last year Representative Harris introduced HB 432 to do that, but it didn't pass. Right now, Alaskan producers of organic products must go out of state for certification; the packet contains letters relating to this and the associated cost burden. TAPE 03-27, SIDE B Number 2958 MS. BITNEY, to show how many communities are affected, highlighted three farmers' markets in Anchorage and one each in Eagle River, Fairbanks, Homer, Soldotna, and Wasilla; in addition, Delta and Talkeetna plan to start one. Those are the smaller producers, and there are larger agricultural producers as well such as Wolverine [Farm], which produces carrots. They face a big issue regarding costs associated with keeping the "organic" label, she told members. Offering a label for committee members to view, she indicated these labels cannot be used without certification. Number 2944 REPRESENTATIVE GATTO asked why meat, fish, and poultry aren't included in the bill. MS. BITNEY replied: Actually, I have a clarification in there, and ... they are actually applied in two different sections of the statute. And so we're dealing with them separately, and part of the reason for that is because ... we have a distinct need right now to make sure we get the agriculture through. And they've been waiting for over a year and a half to do that. Number 2905 REPRESENTATIVE GUTTENBERG referred to page 1 [Section 2, lines 12-13], which says in part, "The department may establish a state organic certification program". He asked whether it should be "shall" rather than "may". MS. BITNEY answered, "We definitely want them to do that, so I would have to check with the Department of Law to clarify that." Number 2875 REPRESENTATIVE GUTTENBERG referred to Section 1 and noted that it says [on line 5, "AS 03.58.010 is repealed and reenacted to read:"]. He asked what the change was. MS. BITNEY answered that the [statutory] organic standards in place aren't in line with the current federal organic program. REPRESENTATIVE GUTTENBERG surmised, then, that basically the state standards had been thrown out and the federal standards adopted. MS. BITNEY concurred. Number 2850 REPRESENTATIVE HEINZE observed that [the sponsor statement] says qualified inspectors would complete the inspection and [the final certification process would be performed by a designated state official]. She asked whether the inspectors are Alaskans or would be brought in from the federal government. MS. BITNEY answered that a lot of the inspectors are federally qualified because there is a significant cost for the training. She added, "People haven't applied for the training yet because we don't even have the certification program here in Alaska yet. So I believe that if we did do this, we would have the certification here and then the inspectors would follow." REPRESENTATIVE HEINZE asked whether funds are available somewhere to start the certification process. MS. BITNEY replied: We have a fiscal note that covers basically the certification process. And the inspection process is actually what requires the most time. And right now the inspectors come up, do a very thorough inspection. And we would be able to have the certification process, sign off on it - they would look through all the required documentation, make sure everything was correct, and could do an onsite inspection follow-up if they wanted. Number 2770 REPRESENTATIVE STOLTZE remarked that he is very sensitive to fiscal matters and is working with Representative Harris, a cosponsor, so that the House Finance Committee can scrutinize this to make sure it just meets necessary costs. Representative Stoltze said he'd keep a watchful eye as well. REPRESENTATIVE HEINZE clarified that she wanted to ensure that the money is there to implement this. REPRESENTATIVE STOLTZE replied that if these [costs] are all justified, he will fight tooth and nail for this important industry in his district and others. It isn't a large industry at this point, he noted, but certainly has potential. He expressed the desire to nurture it. Number 2726 REPRESENTATIVE GUTTENBERG referred to Section 4, page 2, line 10, which relates to establishing a fine. He asked whether this is new or is common practice. MS. BITNEY answered that the U.S. Code sets a $10,000 limit for a fine. The Department of Natural Resources (DNR) - under [the Division of Agriculture] - would have to determined with the Department of Law what they would set for a fine. She surmised that it would be in line with other states, and noted that the [federal] organic program has draft language that all states have looked at for adoption. "I believe ours was in line with that," she added. REPRESENTATIVE GUTTENBERG asked whether this is a new policy for Alaska with regard to fines. REPRESENTATIVE STOLTZE offered to find out. Number 2633 LARRY DeVILBISS, Proprietor/Manager, Wolverine Farm, began by explaining that Wolverine Farm has existed in the Matanuska Valley since 1956. He told members: When we came up to begin managing the farm in 1980, we made a number of decisions that sort of changed the direction of where we went. We had traditionally been a potato and dairy farm, and we decided to go into organic production as much as possible, and to focus on carrots and beef. And over that 22 or 23 years, we have phased completely out of the nonorganic production ... of carrots and are just producing organic carrots now - just to tell you that that's an indicator of where the market has gone up here; it has definitely grown enough to accommodate at least this farm ... in one product. And about five or six years ago, I was a founding member of the Alaska Organic Association, because up to that point there had been no way to certify organically up here in the state. And after quite a bit of research we came up with a model that basically was modeled after the California organic growers' association and Oregon Tilth. And through these years, with a board ... [composed] of both growers and retailers and a couple of housewives, we flew in inspectors that were members of the international organic inspectors association and adopted standards and have had a program that we think had a lot of credibility and ... worked pretty well. But when the national standard kicked in last year, ... it knocked out the possibility of growers' being involved at all in the