Dairy Security Act of 2011 - Directs the Secretary of Agriculture (USDA) to establish a dairy producer margin protection program to protect dairy producer income by paying participating producers: (1) basic margin protection payments when actual dairy producer margins are less than the threshold levels for such payments, and (2) supplemental margin protection payments if purchased by a participating producer.
Makes all registering U.S. dairy producers eligible for such program.
Authorizes a producer to purchase supplemental margin protection at the time of program registration.
Directs the Secretary to establish: (1) a dairy market stabilization program for all U.S. dairy producers in order to balance the supply of milk with demand when dairy producers are experiencing low or negative operating margins, and (2) a board of directors for the program.
Requires milk handlers to reduce payments to each participating producer from whom the handler receives milk during any month in which stabilization program payment reductions are in effect.
Directs the Secretary to conduct the margin protection and stabilization programs from January 1, 2012, through December 31, 2017.
Directs the Secretary to amend each federal milk marketing order as provided for by this Act.
Eliminates the: (1) dairy product price support program, (2) the milk income loss contract program, (3) permanent price support authority for milk, and (4) the dairy export incentive program.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3062 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 3062
To establish a program for dairy producers under which producers can
offset reductions in producer income when the margin between milk
prices and feed costs is less than a specified amount, to establish a
dairy market stabilization program for producers participating in the
margin protection program, to provide for the amendment of Federal milk
marketing orders, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 23, 2011
Mr. Peterson (for himself, Mr. Simpson, Mr. Welch, Mr. Costa, Mr.
Courtney, Mr. Schrader, Mr. Larsen of Washington, and Mr. Long)
introduced the following bill; which was referred to the Committee on
Agriculture
_______________________________________________________________________
A BILL
To establish a program for dairy producers under which producers can
offset reductions in producer income when the margin between milk
prices and feed costs is less than a specified amount, to establish a
dairy market stabilization program for producers participating in the
margin protection program, to provide for the amendment of Federal milk
marketing orders, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Dairy Security Act
of 2011''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--DAIRY PRODUCER MARGIN PROTECTION AND DAIRY MARKET
STABILIZATION PROGRAMS
Sec. 101. Definitions.
Sec. 102. Calculation of average feed cost and actual dairy producer
margins.
Subtitle A--Dairy Producer Margin Protection Program
Sec. 111. Establishment of dairy producer margin protection program.
Sec. 112. Eligibility and registration of dairy producers for margin
protection program.
Sec. 113. Production history and annual production quantity of
participating dairy producers.
Sec. 114. Basic margin protection.
Sec. 115. Supplemental margin protection.
Sec. 116. Effect of failure to pay administrative fees or premiums.
Sec. 117. No payment limitations.
Subtitle B--Dairy Market Stabilization Program
Sec. 131. Establishment of dairy market stabilization program.
Sec. 132. Threshold for implementation and reduction in dairy producer
payments.
Sec. 133. Producer milk marketings information.
Sec. 134. Calculation and collection of reduced dairy producer
payments.
Sec. 135. Remitting monies to Commodity Credit Corporation.
Sec. 136. Suspension of reduced payment requirement.
Sec. 137. Audit requirements.
Sec. 138. Board of directors.
Subtitle C--Commodity Credit Corporation
Sec. 151. Use of Commodity Credit Corporation.
Subtitle D--Duration
Sec. 161. Duration.
TITLE II--FEDERAL MILK MARKETING ORDER REFORM
Sec. 201. Required amendments to Federal milk marketing orders.
Sec. 202. Amendment process.
Sec. 203. Development of effective balancing programs for milk markets.
TITLE III--REPEAL OF SUPERSEDED PROVISIONS
Sec. 301. Repeal of dairy product price support and milk income loss
contract programs.
Sec. 302. Repeal of permanent price support authority for milk.
Sec. 303. Repeal of dairy export incentive program.
Sec. 304. Effective date.
TITLE I--DAIRY PRODUCER MARGIN PROTECTION AND DAIRY MARKET
STABILIZATION PROGRAMS
SEC. 101. DEFINITIONS.
In this title:
(1) Actual dairy producer margin.--The term ``actual dairy
producer margin'' means the difference between the all-milk
price and the average feed cost, as calculated under section
102.
(2) All-milk price.--The term ``all-milk price'' means the
average price received, per hundredweight of milk, by dairy
producers for all milk sold to plants and dealers in the United
States, as reported by the National Agricultural Statistics
Service.
(3) Annual production quantity.--The term ``annual
production quantity'' means the quantity of annual milk
marketings determined for a dairy producer under section 113(b)
for each year in which the dairy producer participates in the
margin protection program.
(4) Average feed cost.--The term ``average feed cost''
means the average cost of feed used by a dairy operation to
produce a hundredweight of milk, determined under section 102
using the sum of the following:
(A) The product determined by multiplying 1.192 by
the price of corn per bushel.
(B) The product determined by multiplying 0.00817
by the price of soybean meal per ton.
(C) The product determined by multiplying 0.0152 by
the price of alfalfa hay per ton.
