I 

113TH CONGRESS 

1ST SESSION H. R. 1741 

To establish a dairy producer margin insurance program for the purpose 

of protecting dairy producer income by paying participating dairy producers margin insurance payments when actual dairy producer margins 

are less than a threshold level, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 25, 2013 

Mr. GOODLATTE (for himself and Mr. DAVID SCOTT of Georgia) introduced 

the following bill; which was referred to the Committee on Agriculture 

A BILL 

To establish a dairy producer margin insurance program 

for the purpose of protecting dairy producer income by 

paying participating dairy producers margin insurance 

payments when actual dairy producer margins are less 

than a threshold level, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Dairy Freedom Act’’. 


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1 SEC. 2. DAIRY PRODUCER MARGIN INSURANCE PROGRAM. 

2 Subtitle E of title I of the Food, Conservation, and 

3 Energy Act of 2008 (7 U.S.C. 8771 et seq.) is amended 

4 by adding at the end the following new section: 

5 ‘‘SEC. 1511. DAIRY PRODUCER MARGIN INSURANCE PRO6 GRAM. 

7 ‘‘(a) DEFINITIONS.—In this section: 

8 ‘‘(1) ACTUAL DAIRY PRODUCER MARGIN.—The 

9 term ‘actual dairy producer margin’ means the dif10 ference between the all-milk price and the average 

11 feed cost, as calculated under subsection (b)(2). 

12 ‘‘(2) ALL-MILK PRICE.—The term ‘all-milk 

13 price’ means the average price received, per hun14 dredweight of milk, by dairy producers for all milk 

15 sold to plants and dealers in the United States, as 

16 reported by the National Agricultural Statistics 

17 Service. 

18 ‘‘(3) AVERAGE FEED COST.—The term ‘average 

19 feed cost’ means the average cost of feed used by a 

20 dairy operation to produce a hundredweight of milk, 

21 determined under subsection (b)(1) using the sum of 

22 the following: 

23 ‘‘(A) The product determined by multi24 plying— 

25 ‘‘(i) 1.0728; by 

26 ‘‘(ii) the price of corn per bushel. 


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1 ‘‘(B) The product determined by multi2 plying— 

3 ‘‘(i) 0.00735; by 

4 ‘‘(ii) the price of soybean meal per 

5 ton. 

6 ‘‘(C) The product determined by multi7 plying— 

8 ‘‘(i) 0.0137; by 

9 ‘‘(ii) the price of alfalfa hay per ton. 

10 ‘‘(4) CONSECUTIVE 2-MONTH PERIOD.—The 

11 term ‘consecutive 2-month period’ refers to the 2- 

12 month period consisting of the months of January 

13 and February, March and April, May and June, 

14 July and August, September and October, or No15 vember and December, respectively. 

16 ‘‘(5) DAIRY PRODUCER.—The term ‘dairy pro17 ducer’ means an individual or entity that directly or 

18 indirectly (as determined by the Secretary)— 

19 ‘‘(A) shares in the risk of producing milk; 

20 and 

21 ‘‘(B) makes contributions (including land, 

22 labor, management, equipment, or capital) to 

23 the dairy operation of the individual or entity 

24 that are at least commensurate with the share 


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1 of the individual or entity of the proceeds of the 

2 operation. 

3 ‘‘(6) MARGIN INSURANCE PROGRAM.—The term 

4 ‘margin insurance program’ means the dairy pro5 ducer margin insurance program required by this 

6 section. 

7 ‘‘(7) PARTICIPATING DAIRY PRODUCER.—The 

8 term ‘participating dairy producer’ means a dairy 

9 producer that registers under subsection (d)(2) to 

10 participate in the margin insurance program. 

11 ‘‘(8) PRODUCTION HISTORY.—The term ‘pro12 duction history’ means the quantity of annual milk 

13 marketings determined for a dairy producer under 

14 subsection (e)(1). 

