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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1640 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1640

 To amend the Agricultural Adjustment Act to require the Secretary of 
 Agriculture to determine the price of all milk used for manufactured 
  purposes, which shall be classified as Class II milk, by using the 
      national average cost of production, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 3, 2011

   Mr. Casey introduced the following bill; which was read twice and 
   referred to the Committee on Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL

 
 To amend the Agricultural Adjustment Act to require the Secretary of 
 Agriculture to determine the price of all milk used for manufactured 
  purposes, which shall be classified as Class II milk, by using the 
      national average cost of production, 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 ``Federal Milk Marketing Improvement 
Act of 2011''.

SEC. 2. PRICES RECEIVED FOR MILK UNDER MILK MARKETING ORDERS.

    Section 8c(5)(B) of the Agricultural Adjustment Act (7 U.S.C. 
608c(5)(B)), reenacted with amendments by the Agricultural Marketing 
Agreement Act of 1937, is amended--
            (1) in the first clauses (i) and (ii), by inserting 
        ``(based on the blended price of all milk covered by the 
        order)'' after ``uniform prices'' each place it appears; and
            (2) in clause (b) of the matter following the first clause 
        (ii), by inserting ``and the component value'' after 
        ``quality''.

SEC. 3. CLASS II MILK PRICING.

    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, is amended by adding at the end the following:
                    ``(P) Class ii milk pricing.--
                            ``(i) Definition of national average cost 
                        of production.--In this subparagraph, the term 
                        `national average cost of production' means the 
                        amount, as determined by the Economic Research 
                        Service of the Department of Agriculture, equal 
                        to the difference between--
                                    ``(I) the national average of the 
                                operating cost and the allocated 
                                overhead cost of producing all milk in 
                                the 48 contiguous States; and
                                    ``(II) the opportunity cost for 
                                unpaid labor of producing all milk in 
                                the 48 contiguous States.
                            ``(ii) Minimum price.--The Secretary shall 
                        base the minimum price for Class II milk on the 
                        national average cost of production.
                            ``(iii) Survey.--For purposes of 
                        determining the national average cost of 
                        production under clause (i), the Secretary 
                        shall survey dairy producers and associations 
                        of dairy producers subject to Federal and State 
                        milk marketing orders and in all unregulated 
                        areas applicable to all milk.
                            ``(iv) Price announcement.--
                                    ``(I) In general.--Not later than 
                                November 1 of each calendar year, the 
                                Secretary shall announce the minimum 
                                price for Class II milk for the next 
                                calendar year, as determined in 
                                accordance with clause (ii).
                                    ``(II) Adjustments.--Using the most 
                                currently available national average 
                                cost of production, the Secretary shall 
                                adjust the price announced under 
                                subclause (I) for a calendar year on 
                                April 1, July 1, and October 1 of the 
                                calendar year.
                                    ``(III) Notification.--Not later 
                                than 15 days prior to the effective 
                                date of a price adjustment under this 
                                clause, the Secretary shall submit 
                                notification of the adjusted price to--
                                            ``(aa) the Committee on 
                                        Agriculture of the House of 
                                        Representatives;
                                            ``(bb) the Committee on 
                                        Agriculture, Nutrition, and 
                                        Forestry of the Senate;
                                            ``(cc) each administrator 
                                        of a Federal milk marketing 
                                        order;
                                            ``(dd) each State agency 
                                        that oversees the pricing of 
                                        milk paid to dairy producers; 
                                        and
                                            ``(ee) other applicable 
                                        Federal and State agencies.
                                    ``(IV) Publication.--After 
                                receiving notification under subclause 
                                (III)(cc), each administrator of a 
                                Federal milk marketing order shall 
                                publish the decision of the Secretary 
                                in all bulletins and publications of 
                                the Federal milk marketing order.
                            ``(v) Basic formula price.--
                                    ``(I) In general.--The Secretary 
                                shall use the Class II milk price 
                                announced under clause (iv) as the 
                                basic formula price for all Federal and 
                                State milk marketing orders and all 
                                unregulated milk production areas.
                                    ``(II) Class i milk.--
                                            ``(aa) In general.--The 
                                        price of Class I milk in all 
                                        Federal and State milk 
                                        marketing orders and all 
                                        unregulated milk production 
                                        areas shall be equal to--

                                                    ``(AA) the basic 
                                                formula price under 
                                                subclause (I); plus

                                                    ``(BB) the 
                                                applicable Class I milk 
                                                differential under 
                                                Federal and State milk 
                                                marketing orders.

