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Calif Bill Takes Aim at Wineries Who Fail to Pay for Winegrape Purchases

Submitted By: Lewis Perdue, March 19, 2012

March 19, 2012

Sacramento, Calif. – Assembly Speaker pro Tempore Fiona Ma (D-San Francisco) has amended AB 907 with legislative language to better protect winegrape growers from the relatively small number of wineries that fail to pay for purchased grapes.

In California, winegrape growers enjoy the protections and benefits of the Processors Law. Administered by the California Department of Food and Agriculture’s (CDFA) Market Enforcement Branch (MEB), the Processors Law protects growers from nonpayment by processors, which includes wineries. The law requires wineries that buy winegrapes from growers to obtain a processors license.

“Nonpayment for delivered winegrapes is not a widespread problem, but when it occurs the amounts involved can be a very significant issue for the affected growers,” said John Aguirre, president of the California Association of Winegrape Growers (CAWG).

From 2009 – 2011, MEB received complaints against 68 wineries alleging more than $10 million in nonpayment to growers. Currently, if MEB finds that a winery failed to pay a grower, or otherwise violated the Processors Law, then MEB can suspend or revoke that winery’s processors license.

“Suspension or license revocation is not the right solution for a violation under the law,” said Aguirre. “License revocation could put a winery out of business, which is often the least attractive remedy, so it makes sense to provide MEB the opportunity to levy less severe penalties, such as administrative fines.”

CAWG is advocating for a legislative fix, through AB 907, that provides MEB useful tools to sanction wineries, short of license revocation, who fail to pay growers.

If passed, AB 907 would provide MEB limited authority to levy an administrative fine, not to exceed $10,000, if a winery fails to pay a grower for delivered winegrapes or obstructs an investigation by MEB. The bill would also allow for fines of up to $6,000 if a winery that is required to have a processors license knowingly fails to obtain such a license.

Finally, under AB 907, if MEB determines after an investigation and administrative hearing that a winery has failed to pay for delivered grapes, then a winery can be required to post a surety bond to ensure payment to those growers for the amounts owed. This surety bond provision expands upon existing authority which allows MEB to require a winery, with a history of failure to pay, to post a surety bond to ensure payment to growers for future purchases.

“We applaud Assemblywoman Ma for authoring AB 907,” said winegrape grower Brad Goehring. “The bill takes careful aim at the few predatory operators who refuse to pay for delivered winegrapes. If we don’t fix the Processors Law, then an unscrupulous minority who don’t pay for their grapes gain a competitive advantage over compliant wineries, and distrust and uncertainty can creep into the marketplace, resulting in unnecessary costs and burdens for all parties. This is why we need AB 907.”

CAWG represents the growers of more than 60 percent of the gross grape tonnage crushed for wine and concentrate in California. The statewide association provides industry leadership to advocate for public policies, research and education programs, sustainable farming practices and trade positions to enhance the business of growing California winegrapes. For more information about CAWG, visit their Web site at