Code Section Group

Food and Agricultural Code - FAC

DIVISION 20. PROCESSORS, STORERS, DEALERS, AND DISTRIBUTORS OF AGRICULTURAL PRODUCTS [54001 - 57700]

  ( Division 20 enacted by Stats. 1967, Ch. 15. )

CHAPTER 6. Processors of Farm Products [55401 - 55922]

  ( Chapter 6 enacted by Stats. 1967, Ch. 15. )

ARTICLE 8. Processors [55601 - 55613]
  ( Article 8 enacted by Stats. 1967, Ch. 15. )

55601.
  

Every processor shall pay for any farm product which is delivered to the processor at the time and in the manner which is specified in the contract with the producer. If no time is set by such contract, or at the time of delivery, then the processor shall pay for the farm product within 30 days of the delivery or taking possession of such farm product.

(Enacted by Stats. 1967, Ch. 15.)

55601.1.
  

Section 55601.5 shall be known, and may be cited as, the “Clare Berryhill Grape Crush Report Act of 1976.”

(Added by Stats. 1996, Ch. 604, Sec. 1. Effective January 1, 1997.)

55601.3.
  

Upon the following, the processor shall notify the seller, on a form to be prescribed by the department, as to the requirements set forth in Sections 55601 and 55881:

(a) Upon delinquency of a contract.

(b) If payment is not made within 30 days when the contract does not specify time of payment or if there is no contract.

(c) If payment is not made within 30 days when the contract is oral, irrespective of the agreed time of payment.

The processor shall have the burden of proof as to the timely delivery of such a notice.

Such a notice shall only be required as to the first contract between any particular seller and processor during any one calendar year.

(Added by Stats. 1977, Ch. 400.)

55601.4.
  

Notwithstanding the provisions of Section 55601, every processor who purchases livestock for slaughter shall make full payment of such livestock, by the transfer of collected funds to the seller’s account, within two business days from the delivery of such livestock to the processor.

For purposes of this section, “business day” means any day which is a business day under the provisions of Section 9 of the Civil Code.

(Added by Stats. 1979, Ch. 497.)

55601.5.
  

(a) (1) Notwithstanding Section 55461, on or before January 10 of every year, every processor who crushes grapes in this state shall furnish to the secretary, on forms provided by the secretary, a report that includes all of the following:

(A) The total number of tons of grapes purchased by the processor in this state during the preceding crush within each grape-pricing district, broken down by total tons purchased, variety, and price, including any bonuses or allowances, and sugar calculations.

(B) The total number of tons of grapes purchased by the processor in this state in nonrelated purchases during the preceding crush within each grape-pricing district, broken down by total tons purchased, variety, and price, including any bonuses or allowances, and sugar calculations.

(C) The total number of tons of each variety of grape crushed within each grape-pricing district and the average sugar content of each variety within each grape-pricing district.

(D) The total number of tons of grapes purchased and crushed that are expected, as of the date of reporting by the processor, to be marketed as grape concentrate. In reporting tons purchased and crushed that are expected to be marketed as grape concentrate, processors may estimate equivalent tonnage. In estimating the equivalent tonnage, the processor shall include all equivalent tons crushed for the production of grape concentrate for wine and all other purposes marketed outside the state and the equivalent tons crushed for the production of grape concentrate for all purposes other than wine marketed within the state. In determining the estimated equivalent tons, processors shall make their best estimate of the gallons of concentrate per ton of grapes crushed based upon the Brix level of the grapes used in concentrate production.

(2) (A) When reporting price within the category of all tonnage purchased, processors shall include grapes purchased from (i) growers for wine, wine vinegar, juice, concentrate, and beverage brandy, (ii) another processor only if that processor was also the grower of the grapes, (iii) growers that are considered separate entities from the processor operation, or (iv) growers or other processors, but not by the reporting processor; and shall exclude (i) material other than grapes, and defects, or other weight adjustments deducted from the gross-weight ticket, (ii) any raisin-distilling material, (iii) grapes grown by the processor from vineyards that are not considered separate entities, (iv) grapes purchased from other processors that were previously purchased from growers, or (v) grapes crushed to grower accounts or crushed for other wineries. If several varieties were packaged together and purchased for one price, the processor shall report the average price per ton as one mixed lot, and when reporting crush information, shall report individual variety and tonnage information.