(5) Board of directors.--The term ``board of directors''
means the board of directors appointed by the Secretary under
section 138.
(6) Consecutive two-month period.--The term ``consecutive
two-month period'' refers to the two-month period consisting of
the months of January and February, March and April, May and
June, July and August, September and October, or November and
December, respectively.
(7) Dairy producer.--The term ``dairy producer'' means an
individual or entity that directly or indirectly (as determined
by the Secretary)--
(A) shares in the risk of producing milk; and
(B) makes contributions (including land, labor,
management, equipment, or capital) to the dairy
operation of the individual or entity that are at least
commensurate with the share of the individual or entity
of the proceeds of the operation.
(8) Handler.--
(A) In general.--The term ``handler'' means a
person making payment to a dairy producer for milk
produced in the United States and marketed for
commercial use.
(B) Producer-handler.--The term includes a
producer-handler.
(9) Margin protection program.--The term ``margin
protection program'' means the dairy producer margin protection
program required by subtitle A.
(10) Participating dairy producer.--The term
``participating dairy producer'' means a dairy producer that--
(A) registers under section 112(b) to participate
in the margin protection program under subtitle A; and
(B) as a result of such registration, also
participates in the stabilization program under
subtitle B.
(11) Production history.--The term ``production history''
means the quantity of annual milk marketings determined for a
dairy producer under section 113(a).
(12) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture.
(13) Stabilization program.--The term ``stabilization
program'' means the dairy market stabilization program required
by subtitle B for all participating dairy producers.
(14) Stabilization program base.--The term ``stabilization
program base'', with respect to a participating dairy producer,
means the stabilization program base calculated for the
producer under section 131(b).
(15) United states.--The term ``United States'', in a
geographical sense, means the 50 States.
SEC. 102. CALCULATION OF AVERAGE FEED COST AND ACTUAL DAIRY PRODUCER
MARGINS.
(a) Calculation of Average Feed Cost.--The Secretary shall
calculate the national average feed cost for each month using the
following data:
(1) The price of corn for a month shall be the price
received during that month by farmers in the United States for
corn, as reported by the National Agricultural Statistics
Service.
(2) The price of soybean meal for a month shall be the
central Illinois price for soybean meal, as reported by the
Agricultural Marketing Service.
(3) The price of alfalfa hay for a month shall be the price
received during that month by farmers in the United States for
alfalfa hay, as reported by the National Agricultural
Statistics Service.
(b) Calculation of Actual Dairy Producer Margins.--
(1) Margin protection program.--For use in the margin
protection program under subtitle A, the Secretary shall
calculate the actual dairy producer margin for each consecutive
two-month period by subtracting--
(A) the average feed cost for that consecutive two-
month period, determined in accordance with subsection
(a); from
(B) the all-milk price for that consecutive two-
month period.
(2) Stabilization program.--For use in the stabilization
program under subtitle B, the Secretary shall calculate (not
later than 20th of each month) the actual dairy producer margin
for the preceding month by subtracting--
(A) the average feed cost for that preceding month,
determined in accordance with subsection (a); from
(B) the all-milk price for that preceding month.
Subtitle A--Dairy Producer Margin Protection Program
SEC. 111. ESTABLISHMENT OF DAIRY PRODUCER MARGIN PROTECTION PROGRAM.
The Secretary shall establish and administer a dairy producer
margin protection program for the purpose of protecting dairy producer
income by paying participating dairy producers--
(1) basic margin protection payments when actual dairy
producer margins are less than the threshold levels for such
payments; and
(2) supplemental margin protection payments if purchased by
a participating dairy producer.
SEC. 112. ELIGIBILITY AND REGISTRATION OF DAIRY PRODUCERS FOR MARGIN
PROTECTION PROGRAM.
(a) Eligibility.--All dairy producers in the United States are
eligible to participate in the margin protection program, except that a
dairy producer must be registered with the Secretary before the
producer may receive--
(1) basic margin protection payments under section 114; and
(2) if the dairy producer purchases supplemental margin
protection under section 115, supplemental margin protection
payments under such section.
(b) Registration Process.--
(1) In general.--The Secretary shall register all
interested dairy producers in the margin protection program.
The Secretary shall specify the manner and form by which a
dairy producer must register.
(2) Treatment of multi-producer operations.--If a dairy
operation consists of more than one dairy producer, all of the
dairy producers of the operation shall be treated as a single
dairy producer for purposes of--
(A) registration to receive basic margin protection
and purchase supplemental margin protection;
(B) payment of the administrative fee under
subsection (d) and producer premiums under section 115;
and
(C) participation in the stabilization program
under subtitle B.
(3) Treatment of producers with multiple dairy
operations.--If a dairy producer operates two or more dairy
operations, each dairy operation of the producer shall require
a separate registration to receive basic margin protection and
purchase supplemental margin protection. Only those dairy
operations so registered shall be subject to the stabilization
program.