15 ‘‘(9) UNITED STATES.—The term ‘United 

16 States’, in a geographical sense, means the 50 

17 States. 

18 ‘‘(b) CALCULATION OF AVERAGE FEED COST AND

19 ACTUAL DAIRY PRODUCER MARGINS.— 

20 ‘‘(1) CALCULATION OF AVERAGE FEED COST.— 

21 The Secretary shall calculate the national average 

22 feed cost for each month using the following data: 

23 ‘‘(A) The price of corn for a month shall 

24 be the price received during that month by agri25 cultural producers in the United States for 


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1 corn, as reported in the monthly Agriculture 

2 Prices report by the Secretary. 

3 ‘‘(B) The price of soybean meal for a 

4 month shall be the central Illinois price for soy5 bean meal, as reported in the Market News— 

6 Monthly Soybean Meal Price Report by the Sec7 retary. 

8 ‘‘(C) The price of alfalfa hay for a month 

9 shall be the price received during that month by 

10 agricultural producers in the United States for 

11 alfalfa hay, as reported in the monthly Agri12 culture Prices report by the Secretary. 

13 ‘‘(2) CALCULATION OF ACTUAL DAIRY PRO14 DUCER MARGINS.—The Secretary shall calculate the 

15 actual dairy producer margin for each consecutive 2- 

16 month period by subtracting— 

17 ‘‘(A) the average feed cost for that con18 secutive 2-month period, determined in accord19 ance with paragraph (1); from 

20 ‘‘(B) the all-milk price for that consecutive 

21 2-month period. 

22 ‘‘(c) ESTABLISHMENT OF DAIRY PRODUCER MARGIN

23 INSURANCE PROGRAM.—The Secretary shall establish and 

24 administer a dairy producer margin insurance program for 

25 the purpose of protecting dairy producer income by paying 


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1 participating dairy producers margin insurance payments 

2 when actual dairy producer margins are less than the 

3 threshold levels for the payments. 

4 ‘‘(d) ELIGIBILITY AND REGISTRATION OF DAIRY

5 PRODUCERS FOR MARGIN INSURANCE PROGRAM.— 

6 ‘‘(1) ELIGIBILITY.—All dairy producers in the 

7 United States shall be eligible to participate in the 

8 margin insurance program. 

9 ‘‘(2) REGISTRATION PROCESS.— 

10 ‘‘(A) REGISTRATION.— 

11 ‘‘(i) IN GENERAL.—The Secretary 

12 shall register all interested dairy producers 

13 in the margin insurance program. 

14 ‘‘(ii) MANNER AND FORM.—The Sec15 retary shall specify the manner and form 

16 by which a dairy producer shall register for 

17 the margin insurance program. 

18 ‘‘(B) TREATMENT OF MULTI-PRODUCER

19 OPERATIONS.—If a dairy operation consists of 

20 more than 1 dairy producer, all of the dairy 

21 producers of the operation shall be treated as a 

22 single dairy producer for purposes of— 

23 ‘‘(i) purchasing margin insurance; and 

24 ‘‘(ii) payment of producer premiums 

25 under subsection (f)(4). 


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1 ‘‘(C) TREATMENT OF PRODUCERS WITH

2 MULTIPLE DAIRY OPERATIONS.—If a dairy pro3 ducer operates 2 or more dairy operations, each 

4 dairy operation of the producer shall require a 

5 separate registration to participate and pur6 chase margin insurance. 

7 ‘‘(3) TIME FOR REGISTRATION.— 

8 ‘‘(A) EXISTING DAIRY PRODUCERS.—Dur9 ing the 1-year period beginning on the date of 

10 enactment of this section, a dairy producer that 

11 is actively engaged in a dairy operation as of 

12 that date may register with the Secretary to 

13 participate in the margin insurance program. 

14 ‘‘(B) NEW ENTRANTS.—A dairy producer 

15 that has no existing interest in a dairy oper16 ation as of the date of enactment of this sec17 tion, but that, after that date, establishes a new 

18 dairy operation, may register with the Secretary 

19 during the 180-day period beginning on the 

20 date on which the dairy operation first markets 

21 milk commercially to participate in the margin 

22 insurance program. 

