Building a Company from the Ground Up

August 1st, 2015

The building of the Central Valley Project in the early 1960s was the genesis of the current Woolf Farming and Processing firm in Fresno, CA.

Stuart Woolf, CEO and president, and a member of the Western Growers board of directors, said the building of that project and the use of the water came with restrictions for landowners.  After 10 years of receiving that water, large landowners had to break up their holdings into 160 acre parcels.  Jack Woolf, Stuart’s father and the now 98-year-old patriarch of the family farming operation, had been working in the valley for more than three decades as the general business manager for the farm holdings of Russell Giffen, a Westside farming pioneer.  Giffen Inc. had more than 125,000 acres at one point and in 1974 Jack Woolf was able to buy a 160-acre parcel and start his own operation.

 

A Strategic Business Model

As a veteran of San Joaquin Valley farming, Jack Woolf, who was 57 at the time, had some strong ideas as to the business model that he wanted to follow.  He set the company on a course that it has remained true to ever since.  Forty years later, the younger Woolf said Woolf Farming is one of the few original buyers of Giffen’s holdings that has survived the ensuing decades intact.

“My dad wanted to concentrate on crops that were not labor intensive and where California had a competitive advantage,” said Stuart.  “He also wanted to be less dependent on cotton, which seemed to survive on the whims of Congress and the Farm Bill.”

Jack Woolf used processing tomatoes as the key crop for his row crops and planted almonds and pistachios to anchor the permanent crops.  The company has followed that path for 40-plus years.  Today all six of Jack’s children plus all 24 grandchildren own farming operations that are managed by Woolf Farming and Processing.  About half of the acreage is in row crops—revolving around processing tomatoes as the key rotation crop—and the other half are in almonds, pistachios and wine grapes with a few walnut acres.  Most of the acreage is in California’s Westside farming community in the Westlands Water District.

Stuart said the three core crops—processing tomatoes, almonds and pistachios—remain crops in which California has unique conditions that make it the world leader.  He noted that the number of processing tomatoes grown in Fresno County alone top the production in Italy on an annual basis.  “If Fresno County was its own country, it would have more processing tomatoes than any other area in the world except California.”

Processing tomatoes have become a very good crop for California beginning with the advent of mechanical harvesting in the 1960s.  Since then, improved farming techniques and better varieties have propelled the production to unthinkable stratospheres a generation ago.  “In 1974, my dad wrote a business plan estimating that he would get 22 tons to the acre.  He tells me now that he was exaggerating a bit to make the numbers look better.  He was expecting about 20 tons per acre.  Today we get about 60 tons to the acre.”

Drip irrigation has been one of the great yield-building innovations.  Stuart said his dad began using drip well before almost anyone else.

On the row crop side, the company also manages a significant amount of acreage of onions, garlic and grain crops, which are used for rotation purposes.

This year, Woolf said the drought has taken its toll and about half of the row crops under the firm’s management have been fallowed with the water diverted to the permanent crops.

California pistachios and almonds continue to be very bright spots in the permanent crop sector for Golden State agriculture and for Woolf Farming.  Both crops have been on a growth curve for many years and the future looks just as bright.  The Woolf Farming entities also grow a lot of wine grapes, which is another crop where California has a competitive advantage because of soil and climate, and has seen tremendous growth in the last few decades.

 

Stuart Woolf’s Path

Stuart Woolf was about 15 years old and a high school student in San Jose when his father started the company in 1974.  He jokingly says the operation gave him a great summer job picking cotton in 100 degree temperatures on the Westside of the valley and living in relative squalor with some other workers.  “I loved it; we never had to pick up anything off the floor.”

At the time, Woolf figured he was “too smart” to end up in agriculture.  He went to UC Berkeley, where he met his wife, Lisa, and then on to graduate school in business at Boston College.  At the time, leverage buyouts were the rage and many of his grad school buddies envisioned careers in investment banking.  Stuart became computer literate and his father saw that his business background could be a big asset in the family’s ever-growing farming operations.  “My dad encouraged me to come back and helped me set up my own farming operation.  He told me he loved farming and after a while I felt the same way.  It got in my blood.  Now I am like any other farm guy.  I fell in love with the food industry.  It is a great industry.  Every day you get to interact with the guys with shovels all the way up to the presidents of these major businesses.”

Stuart’s move to the top position at Woolf Farming was somewhat evolutionary.  He and his older brother, John, were working on the farm management side of the business about the time his father was relinquishing the top position.  “But John wanted to be out on the farm.  He stepped down and recommended that I run it.  My dad wasn’t ever put in the position of having to choose one son over another.”

Each of Jack Woolf’s other five offspring have their own farming entities and are on the board of Woolf Farming and Processing.  The company continues to strive for vertical integration, which it has achieved in both processing tomatoes and almonds with processing facilities as well as farming operations.  “We are looking to move in that direction with pistachios as well,” Stuart said.

 

The Future

While many of the third generations of Woolfs are in the business and Stuart makes no bones about the fact that his last name was instrumental in achieving the top spot, moving forward the company has a policy of picking the best person for the job…not the best Woolf for the job.  The board includes four non-family members and Stuart said “we are committed to hiring the best person in each role.  We have a non-nepotism policy.”

But a nephew is in-house counsel and many of the third generation are working in one entity or another.  The Woolfs are strong believers of going outside of the business to get experience.  In fact, on Stuart’s resume in his early 20s is a stint at Fresh Express in the 1980s where he worked for Bruce Taylor, and had a front row seat during the beginning of the value-added revolution in the fresh vegetable industry.

Stuart said he is “cautiously optimistic” about the future of farming in California.  The company has built its model around the state’s unique farming advantages, which he believes are too great to ignore.  While he notes the pendulum has swung to a very anti-farming position at the current time, he is hoping for a swing back in the near future.  He believes the state’s advantages in the agricultural realm are just too great to ignore, and, at some point, the powers-to-be will see it the same way.

While he absolutely loves the Westside, which he calls “beautiful”, Woolf said there is not a clamor for urbanization in that area and it should remain a viable ag option for generations to come.  He said the state has enough water, it is just a matter of how it is managed.  “Farming has taken a disproportionate share of the water woes.  We have a global competitive advantage.  All you have to do is add water to make it flourish.”

He believes the time is coming when the state’s farming potential is embraced and allowed to flourish.  In fact, he believes the drought is helping to turn the tide in agriculture’s favor.  As more and more people are forced to conserve and cut back on their water use, Woolf sees a greater understanding of the need for increased supplies and what that water can do.

 

On a Personal Note

Stuart and his wife of 30-plus years have five kids ranging in age from 18 to 28, with four sons and a daughter.  His oldest, Coulter, is involved in the processing tomato business, while son number two, Morgan, works in Nicaragua in the coffee business.  Jack is involved in almond orchard development.  His daughter Haley recently graduated from the University of Colorado and is living in Santa Barbara, while his youngest, Wiley, will be a senior in high school this year in Fresno.

For fun, he said the family has “a couple of cabins in the Sierras.  We enjoy Carpinteria and we love to travel, eat well and enjoy wine.”

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2015 WG ANNUAL MEETING Futurist to Keynote San Diego Convention

August 1st, 2015

Within two decades there will not be a single human harvesting fruits and vegetables in this country.

That provocative statement is the work of David Evans, formerly the chief futurist at Cisco who is now working on technology to connect all the machines in your home.  Wouldn’t it be great, he said, if when you drove into your garage, that action alerted the heater to turn on, the doors to unlock, the music to play and the oven to preheat.  And the reverse happened when you pulled out of your garage in the morning and closed the garage door…your house would automatically go into shut down mode.  Evans will be the keynote speaker during the Western Growers Annual Meeting that will be held Nov. 8-11 at the Grand Del Mar in San Diego.

Titled “Thought for Food,” his speech will analyze the challenges facing the agricultural industry, and discuss the major advances that are coming down the pike to solve those challenges.  Not surprisingly, Evans believes a technological revolution is lurking around the corner for the fruit and vegetable industry.

High on his list of coming breakthroughs are advancements in robotics that will reduce the need for human pickers at the farm level.  He believes artificial intelligence that will accomplish many farm tasks is on the brink of reality.

Evans has long been right in his observations. More than 20 years ago he identified the World Wide Web as a place that would profoundly change commerce.  He foresaw the Internet as facilitating on-line shopping before almost anyone else was predicting that.  He also was one of the first, if not the first, to coin the phrase the Internet of Things (IOT).  That basically refers to the practice of placing computer chips in everything—your car, your refrigerator, your light switches, your medicine cabinet—so that all of these inputs can interconnect for the betterment of humankind.

His startup company is called Stringify and, as the name suggests, endeavors to string everything together within your house.  He recently said that development is progressing very rapidly with beta testing very close and full production just around the corner.

Turning his attention to the ag space for his Annual Meeting talk, Evans said the Internet of Things, which he has since updated to the Internet of Everything, will have a profound impact on agriculture.  He said this “technological tsunami” will completely change how agriculture produces its products and conducts business.

