The 2018-19 Budget

California Department of Food and Agriculture

Department Overview. The California Department of Food and Agriculture (CDFA) is charged with protecting and promoting agriculture. The department manages programs in the areas of (1) animal health and food safety, (2) crop inspection, (3) agricultural marketing, (4) enforcement of weights and measures, and (5) plant health and pest prevention. Many of the department’s activities are conducted in partnership with county agricultural commissioners (CACs) and county sealers of weights and measures.

Governor’s Budget Proposal for CDFA. The Governor’s budget proposes $463 million from various funds for support of CDFA in 2018‑19. This is a net decrease of $139 million (23 percent) from the estimated current-year spending level. This year-over-year decrease in spending is mainly explained by $158 million from the Greenhouse Gas Reduction Fund (GGRF) included on a one-time basis in the current-year budget.

In addition, under the Governor’s 2018‑19 cap-and-trade expenditure plan—which was issued after the release of the Governor’s proposed budget—CDFA requests $104 million from the GGRF to facilitate greenhouse gas emission reductions through the Dairy Digester Research and Development Program ($73 million), Alternative Manure Management Program ($26 million), and Healthy Soils Program ($5 million). For a review of the cap-and-trade expenditure plan please see our report The 2018‑19 Budget: Resources and Environmental Protection.

In this analysis, we assess two proposals in the Governor’s 2018‑19 budget related to: (1) the Bee Safe Program, and (2) Citrus Pest and Disease Prevention. In addition, we briefly review the Governor’s safe and affordable drinking water proposal—for which CDFA would play an administrative role—though a more thorough discussion of the proposal appears in another publication.

Bee Safe Program

Background

Bees Perform a Critical Function. Many crops in California are dependent on the state’s estimated 740,000 domestic bee colonies (excludes wild bees) for pollination. In addition to domestic colonies, beehives are transported from out-of-state into California in order to ensure there are enough bees to pollinate certain crops. For example, in order to pollinate over 900,000 acres of almonds grown in California every year (with a value of about $5 billion in 2016), about 650,000 beehives are temporarily transported into California. In addition to pollinating commercial crops such as almonds, bees pollinate ornamental plants, fruits, and vegetables grown at private residences and in public spaces such as parks.

Multiple Factors Affect Bees’ Health. The overall health of bees is related to complex interactions among multiple factors including nutrition, pesticide applications, and disease. Honey bees need access to foraging habitat within a few miles of a hive in order to have a nutritious diet. The application of pesticides can seriously affect honey bee health and in some cases prove fatal to bees. Factors that determine the impact of pesticide applications on bees include the proximity of apiaries (a collection of hives) to the application of pesticides, the toxicity of the pesticide to bees, and the ability of beekeepers to move apiaries a safe distance away. Honey bee health can also be affected by pests (such as the Varroa mite), pathogens (such as American foulbrood, an incurable bacterial disease), and viruses. When shipments of bees arrive from out-of-state, they are typically inspected at CDFA-operated border inspection stations to try to prevent hives carrying pests, pathogens, and viruses from entering the state.

U.S. EPA Recommends States Develop Pollinator Protection Plans. The U.S. Environmental Protection Agency (EPA) recommends that states develop managed pollinator protection plans (MP3) and adopt best management practices to protect bees from harmful pesticides. MP3 are intended to ensure that growers, pesticide applicators, beekeepers, and other agricultural stakeholders take a collaborative approach to ensuring the health of managed bees. As part of the 2016‑17 budget, the Legislature approved a request by the Department of Pesticide Regulation (DPR) for two positions and $308,000 ongoing to implement an MP3 in California. Under the proposal DPR was required to (1) develop the MP3, (2) evaluate the effects of certain pesticides on bees in collaboration with the U.S. EPA, (3) organize onsite field events for growers and beekeepers, (4) disseminate brochures and educational materials, and (5) investigate incidents where pesticides had damaged bees.

