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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1741 Introduced in House (IH)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Dairy Freedom Act''.

SEC. 2. DAIRY PRODUCER MARGIN INSURANCE PROGRAM.

    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 new section:

``SEC. 1511. DAIRY PRODUCER MARGIN INSURANCE PROGRAM.

    ``(a) Definitions.--In this section:
            ``(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 subsection 
        (b)(2).
            ``(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) 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 subsection 
        (b)(1) using the sum of the following:
                    ``(A) The product determined by multiplying--
                            ``(i) 1.0728; by
                            ``(ii) the price of corn per bushel.
                    ``(B) The product determined by multiplying--
                            ``(i) 0.00735; by
                            ``(ii) the price of soybean meal per ton.
                    ``(C) The product determined by multiplying--
                            ``(i) 0.0137; by
                            ``(ii) the price of alfalfa hay per ton.
            ``(4) Consecutive 2-month period.--The term `consecutive 2-
        month period' refers to the 2-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.
            ``(5) 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.
            ``(6) Margin insurance program.--The term `margin insurance 
        program' means the dairy producer margin insurance program 
        required by this section.
            ``(7) Participating dairy producer.--The term 
        `participating dairy producer' means a dairy producer that 
        registers under subsection (d)(2) to participate in the margin 
        insurance program.
            ``(8) Production history.--The term `production history' 
        means the quantity of annual milk marketings determined for a 
        dairy producer under subsection (e)(1).
            ``(9) United states.--The term `United States', in a 
        geographical sense, means the 50 States.
    ``(b) Calculation of Average Feed Cost and Actual Dairy Producer 
Margins.--
            ``(1) Calculation of average feed cost.--The Secretary 
        shall calculate the national average feed cost for each month 
        using the following data:
                    ``(A) The price of corn for a month shall be the 
                price received during that month by agricultural 
                producers in the United States for corn, as reported in 
                the monthly Agriculture Prices report by the Secretary.
                    ``(B) The price of soybean meal for a month shall 
                be the central Illinois price for soybean meal, as 
                reported in the Market News--Monthly Soybean Meal Price 
                Report by the Secretary.
                    ``(C) The price of alfalfa hay for a month shall be 
                the price received during that month by agricultural 
                producers in the United States for alfalfa hay, as 
                reported in the monthly Agriculture Prices report by 
                the Secretary.
            ``(2) Calculation of actual dairy producer margins.--The 
        Secretary shall calculate the actual dairy producer margin for 
        each consecutive 2-month period by subtracting--
                    ``(A) the average feed cost for that consecutive 2-
                month period, determined in accordance with paragraph 
                (1); from
                    ``(B) the all-milk price for that consecutive 2-
                month period.
    ``(c) Establishment of Dairy Producer Margin Insurance Program.--
The Secretary shall establish and administer 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 the threshold levels for 
the payments.
    ``(d) Eligibility and Registration of Dairy Producers for Margin 
Insurance Program.--
            ``(1) Eligibility.--All dairy producers in the United 
        States shall be eligible to participate in the margin insurance 
        program.
            ``(2) Registration process.--
                    ``(A) Registration.--
                            ``(i) In general.--The Secretary shall 
                        register all interested dairy producers in the 
                        margin insurance program.
                            ``(ii) Manner and form.--The Secretary 
                        shall specify the manner and form by which a 
                        dairy producer shall register for the margin 
                        insurance program.
                    ``(B) Treatment of multi-producer operations.--If a 
                dairy operation consists of more than 1 dairy producer, 
                all of the dairy producers of the operation shall be 
                treated as a single dairy producer for purposes of--
                            ``(i) purchasing margin insurance; and
                            ``(ii) payment of producer premiums under 
                        subsection (f)(4).
