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Farm Bill would try to hold food handlers more accountable without penalizing them

Food handlers are in luck, but their good fortune might not help farmers who were victimized by shady operators.

In the current version of Senate Bill 711, NC Farm Bill of 2018, the Senate jettisoned a plan to hit produce transport services with hefty fees. The fees were meant to protect farmers from bankrupt or dishonest handlers, but they did not survive as the bill moved through the Senate. Instead, the bill beefs up an existing registration system and imposes fines when food handlers violate the law.

S.B. 711 passed the Senate Monday, June 11, by a 33-13 margin. It is going through committees in the House.

At least two of North Carolina’s largest handlers have filed for bankruptcy since January, after allegedly leaving farmers waiting on several million dollars worth of payment.

“Now it may be another year before they get the money — if they get the money,” sweet potato grower Jeffery Lee said. “It is putting a lot of hardship on the growers. Some of them will make it, and some of them are probably not going to make it.”

The original draft of the Farm Bill hiked the cost of a handlers’ permit to $500 with an annual $250 registration fee. It also more than doubled the minimum bond fee. Handlers would have paid bonds equal to the business of their highest grossing month, or a minimum of $25,000 and a maximum of $250,000.

“If not the determining factor, it had a lot to do with it,” Lee said of the higher fees in the initial bill. “Those three bankruptcies were in excess of $50 million.”

The draft was apparently modeled on legislation in Florida and Georgia, but it would have made North Carolina more restrictive than both states.

In Florida, handlers pay annual license fees of up to $500, as well as a bond ranging from $5,000 to $100,000, depending on their volume of business.

Georgia requires produce handlers to apply online for a $50 to $100 license and provide a minimum bond of $10,000 and up to $230,000. As they annually renew their license, handlers must update their contact information, allowing the department to keep tabs on those handlers who do not pay with certified funds. The handlers who move their own goods or who pay upfront with certified funds are exempt from the licensing process.

Like North Carolina’s newest draft of the Farm Bill, Georgia kept registration costs down. Not wanting to discourage handlers from entering the market, regulators decided not to pile additional fees on top of the existing bond requirements.

In Georgia farmers also struggle with “pinhookers,” dishonest handlers who pay with bad checks or promise later compensation. They’re nearly impossible to track down and prosecute because the pinhookers often cross state lines, getting agencies from several states involved and tangling disciplinary efforts.

“There [are] so many people coming in and out of the state,” Georgia Department of Agriculture Assistant Director Jason Wamba said. “People will come in and buy a truckload, [saying] I will pay you in 30 days, and 30 days never comes. That’s something that has been an issue since time began for selling produce.”

Georgia hopes to win the help of big produce buyers by encouraging them to drive out illegal competition. Still, Wamba wasn’t optimistic.

“There have always been struggles between the brokers and the produce buyers and the producers. There is no fix to that problem,” Wamba said. “If we can get a handle on these buyers and brokers, that’s just a step towards a slight fix towards being able to help our Georgia producers.”

North Carolina shares many of Georgia’s troubles. Many of the agreements between farmers and handlers are verbal, and the lack of written contracts further complicates getting just compensation.

“The other reality is that there were very few brokers or even purchasers of commodities who were listed or had gotten the permit,” N.C. Farm Bureau Federation legislative liaison Jake Parker said. “The existing law hasn’t really been used and arguably isn’t working very well.”

The first draft of the Farm Bill slapped hefty registration and bonding fees on handlers as a fix. As the bill made its way through Senate, however, the registration fees were dropped. Handlers would now register for free, only paying in the form of business and contact information. Changes to bonding fees likewise were scuttled.

This came as a relief to the North Carolina Retail Merchants Association, which had been concerned that the fees would drive handlers out of the market, said the association’s Senior Director of Government Relations Elizabeth Robinson.

“We didn’t want the bar to be set so high that people wouldn’t end up registering and going through the bond requirements,” Robinson said. “Our fear was that people would adjust their business models in a way that might end up hurting some of the farmers who were trying to be helped.”

With a massive harvest in sweet potatoes — N.C.’s biggest produce crop — and diving profits this year, from a handler’s perspective, the original fees would have created a “perfect storm,” said Tami Long, director of marketing and business development for Nash Produce in Nashville, one of the nation’s largest sweet potato and cucumber processing facilities. (North Carolina harvests the most sweet potatoes of any U.S. state.)

“Prices have dropped, drastically,” Long said. “If those fees had been added on top of it — I mean, we already know there are farmers who won’t be farming in 2019.”

The bill now fines handlers $100 per violation.

Also, handlers who pay cash in advance, farmers who sell produce, and restaurants wouldn’t have to register.

“A free registration system is a good thing,” Parker said. “We’ll have some way of identifying people who may be bad actors, and if there are people out there who are operating out there with no registration, there is some way to hold them accountable.”