23 ‘‘(4) RETROACTIVITY.— 

24 ‘‘(A) NOTICE OF AVAILABILITY OF RETRO25 ACTIVE PROTECTION.—Not later than 30 days 


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1 after the effective date of this section, the Sec2 retary shall publish a notice in the Federal Reg3 ister to inform dairy producers of the avail4 ability of retroactive margin insurance, subject 

5 to the condition that interested producers must 

6 file a notice of intent (in such form and manner 

7 as the Secretary specifies in the Federal Reg8 ister notice) to participate in the margin insur9 ance program. 

10 ‘‘(B) RETROACTIVE MARGIN INSURANCE.— 

11 ‘‘(i) AVAILABILITY.—If a dairy pro12 ducer files a notice of intent under sub13 paragraph (A) to participate in the margin 

14 insurance program before the initiation of 

15 the sign-up period for the margin insur16 ance program and subsequently signs up 

17 for the margin insurance program, the pro18 ducer shall receive margin insurance retro19 active to the effective date of this section. 

20 ‘‘(ii) DURATION.—Retroactive margin 

21 insurance under this paragraph for a dairy 

22 producer shall apply from the effective 

23 date of this section until the date on which 

24 the producer signs up for the margin in25 surance program. 


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1 ‘‘(C) NOTICE OF INTENT AND OBLIGATION

2 TO PARTICIPATE.—In no way does filing a no3 tice of intent under this paragraph obligate a 

4 dairy producer to sign up for the margin insur5 ance program once the program rules are final, 

6 but if a producer does file a notice of intent and 

7 subsequently signs up for the margin insurance 

8 program, that dairy producer is obligated to 

9 pay premiums for any retroactive margin insur10 ance selected in the notice of intent. 

11 ‘‘(5) RECONSTITUTION.—The Secretary shall 

12 ensure that a dairy producer does not reconstitute a 

13 dairy operation for the sole purpose of purchasing 

14 margin insurance. 

15 ‘‘(e) PRODUCTION HISTORY OF PARTICIPATING

16 DAIRY PRODUCERS.— 

17 ‘‘(1) DETERMINATION OF PRODUCTION HIS18 TORY.— 

19 ‘‘(A) IN GENERAL.—The Secretary shall 

20 determine the production history of the dairy 

21 operation of each participating dairy producer 

22 in the margin insurance program. 

23 ‘‘(B) CALCULATION.—Except as provided 

24 in subparagraph (C), the production history of 

25 a participating dairy producer shall be equal to 


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1 the highest annual milk marketings of the dairy 

2 producer during any 1 of the 3 calendar years 

3 immediately preceding the registration of the 

4 dairy producer for participation in the margin 

5 insurance program. 

6 ‘‘(C) NEW PRODUCERS.—If a dairy pro7 ducer has been in operation for less than 1 

8 year, the Secretary shall determine the produc9 tion history of the dairy producer by extrapo10 lating the actual milk marketings for the 

11 months that the dairy producer has been in op12 eration to a yearly amount. 

13 ‘‘(2) REQUIRED INFORMATION.—A partici14 pating dairy producer shall provide all information 

15 that the Secretary may require in order to establish 

16 the production history of the dairy operation of the 

17 dairy producer. 

18 ‘‘(3) TRANSFER OF PRODUCTION HISTORY.— 

19 ‘‘(A) TRANSFER BY SALE.— 

20 ‘‘(i) REQUEST FOR TRANSFER.—If an 

21 existing dairy producer sells an entire 

22 dairy operation to another party, the seller 

23 and purchaser may jointly request that the 

24 Secretary transfer to the purchaser the inVerDate Mar 15 2010 00:53 May 01, 2013 Jkt 029200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1741.IH H1741

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1 terest of the seller in the production his2 tory of the dairy operation. 

3 ‘‘(ii) TRANSFER.—If the Secretary de4 termines that the seller has sold the entire 

5 dairy operation to the purchaser, the Sec6 retary shall approve the transfer and, 

7 thereafter, the seller shall have no interest 

8 in the production history of the sold dairy 

9 operation. 

