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John Aguirre, President

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San Joaquin Valley Winegrowers Association – Update

San Joaquin Valley Winegrowers Association – Update

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  • Mailer I received for this event, titled my presentation as: ‘Making Sense of the Government’Trust me, I can neither make sense of the government, nor can I make government sensible. This after all is California.
  • Touch on some topics –Federal IssuesFood Safety Modernization ActCash Method of AccountingFarm BillImmigration ReformState IssuesNew laws in effect for 2014AB 60CA Water Action Plan
  • Washington, DC remains mired in partisan politics. Scandals and partisanship sap energy and attention of Administration and CongressACA distractions for president and Congress, government shutdown/debt ceiling, Benghazi, etc.House of Representatives voted to repeal Obamacare (for the 46 times)Only 24 ‘substantive’ bills passed so far in the 113th CongressLittle progress on comprehensive budget reformSenate passed comprehensive immigration reform, dead in the HouseFarm bill is stalled2014 is an election year and Congress is only scheduled for 113 days
  • On January 4, 2011, President Obama signed into law the FDA Food Safety Modernization Act Enhances FDA’s regulation of $417 billion worth of domestic food and $49 billion worth of imported foods
  • Proposed produce rule makes no distinction between grapes. Raisin, table and wine grapes are all lumped together into the same program of regulation. But, we know there are significant distinctions are associated with production, handling, processing, packaging and shipment of table, raisin and wine grapes.These distinctions are very important, because the produce rule excludes or exempts certain commodities that are handled or processed in ways that minimize health risks.For example, potatoes are ‘rarely consumed raw’ are excluded from regulation. FDA reasons that cooking a potato kills the microbial pathogens that could cause illness. Artichokes, brussel sprouts, figs are included, so to is Kale!Other commodities produced for commercial processing, i.e., tomatoes or peaches, ‘that adequately reduces the presence of microorganisms’ are exempted from regulation. In our case, growers would have to maintain records proving the winegrapes received commercial processing that adequately reduced the presence of microorganisms of public health significance. Complications – brokerage, grapes crushed into must and transferred to another winery facility.
  • Winegrape varietals rarely consumed raw and have little to no commercial value as table or raisin grapes. The California Grape Crush Report provides a good, comprehensive listing of the most significant winegrape varietiesDistinct cultural practices – trellising, water, etc. – and geographic considerationsGrapes harvested for wine cannot be redirected to fresh or raisin markets25 winegrape varietals account for 96.4% of all winegrape varietals crushed, 43 winegrape varietals account for 98.8% crushedTable grape commission reported in 2012 only 2,520 boxes of French Colombard and Carignane shipped as fresh table grapes, out of 100 million boxes.
  • Proposals in House and Senate would pare back use of cash method of accounting. Part of larger talks on budget and tax reform, deficit reductions.
  • Currently, farmers may use the cash method of accounting unless they are structured as a C-corporation, with gross receipts of more than $1 million, or as a family corporation, with gross receipts of more than $25 million. Proposal to establish $10 million threshold – no indexing for inflation – and aggregate gross receipts where shared ownership among different entities is greater than 50%. Growers would have to use accrual method of accounting.CAWG strongly opposes.
  • Unique realities in agriculture, and winegrowing specifically.Expenses occur all year, cash from sale delayed Pre-productive expenses: vine, irrigation and trellis systems capitalized and depreciated. Farming costs till first harvest cannot be expensed under accrual: $7,200 expense during three-year period.Vineyard-winery operations: vineyard can use cash accounting, winery must use accrual. Delay in expensing farm costs – due to ageing of wine or market conditionsMarket cycles: 2012 & 2013 saw strong prices, large harvests2012 average statewide prices 32.6% higher than 2010 Complex transition. Restate income in today’s higher tax environment.Inflation. $10 million in 1983 is worth $4.25 million today
  • House agriculture committee chairman, Frank Lucas, said final passage is not likely until January 2014.Republican controlled House and Democrat controlled Senate cannot agree on level of cuts to food stamps.