                                            ``(bb) Unregulated areas.--
                                        For purposes of item (aa)(BB), 
                                        the Secretary shall assign 
                                        comparable Class I milk 
                                        differentials to each 
                                        unregulated area.''.

SEC. 4. INVENTORY MANAGEMENT PROGRAM.

    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, as amended by section 3, is amended by adding at 
the end the following:
                    ``(Q) Inventory management program.--
                            ``(i) Milk production totals.--Not later 
                        than February 1 of each calendar year, the 
                        Secretary shall determine the total quantity of 
                        all milk produced by each dairy producer or 
                        farming operation during the 3 preceding 
                        calendar years.
                            ``(ii) Production base.--
                                    ``(I) In general.--The starting 
                                production base of a dairy producer 
                                shall be the average quantity of milk 
                                produced by the dairy producer during 
                                the 3 calendar years immediately 
                                preceding the date of enactment of this 
                                subparagraph.
                                    ``(II) Adjustment.--The production 
                                base of a dairy producer shall be 
                                adjusted on January 1st of each year.
                                    ``(III) Limitation.--The production 
                                base of a dairy producer shall be based 
                                on the dairy producer, not the farming 
                                operation, and may not be sold, 
                                transferred, bartered, or donated.
                                    ``(IV) New dairy producer 
                                exception.--A new dairy producer, as 
                                defined by the Secretary, shall--
                                            ``(aa) during the 1-year 
                                        period beginning on the date on 
                                        which the new dairy producer 
                                        commences operation, be exempt 
                                        from any applicable price 
                                        reduction relating to the first 
                                        3,000,000 pounds of milk 
                                        produced by the new dairy 
                                        producer;
                                            ``(bb) in the case of any 
                                        milk produced in excess of 
                                        3,000,000 pounds during that 1-
                                        year period, be subject to each 
                                        price reduction described in 
                                        clauses (vi) and (vii); and
                                            ``(cc) after that 1-year 
                                        period, be subject to each 
                                        price reduction that applies to 
                                        existing dairy producers.
                            ``(iii) Estimation of annual milk 
                        production and domestic consumption.--Not later 
                        than November 1 of each calendar year and 
                        taking into consideration the import 
                        projections and export projections for all milk 
                        products, the Secretary shall estimate the 
                        quantity of all milk to be produced in the 48 
                        contiguous States and marketed by dairy 
                        producers for commercial use during the next 12 
                        months.
                            ``(iv) Identification and determination of 
                        dairy products.--
                                    ``(I) In general.--Not less 
                                frequently than once each quarter, the 
                                Secretary shall--
                                            ``(aa) identify all dairy 
                                        products (including cheeses, 
                                        curds, butter, butterfat, 
                                        butter oil, buttermilk, 
                                        anhydrous milk fat, dairy 
                                        spreads, milk, cream, 
                                        concentrated milk, condensed 
                                        milk, nonfat dry milk powder, 
                                        whole milk powder, skim milk 
                                        powder, all other forms of 
                                        powdered milk, yogurt, ice 
                                        cream, whey, whey powder, dried 
                                        whey, whey protein concentrate, 
                                        all other forms of whey 
                                        products, milk protein 
                                        concentrate, milk protein 
                                        isolate, casein, caseinates, 
                                        lactose, food preps containing 
                                        milk, and milk chocolate) 
                                        imported into, or exported 
                                        from, the United States; and
                                            ``(bb) determine the 
                                        quantity of raw milk contained 
                                        in each such product.
                                    ``(II) Inclusions.--In identifying 
                                dairy products under subclause (I)(aa), 
                                the Secretary shall include any current 
                                or projected future imports or exports 
                                of a product used for dairy, a dairy 
                                substitute, or ingredient, including 
                                any product that does not have the 
                                status of `generally recognized as 
                                safe', as determined by the 
                                Commissioner of Food and Drugs.
                            ``(v) Excess production determination.--Not 
                        more than once every 2 months, if the 