10 ‘‘(B) TRANSFER BY LEASE.— 

11 ‘‘(i) REQUEST FOR TRANSFER.—If an 

12 existing dairy producer leases an entire 

13 dairy operation to another party, the lessor 

14 and lessee may jointly request that the 

15 Secretary transfer to the lessee for the du16 ration of the term of the lease the interest 

17 of the lessor in the production history of 

18 the dairy operation. 

19 ‘‘(ii) TRANSFER.—If the Secretary de20 termines that the lessor has leased the en21 tire dairy operation to the lessee, the Sec22 retary shall approve the transfer and, 

23 thereafter, the lessor shall have no interest 

24 for the duration of the term of the lease in 


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1 the production history of the leased dairy 

2 operation. 

3 ‘‘(C) COVERAGE LEVEL.—A purchaser or 

4 lessee to whom the Secretary transfers a pro5 duction history under this paragraph may not 

6 obtain a different level of margin insurance cov7 erage held by the seller or lessor from whom the 

8 transfer was obtained. 

9 ‘‘(D) NEW ENTRANTS.—The Secretary 

10 may not transfer the production history deter11 mined for a dairy producer described in sub12 section (d)(3)(B) to another person. 

13 ‘‘(4) MOVEMENT AND TRANSFER OF PRODUC14 TION HISTORY.— 

15 ‘‘(A) MOVEMENT AND TRANSFER AUTHOR16 IZED.—Subject to subparagraph (B), if a dairy 

17 producer moves from 1 location to another loca18 tion, the dairy producer may maintain the pro19 duction history associated with the operation. 

20 ‘‘(B) NOTIFICATION REQUIREMENT.—A 

21 dairy producer shall notify the Secretary of any 

22 move of a dairy operation under subparagraph 

23 (A). 

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1 pying a dairy operation location vacated as de2 scribed in subparagraph (A) shall have no inter3 est in the production history previously associ4 ated with the operation at that location. 

5 ‘‘(f) MARGIN INSURANCE.— 

6 ‘‘(1) IN GENERAL.—At the time of the registra7 tion of a dairy producer in the margin insurance 

8 program under subsection (d) and annually there9 after during the duration of the margin insurance 

10 program, an eligible dairy producer may purchase 

11 margin insurance. 

12 ‘‘(2) SELECTION OF PAYMENT THRESHOLD.—A 

13 participating dairy producer purchasing margin in14 surance shall elect a coverage level in any increment 

15 of $0.50, with a minimum of $4.00 and a maximum 

16 of $8.00. 

17 ‘‘(3) SELECTION OF COVERAGE PERCENTAGE.— 

18 A participating dairy producer purchasing margin 

19 insurance shall elect a percentage of coverage, equal 

20 to not more than 80 percent nor less than 25 per21 cent, of the production history of the dairy operation 

22 of the participating dairy producer. 

23 ‘‘(4) PRODUCER PREMIUMS.— 

24 ‘‘(A) PREMIUMS REQUIRED.—A partici25 pating dairy producer that purchases margin 


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1 insurance shall pay an annual premium equal to 

2 the product obtained by multiplying— 

3 ‘‘(i) the percentage selected by the 

4 dairy producer under paragraph (3); 

5 ‘‘(ii) the production history applicable 

6 to the dairy producer; and 

7 ‘‘(iii) the premium per hundredweight 

8 of milk, as specified in the applicable table 

9 under paragraph (B) or (C). 

10 ‘‘(B) PREMIUM PER HUNDREDWEIGHT FOR

11 FIRST 4 MILLION POUNDS OF PRODUCTION.— 

12 For the first 4,000,000 pounds of milk mar13 ketings included in the annual production his14 tory of a participating dairy operation, the pre15 mium per hundredweight corresponding to each 

16 coverage level specified in the following table is 

17 as follows: 

‘‘Coverage Level Premium per Cwt. 