  • 5 Year Farm Bill Spending (based on 2008 Farm Bill)OVERALL COST: House and Senate Farm Bills cost almost $100 billion annually, with $80 billion of that annual total going to domestic food aid. The Senate bill would save about $4.5 billion over 10 years in current food stamp spending, and the House bill would save almost $40 billion.Nutrition dominant share of mandatory spending -- 84% (SNAP)Conservation 5%Commodity programs (direct producer payments) -- 4%Crop insurance – 7%Tiny sliver in red – specialty crop block grants, MAP, pests and disease, SCRI, etc.
  • S. 744 passed out of committee by a vote of 13 to 5 with three Republicans joining 10 Democrats to approve the measure. Senate Majority Leader Harry Reid (D-Nev.) has said it will come to the floor next month.The three Republicans voting "yes" were Sens. Lindsey Graham (S.C.) and Jeff Flake (Ariz.), who are members of the Gang of Eight, which crafted the bill, and Sen. Orrin Hatch (Utah).Basic takeaways:S. 744 is the primary vehicle for comprehensive immigration reformSubstantial investment in border security – billions of dollarsInterior enforcement – E-verify bolstered. 5-year phase-inVisas increase and lean towards merit basis (education, employment, investment)Ag comes out relatively good (compared to industries like construction, hospitality, health care facilities, etc.Undocumented ag workers have quicker access to permanent residency
  • Current undocumented farm workers eligible to obtain legal status through a Blue Card Program. Ag workers who can document working in U.S. agriculture for a minimum of 100 workdays or 575 hours in two years prior to December 31, 2012.Eligible for permanent residency -- paid all taxes, criminal record, and pay a $400 fine. To be eligible for permanent residency (blue card) workers must work: 5years of agricultural employment for at least 100 work days per year during the seven year period beginning the date of enactment; or 3 years of agricultural employment for at least 150 workdays per year during the five-year period beginning on the date of enactment.
  • “At-Will” employees have the freedom to move from employer to employer without any contractual commitment. They would have a visa term of up to 11 months with USDA registered employers and then return home for 30 days. There would be no limit on the number of times a person could obtain the 11-month visa.Contract employees commit to work for an employer for a fixed period of time and would have a visa term of up to 12 months (renewable indefinitely), and conditioned upon a commitment to return to their home country for at least 30 days over a 3-year period.
  • AB 10 – July 1, 2014, CA min wage increases from $8 p/hr to $9 p/hrSB 168 – new liabilities on FLCs for unpaid wages or penalties of a predecessor FLC (problem is predecessor’s workers)SB 435 – One-hour-of-pay for each day employer fails to provide heat illness recovery periods, plus penalties. Cannot require employee to work during a recovery, meal or rest period. Meal and rest periods, relatively well defined. No set formula for recovery periods, subjective determination of employee.AB 263 – Employer may not threaten to report or report to immigration authorities due to employee complaint regarding minimum wage.SB 666 – Employer’s business license may be revoked if employer reports or threatens to report employee who complains about work issues
  • Asm. Luis Alejo
  • “If post hire, an employer records the license for purposes of insurance (to allow an employee to drive a company vehicle) then it has post hire knowledge that an employee may have provided false work authorization documents. This will create a legal quagmire.”It’s clear if you have record of or there is evidence that you know an employee has an AB 60 license, then ICE will assume you know the worker is illegal. You are in trouble. You have violated federal law.BUT, California isn’t concerned about you. If you discriminate against an individual – failure to hire, promote or provide equal treatment to that worker – then you violated state anti-discrimination law.CAWG seeks clarification from state, DHS ICE and possible amendments to AB 60.
  • CWAP – Five year action plan for more sustainable water management. Tries to balance all stakeholders. CAWG comments comprised of three key points: water storage (e.g., raise Shasta Dam, winegrape growers are inherently efficient water users, partnership between government and agriculture – punitive regulations that undermine reasonable and beneficial use doctrine not helpfulIn January, State Water Board will begin developing Calfiornia’s first groundwater quality protection plan and regulations. Reviewing the workplan concept now.Enhanced lighting requirements:Work area lighting about tractors, self-propelled implements, towed equipment and truck loading operations in and adjacent to field work areas during nighttime operations.Minimum of 10 footcandles within 25-feet of covered operations.
  • Transcript