                        Secretary, acting through the Commodity Credit 
                        Corporation, has purchased the maximum quantity 
                        of milk and milk products as required by law to 
                        administer programs including child nutrition 
                        programs (as defined in section 25(b) of the 
                        Richard B. Russell National School Lunch Act 
                        (42 U.S.C. 1769f(b)), feeding programs 
                        administered by the Secretary of Defense, 
                        institutional programs, and any other mandated 
                        Federal food or feeding programs, the Secretary 
                        shall determine whether an excess quantity of 
                        milk and milk products is being produced for 
                        the national domestic market.
                            ``(vi) Reduction in price received.--
                                    ``(I) In general.--Subject to 
                                subclauses (II), (IV), and (V), if the 
                                Secretary determines under clause (v) 
                                that there is excess production, the 
                                Secretary shall provide for a reduction 
                                in the price received by all dairy 
                                producers for not more than 5 percent 
                                of all milk produced in the 48 
                                contiguous States and marketed by dairy 
                                producers for commercial use.
                                    ``(II) Notification.--Not later 
                                than 15 days prior to the 
                                implementation of a reduction in price 
                                in accordance with subclause (I), the 
                                Secretary shall submit notification of, 
                                and justification for, the reduction in 
                                price to--
                                            ``(aa) the Committee on 
                                        Agriculture of the House of 
                                        Representatives;
                                            ``(bb) the Committee on 
                                        Agriculture, Nutrition, and 
                                        Forestry of the Senate;
                                            ``(cc) each administrator 
                                        of a Federal milk marketing 
                                        order;
                                            ``(dd) each State agency 
                                        that oversees the pricing of 
                                        milk paid to dairy producers; 
                                        and
                                            ``(ee) other applicable 
                                        Federal and State agencies.
                                    ``(III) Publication.--After 
                                receiving notification under subclause 
                                (II)(cc), each administrator of a 
                                Federal milk marketing order shall 
                                publish the decision of the Secretary 
                                in all bulletins and publications of 
                                the Federal milk marketing order.
                                    ``(IV) Limitation.--The Secretary 
                                shall not provide for a reduction in 
                                the price received by a dairy producer 
                                under subclause (I) unless the 
                                Secretary determines under this 
                                subparagraph that there exists a 
                                positive trade balance in dairy 
                                products that are imported into, or 
                                exported from, the United States, based 
                                on--
                                            ``(aa) dollar value; and
                                            ``(bb) the quantity of milk 
                                        represented by imports and 
                                        exports, as determined under 
                                        this subparagraph.
                                    ``(V) Amount.--The amount of the 
                                reduction under subclause (I) in the 
                                price received by dairy producers shall 
                                not exceed \1/2\ the minimum price of 
                                Class II milk.
                            ``(vii) Additional reduction.--
                                    ``(I) In general.--If the Secretary 
                                determines that the reduction described 
                                in clause (vi) is insufficient to 
                                reduce excess production, subject to 
                                subclauses (II) and (III) and clause 
                                (ii)(IV), the Secretary shall reduce 
                                the price received by any dairy 
                                producer or farming operation that has 
                                increased the production of all milk in 
                                a calendar quarter, as compared to the 
                                average quantity of milk produced in 
                                the corresponding calendar quarter in 
                                the previous 3 years.
                                    ``(II) Application.--A reduction in 
                                price under subclause (I) shall apply 
                                only to the quantity of milk produced 
                                in excess of the average quantity of 
                                milk produced in the corresponding 
                                calendar quarters in the previous 3 
                                years.
                                    ``(III) Notification.--Not later 
                                than 15 days prior to the 
                                implementation of a reduction in price 
                                in accordance with subclause (I), the 
                                Secretary shall submit notification of, 
                                and justification for, the reduction in 
                                price to--
                                            ``(aa) the Committee on 
                                        Agriculture of the House of 
                                        Representatives;