Evans believes the technological revolution will also bring about vertical factory farming which will replace traditional farming practices.  In fact, he said the geographic advantages that currently exist in California, for example, will no longer be in play.  However, he does not think this means California has lost its edge.  Because of the farming knowledge that already exists in places like California and Arizona, he believes current farmers can lead the revolution toward vertical farming by applying the knowledge they already have to this new technology.  In Evans’ futuristic world, present day specialty crop growers may not have a geographic advantage, but they do have a knowledge advantage.

To register for the Annual Meeting, go to: www.wga.com/events/annual-meeting

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Agricultural Law As Varied as the Number of Lawyers

August 2nd, 2015

The first lawyers specializing in the fresh produce industry tended to practice ag labor law, as articulated by Western Growers CEO Tom Nassif in his President’s Notes column on page 4 of this issue.

Ag labor law was heady stuff in the 1960s and ‘70s when many young lawyers took their newly-minted licenses to practice law and did battle against Cesar Chavez and his burgeoning United Farm Workers union.  Since then the need for lawyers specializing in ag labor law has ebbed and flowed in concert with the times.  But the need for lawyers to handle the many facets of running an agricultural firm has only gone in one direction.  With regulations ever increasing, lawyers specializing in everything from agricultural-related human resources issues to water management to environmental concerns to food safety issues have proliferated.

A few pages further in this issue, a list of member firms of Western Growers that practice law begins, and runs more than a handful of pages deep as there are dozens of companies in that category.  The listings note the areas of specialization of each firm, as well as whether the firm is a member of the Western Growers Ag Legal Network.  That designation means the firm offers a discount to Western Growers members in certain types of cases, as articulated by each firm.

Below, several of those lawyers discussed the trends they currently see in ag law and a few of the areas where there might have been an uptick in activity over the past year.

WG Vice President & General Counsel Jason Resnick opined that piece rate compensation is an area of concern as employers try to comply with new rules covering wages for piece rate employees.  In November 2013, the state’s labor commissioner issued an interpretation determining that rest periods had to be paid at the average hourly piece-rate wage rather than the standard minimum wage calculation that many employers followed.  “Along with other ag associations, we have challenged the labor commissioner’s interpretation,” he said.  “Unfortunately we don’t expect to even have an initial hearing on the issue until March of 2016.”

The WG executive said new rules about paid sick leave also went into effect on July 1.  Conflicting guidance has led to a lot of confusion.  “The new law is not particularly well written,” said Resnick.  “And so-called ‘clean up’ legislation that went into effect on July 13th has done little to improve the language.”

For example, he noted that in one area the laws calls for paid sick leave to cover 24 hours or three days.  In agriculture, many employees work 10 hour shifts.  Does the law require three days’ pay (i.e., 30 hours) or 24 hours of pay, which are not necessarily the same?

In general, he said there are more wage and hour cases than ever before.  “It is very important that employers have up-to-date policies that are comprehensive, including spelled-out policies on meal and rest periods.  Then employers need to adhere to those policies.”

To help keep employers up to date, Western Growers offers the Personnel Procedures Manual, updated annually to keep abreast of changes in laws and regulations.  The manual can be purchased online at www.wga.com/PPM.

Patricia Rynn of Rynn & Janowsky, Irvine, CA, has long specialized in PACA law, including the PACA Trust, which allows the opportunity for produce companies to put themselves in a priority position for their unpaid invoices in the event of a bankruptcy by a buyer of their fresh produce.

PACA case law is fairly mature and Rynn said there have been no new wrinkles in this past year that have caught the industry off-guard.  In fact, she said it has been a bit easier obtaining temporary restraining orders against the movement of assets of insolvent receivers than it was before.  “Certain pockets (of the country) have been a little more difficult to work with, but this year we’ve had some good success even in places like Chicago, which has historically been more difficult.”

She explained that often it is necessary to get a no-notice TRO so assets can’t be shifted and hidden.

While Rynn said the California fresh produce shipper community is very well versed on PACA law, occasionally there are some shippers that don’t know how to protect their rights.  “Typically they come from industries where fresh produce isn’t their sole item.  For example, frozen foods do have PACA rights, but often the companies are not informed as to what to do and how to protect them.”

She said sometime growers, who aren’t required to have a PACA license, are also uninformed about protecting their PACA rights against marketing agents.  They don’t typically include the correct language on their invoices that protect those rights.

This past year, Rynn has also seen an increase in cases against both USDA and California Department of Food and Agriculture regulations dealing with marketing orders and shipping regulations.  In June, the U.S. Supreme Court ruled that the raisin marketing order didn’t reflect current marketing conditions and ruled against the regulations.  She said there are many other regulations that tend to be outdated and she is seeing more questioning of restrictive regulations that limit shipments based on size or grading requirements.

Rynn opined that in the 1930s when many of these regulations were put into effect, they helped protect the industry.  But different circumstances exist today and the same levels of protection are not necessarily needed.

Aaron Colby, an attorney in the Los Angeles office of Davis Wright Tremaine LLP, told WG&S “one of the biggest trends I see for the agriculture industry in California as it relates to employment law issues and risks is the industry’s reliance on farm labor contractors.”  He said that as of Jan. 1, 2015, businesses are directly liable for workers supplied by labor contractors when those labor contractors fail to correctly and completely pay wages or fail to provide workers’ compensation insurance coverage for their employees.  “Businesses using workers from labor contractors are liable to such workers for unpaid wages, even if they have already fully paid the labor contractor,” he said.

Under previous law, he said a worker for a temporary staffing agency or labor contractor was required to prove the existence of a “joint” or “co-employment” relationship to impose liability on the business where they performed their duties.  The new law, however, makes this showing unnecessary.  The result is an expansion of liability to workers of labor contractors when their actual employers fail to obey the law.

He advises business to carefully select new labor contractors and reevaluate existing contractor relationships, focusing on the contractor’s compliance with relevant labor laws, especially with respect to payment of wages.  When the financial viability of a contractor is in question, businesses may wish to consider hiring workers directly.

Colby also echoed Resnick’s concern about the new paid sick leave law.  He said employers are now required to provide paid sick leave to full-time, part-time, temporary, and other employees not covered by a collective bargaining agreement that provides similar paid sick leave benefits, and who have worked in California for at least 30 days within a year.  He recommended a careful reading of the new regulations.

Dale Stern, who is the chair of the food and agriculture practice for Downey Brand LLP firm, headquartered in Sacramento, said the company’s practice is very diverse.  “We have more than 100 lawyers in Stockton, Reno, the Silicon Valley and San Francisco practicing a broad spectrum of law.”  He said almost half of those attorneys are connected with the food and ag practice in some way.  The firm litigates in areas as diverse as water, land use, PACA work, pest control issues and California Market Enforcement Bureau cases.

Discussing some of the more interesting litigation he has been involved in, Stern pointed to a chemical drift case where the spraying of an herbicide on 450 acres to kill some weeds ended up damaging 4,000 acres of crops, including some organic production, wine grapes, corn and blueberries.  “The number of drift cases has increased dramatically in recent years.”

And he sees no letup in sight as environmental groups attack more and more pesticides.  He said growers need to carefully examine their chemical application procedures and make sure they keep them at a minimum, especially aerial applications.

Another trend he has noted is increased activism at local levels on issues that were typically left to state regulators.  “We are dealing with more and more local ordinances all the time,” he said.

Stern advised businesses to make sure they stay abreast of these rules and regulations or they may be inadvertent violators subject to big fines.  “You can’t just look at the ag code or CDFA regulations.  You better look at local jurisdictions and see if any of their rules impact you.”

The Downey Brand attorney said the pure expansion of water lawyers in his firm point to the trend in that direction.  “We have 21 or 22 water lawyers focused on keeping water flowing.  That area of the law is booming.”

Ron Barsamian of Barsamian & Moody, a Fresno, CA, firm, has spent much of his time during this last year battling labor issues on the well-known Gerawan case.  For the uninitiated, the case revolves around California’s Mandatory Mediation and Conciliation (MMC) law.  After winning an election in the early 1990s, the United Farm Workers abandoned the negotiations at Gerawan for more than 20 years before filing unfair labor practices charges with the Agricultural Labor Relations Board through its general counsel several years ago.

Gerawan was the grower in the case and the battle has been ongoing, with Gerawan winning several key points against the ALRB and its general counsel.  Barsamian said those wins have had some very good results for agricultural employers.  He said the general counsel has been ordered by the ALRB to no longer file injunctions in court without giving the ALRB notice.  In addition, the ALRB chairman has announced plans to consider procedural changes with regard to dealing with unfair labor practices after an election has been held.

The longtime agricultural industry attorney said this is the result of a November 2013 election held at Gerawan in which the ballots have still not been counted because the general counsel has been investigating unfair labor practice charges.  Barsamian said the highest priority should be in counting the ballots and that position has been affirmed by the courts.