(c) Time for Registration.--
(1) Existing dairy producers.--During the one-year period
beginning on the date of the enactment of this Act, a dairy
producer that is actively engaged in a dairy operation as of
such date may register with the Secretary--
(A) to receive basic margin protection; and
(B) if the producer elects, to purchase
supplemental margin protection.
(2) New entrants.--A dairy producer that has no existing
interest in a dairy operation as of the date of the enactment
of this Act, but that, after such date, establishes a new dairy
operation, may register with the Secretary during the 180-day
period beginning on the date on which the dairy operation first
markets milk commercially--
(A) to receive basic margin protection; and
(B) if the producer elects, to purchase
supplemental margin protection.
(d) Administrative Fee for Registration.--
(1) Administrative fee required.--A dairy producer shall
pay an administrative fee under this subsection to register for
the margin protection program. The participating dairy producer
shall pay the administrative fee annually thereafter to remain
registered for the margin protection program.
(2) Fee amount.--The administrative fee for a dairy
producer shall be as follows:
(A) If the dairy producer marketed less than 10
million pounds of milk in the previous calendar year,
the administrative fee shall be equal to $100.
(B) If the dairy producer marketed between 10
million and 40 million pounds of milk in the previous
calendar year, the administrative fee shall be equal to
$400.
(C) If the dairy producer marketed more than 40
million pounds of milk in the previous calendar year,
the administrative fee shall be equal to $1,000.
(e) Reconstitution.--The Secretary shall ensure that a dairy
producer does not reconstitute a dairy operation for the sole purpose
of receiving basic margin protection, purchasing supplemental margin
protection, or avoiding participation in the stabilization program.
SEC. 113. PRODUCTION HISTORY AND ANNUAL PRODUCTION QUANTITY OF
PARTICIPATING DAIRY PRODUCERS.
(a) Determination of Production History.--
(1) Determination required.--The Secretary shall determine
the production history of the dairy operation of each
participating dairy producer in the margin protection program.
(2) Calculation.--Except as provided in paragraph (3), the
production history of a participating dairy producer is equal
to the highest annual milk marketings of the dairy producer
during any one of the three calendar years immediately
preceding the dairy producer's registration for participation
in the margin protection program.
(3) New producers.--If a dairy producer has been in
operation for less than a year, the Secretary shall determine
the production history of the dairy producer by extrapolating
the actual milk marketings for the months the dairy producer
has been in operation to a yearly amount.
(4) No change in production history for basic margin
protection.--Once the production history of a participating
dairy producer is determined under paragraph (2) or (3), the
production history shall not be subsequently changed for
purposes of determining the amount of any basic margin
protection payments for the dairy producer made under section
114.
(b) Determination of Annual Production Quantity for Supplemental
Margin Protection.--
(1) Determination required.--If a dairy producer selects
the growth option when purchasing supplemental margin
protection under section 115, the Secretary shall determine the
annual production quantity of the dairy operation of the dairy
producer under paragraph (2).
(2) Calculation.--The annual production quantity of a
participating dairy producer is equal to the actual milk
marketings of the dairy producer during each calendar year in
which the dairy producer purchases supplemental margin
protection, including the calendar year during which the dairy
producer first purchases such supplemental margin protection.
(c) Required Information.--A participating dairy producer shall
provide all information that the Secretary may require in order to
establish--
(1) the production history of the dairy operation of the
dairy producer; and
(2) the annual production quantity of the dairy operation
of the dairy producer if the dairy producer selects the growth
option when purchasing supplemental margin protection under
section 115.
(d) Transfer of Production History or Annual Production Quantity.--
(1) Transfer by sale.--
(A) Request for transfer.--If an existing dairy
producer, as described in section 112(c)(1), sells an
entire dairy operation to another party, the seller and
purchaser may jointly request that the Secretary
transfer to the purchaser the seller's interest in--
(i) production history of the dairy
operation; and
(ii) if applicable, the annual production
quantity of the dairy operation for each year
in which the margin protection program has been
in effect.
(B) Transfer.--If the Secretary determines that the
seller has sold the entire dairy operation to the
purchaser, the Secretary shall approve the transfer
described in subparagraph (A), and, thereafter, the
seller shall have no interest in--
(i) the production history of the sold
dairy operation; or
(ii) if applicable, the annual production
quantity of the dairy operation.
(2) Transfer by lease.--
(A) Request for transfer.--If an existing dairy
producer, as described in section 112(c)(1), leases an
entire dairy operation to another party, the lessor and
lessee may jointly request that the Secretary transfer
to the lessee for the duration of the term of the lease
the lessor's interest in--
(i) production history of the dairy
operation; and
(ii) if applicable, the annual production
quantity of the dairy operation for each year
in which the margin protection program has been
in effect.
(B) Transfer.--If the Secretary determines that the
lessor has leased the entire dairy operation to the
lessee, the Secretary shall approve the transfer
described in subparagraph (A), and, thereafter, the
lessor shall have no interest for the duration of the
term of the lease in--
(i) the production history of the leased
dairy operation; or
(ii) if applicable, the annual production
quantity of the dairy operation.