$4.00 $0.000 

$4.50 $0.01

$5.00 $0.02

$5.50 $0.035 

$6.00 $0.045 

$6.50 $0.09

$7.00 $0.18

$7.50 $0.60

$8.00 $0.95.

18 ‘‘(C) PREMIUM PER HUNDREDWEIGHT FOR

19 PRODUCTION IN EXCESS OF 4 MILLION


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1 POUNDS.—For milk marketings in excess of 

2 4,000,000 pounds included in the annual pro3 duction history of a participating dairy oper4 ation, the premium per hundredweight cor5 responding to each coverage level is as follows: 

‘‘Coverage Level Premium per Cwt. 

$4.00 $0.030 

$4.50 $0.045 

$5.00 $0.066 

$5.50 $0.11

$6.00 $0.185 

$6.50 $0.29

$7.00 $0.38

$7.50 $0.83

$8.00 $1.06.

6 ‘‘(D) TIME FOR PAYMENT.— 

7 ‘‘(i) FIRST YEAR.—As soon as prac8 ticable after a dairy producer registers to 

9 participate in the margin insurance pro10 gram and purchases margin insurance, the 

11 dairy producer shall pay the premium de12 termined under subparagraph (A) for the 

13 dairy producer for the first calendar year 

14 of the margin insurance. 

15 ‘‘(ii) SUBSEQUENT YEARS.— 

16 ‘‘(I) IN GENERAL.—When the 

17 dairy producer first purchases margin 

18 insurance, the dairy producer shall 

19 also elect the method by which the 


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1 dairy producer will pay premiums 

2 under this subsection for subsequent 

3 years in accordance with 1 of the 

4 schedules described in subclauses (II) 

5 and (III). 

6 ‘‘(II) SINGLE ANNUAL PAY7 MENT.—The participating dairy pro8 ducer may elect to pay 100 percent of 

9 the annual premium determined under 

10 subparagraph (A) for the dairy pro11 ducer for a calendar year by not later 

12 than January 15 of the calendar year. 

13 ‘‘(III) SEMI-ANNUAL PAY14 MENTS.—The participating dairy pro15 ducer may elect to pay— 

16 ‘‘(aa) 50 percent of the an17 nual premium determined under 

18 subparagraph (A) for the dairy 

19 producer for a calendar year by 

20 not later than January 15 of the 

21 calendar year; and 

22 ‘‘(bb) the remaining 50 per23 cent of the premium by not later 

24 than June 15 of the calendar 

25 year. 


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1 ‘‘(5) PRODUCER PREMIUM OBLIGATIONS.— 

2 ‘‘(A) PRO-RATION OF FIRST YEAR PRE3 MIUM.—A participating dairy producer that 

4 purchases margin insurance after initial reg5 istration in the margin insurance program shall 

6 pay a pro-rated premium for the first calendar 

7 year based on the date on which the producer 

8 purchases the coverage. 

9 ‘‘(B) SUBSEQUENT PREMIUMS.—Except as 

10 provided in subparagraph (A), the annual pre11 mium for a participating dairy producer shall 

12 be determined under paragraph (4) for each 

13 year in which the margin insurance program is 

14 in effect. 

15 ‘‘(C) LEGAL OBLIGATION.— 

16 ‘‘(i) IN GENERAL.—Except as pro17 vided in clauses (ii) and (iii), a partici18 pating dairy producer that purchases mar19 gin insurance shall be legally obligated to 

20 pay the applicable premiums for the entire 

21 period of the margin insurance program 

22 (as provided in the payment schedule elect23 ed under paragraph (4)(B)), and may not 

24 opt out of the margin insurance program. 


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1 ‘‘(ii) DEATH.—If the dairy producer 

2 dies, the estate of the deceased may cancel 

3 the margin insurance and shall not be re4 sponsible for any further premium pay5 ments. 

6 ‘‘(iii) RETIREMENT.—If the dairy pro7 ducer retires, the producer may request 

8 that Secretary cancel the margin insurance 

9 if the producer has terminated the dairy 

10 operation entirely and certifies under oath 

11 that the producer will not be actively en12 gaged in any dairy operation for at least 

13 the next 7 years. 