                    ``(C) Treatment of producers with multiple dairy 
                operations.--If a dairy producer operates 2 or more 
                dairy operations, each dairy operation of the producer 
                shall require a separate registration to participate 
                and purchase margin insurance.
            ``(3) Time for registration.--
                    ``(A) Existing dairy producers.--During the 1-year 
                period beginning on the date of enactment of this 
                section, a dairy producer that is actively engaged in a 
                dairy operation as of that date may register with the 
                Secretary to participate in the margin insurance 
                program.
                    ``(B) New entrants.--A dairy producer that has no 
                existing interest in a dairy operation as of the date 
                of enactment of this section, but that, after that 
                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 to participate in the margin 
                insurance program.
            ``(4) Retroactivity.--
                    ``(A) Notice of availability of retroactive 
                protection.--Not later than 30 days after the effective 
                date of this section, the Secretary shall publish a 
                notice in the Federal Register to inform dairy 
                producers of the availability of retroactive margin 
                insurance, subject to the condition that interested 
                producers must file a notice of intent (in such form 
                and manner as the Secretary specifies in the Federal 
                Register notice) to participate in the margin insurance 
                program.
                    ``(B) Retroactive margin insurance.--
                            ``(i) Availability.--If a dairy producer 
                        files a notice of intent under subparagraph (A) 
                        to participate in the margin insurance program 
                        before the initiation of the sign-up period for 
                        the margin insurance program and subsequently 
                        signs up for the margin insurance program, the 
                        producer shall receive margin insurance 
                        retroactive to the effective date of this 
                        section.
                            ``(ii) Duration.--Retroactive margin 
                        insurance under this paragraph for a dairy 
                        producer shall apply from the effective date of 
                        this section until the date on which the 
                        producer signs up for the margin insurance 
                        program.
                    ``(C) Notice of intent and obligation to 
                participate.--In no way does filing a notice of intent 
                under this paragraph obligate a dairy producer to sign 
                up for the margin insurance program once the program 
                rules are final, but if a producer does file a notice 
                of intent and subsequently signs up for the margin 
                insurance program, that dairy producer is obligated to 
                pay premiums for any retroactive margin insurance 
                selected in the notice of intent.
            ``(5) Reconstitution.--The Secretary shall ensure that a 
        dairy producer does not reconstitute a dairy operation for the 
        sole purpose of purchasing margin insurance.
    ``(e) Production History of Participating Dairy Producers.--
            ``(1) Determination of production history.--
                    ``(A) In general.--The Secretary shall determine 
                the production history of the dairy operation of each 
                participating dairy producer in the margin insurance 
                program.
                    ``(B) Calculation.--Except as provided in 
                subparagraph (C), the production history of a 
                participating dairy producer shall be equal to the 
                highest annual milk marketings of the dairy producer 
                during any 1 of the 3 calendar years immediately 
                preceding the registration of the dairy producer for 
                participation in the margin insurance program.
                    ``(C) New producers.--If a dairy producer has been 
                in operation for less than 1 year, the Secretary shall 
                determine the production history of the dairy producer 
                by extrapolating the actual milk marketings for the 
                months that the dairy producer has been in operation to 
                a yearly amount.
            ``(2) Required information.--A participating dairy producer 
        shall provide all information that the Secretary may require in 
        order to establish the production history of the dairy 
        operation of the dairy producer.
            ``(3) Transfer of production history.--
                    ``(A) Transfer by sale.--
                            ``(i) Request for transfer.--If an existing 