(3) Coverage level.--
(A) Basic margin protection.--A purchaser or lessee
to whom the Secretary transfers a production history or
annual production quantity under this subsection may
not obtain a different level of basic margin protection
than the basic margin protection coverage held by the
seller or lessor from whom the transfer was obtained.
(B) Supplemental margin protection.--A purchaser or
lessee to whom the Secretary transfers a production
history or annual production quantity under this
subsection may not obtain a different level of
supplemental margin protection coverage than the
supplemental margin protection coverage held by the
seller or lessor from whom the transfer was obtained.
(4) New entrants.--The Secretary may not transfer the
production history or annual production quantity determined for
a dairy producer described in section 112(c)(2) to another
person.
(e) Movement and Transfer of Production History or Annual
Production Quantity.--
(1) Movement and transfer authorized.--Subject to paragraph
(2), if a dairy producer moves from one location to another
location, the dairy producer may maintain the production
history and annual production quantity associated with the
operation.
(2) Notification requirement.--A dairy producer shall
notify the Secretary of any move of a dairy operation under
paragraph (1).
(3) Subsequent occupation of vacated location.--A party
subsequently occupying a dairy operation location vacated as
described in paragraph (1) shall have no interest in the
production history or annual production quantity previously
associated with the operation at such location.
SEC. 114. BASIC MARGIN PROTECTION.
(a) Eligibility.--All participating dairy producers are eligible to
receive basic margin protection under the margin protection program.
(b) Payment Threshold.--Participating dairy producers shall receive
a basic margin protection payment whenever the average actual dairy
producer margin for a consecutive two-month period is less than $4.00
per hundredweight of milk.
(c) Basic Margin Protection Payment.--
(1) Payment required.--The Secretary shall make a basic
margin protection payment to each participating dairy producer
for a consecutive two-month period whenever such a payment is
required by subsection (b) for that period.
(2) Amount of payment.--The basic margin protection payment
for the dairy operation of a participating dairy producer for a
consecutive two-month period shall be determined as follows:
(A) The Secretary shall calculate the difference
between the average actual dairy producer margin for
the consecutive two-month period and $4.00, except
that, if the difference is more than $4.00, the
Secretary shall use $4.00.
(B) The Secretary shall multiply the amount under
subparagraph (A) by of the lesser of the following:
(i) Eighty percent of the production
history of the dairy producer, divided by six.
(ii) The actual amount of milk marketed by
the dairy operation of the dairy producer
during the consecutive two-month period.
SEC. 115. SUPPLEMENTAL MARGIN PROTECTION.
(a) Election of Supplemental Margin Protection.--At the time of the
registration of a dairy producer in the margin protection program under
section 112, the dairy producer may purchase supplemental margin
protection to protect a higher level of the income of a participating
dairy producer than the income level guaranteed by basic margin
protection under section 114.
(b) Selection of Payment Threshold.--A participating dairy producer
purchasing supplemental margin protection shall elect a coverage level
that is higher, in any increment of $0.50, than the payment threshold
for basic margin protection specified in section 114(b), but not to
exceed $8.00.
(c) Selection of Coverage Percentage.--A participating dairy
producer purchasing supplemental margin protection shall elect a
percentage of coverage, equal to not more than 90 percent nor less than
25 percent, of--
(1) the production history of the dairy operation of the
participating dairy producer; or
(2) if the participating dairy producer elects the growth
option under subsection (d)--
(A) the production history of the dairy operation
of the dairy producer, to be used for the calendar year
during which the dairy producer registers for
participation in the margin protection program; and
(B) for subsequent calendar years in which the
margin protection program is in effect, the greater
of--
(i) the production history of the dairy
operation of the dairy producer; or
(ii) the highest annual production quantity
of the dairy operation of the dairy producer
during any previous calendar year in which the
margin protection program was in effect.
(d) Availability of Growth Option.--When a dairy producer purchases
supplemental margin protection, the dairy producer may elect a growth
option that authorizes the use of the annual production quantity of the
dairy operation of the dairy producer, in lieu of production history,
as provided in subsection (c)(2) to determine supplemental margin
protection payments for the dairy producer under subsection (h).
(e) Producer Premiums.--
(1) Premiums required.--A participating dairy producer that
purchases supplemental margin protection shall pay an annual
premium equal to the product obtained by multiplying--
(A) the percentage selected by the dairy producer
under subsection (c);
(B) the production history or annual production
quantity applicable to the dairy producer under such
subsection; and
(C) the premium per hundredweight of milk, as
follows:
------------------------------------------------------------------------
Coverage Level Premium per Cwt.
------------------------------------------------------------------------
$4.50 $0.015
$5.00 $0.036
$5.50 $0.081
$6.00 $0.155
$6.50 $0.230
$7.00 $0.434
$7.50 $0.590
$8.00 $0.922.
------------------------------------------------------------------------
(2) Time for payment.--
(A) First year.--As soon as practicable after a
dairy producer registers to participate in the margin
protection program and purchases supplemental margin
protection, the dairy producer shall pay the premium
determined under paragraph (1) for the dairy producer
for the first calendar year of such supplemental margin
protection.