State and Counties Regulate Bees to Promote Health. State law establishes CDFA’s authority to regulate bees in conjunction with DPR and CACs. Apiary owners or beekeepers are required by law to register the number of colonies and the location of each apiary with the CAC (or CDFA in the absence of a CAC). Regulations require any person intending to apply any pesticide labeled “toxic to bees” to a blossoming plant to ask the local CAC, or designee, whether there are registered beekeepers with colonies located within a one-mile radius of the application site. The CAC provides the pesticide applicator with the contact information of registered beekeepers who wish to be notified in the affected areas. The applicator must give these beekeepers 48 hours notification before the intended application. This notification period is intended to give beekeepers an opportunity to take action to protect their colonies, such as temporarily moving them.

Statute generally:

• Gives CACs Enforcement Authority. CACs have the authority to enforce laws relating to bees, assess penalties, inspect apiaries, and take specified actions when pests or disease are found.

• Requires Apiary Owners to Pay a Registration Fee. Apiary owners are required to (1) pay an annual registration fee of $10 to the CAC of the county where the bees reside to cover the cost of apiary registration (CDFA has authority to periodically update this fee through regulation), and (2) notify CACs when apiaries are moved from one county to another.

• Allows for Regional Coordination of Pesticide Application Notifications. State law allows the director of DPR to (1) establish regions to facilitate the efficient notification of apiary owners of pesticide applications, (2) designate one of the CACs within the region as the regional coordinator, and (3) establish fees on pesticide applicators and beekeepers to establish a program to notify beekeepers when pesticides will be applied. The director of DPR has established fees for the region including Butte, Glenn, and Tehama Counties. Pest control operators are required to pay an annual fee of $75 at the time they register with any of the CACs in the region. Beekeepers who have filed a request with CACs for notification of pesticide usage pay an annual fee ranging from $10 (for 1 to 100 beehives) to $100 (for over 2,000 hives).

• Regulates Importation of Bees. Statute also prohibits, with certain exceptions, the importation into California of any apiaries unless accompanied by a valid certificate signed by an authority in the state of origin testifying that the apiary is free from pests and disease. The certificate must be delivered to the CAC within 72 hours of the arrival of the bee shipment.

Local Regulation Primarily Relies on County General Fund. As previously reported to the Legislature, in 2016‑17 all counties combined expended $1.1 million on apiary programs. Of these expenditures, over 90 percent was from the General Fund of counties, and less than 10 percent was from a combination of apiary registration fees and other charges CACs are authorized to charge for specified bee-related activities. According to CDFA, CACs do not have sufficient resources for enforcement, resulting in beekeeper compliance with the registration requirement that is often low. Based on survey data, the CAC for Tehama County indicated that 26 of the state’s 58 counties have an active apiary program.

Recent Legislation to Improve Bee Foraging Opportunities. In addition to statute establishing CDFA’s authority to regulate bees, Chapter 380 of 2015 (AB 1259, Levine) requires the Department of Fish and Wildlife to consider authorizing placing apiaries on department-managed wildlife areas for bee foraging opportunities. This is intended to provide beekeepers with more opportunities to move their apiaries to safe locations when pesticide applications are scheduled near the location of their hives.

Governor’s Proposal

The Governor’s budget plan for CDFA proposes $1.9 million from the General Fund and two permanent positions to develop and manage a Bee Safe Program to promote and protect California’s beekeeping industry. The request has two major components: (1) funds to counties for local enforcement of existing laws and implementation of new activities and (2) state staff to manage the Bee Safe Program.

Funding for Local Enforcement ($1.5 Million). The proposal would provide $1.5 million in annual funding for CDFA to contract with counties to enforce existing laws on hive registration and other laws intended to prevent apiary thefts. In addition, under the proposal, counties would (1) develop an annual list of apiaries that have received a CDFA-issued brand (under current law, apiary owners may apply to CDFA for a serial number brand for use on apiary equipment), (2) perform one annual compliance visit to each branded apiary to ensure apiaries and apiary equipment are being handled by the lawful owners, (3) submit monthly activity reports and an annual accomplishment report to CDFA, and (4) participate in developing antitheft training for beekeepers and county staff.

