Legislature(2003 - 2004)

04/09/2003 01:24 PM House RES

Audio Topic
* first hearing in first committee of referral
+ 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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
REPRESENTATIVE STOLTZE  informed members that he  would follow up                                                               
on the very good questions they'd asked.                                                                                        

Document Name Date/Time Subjects