In a somewhat related area of the law, Barsamian noted in mid-July that the UFW had been particularly active in the previous two weeks filing notices of intent to take access (NA) for the purpose of organizing farmworkers at various locations.  He said the UFW is typically active at this time of year, but their method of operation has been a bit different this year as it appears to be a more surgical effort over a wider geographic region.  In any event, he urged employers to consult ag labor attorneys as to their rights and obligations with regard to granting access.  While there have been no changes in this area of the law recently, he said it is always best for employers to make sure they and their farm labor contractors are well acquainted with the rules and are acting properly.

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Proprietary Cultivars Reaping Fresh Patent Litigation

August 2nd, 2015

In January, amid a case docket otherwise dominated by electronics and pharmaceuticals, the U.S. Court of Appeals for the Federal Circuit, the group of D.C.-based justices whose jurisdiction over patent matters is second only to the Supreme Court, issued a decision concerning a seemingly more elemental technology: grapes.  The decision in Delano Farms Co. v. California Table Grape Commission marked the conclusion (barring further appeal) of a dispute whose tendrils have been twisting their way up and down the trelliswork of the federal court system since 2007.  The nearly decade-long struggle stands as testament to the growing importance of proprietary cultivars in American agriculture and the growing willingness of the owners of these valuable intellectual property assets to enforce their rights.

Delano Farms involved two grape varieties developed and patented by the USDA: “Scarlet Royal” and “Autumn King.”  The USDA licensed its patents to the California Table Grape Commission, who in turn licensed them to various growers.  Apparently dissatisfied with the royalty payments demanded by the CTGC, several Scarlet Royal/Autumn King licensees banded together to file a lawsuit in the Eastern District of California, asking the district court to declare the patents invalid.

Patents over vegetation come in three flavors: utility patents, the same type of protection available to other types of novel inventions; plant patents, a special category of patent created by the Plant Patent Act of 1930; and plant variety protection certificates (PVPs), a right created by the Plant Variety Protection Act of 1970 which confers patent-like protection but which is administered by the USDA rather than the USPTO.  In the case of vineyards, PVPs are generally of less interest since they apply only to plants propagated sexually or by tuber.  That leaves utility and plant patents.  In theory, a grape breeder could protect a new variety with a standard utility patent, but, in practice, a plant patent may be easier to obtain since the requirements for a plant patent application are more accommodating of the realities of botanical innovation.  And, indeed, it was this specialized form of patent that covered both Scarlet Royal and Autumn King.

A plant patent, which among other things confers the exclusive right to asexually reproduce the patented cultivar, is subject to many of the same eligibility restrictions as a utility patent.  Under Section 102 of U.S. patent law, inventions must be “novel” in order to be protected, and public use of an invention before the patent’s effective filing date can invalidate the patent.  In the case of Scarlet Royal and Autumn King, the Delano Farms plaintiffs claimed that, prior to the USDA’s filing date, the grapes had been grown at J&J Ludy Farms in Bakersfield, CA, invalidating the patents.

However, the Federal Circuit found that the activities of cousins Jim and Larry Ludy, who had apparently obtained vine cuttings surreptitiously from a rogue USDA employee, did not amount to “public use” given their covert nature.  Though the rows of Royal Scarlet and Autumn King propagated by the Ludys were visible from public roads, their novel characteristics could not be discerned by anyone outside the cousins’ small circle of co-conspirators, all of whom acknowledged the hush-hush nature of the operation.

Delano Farms is an important precedent for intellectual property practitioners in terms of defining the boundaries of “public use.”  But for growers, the more immediate takeaway may simply be the increasing role of cultivar patents in the industry.  Once relatively unusual, litigation over plant patents appears to be on the rise, as agribusinesses chase the premium price points that come with boasting a proprietary varietal and patent holders move to enforce their rights accordingly.

On January 20, less than two weeks after the Federal Circuit’s Delano Farms decision brought that lawsuit to a close, a new patent infringement claim was filed in the Eastern District of California.  This time, the patented grape strain was developed not by the USDA but by a private research firm, International Fruit Genetics.  The defendant grower, Sandrini Farms (whose owner also had a cameo in the Delano Farms litigation as a friend and confidante of the Ludys) allegedly cultivated the proprietary vines—given the dispassionate identifier “IFG Four” by their creator but marketed under the more colorful names “Nicolo” and “Sweet Romance”—under license from IFG.

When Sandrini allegedly exceeded the scope of that license by grafting IFG Four vines into a second vineyard without permission (and without paying the agreed 5 percent royalty on the grapes thereby produced), IFG filed suit.  Like the Delano growers before it, Sandrini Farms filed a counterclaim asking the court to declare the IFG patent invalid.  Sandrini alleges, among other things, that he was given the grapes by IFG for purposes of cultivation more than two years before IFG filed its patents, which, if true, could undermine the novelty required of a patentable invention.

Whether IFG and Sandrini choose to battle their way up to the Federal Circuit as did Delano Farms and the CTGC, or whether the dispute ends up quietly fizzling under the cloak of a confidential settlement, what’s certain is that the federal courts sitting in California’s fertile valleys probably haven’t seen the last of plant patent lawsuits.

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U.S. Senator Cory Gardner represents Colorado in the U.S. Senate

August 2nd, 2015

(Editor’s Note: The questions and answers have been edited and paraphrased for clarity and brevity.)

 

Senator Cory Gardner grew up in “the other” Yuma, a small town on the Eastern Plains of Colorado.  He began serving in the Colorado House of Representatives in 2005.  He was elected to the U.S. House of Representatives in 2010, and became Colorado’s junior U.S. senator in 2014.

 

Tell us a little bit about your Colorado roots.

I am a fifth generation Coloradan.  My mother’s family came here in the 1880s and my dad’s family arrived in the early 1900s.  In fact, on my dad’s side of the family, my ancestors started a farm implement business in 1915 that we still operate today.  We are celebrating our 100th anniversary this year.  I grew up in agriculture with farming in my roots.  I still live in the same town as my great grandparents and I understand the fundamental values that are the backbone of the agricultural industry.

 

From the very beginning it appears as if you were preparing for a career in politics.  Is that true?

I didn’t think I was, but looking back everything I did does tend to point in that direction.  As a kid I was a bit of a geek, writing letters to Ronald Reagan and others in elective office.  I was very interested in my dad’s service on the city council in our small town and was always asking him questions.

I did go to Colorado State University and majored in political science and then on to the University of Colorado where I got my law degree.  But in between those two degrees I came home to Yuma and helped my dad relocate our business.  From the time the farm implement store began in 1915 until 1997, we were located in the same building in town.  But in 1997, we moved to a new building out by the highway and I helped manage that move.

 

Did graduation from law school start you on your current political path?

It did but that was not the plan.  When I was in law school, there was a television show called “Ed” that featured a lawyer running a bowling alley and practicing law in a small town.  That’s what I wanted to do: I wanted to be a lawyer in a small town and run a farm implement business.  But that isn’t what happened.

After law school, my student loan payments hadn’t kicked in and the bar results were not in yet so I had about six months before I had to start my career.  I went to Washington D.C. and got a job with the National Corn Growers Association.  That led to a position with Colorado Sen. Wayne Allard as a legislative assistant and eventually I became his legislative director.

While I was working for the senator I did get involved in a lot of campaigns and that did lead to my appointment to the Colorado State Legislature in 2005, and then I won my first election the following year.

 

I noticed in your biography that you changed party affiliation from Democrat to Republican in college.  Did you have a change of heart?

My grandfather was a Democrat and so was my dad…in fact, he still is.  So when I was 18 to be different in Yuma was to be a Democrat and so that is how I registered.  However a Democrat in Yuma is a Republican anywhere else.  As I got older it was obvious that the values and the beliefs I held were more aligned with the Republican Party, so I switched registration.

 

What were your key issues when you first ran for office?

My issues then and the ones I am still passionate about today have not changed.  I am passionate about rural life issues that allow agriculture to not only survive, but to thrive.  In fact, later this week I am holding an economic round table in rural Colorado to discuss some of the things that can be done to help rural America thrive.  I have no pre-conceived agenda but would like to discuss some options such as changes in the tax structure that might allow for greater development in rural communities.  And perhaps looking for a way to give rural communities greater access to capital.

 

Water, of course, is the lifeblood of agriculture.  What can be done at the federal level to help agriculture get the water it needs to prosper?

Number one, the federal government has to keep its nose out of private water rights.  Part of the problem with California’s drought is that it is a federally-created drought in that the government started allocating water to environmental causes rather than letting the farmers keep their rights to that water.  The government needs to find solutions, not get in the way.  I supported Devin Nunes’ bill last year which was the best solution on the table to get more water to California farmers.

Number two, the government has to do more to increase water storage.  We need to construct more water storage facilities.  In Colorado, we have the Northern Integrated Supply Project which has spent $20 million in its lifetime and has yet to create storage for even one drop of water.  This year alone, Colorado could have saved an additional 1.3 million acre-feet of water if we had the storage.

 

What is your take on immigration reform?

We need it.  I support a plan that secures our border and I believe a big part of that solution is a meaningful guest worker program.  We have to figure out a way to get it done.  I was on a plane back to Washington D.C. this week with a couple of other legislators — one Democrat and one Republican.  We were talking about immigration reform and how we can balance the ideas of people on all sides of the issue and come up with a workable solution.  Surely, there is a way.  We need more sound thought on the issue.