Funding for CDFA to Perform Statewide Functions ($353,000). The proposal would provide $353,000 and two CDFA staff to act as statewide experts to provide outreach and education to counties and stakeholders regarding best management practices, as well as pesticides and the safe movement of colonies. CDFA staff would coordinate with counties, landowners, and stakeholders to identify and track safe locations from pesticides when hives must be temporarily relocated. The staff would also produce information that would allow registered and qualified beekeepers to identify private and public lands where foraging and safety from pesticides can be found. Land owners and land managers, including public land managers, would register parcels as bee foraging/safe harbor sites for honey bees before and after crop bloom. This would help beekeepers to move their apiaries to places with adequate forage when they are informed that a pesticide application will occur nearby.

LAO Assessment

Bee Safe Program Would Provide Benefits to Farmers and the Public. Because managed bees provide a public benefit, we find it is reasonable that some state General Fund resources be used to support the state and local government activities that would be performed under the Bee Safe Program. While the program is targeted towards improving the regulation and health of managed bees that mainly pollinate farmers’ crops, the general public would benefit from the proposal as well. Bees placed in locations to facilitate pollination of commercial crops also pollinate ornamental plants, fruits, and vegetables that grow at nearby private residences and public areas. For example, bees from an apiary located in an almond orchard bordering an urban area may pollinate ornamental plants at nearby parks, schools, and private residences.

General Fund Proposed for Some Functions That Could Be Funded Through Fees. The administration proposes to use General Fund to contract with CACs to perform certain bee-related regulatory functions. However, there is already an established policy of funding certain bee-related regulatory functions through a fee mechanism. As described earlier in this analysis, CAC’s have authority to charge $10 per apiary to cover the costs of CAC’s apiary registration program, and DPR has imposed bee-related fees in one region.

According to CDFA staff, counties have indicated that the current $10 per apiary registration fee is insufficient to support apiary registration workload. In addition, under the current scheme, CACs are dependent on beekeepers coming to the CAC to register their hives, and the fee is insufficient to support the use of CAC staff to patrol the county looking for unregistered apiary sites. Moreover, this fee is not intended to support other bee-related activities, such as inspections and training.

Options Exist to Increase Fee Revenue, but Difficult to Determine Appropriate Fee Levels. The Legislature has options to generate additional fee revenue to more fully support apiary registration and enforcement workload, as well as expanding CAC activities as proposed by the Governor. This includes increasing and expanding the use of the existing apiary registration fee. Alternatively, the existing $10 per apiary registration fee could be shifted to a per hive fee. Apiaries generally consist of from one to a few dozen hives. By charging on a per-hive basis, the registration fees would reflect the benefit to beekeepers based upon the number of bee hives they manage. There is precedent in state law for charging a fee on a per-hive basis. In 1987, the Legislature established an annual assessment fee of $0.03 per bee colony for the purpose of research on Africanized bees. (This fee sunset on July 1, 1992.) A third option would be to establish a fee on imported hives, which are also subject to inspection and oversight by CACs.

One challenge, however, to modifying the current fee structure is that there is insufficient data to determine the appropriate fee levels that would have to be assessed in order to fully implement a more robust program envisioned by the administration. It is currently unknown (1) how many registered and unregistered apiaries are operated in the state and (2) the extent and costs of current CAC registration and enforcement activities. We note that costs for apiary programs could vary widely based on the amount and types of agricultural production in a county and the need for managed bee pollination.

LAO Recommendations

Approve One-Year Funding for Bee Safe Program. We recommend the Legislature approve one year of funding to establish the Bee Safe Program in order to better ensure the health of California’s bee population. The Bee Safe program would help CACs address a number of threats to the state’s bee population including die-offs from contact with pesticides that are toxic to bees and early identification of pests and diseases that can affect bees. Representatives for the CACs have indicated that counties need additional training for their inspectors and access to state-level expertise to address an increasing number of bee-related issues. The Bee Safe Program would help to address these issues.

Consider Expanding Fee-Based Funding Options. We recommend the Legislature consider its options regarding how to fund the Bee Safe Program before approving ongoing General Fund support as proposed by the Governor. On the one hand, we believe it is appropriate to fund the program with General Fund given its broad benefit to the public. On the other hand, it is also appropriate to fund the program using fee revenues from regulated beekeepers, who would be the program’s main beneficiaries. Fee-based funding could be accomplished by establishing a new fee on beekeepers or expanding the scope of the existing apiary registration fee. Ultimately, it is a policy decision for the Legislature whether to fund the Bee Safe Program with (1) General fund as proposed by the administration, (2) a mix of General Fund and fees on beekeepers, or (3) entirely through fees on beekeepers.