(B) Subsequent years.--When the dairy producer
first purchases supplemental margin protection, the
dairy producer shall also elect the method by which the
dairy producer will pay premiums under this subsection
for subsequent years in accordance with one of the
following schedules:
(i) Single annual payment.--The
participating dairy producer may elect to pay
100 percent of the annual premium determined
under paragraph (1) for the dairy producer for
a calendar year not later than January 15 of
the calendar year.
(ii) Semi-annual payment.--The
participating dairy producer may elect to pay
50 percent of the annual premium determined
under paragraph (1) for the dairy producer for
a calendar year not later than January 15 of
the calendar year and the remaining 50 percent
of the premium not later than June 15 of the
calendar year.
(f) Producer's Premium Obligations.--
(1) Pro-ration of first year premium.--A participating
dairy producer that purchases supplemental margin protection
after initial registration in the margin protection program
shall pay a pro-rated premium for the first calendar year based
on the date on which the producer purchases the coverage.
(2) Subsequent premiums.--Other than as provided in
paragraph (1), the annual premium for a participating dairy
producer shall be determined under subsection (e) for each year
in which the margin protection program is in effect.
(3) Legal obligation.--A participating dairy producer that
purchases supplemental margin protection shall be legally
obligated to pay the applicable premiums for the entire period
of the margin protection program (as provided in the payment
schedule elected under subsection (e)(2)), and may not opt out
of the margin protection program, except--
(A) if the dairy producer dies, the estate of the
deceased may cancel the supplemental margin protection
and shall not be responsible for any further premium
payments; or
(B) if the dairy producer retires, the producer may
request that Secretary cancel the supplemental margin
protection if the producer has terminated the dairy
operation entirely and certifies under oath that the
producer will not be actively engaged in any dairy
operation for at least the next seven years.
(g) Supplemental Payment Threshold.--A participating dairy producer
with supplemental margin protection shall receive a supplemental margin
protection payment whenever the average actual dairy producer margin
for a consecutive two-month period is less than the coverage level
threshold selected by the dairy producer under subsection (b).
(h) Supplemental Margin Protection Payments.--
(1) In general.--The supplemental margin protection payment
for a participating dairy producer is in addition to the basic
margin protection payment.
(2) Amount of payment.--The supplemental margin protection
payment for the dairy operation of a participating dairy
producer shall be determined as follows:
(A) The Secretary shall calculate the difference
between the coverage level threshold selected by the
dairy producer under subsection (b) and the greater
of--
(i) the average actual dairy producer
margin for the consecutive two-month period; or
(ii) $4.00.
(B) The amount determined under subparagraph (A)
shall be multiplied by the percentage selected by the
dairy producer under subsection (c) and by the lesser
of the following:
(i) The production history or annual
production quantity applicable to the producer
under subsection (c), divided by six.
(ii) The actual amount of milk marketed by
the dairy operation of the dairy producer
during the consecutive two-month period.
SEC. 116. EFFECT OF FAILURE TO PAY ADMINISTRATIVE FEES OR PREMIUMS.
(a) Loss of Benefits.--A participating dairy producer that fails to
pay the required administrative fee under section 112 or is in arrears
on premium payments for supplemental margin protection under section
115--
(1) remains legally obligated to pay the administrative fee
or premiums, as the case may be; and
(2) may not receive basic margin protection payments or
supplemental margin protection payments until the fees or
premiums are fully paid.
(b) Enforcement.--The Secretary may take such action as necessary
to collect administrative fees and premium payments for supplemental
margin protection.
SEC. 117. NO PAYMENT LIMITATIONS.
Notwithstanding any other provision of law (except section 116),
basic margin protection payments and supplemental margin protection
payments received by a participating dairy producer shall not be
subject to limitations for any reason.
Subtitle B--Dairy Market Stabilization Program
SEC. 131. ESTABLISHMENT OF DAIRY MARKET STABILIZATION PROGRAM.
(a) Program Required; Purpose.--The Secretary shall establish and
administer a dairy market stabilization program applicable to
participating dairy producers for the purpose of assisting in balancing
the supply of milk with demand when dairy producers are experiencing
low or negative operating margins.
(b) Election of Stabilization Program Base Calculation Method.--
(1) Deadline for election.--Not later than January 15,
2012, each participating dairy producer shall inform the
Secretary of the method by which the stabilization program base
for the dairy producer for 2012 will be calculated under
paragraph (3).
(2) Change in calculation method.--A participating dairy
producer may change the stabilization program base calculation
method to be used for a calendar year by notifying the
Secretary of the change not later than January 15 of that year.
(3) Calculation methods.--A participating dairy producer
may elect either of the following methods for calculation of
the stabilization program base for the producer:
(A) The volume of the average monthly milk
marketings of the dairy producer for the three months
immediately preceding the announcement by the Secretary
that the stabilization program will become effective.
(B) The volume of the monthly milk marketings of
the dairy producer for the same month in the preceding
year as the month for which the Secretary has announced
the stabilization program will become effective.