 

Are you a supporter of free trade efforts?

I was a big supporter of the fast track trade legislation.  Trade is very important to agriculture and I believe we should be active participants in trying to increase our foreign trade.  Here in Colorado, we do very well in trading some of our items into Mexico and elsewhere.  Olathe sweet corn is among the items that has a very good export record.

 

What’s in your future?

As I look back on these times from the future I want to have played an active role in my kids’ childhood and I want to have helped society prosper and be a better place.  If I am lucky enough to have done that from my current position for a good part of the time that would be great.

 

Have you picked a horse to bet on yet in the Republican primaries for president?

I can tell you I won’t be voting for Hillary Clinton.

 

Our members and many of your constituents produce the finest fruits, vegetables and nuts in the world.  Are you a consumer of our products and do you have a favorite?

Every day!  In northeastern Colorado, we don’t have a lot of fresh produce, but we do grow a lot of onions and potatoes.  I can tell you what my perfect meal would be: a Rocky Ford cantaloupe with some Palisade peaches, Olathe sweet corn, some beef from Yuma topped off with a Sakata onion and some Two Rivers wine.

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Gullickson Takes Over Lead Role for WGIS

August 2nd, 2015

Industry veteran Jeffrey Gullickson was hired as the new leader of Western Growers Insurance Services (WGIS) on July 1 when he was named senior vice president of the full-service, bilingual agency which serves the insurance needs of farmers and related businesses in California, Arizona and Colorado.

As the leader of WGIS, a wholly-owned subsidiary of Western Growers, Gullickson has full responsibility for the company’s production, account management and support teams in WG’s Irvine headquarters and 11 offices in California and Arizona.

“We are very excited to welcome Jeff to our family,” said Tom Nassif, president and CEO of Western Growers.  “Western Growers Insurance Services has a long history of leadership in helping farmers obtain quality affordable health benefit plans, through Western Growers Assurance Trust or other health insurance carriers, as well as workers’ compensation coverage.  In recent years WGIS has expanded its brokerage services to include property and casualty insurance and new crop insurance products for the fresh produce sector.  We see a major opportunity to grow our services with the right leader, and Jeff Gullickson is the very best person for this challenge.”

Gullickson has been in the insurance brokerage business for more than 30 years, spending significant time in the ag space early in his career.  He is a widowed father of four, his children ranging in age from 17 to 28.  His oldest child, Anna, is in the insurance business as an underwriter, while his youngest, Conrad, is entering his senior year in high school.  The family also includes two sons in the middle: Ben, 26, and Peter, 23.  Gullickson enjoys an array of outdoor activities including mountain biking.

He recently sat down with WG&S and discussed his career and vision for WGIS.

Q: You’ve had great success in the insurance brokerage industry, and weren’t looking to leave your prior position.  What piqued your interest about Western Growers?

I started my insurance career focusing on the ag industry in the Northwest: irrigated row crops, apples, vineyards and stone fruit.  The idea of getting back to agribusiness, and working with the caliber of people in the industry had a very strong pull.  My entire career has been working with privately held multi-generational, family-owned business, whether ag or otherwise.  I had a good gig going where I was, but I kept coming back to this opportunity.  A strong part of the appeal was the obvious commitment that every individual I met at Western Growers had…a passion for the industry and the members.

Q: Most WG members probably think of health benefits, and Western Growers Assurance Trust specifically, when they think of WGIS.  Do you view that as a strength, a challenge?

Definitely a strength from a product offering standpoint.  It puts WGIS in a very strong position from a sales perspective.  The longevity and the financial strength of the Trust, combined with its employee health benefits offerings and resources, make it an extremely viable program to members of the association.  Every member or eligible member should take a strong look at it.

On the other hand, I think because of the Trust’s success, other potential risk management and insurance programs have been overlooked.  I believe members don’t often think of us for the other parts of their program, such as workers compensation, crop or property to name a few, but they should.  WGIS offers competitive options specific to the risk management needs of the agricultural industry and an effectiveness that comes with managing all insurance products in one place.

Q: You probably haven’t had much opportunity to meet with WG members yet, but when you do, what will be your first comment or question in most cases?

That’s easy—learning about their operation, from seed to the retail shelf.  Who are their suppliers, their customers, and what contractual obligations have they made?  Learning about their physical assets, processes and products.  What are their employment and HR issues?  I know it’s not one question, but I have a strong interest in learning about their business and only then can I start to formulate ideas around their program.  I want us to build on what we already know, to improve and innovate our offerings, so that we can do more to meet their unique needs.

Q: Describe how some of the changing currents in the industry, such as the Affordable Care Act, shape your vision of WGIS’s mission.

The Affordable Care Act was an extremely complex piece of legislation, which, with the benefit of hindsight, had an enormous impact on business.  From an outside perspective, how Western Growers responded was world class.  The interpretation of the act, and the analysis and communication they (we) offered the membership was impressive.  During the interview process, as I learned how the Association responded, it became apparent this was a sophisticated organization with significant capabilities.  I aim to reinforce these efforts while striving to offer robust consultation specific to each WGIS member, not just limited to the ACA, but their entire risk profile.

Q: What are some of the ways technology is being used today, or might be used tomorrow, to enhance the way WGIS interacts with its clients?

Technology for us is all about communication, communication, communication.  Time is money and how do we make sure our clients are getting what they need, how they need it, and right now?  Whether it’s on their smartphone, in an email, or on a printed explanation of benefits, we need to effectively use technology to communicate with our clients and their constituencies.

Q: You have a team of WGIS professionals working in 11 locations around California and Arizona.  Share your thoughts about how you intend to interact with them and how you might balance demands on your time.

I’ve been in this situation before.  It’s incumbent on me to put the right people in the right place, and if I can do that, it all comes together.  Any insurance brokerage is only as good as the people who serve their clients, whether it’s the broker, a resource, or customer service.

Q: What does success over the next year look like to you?

Success in a year would mean that we have developed a sound strategy based upon the input from our members, and that our members realize that Western Growers Insurance Services is their brokerage.  All of the professionals within WGIS, and the larger Association exist to serve the members.  Again, this is THEIR brokerage, and we’ve set our strategy around what they’ve told us they want…that status a year from now would reek of success!

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Integrated Pest Management Insights

August 2nd, 2015

(Editor’s Note: Questions and answers have been paraphrased for brevity and clarity.)

 

Organic and conventional producers benefit from the use of Integrated Pest Management (IPM).  Earlier this year, I had the opportunity to meet the director of the Western IPM Center, Dr. Jim Farrar, who provides overall leadership for the center.  Here is a summary of key questions related to IPM that Dr. Farrar addressed during a recent conversation on IPM insights.

 

What is IPM and how has it evolved over time?

IPM is a practical knowledge-based system.  This means having a comprehensive knowledge of a particular crop, potential pests and conditions that facilitate their development.  Utilizing IPM is having a plan to prevent, manage and suppress pest damage with the ultimate goal of reducing pests below an economical damaging threshold while protecting the human health and the environment.

IPM is currently used successfully in different settings.  IPM has evolved over time.  Originally it was used for alfalfa production, then evolved to be applied in produce (with lower tolerance of cosmetic damages) and now is even applied in non-agricultural areas, like schools.

 

How does IPM fit into efforts to protect beneficial pollinators or the environment?

According to a report prepared by the Western IPM Center, IPM is a scientific approach to pest management that integrates biological, cultural, mechanical and chemical options to control pest problems.  With that said, different efforts can be integrated into IPM.

IPM can be used in organic, bio-dynamic and urban systems.  IPM can be used in different contexts and for different goals, like protection of pollinators.  The key is having a system in place based on current scientific knowledge and best practices to prevent and control pest damage using different practices.

 

Do you see a growing market for IPM labels and what are your thoughts about it?

There are some efforts, but in general consumers are not aware of this new label/certification option.  The concept of IPM is relatively unknown to many consumers and it may take some time to educate consumers about it.  The IPM label concept may be better in the context of a larger sustainability label.

 

The USDA’s National Agricultural Statistics Services collects data on IPM pest-management practices and groups those practices into four categories: prevention, avoidance, monitoring and suppression.  Could you share a few examples of successful practices in each group?

Prevention: Seed certifications have been very successful for many crops and diseases. 
A particular example is the current certification for lettuce seed in Arizona and California, this requires lettuce seed to be tested and found free of Lettuce Mosaic Virus in a 30,000 seed sample per seed lot.

Avoidance: Crop rotation works for several pests and crops.  A particular example is rotating tomato for about 1 year to control bacterial canker.

Monitoring: Scouting and monitoring is a successful and common practice, but frequency varies depending on cropping system.  A particular example is the frequent monitoring and scouting in leafy greens in Arizona and Southern California, state-licensed Pest Control Advisers (PCAs) scout 100% of lettuce acres at least three to four times per week.

