A bill to amend the Food, Conservation, and Energy Act of 2008 to promote growth and opportunity for the dairy industry in the United States, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Dairy Advancement Act of 2011''.

SEC. 2. 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U.S.C. 8771) is repealed.

SEC. 3. LIVESTOCK GROSS MARGIN INSURANCE FOR DAIRY.

    Subtitle E of title I of the Food, Conservation, and Energy Act of 
2008 (7 U.S.C. 8771 et seq.) is amended by adding at the end the 
following:

``SEC. 1511. LIVESTOCK GROSS MARGIN INSURANCE FOR DAIRY.

    ``(a) In General.--As an alternative to receiving milk income loss 
contract program payments under section 1506, the Secretary shall give 
the producers on a dairy farm an opportunity to make an irrevocable 
election to instead receive livestock gross margin insurance for dairy 
and receive a subsidy from the Secretary for an insurance policy that 
provides the producers on the dairy farm protection against the loss of 
gross margin (the market value of milk minus feed costs) for specified 
portions of milk produced by dairy cows of the producers, for the 
initial month for which the election is made through September 30, 
2012.
    ``(b) Subsidy.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall provide to the dairy producers on a farm under 
        this section a subsidy at the $1.50-deductible level for not 
        more than 3,000,000 pounds of milk for each year.
            ``(2) Producer options.--The producers on a dairy farm may, 
        at the expense of the producers, reduce the deductible level or 
        increase the quantity of covered pounds for a subsidy provided 
        under this section.''.

SEC. 4. FEDERAL MILK MARKETING ORDERS.

    (a) 2-Class System for Classifying Milk.--
            (1) In general.--Not later than September 30, 2014, the 
        Secretary of Agriculture shall establish a 2-class system for 
        classifying milk under Federal milk marketing orders issued 
        under 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, consisting of a fluid milk 
        class and a manufacturing milk class (with the price for both 
        classes determined using the component prices of butterfat, 
        protein, and other solids).
            (2) Amendment to orders.--
                    (A) In general.--The Secretary shall submit a 
                report to the Committee on Agriculture of the House of 
                Representatives and the Committee on Agriculture, 
                Nutrition, and Forestry of the Senate that includes the 
                text of proposed amendments to the Federal milk 
                marketing orders to implement the 2-class system for 
                classifying milk.
                    (B) Effective date.--The proposed amendments 
                described in subparagraph (A) shall take effect not 
                earlier than the date that is 180 days after the date 
                on which the report is submitted under that 
                subparagraph.
    (b) Deadline for Issuance of Orders.--Section 8c(4) of the 
Agricultural Adjustment Act (7 U.S.C. 608c(4)), reenacted with 
amendments by the Agricultural Marketing Agreement Act of 1937, is 
amended by striking ``After'' and inserting ``Not later than 30 days 
after''.
    (c) Economic Impact Assessment.--The Secretary of Agriculture 
shall--
            (1) carry out a review of the milk-feed margin during the 
        1-year period ending on the date of enactment of this Act; and
            (2) not later than September 30, 2013, and each time a 
        proposed change in the Federal milk marketing order formulas is 
        considered by the Secretary--
                    (A) assess the economic impact, over a 1- and 2-
                year period, of proposed changes in Federal milk 
                marketing order formulas on--
                            (i) milk supply;
                            (ii) farm profitability;
                            (iii) consumer demand; and
                            (iv) market prices;
                    (B) submit to the Committee on Agriculture of the 
                House of Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the Senate a 
                report that describes the results of the assessment; 
                and
                    (C) consider, and include in the record, the 
                results of the assessment before making a decision on 
                any proposed change to the Federal milk marketing order 
                formulas.

SEC. 5. DAIRY PROCESSING EQUIPMENT LOAN GUARANTEE FUND.

    (a) Loans.--Section 310B(a) of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1932(a)) is amended--
            (1) by striking the section heading and inserting the 
        following:

``SEC. 310B. RURAL INDUSTRIALIZATION ASSISTANCE.'';