Adopt Reporting Requirement to Inform Future Funding Decisions. We recommend the Legislature adopt budget bill language requiring CDFA to provide a report to the Legislature by January 10, 2019 on the following: (1) annual revenues collected by counties under the current apiary registration fee, (2) county costs to administer the apiary registration program, and (3) options to align fee revenues with county costs and responsibilities. This analysis should further look at costs and responsibilities associated with domestic and imported hives. This report would provide the Legislature with key information needed to decide the extent to which the Bee Safe Program could be funded with fee revenues in lieu of General Fund.

Citrus Pest and Disease Prevention

Background

California Partners With Federal and Local Agencies on Pest Prevention. State law requires CDFA to prevent the introduction and spread of injurious insects or animal pests, plant diseases, and noxious weeds. CDFA works in partnership with many government and private organizations to implement the state’s pest prevention system because invasive species concerns cut across many different jurisdictions. For example, the U.S. Department of Agriculture focuses its pest prevention efforts on pests of nationwide concern and preventing pests from entering from foreign countries. CDFA’s Plant Health and Pest Prevention Services and CACs focus on state and local pest prevention efforts. Agricultural industry groups primarily focus on pests of concern to a specific commodity group. For example, in recent years the citrus industry has provided funding for the state’s efforts to detect and eradicate Asian Citrus Psyllid (ACP), an insect that is the vector for Huanglongbing (HLB), a disease fatal to citrus trees.

The Plant Health and Pest Prevention Services division investigates the existence of pests, determines the probability of its spread, and determines the feasibility of its control or eradication. The division may establish, maintain, and enforce quarantines; eradication efforts; and other measures to protect the agricultural industry and other plants from the introduction and spread of exotic pests.

Citrus Is a Major Crop in California. According to CDFA, in 2015, California accounted for over 40 percent of the U.S. citrus production. In that year, the total value of California’s oranges, grapefruit, lemons, and mandarins was estimated at $1.7 billion. About 90 percent of California’s citrus industry is located in five counties (Fresno, Kern, Tulare, Ventura, and Riverside). In addition to commercial citrus crops, CDFA estimates over 50 percent of residential properties have at least one citrus tree.

HLB Is Fatal for Citrus Trees. ACP is a non-native insect pest that serves as the vector for HLB. When the ACP feeds, it injects a toxin that causes citrus tree leaves to twist and die. More importantly, ACP is the vector of the bacterium that causes HLB, an incurable disease that eventually causes trees to die. Infected trees must be removed and destroyed to ensure they do not serve as a reservoir for the bacteria. The first HLB-infected tree in California was confirmed in Hacienda Heights in 2012. HLB can have a significant effect on citrus production. According to a study by the University of Florida, from 2006‑07 through 2013‑14 the state’s orange production declined by an estimated 24 percent due to HLB. The economic impacts of HLB in Florida over the eight-year period were estimated to be losses of $7.8 billion in cumulative industry output, or an annual average loss of $975 million.

State Performs Suppression and Enforcement Activities. Upon detection of ACP or HLB in a new area, quarantine boundaries are created by CDFA. Hold notices are then placed on all businesses or properties where citrus nursery stock, host plants, or citrus fruit is grown, processed, or stored. After an emergency quarantine becomes effective, agreements are signed with these entities to allow the movement of fruit and nursery trees within and out of the quarantine area under specific conditions, such as passing an inspection. Ongoing enforcement and oversight visits occur (no less than monthly) to ensure the entities are adhering to the compliance agreement conditions.

Industry Funds Suppression Activities. The industry provides funding for ACP and HLB suppression activities through a self-assessment of up to $0.12 per carton (equivalent to 40 pounds of citrus fruit). Funds raised through the industry self-assessment—over $20 million annually in recent years—are deposited into the Citrus Disease Management Account in the Food and Agriculture Fund. Industry also provides about $500,000 per year to reimburse CDFA for citrus grove surveys that involve trapping insects and analyzing the results of trapping efforts. In addition, the state and federal governments have provided funding for these purposes in prior years. In 2017‑18, the state is estimated to spend a total of $49.1 million on suppression activities. This amount includes $10 million in one-time General Fund support and $24.2 million from the Food and Agriculture Fund (including industry contributions).