Suppression: Two great examples are the use of biological and chemical pesticides and also releasing beneficial organisms to control infestation in several pests and crops.  A particular example is the release of the filbert aphid parasitoid, Trioxys pallidus by Oregon hazelnut growers to control filbert aphids.

 

What tools are available for producers to determine best IPM activities and specific practices by crop?

IPM practices are already established in every state through land-grant universities.  The Western IPM Center website has links to access different IPM state programs that consider local and crop specific information in California, Arizona and Colorado.  This is the link to access this information: http://westernipm.org/index.cfm/about-the-center/western-partners/state-programs/.

While using these resources, it is important to keep in mind that an IPM plan does not always use all types of practices (biological, cultural, mechanical and chemical) to control a pest.  For example, the Fusarium wilt of tomato does not have effective chemical practices to use currently.

 

In March 2015, the Western IPM Center released a report about adoption and impacts of IPM in Agriculture in the Western States.  Could you summarize the key findings of that report in a few words?

In sum, IPM is widely adopted in agriculture in the West.  This benefits producers, consumers and the environment.

 

What are some of the steps producers should consider to implement a new or evaluate an existing IPM program?

Here are a few considerations: 1) know your crop and potential pests, this means to know how to identify pests and their damages as well as to understand their life cycle, 2) plan ahead to prevent and avoid pests, 3) get in the field and monitor regularly, 4) use multiple suppression practices; 5) assess your plan, verify you are doing well with your controls; and 6) work with experts on particular crops/pests if possible.

 

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“Anti-Degradation Policy” Reviewed by State Water Regulators

August 2nd, 2015

California’s long-standing “anti-degradation policy” governing water discharges is being expanded beyond its historical application to individual facilities making discharges to surface water.  Recently, the state has moved to apply this policy to water quality programs that regulate discharges to groundwater from agricultural activities (e.g., irrigated agriculture and dairies).  Some environmental and other interest groups are seeking to use this policy to legally halt or impede general agricultural permitting programs that are designed to facilitate the implementation of best management practices and monitoring on a watershed or representative scale.  This spells trouble unless the State Water Resources Control Board applies reason and pragmatism to its policy of enforcement of the anti-degradation policy.

It is an important policy which requires that the quality of existing high-quality water be maintained unless the state finds that any change will A) be consistent with the maximum benefit to the people of the state, B) will not unreasonably affect present and anticipated beneficial use of such water, and C) will not result in water quality less than that prescribed in policies as of the date on which such policies became effective.  It also requires best practicable treatment or control of discharges to ensure that pollution or nuisance will not occur.

The Regional Water Boards have had technical difficulties with applying the anti-degradation policy to groundwater because they have been using guidance originally developed to regulate discharges to surface water.  Assessing the ability of groundwater to assimilate discharges without unreasonable effects on beneficial uses using this historic framework presents problems because of the minimal and delayed mixing of groundwater, the travel of contaminants in groundwater plumes, the time frames involved in transport of contaminants, and the lack of appropriate baseline data in many locations.  The historic framework also creates a regulatory distinction between high quality and non-high quality groundwater regulation that often makes little practical or technical sense.

Many environmental organizations have long opposed the state’s policy of regulating farm water discharges by allowing farmers to act in coalitions for purposes of collecting and reporting data on pollution levels and actions to reduce them.  These critics believe that every farm should be treated by the state like a brick-and-mortar manufacturing plant: Each farmer should be required to obtain a waste discharge permit that requires him to report reams of monitoring data for water discharges and implement farm-site specific procedures, approved by regulators, to manage discharges.  These environmental groups have now turned to the anti-degradation policy to achieve what they have failed to achieve before:  The demise of the existing coalition-based Irrigated Lands Programs.

Since this policy has been woven into agricultural Waste Discharge Requirement Permits (WDRs) and Irrigated Lands Conditional Waivers, Western Growers staff along with other agricultural representatives met with each member of the SWRCB about the possibility of updating or augmenting existing guidance contained in the anti-degradation policy as it relates to groundwater.  Because this is a policy and not a statutory provision, the SWRCB has discretion to revise it, adopt a new policy, and/or adopt guidance with respect to its application to agricultural activities.  As a result of our meetings, board members agreed that a review of the policy was necessary and directed staff to begin working on a draft document that includes stakeholder involvement.

On June 9, the SWRCB published on their website the “Scope of Policy for Protecting and Improving Groundwater Quality in California” and is holding listening sessions with stakeholders to garner input on changes that may be needed.  The Draft Scoping Document sets forth a broad framework with respect to a potential new Groundwater Policy.  This new policy would replace the existing application of the anti-degradation policy and would apply to both high quality and non-high quality waters.  This approach would be helpful as long as the new groundwater policy establishes reasonable and achievable requirements.  If the requirements for allowing discharges are too difficult to achieve, or are not economically feasible, then the groundwater policy will fail to achieve its intended result.

Western Growers staff will continue to participate in this process in an effort to make sure the policy is flexible enough to be implemented reasonably and economically.  Documents and anticipated project timelines are posted on the Policy for Protecting and Improving Groundwater Quality website: (http://www.waterboards.ca.gov/plans_policies/antidegradation.shtml).

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Penalties Associated with ACA

August 2nd, 2015

Dear Jon

 

We offer a health benefit plan now to our full-time employees and understand that the employees we currently consider seasonal may in fact be full-time.  We will offer them benefits next year.  My question is about penalties.  I know about the employer mandate penalty but I’ve heard there are penalties for failing to do the IRS employer reporting.  Can you explain these please?

Purposefully Avoiding Penalties in Petaluma

 

 

 

Dear Purposefully,

 

Employers face several potential penalties under the health care reform law.  Let’s start with a quick recap of the large employer mandate.  The Patient Protection and Affordable Care Act’s (ACA) large employer mandate was first delayed in the summer of 2013, until 2015.  Then on February 10, 2014, the Obama Administration announced another delay of the mandate for large employers with 50-99 full time employees (including full time equivalents), until 2016.

Larger employers with 100 or more full time employees (including full time equivalents) are required to comply with the mandate in 2015.  The mandate; however, has been “relaxed.”  Large employers with 100 or more full time employees and equivalents will be required to offer coverage to only 70 percent or their full-time employees and dependents.  The original requirement was 95 percent.  In 2016, the 95 percent requirement comes back into effect and employers with 50 or more full-time employees and equivalents must comply.

Despite this “relaxed” requirement these larger, large employers will be subject to penalty for failing to offer full-time employees coverage or offering coverage that does not meet the law’s requirements.

 

1.  Large Employer Mandate Penalty

In 2015, if a large employer fails to offer minimum essential coverage to a sufficient number of its full-time employees (70 percent), the employer can be subject to a $2,000 per year penalty for each full-time employee minus the first 80 full-time employees (this IRS discount reverts to the law’s original “minus the first 30” in 2016).  This penalty applies to all full-time employees if even just one full-time employee receives subsidized coverage from a health insurance exchange.

Furthermore, if a large employer offers coverage that does not meet the law’s requirements (fails to meet minimum value or is unaffordable) it may be penalized the lesser of:

•   $3,000 times each employee that goes to an exchange and receives subsidized coverage (because the employer’s offer is unaffordable or does not meet minimum value); or

•   $2,000 times all full-time employees (minus the first 80 full-time employees in 2015 and minus the first 30 in 2016 and beyond).

This penalty is triggered when a full time employee goes to the exchange and is offered subsidized coverage because the employer’s plan does not meet the law’s requirements as discussed above.  Please note that the penalties above are indexed for future years and will increase.

 

2.  ACA Health Insurance Market Reform $100/Day/Violation Self-Reporting Excise Taxes

Besides the more well-known employer mandate tax penalty there are other taxes that employers should understand.  The ACA imposes many health insurance market reforms (“Market Reforms”) that improve coverage for consumers.  If an employer sponsored group health benefit plan fails to implement these Market Reforms they are subject to a self-reporting excise tax.   The Market Reforms were part of the law enacted in 2010.  They were implemented on a rolling basis from 2010 – 2014 and most are effective now.

In fact, the excise taxes now in effect are potentially more significant than the large employer mandate penalties. The ACA imposes an excise tax of $100 per day per affected individual for certain violations.  Calculated annually, the total potential excise tax with respect to a single individual for a continuous violation of a single requirement could be $36,500—which is far greater than the annual pay or play penalty per individual.  The excise tax applies to the following Market Reforms (Note: some market reforms do not apply to grandfathered plans):

•   No lifetime or annual limits on essential health benefits

•   No preexisting condition exclusions

•   No rescissions of coverage

•   Coverage of preventive health services (not applicable to grandfathered plans)

•   Extension of dependent coverage until age 26

•   No preexisting condition exclusions

•   No discrimination against individual participants and beneficiaries based on health status

•   No discrimination in health care providers (not applicable to grandfathered plans)

•   Cost-sharing limitations on essential health benefits (not applicable to grandfathered plans)

•   No waiting periods in excess of 90 days

•   Coverage for individuals participating in approved clinical trials (not applicable to grandfathered plans)

•   Periodic disclosures required in summary of benefits and coverage

•   Health plan reporting requirements

•   No discrimination in favor of highly compensated individuals (delayed for fully-insured plans until regulations issued and not applicable to fully-insured Grandfathered plans)

•   Health plan claim and appeals protections (additional independent medical review requirements not applicable to grandfathered plans)

•   Patient protections, including the selection of primary care provider, coverage of emergency services, and access to pediatric, obstetrical and gynecological care providers (not applicable to grandfathered plans)

 

a.  Exceptions to the Excise Tax Rules

     There are some exceptions to the excise tax. The tax may not be applicable if an employer that is liable for the tax can demonstrate that it did not know that there was a compliance failure.  Employers are, however, required to exercise reasonable diligence to determine whether a compliance failure exists.