        and
            (2) in paragraph (2)--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon;
                    (B) in subparagraph (D)--
                            (i) by striking ``to facilitate'' and 
                        inserting ``facilitating''; and
                            (ii) by striking the period at the end and 
                        inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(E) providing processors of dairy products with 
                incentives for investing in new equipment and 
                technologies by using not more than $15,000,000 each 
                fiscal year to--
                            ``(i) make loans to dairy processors and 
                        cooperatives to cover not more than 50 percent 
                        of the cost of acquisition and adoption of new 
                        equipment, equipment upgrades, and new 
                        technologies--
                                    ``(I) at a fixed rate of interest 
                                not to exceed the prime lending rate 
                                plus 1 percent; and
                                    ``(II) with a term of not to exceed 
                                15 years; and
                            ``(ii) guarantee loans made to dairy 
                        processors and cooperatives for the acquisition 
                        and adoption of new dairy equipment, equipment 
                        upgrades, and new technologies, at a guarantee 
                        rate of not more than 90 percent.''.
    (b) Lending Power for Dairy Processing Cooperatives.--Section 3.7 
of the Farm Credit Act of 1971 (12 U.S.C. 2128) is amended by adding at 
the end the following:
    ``(g) Dairy Processing Cooperatives.--
            ``(1) In general.--A bank for cooperatives may use not more 
        than $15,000,000 each fiscal year to provide dairy processing 
        cooperatives with working capital lines of credit and accounts 
        receivable financing for the purpose of accessing export 
        marketing opportunities for milk and milk products.
            ``(2) Limitations.--Financing provided by a bank for 
        cooperatives for a project under paragraph (1) may not exceed 
        the lesser of--
                    ``(A) $1,000,000; or
                    ``(B) 75 percent of the costs of carrying out the 
                project.
            ``(3) Term.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term of a line of credit 
                described in paragraph (1) shall not exceed 2 years.
                    ``(B) Revolving lines of credit.--A revolving line 
                of credit may be used for multiple transactions.
            ``(4) Due date.--An accounts receivable financing loan 
        under this subsection shall be due on the earlier of--
                    ``(A) the date on which the receivable is paid; or
                    ``(B) 180 days after the date of disbursement.
            ``(5) Use of financing.--
                    ``(A) Working capital line of credit financing.--
                Working capital line of credit financing under this 
                subsection may be used--
                            ``(i) to acquire inventory for the 
                        production of milk products;
                            ``(ii) to pay direct and indirect costs 
                        (such as design, engineering, labor, and 
                        overhead costs) used for--
                                    ``(I) the manufacture or purchase 
                                of goods, including work-in-process, 
                                for the production of milk products; or
                                    ``(II) the provision of services 
                                for the production of milk products; or
                            ``(iii) to support standby letters of 
                        credit used as bid bonds, performance bonds, or 
                        payment guarantees.
                    ``(B) Accounts receivable financing.--Accounts 
                receivable financing under this subsection may be used 
                to finance export accounts receivables for milk and 
                milk products sold on payment terms of not more than 
                180 days after the date of arrival at the port of 
                importation, if the finance export accounts receivable 
                have been insured by the Commodity Credit Corporation 
                or other guarantor approved by the Secretary.''.

SEC. 6. MANDATORY REPORTING OF DAIRY COMMODITIES.

    (a) Definitions.--Section 272 of the Agricultural Marketing Act of 
1946 (7 U.S.C. 1637a) is amended to read as follows:

``SEC. 272. DEFINITIONS.