Court Ruling May Limit Suppression Activities. A recent superior court ruling suspended certain CDFA activities, such as the application of pesticides, that are intended to control or eradicate pests. These activities include spraying pesticides used to control ACP on public and private property under the Statewide Plant Pest Prevention and Management Program. At the time this analysis was prepared, it was unclear what impact the court’s decision would have on the state’s ability to contain ACP.

Governor’s Proposal

The Governor’s budget plan proposes $5 million ($2.5 million from the General Fund and $2.5 million from the Food and Agriculture Fund) in ongoing funding to perform ACP and HLB suppression activities in newly detected areas and to augment quarantine regulation enforcement activities in existing and newly detected areas. Under the Governor’s proposal, total spending would decline from $49.1 million in 2017‑18 to $38.6 million in 2018‑19. As discussed in more detail below, this largely reflects funding provided in the current year on a one-time basis.

LAO Assessment

ACP and HLB Spreading. Data indicates that the area affected by ACP and HLB has increased substantially in California in recent years. Figure 1 shows that from 2012 through 2017 the number of counties where ACP has been detected increased from 9 to 26, or by 188 percent, and the number of counties with an HLB infected tree grew from one to three. Over this period, the number of square miles under quarantine for ACP more than doubled from 25,813 to 63,647. Similarly, between 2014 and 2017 the number of square miles under quarantine for HLB increased more than six-fold, from 92 to 617, and the number of trees identified as infected with HLB grew from 1 to 302.

Funding for Suppression of ACP and HLB Would Decrease. Figure 2 summarizes annual funding for ACP and HLB suppression from 2012‑13 through 2018‑19 (as proposed by the Governor). As illustrated in the figure, funding would decrease by $10.5 million (or 21 percent) from 2017‑18 to 2018‑19. The bulk of this decrease is due to a $7.5 million year-over-year reduction in General Fund support because the current-year budget includes a one-time $10 million appropriation. In addition, spending from the Food and Agriculture Fund is projected to decline by about $4 million, which mainly reflects one-time funding available in 2017‑18 that carried over from the prior year, partly offset by an increase in state contributions of $2.5 million. Given the proposed decrease in total spending, it is unclear the degree to which the department will be able to address the continuing spread of ACP and HLB.

LAO Recommendations

Approve Governor’s Proposal. At a minimum, we recommend the Legislature approve the Governor’s request for funding to suppress ACP and HLB. Given the recent increases in the square miles under quarantine for both ACP and HLB, the growing number of trees infected with HLB over the past few years, and the threat ACP and HLB post to the state’s citrus industry, we believe the request is reasonable.

Require CDFA Report at Budget Hearings on Need for Additional Resources. We recommend the Legislature require CDFA to report at budget hearings on whether the proposed resources are sufficient to address the threat posed by ACP and HLB to the state’s citrus crops. Specifically, the department should report on (1) whether the measures it is currently implementing are sufficient to suppress ACP and HLB, (2) whether there are additional measures that the state should implement to suppress ACP and HLB, and (3) what would be the costs of implementing any such measures. This information would help the Legislature to assess all of the available options for improving suppression of ACP and HLB, and the costs associated with implementing these options.

Safe and Affordable Drinking Water Fund

The administration proposes budget trailer legislation to implement a significant new policy that would impose new charges on water system customers and certain agricultural entities to implement a new financial assistance program to address unsafe drinking water, particularly in small and disadvantaged communities. CDFA requests $1.4 million from the Safe and Affordable Drinking Water Fund and seven ongoing positions to administer the collection of the charges on agricultural entities. (The State Water Resources Control Board would be responsible for collecting the charge on water system customers and administering the financial assistance program.) In our analysis of the proposal—which appears in The 2018‑19 Budget: Resources and Environmental Protection—we identify three issues for the Legislature to consider as it deliberates on the proposal: (1) consistency with the state’s human right to water policy, (2) uncertainty about the estimated revenues that would be generated by the proposal and the amount of funding needed to address the problem, and (3) consistency with the polluter pays principle.