 

     Likewise, the tax may not apply if an employer can demonstrate that a compliance failure was due to reasonable cause rather than willful neglect and was corrected within 30 days after the employer knew or should have known about the failure.  Please note that “reasonable cause” and “willful neglect” are not yet explicitly defined.

 

b.  Minimum and Maximum Penalties

     The law sets the minimum and maximum amount of excise taxes.  The minimum excise tax for a compliance failure after notice is generally $2,500.  The minimum excise tax is increased to $15,000 if the violations are more than de minimis.  The maximum excise tax for “unintentional failures” for a single employer plan is the lesser of 10 percent of the amount paid during the preceding tax year by the employer for group health plans, or $500,000.

 

c.  Timing of Self Reporting

Any entity liable for the excise taxes must report this tax and file Form 8928 (Return of Excise Taxes under Chapter 43 of the Internal Revenue Code).  Generally, Form 8928 must be filed on or before the due date for the employer’s federal income tax return.  Failure to timely file this form can result in the assessment of additional penalties and interest.

 

3.  IRS Reporting Penalties

The Trade Preferences Extension Act of 2015 (“Trade Act”) was signed into law by President Obama on June 29, 2015 doubles the potential penalties for employers and insurers that fail to comply with the ACA’s reporting requirements that start in early 2016.

 

a.  ACA Coverage Reporting

Under the ACA, employers with 50 or more full-time employees and equivalents are required to file annual reports with the IRS stating whether the employer offered health benefits coverage to full-time employees and dependents during the prior year and furnish this information to full-time employees as well.  Employers with self-insured plans and insurers are also required file reports with the IRS and furnish this information to covered individuals as well.

 

     The reporting provides information necessary for the IRS to enforce the ACA individual and large employer mandates.  The data year for the reporting is 2015 and the reports are to be filed and furnished

     in early 2016 (WGA members may view our webinar on the reporting requirements here: http://bitly.com/acareporting)

 

     The penalty for failing to file the required information return was increased by the Trade Act from $100 per return to $250 per return.  The annual cap on penalties was doubled by the Trade Act from $1,500,000 to $3,000,000.

 

     The IRS is providing short-term relief from penalties for those entities that can demonstrate good faith efforts to comply with the ACA reporting requirements; however, the penalty relief only relates to incorrect or incomplete information reported.  There is no relief for failing to timely file or furnish statements.

 

b.  W-2 and 1099-series Reporting

     The Trade Act also modifies the penalties associated with failing file W-2s, 1099-R, and 1099-MISC.  The basic penalty for failure to file or furnish a correct information return or payee statement will more than double from $100 to $250, and the standard annual penalty cap will double from $1.5 million to $3 million.  If the failure relates to both an information return and a payee statement, the penalties are doubled ($500 per statement and a $6 million cap).  These penalties go into effect in 2016 (applicable to returns and statements required to be filed after December 31, 2015).

 

If you are interested in learning more about the Affordable Care Act, download the Ag Employer’s Guide to Health Care Reform available to all WGA members through our store.  You can find it here:  www.bitly.com/aghcrguide.  For more information about this article or if you have other questions about health care reform contact our Health Care Reform team today at [email protected] or 800-333-4WGA.  Write to Dear Jon at [email protected].  For more information and resources on Health Care Reform, visit www.wgat.com/health-care-reform.

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School Gardens Continue to Flourish

August 2nd, 2015

By Sabrina Blair

 

Western Growers Foundation has now proudly funded more than 1,000 school gardens throughout Arizona and California.  We estimate that approximately 558,800 students have been exposed to fresh fruits and vegetables as a result of these school gardens and that number continues to grow each year as new students are introduced to the garden.

WGF’s mission is not only to create, but to sustain fruit and vegetable gardens in every willing Arizona and California school.  In our steps toward sustainability, we allow schools to reapply for our grants because we understand the ongoing cost of maintenance to keep these gardens growing and flourishing.  Additionally, we regularly survey our schools to check on the status of the garden, find out how they are using grant funds, and what they are growing and teaching in the garden.  We also want to hear of their successes and challenges.

In conjunction with these practices, we conduct a survey of preschools and child care centers throughout California one year after they receive a grant from WGF.  The schools are asked to provide feedback on their experiences in the garden including best practices.  Of the 53 respondent schools so far, all of them reported using the garden to discuss nutrition and the benefits of eating fresh fruits and vegetables.  They also reported using the garden to supplement school-provided meals or snacks, and to conduct cooking and taste testing activities.

A teacher from Pine Tree Preschool in Los Angeles reported that a kale salad they made at school was a big hit with students.  One student went home and told his mom that he wanted to go to the grocery store and purchase some kale to make a salad like the one made during cooking class.  The salad was served with dinner that night and the whole family enjoyed it.

The survey results also proved that the most popular commodities in these school gardens are tomatoes and strawberries.  More than 65 percent of schools grew tomatoes and 51 percent of them grew strawberries.  Tomatoes and strawberries were also the most liked by students followed by lettuce, carrots and cucumber.

To learn more about their best practices as well as tips on volunteer recruiting and garden maintenance, visit www.csgn.org/best-practices-pre-k.

We also recently checked in with a few K-12 grant recipient schools in California and filmed our visits.  Hear from these students and teachers about their experiences and the importance of school gardens by viewing our new video available at www.csgn.org/california.

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Western Growers’ COMPENSATION SURVEY More Info; More Participants

August 1st, 2015

With 9 percent more participants and the data becoming more robust, the Western Growers HR Practices and Compensation Surveys are a must-have for both large and small companies doing business in the fresh produce industry.

Karen Timmins, WG senior vice president of human resources, said that with 53 job titles defined, classified and analyzed from CEO to field-level supervision, the surveys give the ag industry professionals responsible for pay decisions a clear picture of the general pay practices of their colleagues.  “Anyone who doesn’t want to pay too much or pay too little, for a particular position, would be smart to read these reports.”

Fran Mueseler, a certified compensation specialist and CEO of PeopleMatters Compensation Resources LLC, compiles the data for Western Growers as an independent outside third party so that no member of the WG staff has individual access to the raw data.  Timmins and the rest of the WG staff only see the final survey results, the same as all participants.  This year, Mueseler said the number of participants—96 companies—has allowed for greater grouping of companies by county in several areas.  Timmins said this gives readers of the report not only trends in the industry, but trends in their specific agricultural region.

The PeopleMatters executive noted a few trends occurring in pay practices for produce executives, including the use of incentive and bonus pay.  Mueseler noted there is a difference between a bonus and incentive pay.  “A bonus is like manna from heaven.  It is an after-the-fact reward or payment based on the performance of an individual or the company’s success.  Conversely, an incentive is any form of variable payment tied to performance.  Incentives are contrasted with bonuses in that performance goals for incentives are predetermined at the beginning of the performance period, and the employee knows what they need to do in order to earn the incentive.”

The 2014 data showed that 30 percent of the survey participants have formalized their variable pay structure.  Incentive or bonus can represent a significant percentage of an employee’s total annual cash compensation, especially at the senior management level.  CEOs, on average, had an incentive earning opportunity target of 56 percent of base pay.  CEOs at the companies participating in the survey were actually paid an average of 48 percent of annual base pay.

Mueseler said the produce industry’s adoption of incentive-based salary packages follows a trend in business that tends to cut across all industries.  She theorized that the agricultural industry was a little bit slower in adopting this concept because there are uncontrollable outside factors that can greatly influence individual performance, with weather being the most significant outside influence.  Good or bad, it can greatly impact the bottom line and performance of everyone from the harvesting crew supervisor to the CEO.

The HR Practices Survey, which is separate from the Compensation survey, reports on HR practices and policies, including paid time off, health plan premiums, health care reform, retirement plans, incentive plan structure, and long-term incentive plan offerings.  The survey analyzes HMO and PPO health plan premiums.  Because the Affordable Care Act (ACA) rules are based on the number of employees a firm has, the data was parsed using those same parameters.

The analysis shows that all size employers—from fewer than 50 employees to 500+ employees—absorb about the same percent of the monthly premium for both HMO and PPO coverage for employee only.  However, larger employers are more generous when it comes to adding family members to the policy.  Larger employers (500+ employees) absorb about 20 percent more of the premium for PPO plan family coverage.