(c) Treatment of Multi-Producer Operations.--As provided in section
112(b)(2), if a dairy operation consists of more than one dairy
producer, all of the dairy producers of the operation shall be treated
as a single participating dairy producer for purposes of operation of
the stabilization program with respect to the producers.
(d) Treatment of Producers With Multiple Dairy Operations.--As
provided in section 112(b)(3), if a participating dairy producer
operates two or more dairy operations, only those dairy operations of
the dairy producer registered under section 112 shall be subject to the
stabilization program.
SEC. 132. THRESHOLD FOR IMPLEMENTATION AND REDUCTION IN DAIRY PRODUCER
PAYMENTS.
(a) When Stabilization Program Required.--The Secretary shall
announce that the stabilization program is in effect and order reduced
payments for any participating dairy producer that exceeds the
applicable percentage of the producer's stabilization program base
whenever--
(1) the actual dairy producer margin has been $6.00 or less
per hundredweight of milk for the immediately preceding two
months; or
(2) the actual dairy producer margin has been $4.00 or less
per hundredweight of milk for the immediately preceding month.
(b) Effective Date for Implementation of Payment Reductions.--
Reductions in dairy producer payments shall commence beginning on the
first day of the month immediately following the announcement by the
Secretary under subsection (a).
SEC. 133. PRODUCER MILK MARKETINGS INFORMATION.
(a) Collection of Milk Marketing Data.--For each month during which
the stabilization program is in effect, each handler shall calculate
the following:
(1) The volume of milk marketings the handler has received
from each participating dairy producer during that month.
(2) The volume of milk marketings the handler has received
from each participating dairy producer during the same month of
the preceding year.
(3) The volume of milk marketings the handler has received
from each participating dairy producer during each of the three
months preceding the month in which the Secretary makes the
announcement that the stabilization program will be in effect.
(b) Effect of Changing Handlers.--If a participating dairy producer
changes handlers, the producer shall ensure that milk marketings data
required to make the calculations under subsection (a) is provided to
the new handler.
SEC. 134. CALCULATION AND COLLECTION OF REDUCED DAIRY PRODUCER
PAYMENTS.
(a) Reduced Producer Payments Required.--During any month in which
payment reductions are in effect under the stabilization program, each
handler shall reduce payments to each participating dairy producer from
whom the handler receives milk.
(b) Reductions Based on Actual Dairy Producer Margin.--
(1) Reduction requirement 1.--Unless the reduction required
by paragraph (2) or (3) applies, when the actual dairy producer
margin has been $6.00 or less per hundredweight of milk for two
consecutive months, the handler shall make payments to a
participating dairy producer for a month based on the greater
of the following:
(A) Ninety-eight percent of the stabilization
program base of the dairy producer.
(B) Ninety-four percent of the marketings of milk
for the month by the producer.
(2) Reduction requirement 2.--Unless the reduction required
by paragraph (3) applies, when the actual dairy producer margin
has been $5.00 or less per hundredweight of milk for two
consecutive months, the handler shall make payments to a
participating dairy producer for a month based on the greater
of the following:
(A) Ninety-seven percent of the stabilization
program base of the dairy producer.
(B) Ninety-three percent of the marketings of milk
for the month by the producer.
(3) Reduction requirement 3.--When the actual dairy
producer margin has been $4.00 or less for any one month, the
handler shall make payments to a participating dairy producer
for a month based on the greater of the following:
(A) Ninety-six percent of the stabilization program
base of the dairy producer.
(B) Ninety-two percent of the marketings of milk
for the month by the producer.
(c) Continuation of Reductions.--The largest level of payment
reduction required under paragraph (1), (2), or (3) of subsection (b)
shall be continued for each month until the Secretary suspends the
stabilization program and terminates payment reductions in accordance
with section 136.
(d) Payment Reduction Exception.--Notwithstanding any preceding
subsection of this section, a handler shall make no payment reductions
for a dairy producer for a month if the producer's milk marketings for
the month are equal to or less than the percentage of the stabilization
program base applicable to the producer under paragraph (1), (2), or
(3) of subsection (b).
SEC. 135. REMITTING MONIES TO COMMODITY CREDIT CORPORATION.
(a) Remitting Monies.--As soon as practicable after the end of each
month during which payment reductions are in effect under the
stabilization program, each handler shall remit to the Commodity Credit
Corporation an amount equal to the amount by which payments to
participating dairy producers are reduced by the handler under section
134.
(b) Availability of Monies.--As soon as practicable after receipt
of monies under subsection (a), the Commodity Credit Corporation shall
make the monies available to the board of directors under section 138.
SEC. 136. SUSPENSION OF REDUCED PAYMENT REQUIREMENT.
(a) Suspension Thresholds.--The Secretary shall suspend the
stabilization program whenever the Secretary determines that--
(1) the actual dairy producer margin is greater than $6.00
per hundredweight of milk for two consecutive months; or
(2) the price in the United States for either cheddar
cheese or skim milk powder (non-fat dry milk) is more than 20
percent above the world price for that same commodity for two
consecutive months.
