Wineries that stiff their grape growers could be fined, not put out of business
March 19, 2012
• Bill offers less severe penalty
• ‘Takes careful aim at the few predatory operators’
Out of the more than 2,200 wineries in California, 68 failed to pay for their grapes in the 2009-2011 period. And that could result in their being put out of business under current law.
Now the state’s winegrape growers are backing a bill to offer a less severe penalty that would allow the wineries to stay in operation while extracting payment for what’s owed.
“Nonpayment for delivered winegrapes is not a widespread problem, but when it occurs the amounts involved can be a very significant issue for the affected growers,” says John Aguirre, president of the California Association of Winegrape Growers.
Assembly Speaker pro Tempore Fiona Ma, D-San Francisco, has amended AB 907 with legislative language that the winegrape growers say will better protect them from the relatively small number of wineries that fail to pay for purchased grapes.
Currently, if the California Department of Food and Agriculture’s Market Enforcement Branch finds that a winery failed to pay a grower, or otherwise violated the Processors Law, then MEB can suspend or revoke that winery’s processors license.
“Suspension or license revocation is not the right solution for a violation under the law,” says Mr. Aguirre. “License revocation could put a winery out of business, which is often the least attractive remedy, so it makes sense to provide MEB the opportunity to levy less severe penalties, such as administrative fines.”
The problem, while involving only a small number of wineries, has added up in dollar amount. Those 68 wineries that have yet to pay for their grapes they received owe more than $10 million in nonpayment to growers, the association says.
If passed, AB 907 would provide MEB limited authority to levy an administrative fine, not to exceed $10,000, if a winery fails to pay a grower for delivered winegrapes or obstructs an investigation by MEB. The bill would also allow for fines of up to $6,000 if a winery that is required to have a processors license knowingly fails to obtain such a license.
Finally, under AB 907, if MEB determines after an investigation and administrative hearing that a winery has failed to pay for delivered grapes, then a winery can be required to post a surety bond to ensure payment to those growers for the amounts owed. This surety bond provision expands upon existing authority that allows MEB to require a winery, with a history of failure to pay, to post a surety bond to ensure payment to growers for future purchases.
“The bill takes careful aim at the few predatory operators who refuse to pay for delivered winegrapes,” says winegrape grower Brad Goehring. “If we don’t fix the Processors Law, then an unscrupulous minority who don’t pay for their grapes gain a competitive advantage over compliant wineries, and distrust and uncertainty can creep into the marketplace, resulting in unnecessary costs and burdens for all parties.”