This is the sixth year that Western Growers has produced the Compensation and HR Practices surveys.  Survey participation has more than quadrupled since the first year.  “We have always told the participants that we would not release their names, as participating companies, until we reached 100 companies.  We didn’t quite reach it this year so we will honor that commitment,” said Timmins.  It is important to note the participating companies’ data will remain in aggregate, it has and will always remain impossible to identify individual pay information.

However, she looks forward to the completion of the next survey a year from now when the 100 company threshold will most likely be topped and participation can be publicized.  In other industries, Timmins said publicity tends to increase participation.  “Once companies see that their neighbors are sharing compensation data, they do it as well.  In the high-tech industry, they basically get 100 percent participation.  All the companies participate and benefit from the data.”

Timmins said increased participation builds a more robust database, which makes the reporting more statistically sound.  Strong data allows companies to better hone their compensation packages and make sure they are positioned where they want to be in relation to their competitors.

The WG executive said the number of member companies that have participated in at least one of the two surveys continues to increase.  The surveys are detailed and, while it isn’t a monumental task to complete them, it does take a concerted and committed effort.  She said that about two-thirds of the companies repeat the process each year with the other third participating less than annually.  WG continues to work with their website programmers to facilitate the ease of completing the survey, so as to encourage more member companies to participate.  Returning participants to the survey are equally important as attracting new participants.  Mueseler indicated that when repeat participation achieves a critical mass, we will be able to report on year-over-year trends in pay and H.R. Practices.

All participants receive, free of charge, the survey results for the survey(s) they have completed.  Western Growers members who did not participate in the survey(s) can purchase the survey results.  The cost for both reports is $1,800.  The Compensation survey results can be purchased separately for $1,500, and the HR Practices survey for $500.  Members interested in purchasing the survey results or participating in an advisory group can contact Karen Timmins, Western Growers senior vice president of human resources, at 949-885-2295 or [email protected].

The advisory group, made up of a group of HR professionals who participate in the survey, is an important element in the ongoing development and improvement of the survey.  Timmins said qualified advisory board members do not have to be current survey participants, but they do have to commit to future participation.  The group meets with Mueseler and Timmins at least three times a year via conference call to help improve the survey.  “We rely on them to review our job descriptions to ensure a match to what they know of the industry,” said Timmins.  “We get feedback for additional jobs to add to the survey, and, at their suggestion, we add questions they deem best and appropriate.  Finally, we ask them to generate interest in survey participation among their contacts in ag.”

Posted in August 2015 Issue | Comments Closed

Labor Commissioner — 10-Hour Work Day Equals 30 Hours Paid Sick Leave

August 21st, 2015

The Labor Commissioner’s office recently issued an opinion letter regarding California’s new paid sick leave (PSL) law. The opinion letter addresses questions regarding how employers should provide PSL to employees who don’t work a traditional 8-hour/day schedule. The letter has special significance for agricultural employers and their employees who regularly work 10 or more hours in a day.

According to the opinion letter, companies using the lump-sum approach should provide employees who regularly work 10-hour shifts with 30 hours of leave (i.e., three days at 10 hours per day) up front instead of 24 hours of leave. For these employees, a “day” is not limited to a maximum of eight hours. This is consistent with the counsel that most ag employment practitioners have been giving out of an abundance of caution.

The letter also addresses employees who work less than a regular eight hour day (e.g. a six-hour day). The labor commissioner interprets the PSL law to require that “the ‘full amount of leave’ the employer would need to front load for these employees would be a minimum of 24 hours (not three six-hour days).” The letter goes on to say that if the employer were to only front load three six hour days (i.e. 18 hours), it would “undercut the mandatory minimum standard of 24 hours for these employees.”

The commissioner also addresses the accrual method for employees working such shifts. For an employee that has accrued 30 hours or more of PSL in his or her leave bank, and regularly works 10 hours per day, “the employee must be able to use and be paid for the full three days at 10 hours per day.” The employer cannot limit the employee’s use to 24 hours. The letter says that doing so would “undercut the Legislature’s intent that employees be entitled to take a minimum of three days of paid sick leave, without losing any compensation they would normally earn during their regular working hours.”

Moreover, for part-time employees working regular six-hour shifts, the employer cannot “limit the employee’s use of accrued PSL to only three days.” In other words, the employer cannot limit the use of PSL to three six-hour days or 18 hours, but must allow the employee to use 24 hours. “To limit a part-time worker who works four hour days to only 12 hours of paid sick leave, based on a ‘three day’ standard, disregards the statutory reference to a minimum of 24 hours and would defeat the legislative objective of providing low wage workers with at least a minimum of 24 hours of paid sick leave per year,” the Labor Commissioner’s office said.

The letter concludes noting “that the specifications as to the amount of paid sick leave that must be provided by an employer, and which the employee must be allowed to use in a year, are, by express definition in the statute, minimums. An employer is always free to elect to provide sick leave in greater amounts, and the legislative and public policy intent underlying the statute reflects that it is often in the best interests of both the employer and the employee to do so.”

For more information, contact Jason Resnick at (949) 885-2253. 

 

 

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Updated Information for ALRB Public Hearings on Proposed Access Rules

August 25th, 2015

The ALRB has updated the information it issued with regard to the public hearings it is holding on a proposed rule that would permit ALRB staff to visit agricultural worksites for the purpose of educating farmworkers and supervisors about their rights and responsibilities under Agricultural Labor Relations Act. Please note the following changes to the information that was included in the August 18th edition of Spotlight:

Location Change

 Public hearings will be held in Fresno, Salinas and Santa Maria

  • Oxnard hearing has been cancelled
  • Salinas location has changed and will now be held at the Salinas Sports Complex (details below)

Time Change

Each hearing will be held from 1:00 p.m. to 3:00 p.m., recess from 3:00 p.m. to 4:30 p.m., and resume from 4:30 p.m. to 7:00 p.m. until such time that all public testimony has been received. The public is invited to present your input at either session. It is not necessary to be present during the entire hearing.

 Background

 ALRB staff are not currently authorized to visit agricultural work sites for the purposes of conducting worker education sessions, unless ordered by the ALRB as a remedy to address unfair labor practice charges. At the initial meeting of the ALRB Ad Hoc Labor-Management Committee, members representing management, including Western Growers Vice President and General Counsel Jason Resnick, expressed serious concerns about the proposal including:

·         How would employers be selected for worker education, and wouldn’t employees assume that the employer had been selected because it had engaged in misconduct or that ALRB staff were encouraging workers to unionize?

·         Who will be conducting the education sessions? If conducted by staff from the ALRB general counsel’s office or regional offices, they have proven to be pro-union and not neutral as mandated by the Act.

·         Why does this agency in particular require worksite access to educate workers about their rights and responsibilities when other agencies are not afforded similar access?

·         With technology, social media and alternative effective channels of communication widely available to all employee populations today, why is it appropriate or desirable to impose training on employers and employees at the worksite?

HEARING LOCATIONS *(Please note: Each facility will accommodate 150-200 persons)

WEDNESDAY, SEPTEMBER 9, 2015 – Fresno, California
Doubletree by Hilton Fresno Convention Center
2233 Ventura Street, Salon C
Fresno, California 93721
(559) 268-1000

1:00 p.m. – 3:00 p.m. Public input

3:00 p.m. – 4:30 p.m. Recess

4:30 p.m. – 7:00 p.m. Public input

MONDAY, SEPTEMBER 14, 2015 – Salinas, California
Salinas Sports Complex

1034 North Main St.
Salinas, California 93906
(831) 424-8039

1:00 p.m. – 3:00 p.m. Public input

3:00 p.m. – 4:30 p.m. Recess

4:30 p.m. – 7:00 p.m. Public input

TUESDAY, SEPTEMBER 15, 2015 – Santa Maria, California
Santa Maria Inn
801 South Broadway
Santa Maria, California 93454
(805) 628-7777

1:00 p.m. – 3:00 p.m. Public input

3:00 p.m. – 4:30 p.m. Recess

4:30 p.m. – 7:00 p.m. Public input

Please contact Jason Resnick if you plan to attend one or more of the hearings. 

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California Supreme Court to Review Gerawan Decision

August 25th, 2015

The California Supreme Court has granted review of the decision of the Fifth District Court of Appeal in Gerawan Farming, Inc. v. Agricultural Labor Relations Board. The case will consider whether the “Mandatory Mediation and Conciliation” (MMC) law is unconstitutional and, if not, may an employer oppose a certified union’s request for referral to the MMC process by asserting that the union has “abandoned” the bargaining unit.

Western Growers anticipates that it will join with other agricultural trade associations in support of Gerawan by filing an amicus brief with the court as we have done in the past. 

The 3rd District Court of Appeal in Sacramento upheld the MMC law in 2006. But in May, the Court of Appeal in Fresno reversed a decision of the ALRB and found the MMC law unconstitutional on its face and as applied to Gerawan. The Supreme Court is now set to resolve the split between the two appellate courts and decide once and for all whether the MMC law is constitutional or not.

