Milk Price Discovery Improvement Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Milk Price Discovery Improvement Act 
of 1997''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) the National Cheese Exchange, located in Green Bay, 
        Wisconsin, is the only cash market for bulk cheese in the 
        United States, trades less than 1 percent of all bulk cheese 
        sold nationally, and currently functions as the only price 
        discovery mechanism for bulk cheese throughout the industry;
            (2) the National Cheese Exchange opinion price directly 
        influences milk prices paid to farmers because of its use in 
        the Department of Agriculture's basic formula price under 
        Federal milk marketing orders;
            (3) opinion prices at the National Cheese Exchange 
        influence the price for much of the bulk cheese bought and sold 
        in the United States and directly or indirectly influences the 
        price of milk paid to producers throughout the United States;
            (4) the National Cheese Exchange is a thinly traded, 
        illiquid, and highly concentrated market that is increasingly 
        volatile;
            (5) a report issued by the University of Wisconsin and 
        funded by the United States Department of Agriculture concluded 
        that the National Cheese Exchange is vulnerable to price 
        manipulation;
            (6) the thin nature of the National Cheese Exchange and the 
        characteristics of that market that may facilitate price 
        manipulation have led to widespread producer concern about the 
        validity of prices at the National Cheese Exchange; and
            (7) it is in the national interest to ensure that prices on 
        cash markets that directly and indirectly affect milk prices 
        are determined in the most competitive manner practicable and 
        to improve price discovery for milk and other dairy products.

SEC. 3. BASIC FORMULA PRICE.

    Section 143(a) of the Agricultural Market Transition Act (7 U.S.C. 
7253(a)) is amended by adding at the end the following:
            ``(5) National cheese exchange.--
                    ``(A) In general.--In carrying out this subsection 
                and section 8c(5) of the Agricultural Adjustment Act (7 
                U.S.C. 608c(5)), reenacted with amendments by the 
                Agricultural Marketing Agreement Act of 1937, the 
                Secretary shall not, directly or indirectly, use a 
                price established on the National Cheese Exchange to 
                determine the basic formula price for milk or any other 
                milk price regulated by the Secretary.
                    ``(B) Regulations.--Not later than 60 days after 
                the date of enactment of this paragraph, the Secretary 
                shall review and amend the applicable regulations 
                promulgated by the Secretary to ensure that the 
                regulations comply with subparagraph (A).
                    ``(C) Effect on further revision.--Subparagraph (B) 
                shall not preclude a further revision to, or 
                replacement of, the basic formula price under this 
                subsection or section 8c(5) of the Agricultural 
                Adjustment Act (7 U.S.C. 608c(5)), reenacted with 
                amendments by the Agricultural Marketing Agreement Act 
                of 1937, except that the revision or replacement shall 
                be consistent with subparagraph (A).''.

SEC. 4. DAIRY PRICE DISCOVERY AND REPORTING SYSTEM.

    Section 203 of the Agricultural Marketing Act of 1946 (7 U.S.C. 
1622) is amended by adding at the end the following:
    ``(o) Dairy Price Discovery and Reporting System.--
            ``(1) In general.--Not later than 1 year after the date of 
        enactment of this subsection, the Secretary shall develop a 
        price discovery system for raw milk, bulk cheese, and other 
        dairy products in order to facilitate orderly marketing 
        conditions.
            ``(2) Administration.--In carrying out paragraph (1), the 
        Secretary shall--
                    ``(A) collect and disseminate, on a weekly basis, 
                statistically reliable information, obtained from all 
                cheese manufacturing areas in the United States on 
                prices and terms of trade for spot and forward 
                contracts, reported separately, transactions involving 
                bulk cheese, including information on the national 
                average price and regional average prices for bulk 
                cheese sold through spot and contract transactions;
                    ``(B) provide technical assistance to any person, 
                group of persons, or organization seeking to organize a 
                cash market alternative to the National Cheese Exchange 
                that the Secretary believes will improve price 
                discovery; and
                    ``(C) not later than 180 days after the date of 
                enactment of this subsection--
                            ``(i) in cooperation with the Commodity 
                        Futures Trading Commission, conduct a study and 
                        report to Congress on means of encouraging 
                        improved volume in futures trading for milk, 
                        bulk cheese, and other dairy products; and
                            ``(ii) conduct a study and report to 
                        Congress on the feasibility and desirability of 
                        the creation of an electronic exchange for 
                        cheese and other dairy products.
            ``(3) Confidentiality.--All information provided to, or 
        acquired by, the Secretary under paragraph (2)(A) shall be kept 
        confidential by each officer and employee of the Department of 
        Agriculture, except that general weekly statements may be 
        issued that are based on the information and that do not 
        identify the information provided by any person.''.

SEC. 5. OVERSIGHT OF CASH MARKETS AFFECTING FEDERAL MILK MARKETING 
              ORDERS.

    Section 8c of the Agricultural Adjustment Act (7 U.S.C. 608c), 
reenacted with amendments by the Agricultural Marketing Agreement Act 
of 1937, is amended by adding at the end the following:
            ``(20) Oversight of cash markets affecting federal milk 
        marketing orders.--
                    ``(A) Definition of noncompetitive practice.--In 
                this paragraph, the term `noncompetitive practice' 
                means an action or measure that involves engaging in a 
                course of business or act for the purpose or with the 
                effect of--
                            ``(i) manipulating or controlling a price 
                        on a cash market that affects the price of milk 
                        regulated under an order issued under this 
                        section;
                            ``(ii) creating a monopoly in the 
                        acquiring, buying, selling, or dealing in a 
                        product; or
                            ``(iii) restraining commerce.
                    ``(B) General rule.--In order to ensure fair trade 
                practices and orderly marketing conditions for milk and 
                milk products under this section, the Secretary shall 
                prohibit noncompetitive practices on a cash exchange 
                for milk, cheese, and other milk products that the 
                Secretary finds affects or influences the price of milk 
                regulated under an order issued under this section.
                    ``(C) Other agencies and states.--This paragraph 
                shall not affect the authority of the Federal Trade 
                Commission, Commodity Futures Trading Commission, 
                Department of Justice, any other Federal agency, or any 
                State agency to regulate a noncompetitive practice 
                described in subparagraph (B).
                    ``(D) Enforcement.--The enforcement provisions of 
                sections 203, 204, and 205 of the Packers and 
                Stockyards Act, 1921 (7 U.S.C. 193, 194, 195) shall 
                apply, to the extent practicable (as determined by the 
                Secretary), to this paragraph.''.

Summary: Milk Price Discovery Improvement Act of 1997 - Amends the Agricultural Market Transition Act to prohibit the Secretary of Agriculture from directly or indirectly using a price established on the National Cheese Exchange to determine the basic formula price for milk. Amends the Agricultural Marketing Act of 1946 to direct the Secretary to develop a dairy price discovery and reporting system, which shall include: (1) collection and dissemination of weekly cheese prices. (2) technical assistance to organize a cash market alternative to the National Cheese Exchange. And (3) studies of improved volume in dairy futures trading and on creation of an electronic dairy exchange. Amends the Agricultural Adjustment Act, reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, to provide for oversight of cash markets affecting Federal milk marketing orders.