(B) When reporting price within the category of nonrelated purchases, processors shall exclude tonnage of grapes purchased from a grower if, during the reporting year (i) the grower or an affiliate of the grower, or both the grower and the affiliate of the grower, owned, directly or indirectly, at least 5 percent of the indicia of ownership or voting authority of the processor, (ii) the processor or an affiliate of the processor, or both the processor and the affiliate of the processor, owned, directly or indirectly, at least 5 percent of the indicia of ownership or voting authority of the grower, or (iii) the processor or an affiliate of the processor, or both the processor and the affiliate of the processor, provided long-term financing to the grower in exchange for rights or options to purchase a significant portion of the grower’s harvest.

(b) On or before February 25 of every year, each processor who crushes grapes in this state shall furnish to the secretary information concerning the final prices, including any bonuses or allowances, paid by variety and grape-pricing district to all growers holding reference price contracts in effect prior to January 1, 1977, which payments have not been reported on January 10.

(c) (1) The secretary may not release or otherwise make available any information furnished by an individual processor under this section, except in proceedings brought against the processor by the secretary for the purpose of enforcing this section, or except in the case of a producer who holds any reference price-grape purchase contract, to whom the secretary may furnish, upon request and at a reasonable cost, the information needed to verify the reference price, including any bonuses or allowances, set forth in the contract.

(2) The secretary shall not release or otherwise make available any information furnished by an individual processor under this section to any other division of the department except in accordance with a subpoena issued in accordance with Section 1985.3 of the Code of Civil Procedure.

(3) The secretary shall release only aggregate figures for grapes crushed that are expected to be marketed as grape concentrate and shall not include information by district, types, or variety.

(d) The secretary shall enforce the collection of the information and, on or before February 10 of each year, shall publish a preliminary summary report on the preceding crush. The report shall include all of the following information:

(1) The weighted average price paid on the basis of the prices, including any bonuses or allowances, reported and average sugar content for each grape variety purchased within each grape-pricing district.

(2) The total number of tons of grapes crushed and the average sugar content for each grape variety within each grape-pricing district.

(3) Each price category paid, separated by sugar calculations, if any, and the percentage each represents of the total for each variety within each grape-pricing district.

(4) Commencing with the report for the 1997 crush, in a separate and independent table without affecting or modifying existing tables, by weighted average price only, nonrelated purchases, by variety within each grape-pricing district excluding any bonuses, allowances, sugar calculations, and tonnage.

(e) On or before March 10 of each year, the secretary shall publish a final summary report, which shall contain all of the data furnished by the processors on or before January 10 and on or before February 25 of each year covering purchases under reference price contracts. The secretary may publish an addendum or supplemental report when reasonably necessary to correct any erroneous or misleading information contained in the annual report required by this section.

(f) The forms provided to processors by the secretary pursuant to this section shall provide for the separate reporting of grapes used by a processor (1) as distilling material and (2) for both beverage brandy and other than beverage brandy. A processor shall report all grapes used as distilling material by variety. The secretary, in determining the weighted average price paid for each grape variety purchased within each grape-pricing district, shall not include the prices paid for grapes of any variety used as distilling material for other than beverage brandy in determining the weighted average price. The secretary’s report shall include a separate summary regarding grapes used by processors as distilling material.

(g) All grape purchase contracts entered into on or after January 1, 1977, shall provide for a final price, including any bonuses or allowances, to be set on or before the January 10 following delivery of the grapes purchased. Any grape purchase contract entered into in violation of this subdivision is illegal and unenforceable. For the purpose of this section, a grape purchase contract shall not include any existing supply contract between a nonprofit cooperative association and a commercial processor.