actual certification. And so we've kind of been floundering since then. Since that time, I've actually stepped out of the carrot side of the production here at Wolverine Farm, and ... there's three other relatives that are picking that up. And this year they've had to go out to Washington [State] to certify because nothing was put in place last year ... to enable us to certify. Number 2455 MR. DeVILBISS continued: The way we [envision] this working is that we'll continue flying in independent inspectors to do ... the inspecting, at our expense, until such time as ... there are qualified inspectors up here that could do it. ... But even then, the growers would expect to bear that expense. The only thing we haven't been able to do ... and need from the state is some kind of a certification of that process so that we can use the federal seal. And in order for the state to do that, it was necessary for this law that is coming before you to repeal the old state standard and adopt the national organic standard, and make room for the state to accommodate this process. I ... was unaware up to this point [that] there was a fiscal note attached to it at all. But we're not looking for a handout. We're just looking for a way to do business here ... that doesn't require us to put another state sticker on our bags. That really doesn't seem appropriate. It's not something we want to do. We've developed quite a bit of loyalty for Alaskan products here. MR. DeVILBISS mentioned moving the bill ahead and said he believes [organic food] is a niche that is growing. Referring to a recent audit on the Division of Agriculture, he said one recommendation was that the state do what it can to help niches like this in the agricultural industry to get started. This bill certainly would help do that, he concluded. Number 2356 REPRESENTATIVE GATTO asked Mr. DeVilbiss what gross weight of carrots Wolverine Farm can produce annually. MR. DeVILBISS answered that they've been producing 500 to 600 tons a year. Annual gross revenues have been about $350,000 to $400,000. On the organic side, he noted, most of that goes toward wages because it is very labor-intensive. REPRESENTATIVE GATTO asked whether other kinds of organic produce are grown in the Matanuska Valley. MR. DeVILBISS affirmed that. He said the association has producers that grow a large variety of vegetables, more for farmers' market, but one commercial potato producer in Delta produces just potatoes, to his belief. Number 2240 MR. DeVILBISS returned attention to the bill and said: We eventually plan to bring our livestock into the program. In fact, we started to last year, but we ran into a problem: we've been unable to come up with organic sources for enough nitrogen to grow grass here. But as soon as possible we want to be able to sell organic beef as well. And so ... I would like to see that exclusion taken out of there, unless there's some reason why it couldn't be. CHAIR FATE said he'd have to take a look at that. He added: I do know that in previous efforts in red meat programs there's always been some problem in certification. And we've had a difficult time getting, as you are, ... federal inspectors to come up. And it has to be federally inspected meat. And that's one of the problems in several enterprises that have really tried ... and had actually a pretty good local market. But I know the University of Alaska had a red meat program, and that was one of the problems, ... trying to get certification of that meat after, of course, the meat was processed. MR. DeVILBISS added that the national standard addresses this fully, so there's no complication as far as the standard on the national level is concerned. Number 2150 REPRESENTATIVE HEINZE lauded Mr. DeVilbiss as a "shining star" in the agricultural field for dedication and the products he produces. She then asked how fertilizer is applied for organic foods. MR. DeVILBISS replied: Well, if you read the national standard, which is probably two or three inches thick, you'd have a better idea. But basically it has to be done without any synthetic compounds, which means you can't use fertilizer that's been chemically produced. There's natural rock for phosphate; we use fish byproduct for the phosphorus; the nitrogen is harder to come by, but that's where we use composting and cow manure and ... a whole bunch of other stuff. And it's all spelled out and it's all got to be verified ... as the process goes along so it's not ... infringed on. And I might say that one reason we, as a farm, decided to go organic is 'cause we're convinced that our father died prematurely of cancer because of agricultural chemicals. ... We don't criticize farmers ... that don't do it that way, but we had good motivation as a family to do something different. CHAIR FATE informed members that Dean Brown and Rob Wells of the Division of Agriculture were available to answer questions. Number 2030 REPRESENTATIVE GUTTENBERG remarked that he likes the option of having an organic foods section at the store. He asked Mr. DeVilbiss, on a larger scale, whether there is a separate market that is large enough for this. MR. DeVILBISS answered: We wouldn't be moving that direction if there weren't. ... The production figures I gave Representative Gatto were for organic production only. ... It's a niche that ... has grown significantly in the past 20 years and ... I expect will continue to grow. REPRESENTATIVE GUTTENBERG asked whether most of the market is in supermarkets or farmers' markets. MR. DeVILBISS replied that it's in both places. He added, "Our production has gone almost entirely into the supermarket chains. In fact, through last year, ... we were even in Juneau for a while." Number 1935 RIVER BEAN, President, Alaska Organic Association, began by thanking Representative Stoltz for bringing the bill forward on behalf of his association. He urged passage so Alaska has something in place to help with the certification process. Noting that a number of farmers must go to Washington State this year in order to be certified at great expense, he contrasted that with the cost for in-state certification, saying it would simply be returning the cost of the program to the state. He told members: We're not looking for a handout; we're looking to cover costs. But at this point the Alaska Organic Association can no