The legal battle between Gerawan Farming and the United Farm Workers Union and the ALRB has dragged on for about three years. The saga began when the union won an election to represent Gerawan workers in 1992, but after initial contract negotiations stalled, the union walked away from the workers. Then in 2012, the UFW returned to Gerawan claiming it still had the right to represent the workers. After several negotiation sessions, during which the UFW never made an economic proposal, the UFW asked the ALRB to invoke the MMC provisions. Enacted in 2003, the MMC law essentially forces farm employers into binding arbitration that ultimately results in a collective bargaining agreement being imposed on the employer and employees. 

Gerawan challenged the MMC order that would have resulted in a contract being forced upon it and Gerawan’s employees. Meanwhile Gerawan’s employees petitioned the ALRB for a new election to decertify the union. After ALRB officials unsuccessfully attempted to thwart the decertification election, an election was held in November 2013 where thousands of workers are believed to have turned out to force the UFW away, but the ALRB has impounded the ballots. After hearing months of witness testimony, an administrative law judge will eventually determine whether the union’s alleged election challenges and unfair labor practice charges against Gerawan tainted the election or whether the workers will finally have their ballots counted.

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Feds Sponsoring Clean Water Rule Webinar on August 27

August 25th, 2015

The Environmental Protection Agency and the Army Corp of Engineers will hold a webinar on Thursday, August 27 from 1:00 to 2:00 p.m. EDT (4:00 to 5:00 p.m. PDT) to provide more details about the final Clean Water Rule. This webinar will provide a review of the final rule, answer some commonly asked questions, and discuss what to expect as the rule is implemented.  

The EPA and the Army Corp signed the Clean Water Rule on May 27, 2015, to protect the streams and wetlands that form the foundation of the nation’s water resources from pollution and degradation. The final rule is effective August 28, 2015.

Western Growers identified a number of serious concerns when the proposed rule was issued. Although the final iteration addressed some of our concerns, we continue to oppose the now-final rule and hope Congress intervenes to at least delay implementation.

For more information on the webinar and Clean Water Rule visit: www.epa.gov/cleanwaterrule and http://www.army.mil/asacw.

For more information on Western Growers’ positon, please contact Dennis Nuxoll at (202) 296-0191

REGISTER FOR THE WEBINAR

WEBINAR FLYER

CLEAN WATER RULE INFO PAGE

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CDFA Announces Vacancies on the Fertilizer Inspection Advisory Board

August 25th, 2015

Interested in serving on CDFA’s Fertilizer Inspection Board?  CDFA has announced three board vacancies they are looking to fill.

Individuals interested in being considered for a board appointment should send a brief resume by August 31, 2015 to the California Department of Food and Agriculture – Feed, Fertilizer, and Livestock Drugs Regulatory Services Branch, 1220 N Street, Sacramento, CA 95814, Attn: Marilyn Boehnke or  via email [email protected].

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Three Techniques to Lower Workers Compensation Costs

August 27th, 2015

There are many steps an employer can take to reduce its workers compensation premium costs.  For example, safety training educates workers avoid potential accidents and injuries. Worksite inspections help identify hazardous conditions that need to be corrected. There are other actions that a business can undertake that will also significantly decrease premium costs

Companies focused on safety should consider a “loss sensitive” insurance policy. These types of policies are less expensive because the company shoulders more of the risk. A company may choose a higher deductible, sometimes as high as $100,000 or more which would require it to pays claims up t that amount. In return, their premium is lowered significantly. Combined with solid training and safety programs, a company can usually save thousands of dollars in up-front premium costs.  

Companies can also review classification codes. Often, companies use the same class codes year after year. However, as the company evolves, class codes may need to change. As the company gets better equipment and eliminates certain job functions, it is appropriate to update class codes for each and every job. Here’s an example: an agricultural client raised cattle for many years and had some of its payroll applied to a livestock handling classification. During a review of company operations, we discovered that the company discontinued the livestock operation several years ago, but had continued to report the payroll under the livestock handling classification. Removing that classification reduced their premium significantly.

Finally, aggressive claims management can have a big impact on your experience mod, and ultimately your premium. Many claims get opened and high reserve levels are set even though little or nothing has been done on the claim. In some cases, claims remain open even though little or no dollars are spent on them. However, the claim reserves count against loss experience and have a negative impact on the experience mod. Working closely with adjustors can help minimize and close claims quickly to mitigate the impact they have on your loss experience. 

A proactive approach to your workers compensation program can have a significant impact on your premiums. Western Growers Insurance Services has successfully helped many of our clients lower their costs by helping them navigate these issues. If your company is need of a workers’ comp review or would like more information, contact Greg Nelson at (949) 885-2287.

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Court Denies Water Agencies’ Restraining Order Request

August 27th, 2015

Yesterday, the United States Eastern District Court of California ruled against two water districts that requested a temporary restraining order to prevent 88,000 acre-feet of water from being flushed into the Pacific Ocean. The San Luis & Delta-Mendota Water Authority (SLDMWA) and Westlands Water District (WWD) filed the request for a temporary restraining order (TRO) following an announcement by the Bureau of Reclamation to release water from Trinity Reservoir to protect Klamath River salmon.

Similar to a ruling he made last year, the judge denied the TRO saying he thought it was unlikely the agencies would win their case, an essential element to granting a restraining order, and added the protection of the salmon outweighed the needs of farmers.

During the four years of this drought, more than 200,000 acre-feet of water have been released to the ocean for fishery purposes. The 88,000 acre- feet being released this year (28 billion gallons) is enough to provide water to more than 175 families for one year.    

Five water agencies, including SLDMWA and WWD, issued a press release bemoaning the ruling saying in part, “At a time when record fallowing of agricultural land is on the rise, community wells are drying up, and more than 95 percent of the State is experiencing drought conditions, today’s decision is one more disappointment from achieving a reasonable balance for all Californians who depend upon a reliable water supply.”

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Fox Business Host, Stuart Varney, Heads Annual Meeting’s PAC Lunch

August 27th, 2015

Despite world markets largely rebounding yesterday and today from record selloffs this week, both the U.S. and global economies sit precariously on the precipice while the investors wait to see how things shake out with China and Europe. Many see the global economy heading for troubled waters; however, there are optimists out there.

One of those optimists is Fox Business commentator Stuart Varney. Varney hosts the “Varney & Co.” show that airs every weekday from 9 a.m. to noon (EDT) on the Fox Business Network and will be the featured speaker at the Political Action Committee (PAC) Lunch during the 90th Annual Meeting this November in San Diego.

With nearly 40 years of economic journalistic experience behind him, Varney expects to see a dramatic jump in the America economy over the next several years.  “I think we are about to see 4-5 percent growth on an annual basis,” he told WG&S magazine in mid-August.  “We are going to see a change in policy as the Obama (economic) model is cast aside and a more Reaganite philosophy is adopted with smaller government and lower tax rates.”

The British-born commentator and London School of Economics graduate predicates his belief on Republicans winning the White House in the November 2016 election.  He is confident that will happen and believes the stock market will rally in 2016 in anticipation of that election result.

The September issue of the WG&S magazine takes a more detailed look at Varney. But if you truly want to hear what he has to say about the economy and how the presidential election will affect the U.S. and the rest of the world, you should plan on attending the PAC Lunch on November 9. As an attendee you will hear from him directly and have the opportunity to pose your own question.

CLICK HERE to register for the Annual Meeting and to sign up for the PAC Lunch (NOT INCLUDED in your Annual Meeting registration)

CLICK HERE to book your room

For more questions on the PAC LUNCH or on the Annual Meeting contact Randy Hause at (949) 885-2265. 

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Renew Your WG Membership and Stay Connected

August 6th, 2015

Western Growers is your connection to success. From government affairs to health care and human resources needs to innovation, we exist to support you.

5 Reasons to Renew Your Membership Today

  1. To make sure your voice is heard. Our federal and state government relations team interacts with decision makers to address water, immigration, environment, crop protection, food safety and other issues that affect your bottom line.
  2. To access ag-specific HR and legal training, compensation data and more. We have staff who are expertly trained that can come to you, a free Legal Hotline that gives your staff one-on-one access to top-notch legal and regulatory advice, and we maintain products like the Personnel Procedures Manual and HR Practices and Compensation Surveys to keep you in compliance and provide regional, ag-specific compensation data to find and keep top industry talent.
  3. To obtain health benefits built for ag employees and business insurance to protect your company. Western Growers Insurance Services (WGIS) is a full-service risk-management agency that provides products for your workers’ unique needs, when they need it and at a price that works for you and them.
  4. To stay on the leading edge of ag innovation. Through our Science & Technology team, you have access to commodity-specific food safety guidelines, scientific consultations for your company’s needs and monthly Lunch and Learn webinars to keep you updated about the latest technology and industry practices.
  5. To inspire the next generation of farmers and consumers. Through Western Growers Foundation, you support our mission to plant a fruit and vegetable garden in every willing Arizona and California school.

Renew your membership today!

Go to www.wga.com/renewals or send your payment with the enclosed invoice. For questions regarding your invoice, please contact Robert Steinmann at 949-885-2266.

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