(b) Implementation by Handlers.--Handlers shall cease reducing
payments to participating dairy producers under the stabilization
program upon receiving notice of the suspension of the stabilization
program from the Secretary.
SEC. 137. AUDIT REQUIREMENTS.
(a) Audits of Producer and Handler Compliance.--
(1) Audits authorized.--If determined by the Secretary to
be necessary to ensure compliance by participating dairy
producers and handlers with the stabilization program, the
Secretary may conduct periodic audits of participating dairy
producers and handlers.
(2) Sample of dairy producers.--Any audit conducted under
this subsection shall include, at a minimum, investigation of a
statistically valid and random sample of participating dairy
producers.
(b) Audit by Inspector General.--
(1) Audit required.--At the end of the second year of
operation of the stabilization program, the Inspector General
of the Department of Agriculture shall audit and evaluate the
effectiveness of the stabilization program. In conducting the
audit and evaluation, the Inspector General shall include the
use of established dairy economic models to ascertain the
effectiveness, operation, and administration of the program.
(2) Submission of results.--The Inspector General shall
submit the results of the audit and evaluation conducted under
paragraph (1) to the Secretary, who shall make such
recommendations to Congress as the Secretary considers
appropriate regarding the stabilization program.
SEC. 138. BOARD OF DIRECTORS.
(a) Establishment; Purpose.--The Secretary shall establish a board
of directors for the stabilization program for the purpose of--
(1) administering the monies made available to the board of
directors under section 135; and
(2) determining the most effective use of such monies.
(b) Appointment of Directors.--
(1) Number and qualifications.--The Secretary shall appoint
15 members to serve on the board of directors, who shall be
representative of the United States dairy producer community,
taking into account geographical diversity, cooperative
membership, and volumes of milk produced in various States and
regions.
(2) Reimbursement of expenses.--Monies made available to
the board of directors under section 135 may be used to
reimburse a member of the board of directors for reasonable and
appropriate costs incurred by the member to serve on the board
of directors.
(c) Decisionmaking.--The board of directors shall reach decisions
by an affirmative vote of \2/3\ of its members.
(d) Removal of Dairy Products and Expansion of Demand.--
(1) Spending authority.--The board of directors shall have
the authority to use monies made available to the board of
directors under section 135--
(A) to purchase dairy products through commercial
sources for donation to food banks and other food
programs that the Board determines appropriate, within
three months of collecting the funds; and
(B) to expand consumption and build demand for
dairy products.
(2) No duplication of effort.--The board of directors shall
ensure that projects supported under paragraph (1) are
compatible with, and do not duplicate, programs supported by
the dairy research and promotion activities conducted under the
Dairy Production Stabilization Act of 1983 (7 U.S.C. 4501 et
seq.).
(3) Management contract.--The board of directors may enter
into a contract with a managing entity to carry out this
subsection.
(e) Accounting and Reporting Requirement.--
(1) Accounting.--The board of directors shall keep an
accurate account of all monies made available to the board of
directors under section 135.
(2) Reporting.--Not later than December 31 of each year
that the stabilization program is in effect, the board of
directors shall provide to the Committee on Agriculture of the
House of Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate a report that provides an
accurate accounting of the monies received by the board of
directors during that year and all expenditures made by the
board of directors during that year.
Subtitle C--Commodity Credit Corporation
SEC. 151. USE OF COMMODITY CREDIT CORPORATION.
The Secretary shall use the funds, facilities, and the authorities
of the Commodity Credit Corporation to carry out this title.
Subtitle D--Duration
SEC. 161. DURATION.
The Secretary shall conduct the margin protection program and the
stabilization program during the period beginning on January 1, 2012,
and ending on December 31, 2017.
TITLE II--FEDERAL MILK MARKETING ORDER REFORM
SEC. 201. REQUIRED AMENDMENTS TO FEDERAL MILK MARKETING ORDERS.
(a) Amendments Required.--
(1) In general.--The Secretary of Agriculture shall amend
each Federal milk marketing order issued under section 8c of
the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with
amendments by the Agricultural Marketing Agreement Act of 1937
(in this title referred to as a ``milk marketing order''), as
required by this section.
(2) Relation to other laws.--Except as provided in section
202, the Secretary shall execute the amendments required by
this section without regard to any provision of section 8c of
the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with
amendments by the Agricultural Marketing Agreement Act of 1937,
as in effect on the day before the date of the enactment of
this Act.
(b) Use of End-Product Price Formulas.--The Secretary shall
eliminate the use of end-product price formulas for setting prices for
Class III milk, and instead use a competitive price for setting prices
for Class III milk.
(c) Administrative Authority.--In addition to and notwithstanding
the authority provided under section 8d of the Agricultural Adjustment
Act (7 U.S.C. 608d), reenacted with amendments by the Agricultural
Marketing Agreement Act of 1937, the Secretary may--
(1) require handlers to report, maintain, and make
available all information and records as the Secretary
considers necessary for the administration of any milk
marketing order; and
(2) adopt only such conforming amendments to milk marketing
orders as the Secretary determines to be necessary to implement
the amendments required by this section.