                        dairy producer sells an entire dairy operation 
                        to another party, the seller and purchaser may 
                        jointly request that the Secretary transfer to 
                        the purchaser the interest of the seller in the 
                        production history of the dairy operation.
                            ``(ii) Transfer.--If the Secretary 
                        determines that the seller has sold the entire 
                        dairy operation to the purchaser, the Secretary 
                        shall approve the transfer and, thereafter, the 
                        seller shall have no interest in the production 
                        history of the sold dairy operation.
                    ``(B) Transfer by lease.--
                            ``(i) Request for transfer.--If an existing 
                        dairy producer 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 interest of the lessor in the 
                        production history of the dairy operation.
                            ``(ii) Transfer.--If the Secretary 
                        determines that the lessor has leased the 
                        entire dairy operation to the lessee, the 
                        Secretary shall approve the transfer and, 
                        thereafter, the lessor shall have no interest 
                        for the duration of the term of the lease in 
                        the production history of the leased dairy 
                        operation.
                    ``(C) Coverage level.--A purchaser or lessee to 
                whom the Secretary transfers a production history under 
                this paragraph may not obtain a different level of 
                margin insurance coverage held by the seller or lessor 
                from whom the transfer was obtained.
                    ``(D) New entrants.--The Secretary may not transfer 
                the production history determined for a dairy producer 
                described in subsection (d)(3)(B) to another person.
            ``(4) Movement and transfer of production history.--
                    ``(A) Movement and transfer authorized.--Subject to 
                subparagraph (B), if a dairy producer moves from 1 
                location to another location, the dairy producer may 
                maintain the production history associated with the 
                operation.
                    ``(B) Notification requirement.--A dairy producer 
                shall notify the Secretary of any move of a dairy 
                operation under subparagraph (A).
                    ``(C) Subsequent occupation of vacated location.--A 
                party subsequently occupying a dairy operation location 
                vacated as described in subparagraph (A) shall have no 
                interest in the production history previously 
                associated with the operation at that location.
    ``(f) Margin Insurance.--
            ``(1) In general.--At the time of the registration of a 
        dairy producer in the margin insurance program under subsection 
        (d) and annually thereafter during the duration of the margin 
        insurance program, an eligible dairy producer may purchase 
        margin insurance.
            ``(2) Selection of payment threshold.--A participating 
        dairy producer purchasing margin insurance shall elect a 
        coverage level in any increment of $0.50, with a minimum of 
        $4.00 and a maximum of $8.00.
            ``(3) Selection of coverage percentage.--A participating 
        dairy producer purchasing margin insurance shall elect a 
        percentage of coverage, equal to not more than 80 percent nor 
        less than 25 percent, of the production history of the dairy 
        operation of the participating dairy producer.
            ``(4) Producer premiums.--
                    ``(A) Premiums required.--A participating dairy 
                producer that purchases margin insurance shall pay an 
                annual premium equal to the product obtained by 
                multiplying--
                            ``(i) the percentage selected by the dairy 
                        producer under paragraph (3);
                            ``(ii) the production history applicable to 
                        the dairy producer; and
                            ``(iii) the premium per hundredweight of 
                        milk, as specified in the applicable table 
                        under paragraph (B) or (C).
                    ``(B) Premium per hundredweight for first 4 million 
                pounds of production.--For the first 4,000,000 pounds 
                of milk marketings included in the annual production 
                history of a participating dairy operation, the premium 
                per hundredweight corresponding to each coverage level 
                specified in the following table is 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.
------------------------------------------------------------------------