(h) (1) If the department reasonably believes that a processor has failed, refused, or neglected to provide the information required by this section, or if the department finds apparent discrepancies in the information reported, the department may audit or investigate in accordance with Article 11 (commencing with Section 55721) or proceed in accordance with Article 5 (commencing with Section 55522.5), except as specified in paragraph (6). Injunctive relief under Section 55921 shall issue only upon a finding by a court of competent jurisdiction that a processor has done any of the following:

(A) Refused to submit required information after the department provides reasonable notice to the processor of the processor’s obligations and rights under this chapter.

(B) Misreported a fact, knowing that fact to be false, or in reckless disregard for whether the fact was true.

(2) Both the refusal to submit after the provision of reasonable notice and the misreporting of a fact under the circumstances set forth in this subdivision shall constitute violations of this chapter. Neither a refusal to submit nor a misreporting of a fact under this subdivision shall be prosecuted pursuant to Article 18 (commencing with Section 55901) or subject to civil penalties under Article 19 (commencing with Section 55921).

(3) In the case of misreporting in any action authorized by this section, it shall be a defense for a processor to rely on information provided to the processor by a producer with respect to whether a purchase is a related purchase.

(4) In the case of a refusal to report or misreporting, the department shall not commence an audit or investigation, other than a routine audit based on scientifically proven random sampling methods, without first disclosing to the processor being audited or investigated any and all information that constitutes the department’s belief that the processor has not complied, including the identities of all persons providing information on potential violations to the department.

(5) Anonymous complaints, unattributable information, or undocumented information shall not constitute reasonable belief and shall not be the basis for any investigation or audit action brought under this section. The department shall inform the processor of its reasons for auditing.

(6) No action shall be taken pursuant to Article 5 (commencing with Section 55522.5), Article 18 (commencing with Section 55901), or Article 19 (commencing with Section 55921) based on the reporting of grape concentrate pursuant to subparagraph (D) of paragraph (1) of subdivision (a).

(i) For purposes of this section, the following definitions shall apply:

(1) “Affiliate” or “affiliated with” means a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control of another person. For the purposes of this paragraph, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of any person.

(2) “Estimated equivalent tons,” when used in the context of reporting tons purchased and crushed that will be marketed as grape concentrate, shall be determined by use of the following formulas:

(A) Gallons of concentrate (approximately 20° Brix) produced divided by 40 equals equivalent tons.

(B) Gallons of concentrate (approximately 68° Brix) divided by 170 equals equivalent tons.

(3) “Grape-pricing district” means a district used by the federal-state cooperative market news services, as provided in Section 58231.

(4) “Long-term financing” means financing that by its terms is due over a period of more than one year, or more than 180 days if there is a purchase agreement between a grower and a processor, or if there is a farming agreement where the purchase price is on a per-acre basis.

(5) “Person” includes an individual, partnership, corporation, limited liability company, firm, company, or other entity.

(6) “Purchase” means the taking by sale, discount, negotiation, mortgage, pledge, lien, issue or reissue, gift, or any other voluntary transaction creating an interest in property. For purposes of this paragraph, “sale” shall consist of the passing of title from the seller to the buyer for a price.

(Amended by Stats. 1999, Ch. 199, Sec. 1. Effective January 1, 2000.)

55601.6.
  

(a) To provide funds to carry out Section 55601.5, each processor who crushes more than 100 tons of grapes in California shall pay to the secretary the amount determined by the secretary to be necessary to cover these costs, but not to exceed ten cents ($0.10) per ton of grapes received for crushing, fresh weight equivalent, during each marketing season beginning July 1 and ending the following June 30. However, five cents ($0.05) per ton of grapes received for crushing, or one-half of the fee if the fee is less than ten cents ($0.10), shall be paid by the processor who crushes grapes and five cents ($0.05) per ton of grapes received for crushing, including any grapes produced by the processor, or one-half of the fee if the fee is less than ten cents ($0.10), shall be paid by the processor who crushes grapes and may be deducted from moneys owed to the producer.