    ``In this subtitle:
            ``(1) Dairy commodity.--
                    ``(A) In general.--The term `dairy commodity' means 
                a product manufactured from milk or a milk-derived 
                ingredient.
                    ``(B) Inclusions.--The term `dairy commodity' 
                includes--
                            ``(i) fluid milk;
                            ``(ii) cheese;
                            ``(iii) butter;
                            ``(iv) nonfat dry milk;
                            ``(v) skim milk;
                            ``(vi) whey products;
                            ``(vii) dry proteins (such as a milk 
                        protein concentrate, casein, and a caseinate);
                            ``(viii) a lactose product; and
                            ``(ix) a fresh dairy product (such as 
                        yogurt and ice cream).
            ``(2) Dairy processor.--The term `dairy processor' means a 
        person or legal entity that commercially processes a monthly 
        average of at least 250,000 pounds of milk into cheese, butter, 
        fresh dairy products, nonfat dry milk, or other dairy solids.
            ``(3) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture.''.
    (b) Mandatory Reporting.--Section 273 of the Agricultural Marketing 
Act of 1946 (7 U.S.C. 1637b) is amended--
            (1) by redesignating subsections (c) through (e) as 
        subsections (d) through (f), respectively;
            (2) by striking subsections (a) and (b) and inserting the 
        following:
    ``(a) Daily Reporting.--
            ``(1) In general.--The corporate officers or officially 
        designated representatives of each dairy processor shall report 
        to the Secretary at least once each reporting day, not later 
        than 10:00 a.m. Central Time, for each sales transaction 
        involving a dairy commodity, information concerning--
                    ``(A) the sales price;
                    ``(B) the quantity sold;
                    ``(C) the location of the sales transaction; and
                    ``(D) product characteristics, including--
                            ``(i) moisture level;
                            ``(ii) packaging size;
                            ``(iii) grade;
                            ``(iv) if appropriate, fat or protein 
                        level;
                            ``(v) heat level for dried products; and
                            ``(vi) other defining product 
                        characteristics.
            ``(2) Publication.--The Secretary shall make the 
        information reported under paragraph (1) available to the 
        public not less frequently than once each reporting day, 
        categorized by location and product characteristics.
    ``(b) Weekly Reporting.--
            ``(1) In general.--The corporate officers or officially 
        designated representatives of each dairy processor shall report 
        to the Secretary, on the first reporting day of each week, not 
        later than 9:00 a.m. Central Time, for the prior week 
        information concerning--
                    ``(A) the sales prices for sales transactions 
                involving dairy commodities, categorized by product 
                characteristics; and
                    ``(B) the quantities of dairy commodities sold.
            ``(2) Publication.--The Secretary shall make the 
        information reported under paragraph (1) available to the 
        public on the first reporting day of the each week, not later 
        than 10:00 a.m. Central Time, categorized by location and 
        product characteristics.
            ``(3) Federal order prices.--The Secretary shall use weekly 
        prices published under paragraph (2) to calculate Federal milk 
        marketing order prices.
    ``(c) Monthly Reporting.--
            ``(1) In general.--The corporate officers or officially 
        designated representatives of each dairy processor shall report 
        to the Secretary, on the first reporting day of each month, not 
        later than 9:00 a.m. Central Time, the quantity of all dairy 
        commodities processed by the dairy processor during the prior 
        month.
            ``(2) Publication.--The Secretary shall make the 
        information reported under paragraph (1) available to the 
        public on the first reporting day of the each month, not later 
        than 10:00 a.m. Central Time, categorized by location and 
        product characteristics.''; and
            (3) in subsection (d) (as redesignated by paragraph (2))--
                    (A) in paragraph (3), by adding at the end the 
                following:
                    ``(C) Cold storage survey.--
                            ``(i) In general.--For purposes of the cold 
                        storage survey of the National Agricultural 
                        Statistics Service, each facility storing dairy 
                        products shall report to the Secretary each 
                        month information on the quantity of dairy 
                        products stored.
                            ``(ii) Audit.--Subject to the availability 
                        of appropriations, the Secretary shall take 
                        such measures as are necessary to audit the 
                        survey described in clause (i) and ensure 
                        compliance with the reporting requirement.
                    ``(D) Dairy products survey.--
                            ``(i) In general.--For purposes of the 
                        dairy products survey of the National 
                        Agricultural Statistics Service, each 
                        manufacturer storing dairy products shall 
                        report to the Secretary each month information 
                        on the quantity of dairy products stored.
                            ``(ii) Audit.--The Secretary shall take 
                        such measures as are necessary to audit the 
                        survey described in clause (i) and ensure 
                        compliance with the reporting requirement.''; 
                        and
                    (B) by adding at the end the following
            ``(7) Survey products.--In carrying out this section, the 
        Secretary shall require each manufacturer and other appropriate 
        person to report to the Secretary, at a periodic interval 
        determined by the Secretary, information on the products in the 
        cold storage survey and the dairy products survey of the 
        National Agricultural Statistics Service.
            ``(8) Exemption.--The Secretary may exempt from all 
        reporting requirements under this section any manufacturer or 
        facility that stores less than an average of 10,000 pounds 
        monthly on an annual basis.
            ``(9) Collection and publication of data.--The Secretary 
        shall collect and publish data on actual milk prices paid by 
        dairy processors.''.

SEC. 7. BUDGETARY EFFECTS.

    The budgetary effects of this Act, for the purpose of complying 
with the Statutory Pay-As-You-Go Act of 2010, shall be determined by 
reference to the latest statement titled ``Budgetary Effects of PAYGO 
Legislation'' for this Act, submitted for printing in the Congressional 
Record by the Chairman of the Senate Budget Committee, provided that 
such statement has been submitted prior to the vote on passage.

Summary: Dairy Advancement Act of 2011 - Amends the Food, Conservation, and Energy Act of 2008 to repeal the dairy product price support program. Directs the Secretary of Agriculture (USDA) to permit dairy producers, as an alternative to receiving milk income loss contract program payments, to receive livestock gross margin insurance that protects against the loss of gross margin for the initial election month through September 30, 2012. Provides for a limited subsidy. Directs the Secretary to establish a two-class system for classifying milk under federal milk marketing orders. Amends the Consolidated Farm and Rural Development Act to authorize loans and loan guarantees to provide dairy producers with incentives to invest in new equipment and technologies. Amends the Farm Credit Act to authorize banks for cooperatives to provide dairy processing cooperatives with lines of credit and accounts receivable financing to develop export opportunities for milk and milk products. Amends the Agricultural Marketing Act of 1946 to revise dairy productcommodity reporting provisions.