                    ``(C) Premium per hundredweight for production in 
                excess of 4 million pounds.--For milk marketings in 
                excess of 4,000,000 pounds included in the annual 
                production history of a participating dairy operation, 
                the premium per hundredweight corresponding 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.
------------------------------------------------------------------------

                    ``(D) Time for payment.--
                            ``(i) First year.--As soon as practicable 
                        after a dairy producer registers to participate 
                        in the margin insurance program and purchases 
                        margin insurance, the dairy producer shall pay 
                        the premium determined under subparagraph (A) 
                        for the dairy producer for the first calendar 
                        year of the margin insurance.
                            ``(ii) Subsequent years.--
                                    ``(I) In general.--When the dairy 
                                producer first purchases margin 
                                insurance, 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 1 of the schedules 
                                described in subclauses (II) and (III).
                                    ``(II) Single annual payment.--The 
                                participating dairy producer may elect 
                                to pay 100 percent of the annual 
                                premium determined under subparagraph 
                                (A) for the dairy producer for a 
                                calendar year by not later than January 
                                15 of the calendar year.
                                    ``(III) Semi-annual payments.--The 
                                participating dairy producer may elect 
                                to pay--
                                            ``(aa) 50 percent of the 
                                        annual premium determined under 
                                        subparagraph (A) for the dairy 
                                        producer for a calendar year by 
                                        not later than January 15 of 
                                        the calendar year; and
                                            ``(bb) the remaining 50 
                                        percent of the premium by not 
                                        later than June 15 of the 
                                        calendar year.
            ``(5) Producer premium obligations.--
                    ``(A) Pro-ration of first year premium.--A 
                participating dairy producer that purchases margin 
                insurance after initial registration in the margin 
                insurance program shall pay a pro-rated premium for the 
                first calendar year based on the date on which the 
                producer purchases the coverage.
                    ``(B) Subsequent premiums.--Except as provided in 
                subparagraph (A), the annual premium for a 
                participating dairy producer shall be determined under 
                paragraph (4) for each year in which the margin 
                insurance program is in effect.
                    ``(C) Legal obligation.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), a participating dairy 
                        producer that purchases margin insurance shall 
                        be legally obligated to pay the applicable 
                        premiums for the entire period of the margin 
                        insurance program (as provided in the payment 
                        schedule elected under paragraph (4)(B)), and 
                        may not opt out of the margin insurance 
                        program.
                            ``(ii) Death.--If the dairy producer dies, 
                        the estate of the deceased may cancel the 
                        margin insurance and shall not be responsible 
                        for any further premium payments.
                            ``(iii) Retirement.--If the dairy producer 
                        retires, the producer may request that 
                        Secretary cancel the margin insurance 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 7 years.
            ``(6)  Payment threshold.--A participating dairy producer 
        with margin insurance shall receive a margin insurance payment 
        whenever the average actual dairy producer margin for a 
        consecutive 2-month period is less than the coverage level 
        threshold selected by the dairy producer under paragraph (2).
            ``(7)  Margin insurance payments.--
                    ``(A) In general.--The Secretary shall make a 
                margin insurance protection payment to each 
                participating dairy producer whenever the average 
                actual dairy producer margin for a consecutive 2-month 
                period is less than the coverage level threshold 
                selected by the dairy producer under paragraph (2).
                    ``(B) Amount of payment.--The margin insurance 
                payment for the dairy operation of a participating 
                dairy producer shall be determined as follows:
                            ``(i) The Secretary shall calculate the 
                        difference between--
                                    ``(I) the coverage level threshold 
                                selected by the dairy producer under 
                                paragraph (2); and
                                    ``(II) the average actual dairy 
                                producer margin for the consecutive 2-
                                month period.
                            ``(ii) The amount determined under clause 
                        (i) shall be multiplied by--
                                    ``(I) the percentage selected by 
                                the dairy producer under paragraph (3); 
                                and
                                    ``(II) the lesser of--
                                            ``(aa) the quotient 
                                        obtained by dividing--

                                                    ``(AA) the 
                                                production history 
                                                applicable to the 
                                                producer under 
                                                subsection (e)(1); by

                                                    ``(BB) 6; and

                                            ``(bb) the actual quantity 
                                        of milk marketed by the dairy 
                                        operation of the dairy producer 
                                        during the consecutive 2-month 
                                        period.
    ``(g) Effect of Failure To Pay Premiums.--
            ``(1) Loss of benefits.--A participating dairy producer 
        that is in arrears on premium payments for margin insurance--
                    ``(A) remains legally obligated to pay the 
                premiums; and
                    ``(B) may not receive margin insurance until the 
                premiums are fully paid.
            ``(2) Enforcement.--The Secretary may take such action as 
        is necessary to collect premium payments for margin insurance.
    ``(h) Duration.--The Secretary shall conduct the margin insurance 
program during the period beginning on October 1, 2014, and ending on 
September 30, 2018.''.

SEC. 3. REPEAL OR REAUTHORIZATION OF OTHER DAIRY-RELATED PROVISIONS.

    (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.
    (c) Repeal Dairy Export Incentive Program.--Section 153 of the Food 
Security Act of 1985 (15 U.S.C. 713a-14) is repealed.
    (d) Conforming Amendments.--Section 902(2) of the Trade Sanctions 
Reform and Export Enhancement Act of 2000 (22 U.S.C. 7201(2)) is 
amended--
            (1) by striking subparagraph (D); and
            (2) by redesignating subparagraphs (E) and (F) as 
        subparagraphs (D) and (E), respectively.
    (e) Effective Date.--The repeals under subsections (a), (b), and 
(c) and the amendments made by subsection (d) shall take effect on 
October 1, 2013.
                                 <all>
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