14 ‘‘(6) PAYMENT THRESHOLD.—A participating 

15 dairy producer with margin insurance shall receive a 

16 margin insurance payment whenever the average ac17 tual dairy producer margin for a consecutive 2- 

18 month period is less than the coverage level thresh19 old selected by the dairy producer under paragraph 

20 (2). 

21 ‘‘(7) MARGIN INSURANCE PAYMENTS.— 

22 ‘‘(A) IN GENERAL.—The Secretary shall 

23 make a margin insurance protection payment to 

24 each participating dairy producer whenever the 

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1 secutive 2-month period is less than the cov2 erage level threshold selected by the dairy pro3 ducer under paragraph (2). 

4 ‘‘(B) AMOUNT OF PAYMENT.—The margin 

5 insurance payment for the dairy operation of a 

6 participating dairy producer shall be determined 

7 as follows: 

8 ‘‘(i) The Secretary shall calculate the 

9 difference between— 

10 ‘‘(I) the coverage level threshold 

11 selected by the dairy producer under 

12 paragraph (2); and 

13 ‘‘(II) the average actual dairy 

14 producer margin for the consecutive 

15 2-month period. 

16 ‘‘(ii) The amount determined under 

17 clause (i) shall be multiplied by— 

18 ‘‘(I) the percentage selected by 

19 the dairy producer under paragraph 

20 (3); and 

21 ‘‘(II) the lesser of— 

22 ‘‘(aa) the quotient obtained 

23 by dividing— 

24 ‘‘(AA) the production 

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1 ducer under subsection 

2 (e)(1); by 

3 ‘‘(BB) 6; and 

4 ‘‘(bb) the actual quantity of 

5 milk marketed by the dairy oper6 ation of the dairy producer dur7 ing the consecutive 2-month pe8 riod. 

9 ‘‘(g) EFFECT OF FAILURE TO PAY PREMIUMS.— 

10 ‘‘(1) LOSS OF BENEFITS.—A participating 

11 dairy producer that is in arrears on premium pay12 ments for margin insurance— 

13 ‘‘(A) remains legally obligated to pay the 

14 premiums; and 

15 ‘‘(B) may not receive margin insurance 

16 until the premiums are fully paid. 

17 ‘‘(2) ENFORCEMENT.—The Secretary may take 

18 such action as is necessary to collect premium pay19 ments for margin insurance. 

20 ‘‘(h) DURATION.—The Secretary shall conduct the 

21 margin insurance program during the period beginning on 

22 October 1, 2014, and ending on September 30, 2018.’’. 


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1 SEC. 3. REPEAL OR REAUTHORIZATION OF OTHER DAIRY2 RELATED PROVISIONS. 

3 (a) REPEAL OF DAIRY PRODUCT PRICE SUPPORT

4 PROGRAM.—Section 1501 of the Food, Conservation, and 

5 Energy Act of 2008 (7 U.S.C. 8771) is repealed. 

6 (b) REPEAL OF MILK INCOME LOSS CONTRACT PRO7 GRAM.—Section 1506 of the Food, Conservation, and En8 ergy Act of 2008 (7 U.S.C. 8773) is repealed. 

9 (c) REPEAL DAIRY EXPORT INCENTIVE PROGRAM.— 

10 Section 153 of the Food Security Act of 1985 (15 U.S.C. 

11 713a–14) is repealed. 

12 (d) CONFORMING AMENDMENTS.—Section 902(2) of 

13 the Trade Sanctions Reform and Export Enhancement 

14 Act of 2000 (22 U.S.C. 7201(2)) is amended— 

15 (1) by striking subparagraph (D); and 

16 (2) by redesignating subparagraphs (E) and 

17 (F) as subparagraphs (D) and (E), respectively. 

18 (e) EFFECTIVE DATE.—The repeals under sub19 sections (a), (b), and (c) and the amendments made by 

20 subsection (d) shall take effect on October 1, 2013. 

Æ 


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