Trump budget ‘devastating' to winegrape farming: California ag secty.

As California government is preparing to renew its mechanism for fighting climate change and crafting a new budget, Sacramento is facing new federal policy and funding directives that are cutting into farming-related environmental and social justice goals, said the Golden State's agriculture secretary at a wine industry seminar in Napa.

President Trump's proposed budget, released May 23, would cut mandatory and discretionary U.S. Department of Agriculture spending by $11.8 billion from the fiscal 2017 budget. That proposal is 'devastating' to farming, said Karen Ross, head of the California Department of Food and Agriculture, at the Vineyard Economic Seminar on May 24.

'It eliminates so many things that matter to agriculture,' Ross said.

That includes elimination of exports-oriented Market Access and Foreign Market Development programs, totaling $234.5 million a year; the Specialty Crop Block Grant Program; and the Regional Conservation Partnership Program. Also targeted by the administration's budget is $28.6 billion trimmed from the federal crop insurance program over a decade.

There's also worry about possible cuts to the USDA's National Agricultural Statistics Service, which produces the annual California Grape Crush Report. The release of that document each February is highly anticipated in the wine business, as it provides a benchmark for contract negotiations between growers and vintners.

Any cuts to agricultural-research programs would also affect the industry, she said.

'We know as artful as we are at making wine, everything we do is based on science,' Ross said.

Congress will have its own say on funding for agriculture during the annual farm bill debate.

Meanwhile, legislators in Sacramento work toward getting enough votes to extend the state's greenhouse-gas emissions cap-and-trade program by the end of the fiscal year June 30. That program requires companies to purchase permits to release such gases.

'If we don't use this as one of several market-based programs, including all the incentive dollars we're providing to industry to adapt to a low-carbon economy, then the only choices will be much more prescriptive,' Ross said.

Agriculture will be a key player in achieving carbon-sequestration targets put forward in the Paris climate-change accords, Ross said. Such targets are reached when greenhouse gases such as carbon dioxide are pulled from the air and stored, such as through plant photosynthesis.

But President Trump on June 1 said he will formally pull the U.S. out of the Paris pact.

As the federal budget leaves questions about funding for conservation projects, the CDFA is allocating cap-and-trade revenues to purchase conservation easements on farmland suitable for carbon sequestration, Ross said. Last year, $40 million in grants for farmland conservation were distributed, she said.

Another way the CDFA policy is fighting emissions is its new Healthy Soils Initiative, Ross said. That program uses USDA standards for low or minimal tilling of soil, creating buffer zones around waterways, limiting grazing and controlling synthetic fertilizers known to contaminate drinking water with arsenic and nitrates.

The first projects through the initiative are set to roll out this summer, Ross said.

Another effort is the 4-year-old Climate Smart Agriculture program, which has given out 500 grants totaling $600 million to fund water and energy conservation projects, Ross said.

'Wine has been an early leader in this,' she said.

Also part of this is funding dairy manure biodigesters to capture greenhouse gases and create energy revenue for farmers.

Also top of mind for California wine business experts speaking at the Napa seminar were potential litigation coming from recent labor-related actions by the Legislature and state Supreme Court.

Three major actions on labor are affecting agriculture in the state were new minimum-wage rules, which don't exclude agriculture at full rollout over the next few years; rules for rest periods; and tighter control of piece-rate compensation.

Piece-rate rules, effective Jan. 1, 2016, were promoted as encouraging high productivity among ag workers, and the wine business has been using such pay largely at harvest and pruning, said Greg Walsh, co-managing director of Napa-based law firm Dickenson, Peatman & Fogarty.

'As wages have been growing and exemptions have been dying, piece rate is dying a slow and painful death,' he said.

Nails in piece-rate's coffin came from the Legislature, which said employers need to also pay for nonproductive time, Walsh said. That includes heat-recovery periods, which are mandated shade-and-water breaks on hot days, and transportation between properties.

And this additional compensation is retroactive. But the law allowed for employers to settle up by paying 4 percent on top of what was paid piece rate and getting on a state registry, and many employers did so last year, Walsh said. Now there are lawsuits from growers, alleging this retroactive requirement is unconstitutional, and from farmworkers who claim the 4 percent isn't enough.

'If the workers win, all employers who registered have put a bullseye on their backs,' Walsh said.

Compounding this liability is the state's Private Attorneys General Act (PAGA) of 2004, he said. It allows citizens to sue on behalf of labor regulators for violations. Simple mistakes or confusing representation of piece-rate pay statements could bring legal action, Walsh said.

Then on May 8 of this year, the California Supreme Court ruled on Mendoza vs. Nordstrom, relating to the longstanding state law requiring one day off in seven. The court ruled that it was a day off per calendar week but allows for workers to work more, as long as it wasn't coerced.

There are exemptions based on the nature of the work, such as the rush to get grapes into wineries at harvest, and for part-time workers under six hours a day. But what is meant by the work schedule and how each employee's situation is determined opens the door to legal action, Walsh said.

'This is the next wave of claims we'll see,' he said.

Jeff Quackenbush (jquackenbush@busjrnl.com, 707-521-4256) covers construction, commercial real estate and wine.

Correction: California is nicknamed the Golden State, and Florida is called the Sunshine State.