(b) The amount of the fee shall be paid to the secretary on or before January 10 of each year on all grapes received for crushing through December 15. The amount of the fee on any grapes received for crushing after December 15 shall be paid to the secretary on or before June 30 of that marketing season.

(c) The secretary may fix the fee at a lesser amount and may adjust the fee from marketing season to marketing season.

(d) Any processor who crushes grapes who fails, neglects, or refuses to pay the required fee shall be in violation of this chapter. Any processor who crushes grapes shall not be entitled to pass the penalty on to the producer of the grapes.

(e) If the secretary conducts an acreage survey pursuant to Section 55613, the secretary may increase the fee charged pursuant to subdivision (a) by not more than four cents ($0.04) per ton of grapes received for crushing, fresh weight equivalent, to cover costs of the survey. The same ratio of payment between processor and producer shall be maintained if the fee is increased pursuant to this subdivision.

(f) The fee authorized by subdivision (a) for the reports required to be prepared by the secretary pursuant to Section 55601.5 and the increase in that fee authorized by subdivision (e) for the survey authorized by Section 55613 shall be established by the secretary so as to generate only the amount of revenue that the secretary reasonably anticipates will be needed to cover the cost incurred by the secretary in gathering and producing the reports required by Section 55601.5, in conducting the survey authorized by Section 55613, and in conducting related enforcement activities. The funds generated by the fees authorized by this section shall be used only for the purpose of gathering the information and producing the reports required to be prepared by the secretary pursuant to Section 55601.5 and conducting the survey authorized by Section 55613.

(g) All moneys received under this section shall be deposited in the State Treasury to the credit of the Department of Food and Agriculture Fund.

(Amended by Stats. 1997, Ch. 135, Sec. 2. Effective July 28, 1997.)

55601.7.
  

Notwithstanding Section 55461, every processor who handles freestone peaches for freezing and drying in California shall furnish to the director, on or before December 10 of each year, and every processor who handles walnuts, raisins, or prunes in California annually shall furnish to the director, on or before August 31 of each year, on forms provided by the director, the reporting information specified below showing the number of tons purchased by the processor in that marketing season. In the report, the tonnage shall be broken down by at least major varieties and weighted average price paid for the tonnage acquired (including any bonuses or allowances) and may contain other information required by the director, including, but not limited to, the following:

(a) For walnuts, including inshell acquisitions and shelling stock acquisitions, the color, size, percentage of edible yield, and percentage of offgrade.

(b) For raisins, the percentage of mold, moisture content, sand, offgrade, or micro-organisms on offgrade acquisitions.

(c) For prunes, by size and percentage offgrade.

(d) For freestone peaches, by type of utilization on a fresh weight basis and percentage of offgrade.

The above reporting shall be on a statewide basis.

(Amended by Stats. 1984, Ch. 713, Sec. 1.)

55601.8.
  

(a) The secretary shall not release, or otherwise make available, any information furnished by a cooperative or an individual processor under Section 55601.7 or this section, including information relating to the weighted average prices paid, except in proceedings brought against the processor by the secretary for the purpose of enforcing this section.

(b) The secretary shall (1) enforce the collection of the information required in Section 55601.7, (2) on or before January 15, publish a summary report for freestone peaches used for freezing and drying and, (3) on or before October 20, publish a summary report for walnuts, raisins, and prunes, reflecting the statistics derived from the processor reports. The summary reports shall include summaries of all information required to be furnished to the secretary.

(c) The secretary may dispense with the reporting requirements and his or her duties to enforce the collection of this information and the publishing of summary reports if the secretary determines that the same or similar information is made public information within the same time periods of subdivision (b) by any federal or state committee or organization responsible for regulating the handling of any of the commodities subject to this section.

(d) (1) To provide funds to carry out Section 55601.7 and this section, each processor, including agricultural cooperatives, subject to these reporting requirements shall pay to the secretary the amount determined by the secretary to be necessary to cover these costs, but not to exceed twelve cents ($0.12) per fresh ton for freestone peaches, twelve cents ($0.12) per dry ton for raisins and prunes, and twelve cents ($0.12) per inshell dry ton for walnuts handled by the processor during each marketing season.