longer certify. So we need a certifying body in the State of Alaska in order to put "Alaskan certified organic" on our produce or labels or bags, rather than "Washington State for Alaskan grown produce." MR. BEAN said this also would support sustainable agriculture in the valley. Offering his belief that a number of farmers who aren't certified would become certified if the State of Alaska were accredited to do so, he concluded, "I think the publicity is much greater through a state program and ... would offer that opportunity to a lot more growers, maybe on a [sliding-fee scale] than what we could do with the Alaska Organic Association." Number 1802 REPRESENTATIVE HEINZE asked whether the certification would come under the Division of Agriculture, Department of Natural Resources (DNR). MR. BEAN replied that he believed so. REPRESENTATIVE HEINZE asked Dean Brown whether this indicates the Division of Agriculture will stay put. Number 1766 DEAN BROWN, Acting Director, Division of Agriculture, Department of Natural Resources, answered that the administration has been looking at the recommendations from the audit, and that the Board of Agriculture and Conservation had made recommendations for candidates for the director [position]. She offered her understanding that no final decisions have been made yet, but said she'd been the acting director since December 15. Noting that the growing season is approaching and that the Agricultural Revolving Loan Fund is active in supporting farmers, Ms. Brown added that agriculture is alive and well and that producers have viable products they're bringing to market this year. Number 1686 REPRESENTATIVE GUTTENBERG asked Mr. Bean who the members of [Alaska Organic Association] are across the state. MR. BEAN answered that members range from Fairbanks to Homer, although not in the outlying Bush areas. "It's possible they don't know about it," he added. "We've done all of our own advertising, and it's been limited to ... just basically the road system." He acknowledged that the [Anchorage Daily News] goes out to the Bush, but said there are no members there currently. MR. BEAN noted that his personal business, Arctic Organics, was started 18 years ago and always has been organic. However, this is the first year that the produce no longer can be called "organic," and there is a possible federal fine of up to $10,000 if his business calls it that. He added, "We cannot afford to go to Washington State and have them do our inspection for us. So we are no longer able to call our produce 'organic,' and that's a real shame." Number 1577 REPRESENTATIVE GUTTENBERG requested the names of the Alaska Organic Association's members from Fairbanks, his own district. MR. BEAN replied that he didn't have a list with him, but mentioned a certified grower in the Fairbanks area and that a number of people have called wanting Mr. Bean to do a radio program up there, although they hadn't followed through. Number 1544 REPRESENTATIVE MASEK asked about any cooperatives currently in place. She recalled that when she was living on the Yukon River, the Tanana Chiefs Conference had a program under which potatoes, turnips, carrots, and so forth were grown in the village. She mentioned a soil and water conservation program and said she didn't know whether it was affiliated with [Mr. Bean's organization] in any way. MR. BEAN said no and explained: We're basically a stand-alone program and operation. We started the Alaska Organic Association several years ago, and Larry DeVilbiss, as he stated, was one of the founding members, and there were a number of other people. And we spent probably a year and a half researching our standards, and we did this all on our own; ... there were no other groups or entities involved. And so it is just ... basically the board members of the Alaska Organic Association that came up with the standards that we have yet today, but they're no longer effective. Number 1442 REPRESENTATIVE GATTO asked whether genetically modified foods that were grown organically would qualify. MR. BEAN answered that the National Organic Program doesn't allow that. It specifies what the organic standards are, and genetically modified foods aren't part of that. REPRESENTATIVE GATTO asked whether there is a limit on the annual dollar volume. In other words, could a person who sells $500 in products a year be able to sell something organic without certification? MR. BEAN answered yes. He elaborated: Currently, the way that the National Organic Program reads is that anyone that grosses less than $5,000 is allowed to sell their produce as organic as long as ... they're following the standards that the NOP, the National Organic Program, has set forth. But ... if they're not making very much money ... they are not required to pay the money to become certified. They do have to promise to grow to those standards ... and then they can use the word "organic," but they do not need to be certified. Number 1332 CHAIR FATE noted that the bill strikes the current $1,000 cap [for a civil fine] and also includes attorney fees. He asked whether the intent is that there will still be a $1,000 limit. MS. BITNEY replied that there is a limit in the federal law of $10,000. As the bill reads, it is left up to the department. She suggested that might be something for the committee to explore. Number 1242 REPRESENTATIVE KERTTULA referred to the addition of attorney fees to the costs that can be recovered [page 2, line 17]. She said she didn't think any administrative code in Alaska had that and asked whether it's something new. MS. BITNEY said she'd have to get back to Representative Kerttula on that. REPRESENTATIVE STOLTZE added that he didn't feel strongly about it and indicated he didn't have the legal background Representative Kerttula has. REPRESENTATIVE KERTTULA clarified that she wasn't sure it wouldn't be a good idea, but just hadn't seen it before. Number 1180 REPRESENTATIVE MASEK moved to report HB 226 out of committee with individual recommendations and the accompanying fiscal notes; she asked for unanimous consent. There being no objection, HB 226 was reported from the House Resources Standing Committee. REPRESENTATIVE STOLTZE informed members that he would follow up on the very good questions they'd asked.
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