    • 1. San Joaquin Valley Winegrowers Association – Update John Aguirre, President November 5, 2013
    • 2. Advocacy • State Government Relations – Brenda Coleman, Director of Government Relations – The Gualco Group • Federal Government Relations – John Aguirre, President – Cornerstone Government Affairs
    • 3. CAWG Leadership • Chair Heidi Scheid, Scheid Vineyards • Area Directors – – Nat DiBuduo, Fresno – Ryan Metzler, Fresno – Carson Smith, Fresno – JR Shannon, Visalia – Sohan Samran, Madera
    • 4. Issues Update • Federal Issues – – – – Food Safety Modernization Act Cash Method of Accounting Farm Bill Immigration Reform • State Issues – New laws in effect for 2014 – AB 60 – CA Water Action Plan
    • 5. Federal Update • Controversy and Partisanship – ACA website, government shutdown, Benghazi, IRS, Justice Department (AP phone records) • Progress Derailed – – – – Only 24 ‘substantive’ bills passed Immigration Reform Farm Bill Only 113 work days scheduled for 2014
    • 6. Food Safety Modernization Act
    • 7. Food Safety Modernization Act • Proposed rule to establish standards for safe growing, harvesting, packing, and holding of produce on farms – – – – – Worker hygiene Water Presence of animals Equipment, tools and buildings Recordkeeping • Nearly 20,000 comments received
    • 8. Food Safety Modernization Act • Proposed rule covers grapes • Some produce commodities excluded and exempted – – Excluded: produce ‘rarely consumed raw’ (i.e., artichokes, brussel sprouts, figs, kale, potatoes, etc.) – Exempted: produce destined for processing eligible for exemption
    • 9. Food Safety Modernization Act • CAWG and Wine Institute comments – exclude winegrapes – Winegrapes are distinct – Different cultural practices – Grapes harvested for wine cannot be redirected to fresh market – Just 25 listed winegrape varietals in CDFA Crush Report represent 96.4% of all winegrapes crushed
    • 10. Cash Method of Accounting
    • 11. Cash Method of Accounting • Expenses recorded when paid and income recorded when received • Proposals in House and Senate to impose new limits – $10 million gross receipts – Aggregate gross receipts from entities with shared ownership greater than 50%
    • 12. Cash Method of Accounting • Unique realities of winegrapes – Expense farming costs when they occur, recognize income when cash is received – Pre-productive expenses – Vineyard-winery operations – Cyclical markets • Transition complex and disruptive • Inflation will push more growers into accrual
    • 13. Farm Bill
    • 14. Farm Bill Spending: $100 Billion Annually
    • 15. CAWG Farm Bill Agenda • Combined pest and disease mandatory funding – EGVM – PD/GWSS – Emerging pests and diseases • • • • • NCPN Specialty Crop Block Grants Specialty Crop Research Initiative Market Access Program Crop Insurance – AGI and Conservation
    • 16. Immigration Reform
    • 17. Immigration Reform • Senate Judiciary Committee – S. 744, Border Security, Economic Opportunity, and Immigration Modernization Act (Schumer, Graham, Durbin, Flake)
    • 18. S. 744: Ag Provisions • Ag Card Program (Blue Card), eligibility: – 100 work days (575 hrs) between Dec 31, 2010 – 2012 – $100 fine and processing fee • Eligible for permanent residency if: – Pay back taxes, $400 fine, no criminal convictions – 5 years (100 work days) over 8 year period, or – 3 years (150 work days) over 5 year period
    • 19. S. 744: Ag Provision • Ag Guest Worker Program – Portable at-will workers – Contract workers – Workers have three year visa terms – Visa cap of 112,330 per fiscal year (over 4 years) – 2016 wage rates • $9.64 per hour farm laborer • $11.37 per hour equipment operator
    • 20. Immigration Reform • Passage of Comprehensive Immigration Reform – House action remains uncertain – Protests in Bakersfield and Washington, DC • President concedes piece-by-piece passage of immigration
    • 21. State Issues
    • 22. New for 2014 • AB 10 – July 2014 minimum wage • SB 168 – FLC liability • SB 435 – Heat illness recovery periods • AB 263 – Unfair immigration practices • SB 666 – Unfair immigration practices (2)
    • 23. AB 60 – Drivers Licenses • Licensing undocumented workforce has many benefits – – Peace of mind for workers – Better ensures proper training and insurance, includes background check – Allows workers to assume more responsibilities on the job • But, AB 60 creates problems...
    • 24. AB 60 – Drivers Licenses • “…Unable to submit satisfactory proof that the applicant’s presence” in the US is authorized • “It shall be a violation of law…to discriminate against an individual because he or she holds or presents a license issued under this section.”
    • 25. Other Issues • California Water Action Plan – More water storage! • Groundwater Workplan Concept Paper • New requirements for enhanced lighting of ag operations at night
    • 26. California Association of Winegrape Growers John Aguirre 916.379.8995 (Office) john@cawg.org Thank you.

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