(2) (A) The amount of the fee for freestone peaches used for freezing and drying shall be paid to the secretary on or before December 10 for all freestone peaches used for freezing and drying received from April 1 through November 30.

(B) The amount of the fee for any freestone peaches used for freezing and drying received from December 1 to March 31, inclusive, shall be paid to the secretary on or before May 1 of the next marketing season.

(C) The amount of the fee shall be paid to the secretary on or before May 1 of each year for all other commodities received from September 1 to March 31, inclusive.

(D) The amount of the fee for any other commodity received from April 1 to August 31, inclusive, shall be paid to the secretary on or before September 1 of the next marketing season.

(3) The secretary may fix the fee at a lesser amount and may adjust the fee from marketing season to marketing season. Any processor who fails, neglects, or refuses to pay the required fee is in violation of this chapter. Any such processor shall not pass the penalty on to the producer of the commodity.

(4) All funds received under this subdivision shall be deposited in the State Treasury to the credit of the Department of Food and Agriculture Fund.

(e) If the secretary finds that any processor has failed, refused, or neglected to provide the information required by this section, the secretary may proceed in accordance with Article 11 (commencing with Section 55721).

(f) Any cooperative subject to the reporting provisions of this section shall, in lieu of reporting prices, report all advances and other payments made as of the reporting date and its good faith estimate of the market value of the commodity for the crop year.

(g) The willful failure of any processor to report to the secretary, as required by this section, is a violation of this chapter and is a separate and distinct violation of this chapter for each day the processor fails to meet the reporting requirements.

(h) For the purpose of Section 55601.7 and this section, “marketing season” means the crop year that runs from September 1 to August 31, inclusive, for walnuts, raisins, and prunes, and the crop year that runs from April 1 to March 31, inclusive, for freestone peaches.

(Amended by Stats. 1997, Ch. 135, Sec. 3. Effective July 28, 1997.)

55602.
  

Every processor except a licensed winegrower, that purchases for freezing any farm product from the producer of the farm product on a packout basis shall promptly upon completion of the processing of each lot or day’s delivery inform the producer of the results obtained.

(Amended by Stats. 1967, Ch. 807.)

55603.
  

If a specific grade or quality is a condition of a packout basis contract between the producer and the processor, such grade or quality shall be determined at the completion of the processing.

(Amended by Stats. 1967, Ch. 807.)

55604.
  

Every contract between a processor and a producer which covers the purchase of any farm product on a packout basis shall designate the price to be paid for each grade purchased.

(Amended by Stats. 1967, Ch. 807.)

55604.1.
  

Where the processor is operating under continuous United States Department of Agriculture inspection, the United States Department of Agriculture grade determination shall be accepted as final in accounting to the producer.

Where the processor is not operating under continuous United States Department of Agriculture inspection, any dispute as to grade shall be settled by lot inspection to be made by the United States Department of Agriculture. In the event any lot is shipped within 30 days of processing, the processor shall draw representative samples in accordance with United States Department of Agriculture sampling procedures, and the samples shall be held for a period of not less than 30 days from the date of processing for the inspection if necessary.

(Added by Stats. 1967, Ch. 807.)

55604.2.
  

The provisions of Section 55581 of the Agricultural Code and Section 12713 of the Business and Professions Code do not apply to farm products purchased and accounted for on a packout basis, pursuant to this section.

(Added by Stats. 1967, Ch. 807.)

55605.
  

Every processor, except a licensed winegrower, that receives any farm product from the producer of the farm product for processing on a consigned basis shall promptly make and keep a correct record which shows in detail all of the following with reference to the processing, handling, storage, and sale of such farm product:

(a) The name and address of the consignor.

(b) The date received.

(c) The quantity received.

(d) The size of the containers into which the finished product is packed.

(e) The grade and quality of the finished product.

(f) The price which is obtained from the sale of the finished product.