                                            ``(bb) the Committee on 
                                        Agriculture, Nutrition, and 
                                        Forestry of the Senate;
                                            ``(cc) each administrator 
                                        of a Federal milk marketing 
                                        order;
                                            ``(dd) each State agency 
                                        that oversees the pricing of 
                                        milk paid to dairy producers; 
                                        and
                                            ``(ee) other applicable 
                                        Federal and State agencies.
                                    ``(IV) Publication.--After 
                                receiving notification under subclause 
                                (III)(cc), each administrator of a 
                                Federal milk marketing order shall 
                                publish the decision of the Secretary 
                                in all bulletins and publications of 
                                the Federal milk marketing order.
                            ``(viii) Amounts derived from reduction in 
                        prices paid to dairy producers.--
                                    ``(I) In general.--Not later than 
                                30 days after the end of each quarter, 
                                the Secretary shall pay to the special 
                                dairy producer account established 
                                under subclause (II) any amounts 
                                derived from a reduction in milk prices 
                                paid to dairy producers under clauses 
                                (vi) and (vii).
                                    ``(II) Special dairy producer 
                                account.--The Commodity Credit 
                                Corporation shall establish a special 
                                dairy producer account in which amounts 
                                described in subclause (I) shall be 
                                credited.
                            ``(ix) Appeals.--
                                    ``(I) In general.--A dairy producer 
                                subject to an additional reduction 
                                under clause (vii) may appeal to the 
                                Federal or State milk marketing 
                                administrator to provide evidence that 
                                the dairy producer did not increase 
                                production in the calendar year that 
                                the reduction was in effect when 
                                compared to the average quantity of 
                                milk produced during the 3 previous 
                                years.
                                    ``(II) Return of amounts.--If a 
                                dairy producer proves that the dairy 
                                producer did not increase total 
                                production for the effective calendar 
                                year, the Secretary shall return to the 
                                dairy producer any amounts collected 
                                for any overproduction of any quarter 
                                of the affected year.
                                    ``(III) Submission of appeal.--A 
                                dairy producer that ships to an 
                                unregulated milk handler may submit any 
                                appeal of the dairy producer to the 
                                Secretary or to the designated 
                                representative of the Secretary.
                            ``(x) Extraordinary circumstances.--In 
                        deciding an appeal submitted by a dairy 
                        producer under clause (ix), a Federal or State 
                        milk marketing administrator (or, in the case 
                        of an appeal under clause (ix)(III), the 
                        Secretary or the designated representative of 
                        the Secretary) shall take into consideration 
                        production losses due to, at a minimum, fire, 
                        severe weather conditions, or severe disease 
                        outbreaks.
                            ``(xi) Collection.--Except as provided in 
                        clause (xii), reductions in price required 
                        under clause (vi) or (vii) shall be collected 
                        by Federal and State milk marketing 
                        administrators and timely remitted to the 
                        Commodity Credit Corporation to offset the cost 
                        of purchasing excess milk products.
                            ``(xii) Collection in unregulated areas.--
                        Reductions in price required for unregulated 
                        areas under subclause (IV) or (VI) shall be 
                        collected by the Secretary and timely remitted 
                        to the Commodity Credit Corporation to offset 
                        the cost of purchasing excess milk products.
                    ``(R) Prohibition on certain charges.--In carrying 
                out this Act, the Secretary shall not impose charges on 
                dairy producers for the cost of the conversion of raw 
                milk to manufactured products.
                    ``(S) Responsibilities of milk purchasing 
                handlers.--A milk handler that purchases milk from a 
                dairy producer shall assume title for the milk at the 
                time at which the milk is pumped into a milk truck 
                provided by or otherwise delivered to the milk handler.
                    ``(T) Applicability.--Subparagraphs (P) through (S) 
                apply to all dairy producers and handlers of milk in 
                the 48 contiguous States.''.

SEC. 5. AMENDMENTS TO FEDERAL MILK MARKETING ORDERS.

    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, is amended by adding at the end the following:
                    ``(H) Orders covering milk and milk products.--In 
                the case of an order covering milk or milk products, 
                disapproval of an amendment to the order shall not be 
                considered to be disapproval of--
                            ``(i) the order; or
                            ``(ii) other terms of the order.''.
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