(a) The program shall incentivize the creation and permanency of public-serving aggregation and distribution enterprises, known as farm to community food hubs, which may be operated by a nonprofit organization, school district, county office of education, cooperative, food and agriculture-related business, or Certified B Corporation. A farm to community food hub shall do all of the following:

1. (1) Serve as an aggregator and supply chain intermediary for local or regional farms or ranches, particularly those optimizing sustainable agriculture production practices or methods and following state labor practices. The farm to community food hub shall prioritize, to the greatest extent possible, but is not limited to, serving farms or ranches that are 500 acres or less, cooperatively owned, or owned by farmers or ranchers who are socially disadvantaged, beginning, limited resource, veterans, or disabled.
2. (2) Prioritize, to the greatest extent feasible, distributing food products from the farms or ranches described in paragraph (1) to public institutions and nonprofit organizations, with primary emphasis on public schools and food banks in the region. Distribution of the food products may be contracted to a value-added intermediary, such as a produce, grain, meat, or seafood processor, if the food products are ultimately provided on a prioritized basis to public institutions or nonprofit organizations.
3. (3) Ensure that the farms and ranches with which it works comply with all laws, rules, and regulations, including labor and environmental requirements and standards.

(b) The program shall prioritize the creation of new farm to community food hubs and may be administered in two phases, as follows:

1. (1) During the first phase of the program, the office shall solicit and select proposals throughout the state to create farm to community food hubs that meet the requirements in subdivision (a), and award planning grants to selected proposals.
2. (2) During the second phase of the program, the office shall select at least three of the proposals awarded planning grants pursuant to paragraph (1) and award to those proposals development grants for capital and operating expenses of each farm to community food hub for a five-year period.

(d) Notwithstanding Section 10231.5 of the Government Code, for at least five years following the initial award of development grant funding pursuant to paragraph (2) of subdivision (b), the office shall provide an annual report on the status of the farm to community food hubs to the Legislature, in accordance with Section 9795 of the Government Code. The report shall include information on the progress of the farm to community food hubs in all of the following areas:

1. (1) Financial viability of self-sustainability.
2. (2) The number and type, with respect to size and ownership, of farms from which food products were sourced, and the volumes of food products sourced from each farm.
3. (3) The number and type of institutions served by farm to community food hubs, and the volumes of food products provided to each institution.