(g) An itemized statement of costs and charges which the processor paid in connection with the processing, handling, storage, and sale of the farm product. Any services rendered for which charges are made, if not filed with the director, shall be charged at cost, if not covered by a written contract. Cost-supporting data shall be available for verification.

(Amended by Stats. 1976, Ch. 632.)

55606.
  

If the processor has entered into a contract with two or more producers or consignors, which provides that the returns for any farm product which is handled and sold for the account of such producers or consignors shall be pooled on a definite basis as to grade or quality, or both, during a specific period of time, then the processor shall render a true account of sale which shows the net average pool return on each grade and quality from the sales that are made, which shows in detail all charges in connection with the handling, processing, and selling of such farm product. The processor shall keep a correct record of such sales and charges.

(Amended by Stats. 1967, Ch. 807.)

55607.
  

Every processor shall keep accurate books and records which show the name and address of any producer that is selling and making delivery of any farm product to him, including the dates of deliveries, the quantities of the farm product which is delivered, and the agreed price to be paid for such farm product. If no agreed price has been arrived at, or a method for determining it agreed upon, such agreed price shall be considered the value of such product as of date of delivery. For the purpose of ascertaining such value and in addition to other evidence, reference may be had to price quotations from the federal-state market news service.

(Enacted by Stats. 1967, Ch. 15.)

55608.
  

Accurate grading and weight receipts shall be given by all processors to each producer, or his agent, upon each and every delivery. Each receipt shall state all of the following:

(a) The date of the receipt.

(b) The name and address of the producer.

(c) The name of the processor.

(Enacted by Stats. 1967, Ch. 15.)

55609.
  

Not later than five days after demand, the processor shall give to every such producer so requesting a full and complete statement of such producer’s account, which shows all of the following:

(a) The entire quantities of the product which has been delivered by the producer.

(b) The grades of the product which has been delivered by the producer.

(c) The amount which is owing for every lot and for the total amount of the product which has been delivered by the producer.

(Enacted by Stats. 1967, Ch. 15.)

55609.1.
  

Remittance in full of the amount which is realized from such sales, including all collections, overcharges, and damages, less the agreed commission and other charges, together with a complete account of sales, shall be made to the consignor within 10 days after receipt of the moneys by the consignee, unless otherwise agreed in writing.

The burden of proof is upon the consignee to prove the correctness of his accounting as to any transaction which may be questioned.

(Added by Stats. 1976, Ch. 632.)

55610.
  

A processor, in order to prevent loss or economic waste, may resell or redeliver any raw product purchased and received from the producer of the raw product to another processor for the purpose of processing and such act is not an act which requires licensing pursuant to Chapter 7 (commencing with Section 56101) of this division. The processor who resells or redelivers any raw product remains liable to the producer for the full value of the raw product.

(Amended by Stats. 1979, Ch. 871.)

55611.
  

All records required to be kept under this chapter shall be kept for a period of four years.

(Added by Stats. 1976, Ch. 632.)

55613.
  

(a) If the secretary determines by February 1 of any year, commencing in 1992, that an acreage survey of the grape crop is desired by the processors and producers of grapes for wine, and if the producers and processors of grapes for raisins and the producers and packers of grapes for fresh market use agree to pay their proportionate share of the cost of the survey, as determined by the secretary, the secretary shall conduct the survey. The secretary shall implement subdivision (e) of Section 55601.6 to fund the wine industry’s proportionate costs of the survey. If an acreage survey is conducted, the results of the survey shall be printed and made available on or before May 30 of the year in which it is conducted.

(b) The department shall reimburse any processor or producer of grapes for wine to cover the costs incurred by any of those persons to fund the wine industry’s proportionate share of an acreage survey in 1991, from funds collected pursuant to subdivision (e) of Section 55601.6.

(c) For purposes of this section, “acreage survey” means an accumulation of plant removals, new plantings, and graftings to provide reliable information on the changing character of the state’s grape industry. This information shall be tabulated for each county and on a statewide basis and for each variety of grapes.

(Amended by Stats. 1996, Ch. 737, Sec. 4. Effective January 1, 1997.)

FACFood and Agricultural Code - FAC8