Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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STATE FUND |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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General Revenue Fund |
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Revenues |
- 0 - |
- 0 - |
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Expenditures |
Potential increase |
Potential increase |
Potential increase |
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Dairy Industry Fund (Fund
4R2) |
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Revenues |
Potential gain |
Potential gain |
Potential gain |
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Expenditures |
Potential increase |
Potential increase |
Potential increase |
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Note: The state
fiscal year is July 1 through June 30.
For example, FY 2007 is July 1, 2006 – June 30, 2007.
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This
bill would allow Grade A milk producers to give or sell raw milk under certain
conditions. One such requirement would
be that producers obtain a valid raw milk retailer license to sell raw milk,
the fee for which is currently set at $15 annually by administrative rule
(although there are currently no active licenses). As such, the Dairy Industry Fund (Fund 4R2) may realize a gain in
revenue from license fees.
·
There
is likely to be an increase in expenditures from the Dairy Industry Fund (Fund
4R2) or the GRF, both of which fund the Department of Agriculture's Dairy
Division, to compensate and reimburse two additional Milk Sanitation Board
members (estimated to be approximately $3,600), write rules, carry out
administrative functions such as licensing, and perform inspections. The exact amount of the increase to carry
out administrative functions and perform inspections would be dependent on how
many producers would obtain raw milk retailer licenses.
·
No
direct fiscal effect on political subdivisions.
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Background
Current law prohibits the
sale of raw milk from cows or goats directly to consumers. However, Ohio law permits dairy farmers to
sell milk directly to consumers, but the farmer must meet pasteurization and
other requirements and be licensed and inspected as a milk producer.
Changes made by the bill
The bill would allow Grade A
milk producers to give, sell, offer for sale, or expose for sale raw milk to
the ultimate consumer as long as the producer:
(1) holds a valid raw milk retailer license, (2) makes sales on the
premises where the milk is produced, (3) displays a conspicuous notice that the
product is not pasteurized and may contain disease-producing organisms, and (4)
ensures that all final delivery containers used for the sale of raw milk to the
consumer have a label with the disclaimer that the product has not been
pasteurized and may contain disease-producing organisms. The final sale containers must also have
been filled, capped, and stored properly.
Current law allows the
Director of Agriculture to adopt rules regarding the regulation of dairy
products and related licenses.
Corresponding to the bill providing for the sale of raw milk at milk
producer facilities, the bill requires the Director of Agriculture to adopt
additional rules governing the production, labeling, inspection, and sampling
of raw milk that is not to be pasteurized prior to gift, sale, offer for sale,
or exposure to the ultimate consumer.
These rules are to be no more stringent than the Grade A pasteurized
milk ordinance of the Food and Drug Administration to the extent those
provisions do not conflict with the laws of this state. The bill also allows the Director to adopt
rules that regulate the required notices and procedures for hand-filling,
hand-capping, and on-premises storage of raw milk in containers used for the
sale of raw milk to the consumer. The
bill adds a provision that the statutes regarding raw milk do not apply to an
individual who owns an animal for the purpose of personal consumption of the
dairy products that animal produces.
Finally, the bill makes
changes to the Milk Sanitation Board by adding two members, which are to be two
raw milk retailers and by creating a standing subcommittee of the Milk
Sanitation Board to review any raw milk issues.
State Fiscal Effects
Milk sanitation board member
costs
Under current law unchanged
by the bill, the Department of Agriculture must provide the Milk Sanitation
Board with the personnel, office space, and incidentals necessary for it to
perform its duties and exercise its powers.
Members are compensated in an amount determined by division (J) of
section 124.15 of the Revised Code and are reimbursed for actual and necessary
expenses incurred in the performance of their duties. The Department of Agriculture reported that in recent years, each
member of the Milk Sanitation Board, which meets an average of four times per
year, has been compensated at approximately $1,000 per year. Assuming the Board continues to meet four
times per year (and the additional members attend all meetings) and are
reimbursed an average of $200 per member per meeting for actual and necessary
expenses, board member compensation costs would increase by approximately $2,000
per fiscal year and reimbursements would increase by up to $1,600 per fiscal
year. In sum, the Dairy Inspection Fund
(Fund 4R2) would likely experience a $3,600 increase in expenditures per fiscal
year as a result of the addition of two members to the Milk Sanitation Board if
the Board continues to meet four times per year.
Raw milk retailer licensing
As the bill requires a valid
raw milk retailer license to sell raw milk, the Dairy Industry Fund (Fund 4R2)
may realize a gain in revenue from license fees. The Department of Agriculture is uncertain of the number of milk
producers that would opt to sell raw milk on their premises, but such producers
would most likely only comprise a small niche of producers. For example, Pennsylvania licenses approximately
40 farms to sell raw milk according to a December 2004 Pittsburgh
Post-Gazette article. Pennsylvania
is one of 28 states that allow for the sale of raw milk for human
consumption. There are over 3,600
licensed Grade A milk producers in Ohio, which includes tank trucks and other
transporters, processors, and transfer and receiving stations.
Though there are no active
raw milk retailer licenses,[1]
the annual license fee for the raw milk retailer license is currently set by
administrative rule at $15. This amount
is the same charged for many other dairy-industry licenses, such as those for
milk dealers, milk haulers, milk processors, milk producers, and milk weighers,
samplers, and testers. As noted above,
current law only authorizes raw milk to be given or sold by persons who, prior
to 1965, were engaged continuously in the business of selling raw milk directly
to the ultimate consumer. There is
likely to be a gain in revenue to Dairy Industry Fund (Fund 4R2) from the
issuance of new raw milk retailer licenses corresponding to the number of
producers that choose to go obtain such a license.
Consequently, there is
likely to be an increase in expenditures from the Dairy Industry Fund (Fund
4R2) and the GRF, both of which fund the Department of Agriculture's Dairy
Division, to write rules, carry out administrative functions such as licensing,
and perform inspections, as the Department does not currently engage in these
activities in regard to raw milk retailers.
The amount of the increase would be dependent on how many producers
would obtain raw milk retailer licenses.
LSC fiscal staff: Jason Phillips, Budget Analyst
[1] A March 2006 Cleveland Plain Dealer article noted that the last dairy farm in Ohio that was grandfathered into selling raw milk to consumers, Young's Dairy in Clark County, abandoned its license in 2003 after a salmonella outbreak in Ohio. However, the outbreak was not traced to Young's Dairy products.