SEC. 202. AMENDMENT PROCESS.
(a) In General.--The amendments to milk marketing orders required
to be made by section 201 shall be subject to the provisions of
sections 8c(17) and 8c(19) of the Agricultural Adjustment Act (7 U.S.C.
608c(17) and (19)), reenacted with amendments by the Agricultural
Marketing Agreement Act of 1937, except as follows:
(1) Notice of final decision on proposed amendments.--Not
later than 270 days after the date of the enactment of this
Act, the Secretary of Agriculture shall publish in the Federal
Register notice of a final decision on the proposed amendments
to be made to milk marketing orders in order to comply with the
requirements of section 201.
(2) Producer referendum.--
(A) Referendum required.--As soon as practicable
after publication of the final decision on the proposed
amendments under paragraph (1), the Secretary shall
conduct a producer referendum regarding the final
decision on the proposed amendments.
(B) Terms of referendum; exceptions.--The producer
referendum shall be conducted in the manner provided by
section 8c(19) of the Agricultural Adjustment Act (7
U.S.C. 608c(19)), reenacted with amendments by the
Agricultural Marketing Agreement Act of 1937, except
that--
(i) the referendum shall be a single
referendum upon which approval or failure of
the proposed amendments to all milk marketing
orders shall depend; and
(ii) the proposed amendments shall require
approval by one-half of participating producers
or by volume of production (rather than two-
thirds) in order for the referendum to pass and
the proposed amendments to take effect.
(C) Effect of failure.--If the referendum fails,
the milk marketing orders shall remain in force as in
effect before the proposed amendments were published.
(b) Effect of Court Order.--In the event that the Secretary is
enjoined or otherwise restrained by a court order from executing the
amendments to milk marketing orders required by section 201, the length
of time for which that injunction or other restraining order is
effective shall be added to any time limitation in effect under
paragraph (1) or (2) of subsection (a), thereby extending those time
limitations by a period of time equal to the period of time for which
the injunction or other restraining order is in effect.
(c) Relation to Other Amendment Authority.--Nothing in this title
affects the authority of the Secretary to subsequently amend milk
marketing orders, or the ability of producers or other persons to seek
such amendments, in accordance with the rulemaking process provided by
section 8c(17) of the Agricultural Adjustment Act (7 U.S.C. 608c(17)),
reenacted with amendments by the Agricultural Marketing Agreement Act
of 1937.
SEC. 203. DEVELOPMENT OF EFFECTIVE BALANCING PROGRAMS FOR MILK MARKETS.
(a) Advanced Notice of Proposed Rulemaking.--Not later than 90 days
after the enactment of this Act, the Secretary of Agriculture shall
publish in the Federal Register an Advanced Notice of Proposed
Rulemaking seeking public comment on, and proposals recommending,
effective programs that address the issues of the costs of balancing
milk markets, including the use of inter- and intra-marketing
transportation credits. The Secretary shall solicit comments and
proposals that--
(1) address the market's balancing needs;
(2) target support to those producers and handlers who
provide balancing services; and
(3) provide compensation that is in line with the costs of
providing the services and with the benefits to the market of
the services.
(b) Timeliness of Rulemaking.--Not later than one year after the
date of the enactment of this Act, the Secretary shall--
(1) initiate formal rulemaking (by publishing in the
Federal Register a hearing notice) in response to the public
comments received under subsection (a); or
(2) publish notice of the reasons that such a rulemaking is
not to be initiated.
TITLE III--REPEAL OF SUPERSEDED PROVISIONS
SEC. 301. REPEAL OF DAIRY PRODUCT PRICE SUPPORT AND MILK INCOME LOSS
CONTRACT PROGRAMS.
(a) Repeal of Dairy Product Price Support Program.--Section 1501 of
the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8771) is
repealed.
(b) Repeal of Milk Income Loss Contract Program.--Section 1506 of
the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8773) is
repealed.
SEC. 302. REPEAL OF PERMANENT PRICE SUPPORT AUTHORITY FOR MILK.
(a) Repeal.--Section 201 of the Agricultural Act of 1949 (7 U.S.C.
1446) is amended--
(1) in subsection (a), by striking ``milk,''; and
(2) by striking subsections (c) and (d).
(b) Exclusion From Price Support for Other Nonbasic Agricultural
Commodities.--Section 301 of the Agricultural Act of 1949 (7 U.S.C.
1447) is amended by inserting ``(other than milk)'' after
``agricultural commodity''.
SEC. 303. REPEAL OF DAIRY EXPORT INCENTIVE PROGRAM.
Section 153 of the Food Security Act of 1985 (15 U.S.C. 713a-14) is
repealed.
SEC. 304. EFFECTIVE DATE.
The amendments made by this title shall take effect on January 1,
2012.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Agriculture.
Referred to the Subcommittee on Livestock, Dairy, and Poultry.
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