II 

112TH CONGRESS 

1ST SESSION S. 1682 

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. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 12, 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 Food, Conservation, and Energy Act of 2008 

to promote growth and opportunity for the dairy industry 

in the United States, 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 Advancement 

5 Act of 2011’’. 

6 SEC. 2. REPEAL OF DAIRY PRODUCT PRICE SUPPORT PRO7 GRAM. 

8 Section 1501 of the Food, Conservation, and Energy 

9 Act of 2008 (7 U.S.C. 8771) is repealed. 


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1 SEC. 3. LIVESTOCK GROSS MARGIN INSURANCE FOR DAIRY. 

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: 

5 ‘‘SEC. 1511. LIVESTOCK GROSS MARGIN INSURANCE FOR 

6 DAIRY. 

7 ‘‘(a) IN GENERAL.—As an alternative to receiving 

8 milk income loss contract program payments under section 

9 1506, the Secretary shall give the producers on a dairy 

10 farm an opportunity to make an irrevocable election to in11 stead receive livestock gross margin insurance for dairy 

12 and receive a subsidy from the Secretary for an insurance 

13 policy that provides the producers on the dairy farm pro14 tection against the loss of gross margin (the market value 

15 of milk minus feed costs) for specified portions of milk 

16 produced by dairy cows of the producers, for the initial 

17 month for which the election is made through September 

18 30, 2012. 

19 ‘‘(b) SUBSIDY.— 

20 ‘‘(1) IN GENERAL.—Except as provided in para21 graph (2), the Secretary shall provide to the dairy 

22 producers on a farm under this section a subsidy at 

23 the $1.50-deductible level for not more than 

24 3,000,000 pounds of milk for each year. 

25 ‘‘(2) PRODUCER OPTIONS.—The producers on a 

26 dairy farm may, at the expense of the producers, reVerDate Mar 15 2010 05:53 Oct 13, 2011 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1682.IS S1682

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1 duce the deductible level or increase the quantity of 

2 covered pounds for a subsidy provided under this 

3 section.’’. 

4 SEC. 4. FEDERAL MILK MARKETING ORDERS. 

5 (a) 2-CLASS SYSTEM FOR CLASSIFYING MILK.— 

6 (1) IN GENERAL.—Not later than September 

7 30, 2014, the Secretary of Agriculture shall estab8 lish a 2-class system for classifying milk under Fed9 eral milk marketing orders issued under section 

10 8c(5) of the Agricultural Adjustment Act (7 U.S.C. 

11 608c(5)), reenacted with amendments by the Agri12 cultural Marketing Agreement Act of 1937, con13 sisting of a fluid milk class and a manufacturing 

14 milk class (with the price for both classes deter15 mined using the component prices of butterfat, pro16 tein, and other solids). 

17 (2) AMENDMENT TO ORDERS.— 

18 (A) IN GENERAL.—The Secretary shall 

19 submit a report to the Committee on Agri20 culture of the House of Representatives and the 

21 Committee on Agriculture, Nutrition, and For22 estry of the Senate that includes the text of 

23 proposed amendments to the Federal milk mar24 keting orders to implement the 2-class system 

25 for classifying milk. 


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1 (B) EFFECTIVE DATE.—The proposed 

2 amendments described in subparagraph (A) 

3 shall take effect not earlier than the date that 

4 is 180 days after the date on which the report 

5 is submitted under that subparagraph. 

6 (b) DEADLINE FOR ISSUANCE OF ORDERS.—Section 

7 8c(4) of the Agricultural Adjustment Act (7 U.S.C. 

8 608c(4)), reenacted with amendments by the Agricultural 

9 Marketing Agreement Act of 1937, is amended by striking 

10 ‘‘After’’ and inserting ‘‘Not later than 30 days after’’. 

11 (c) ECONOMIC IMPACT ASSESSMENT.—The Secretary 

12 of Agriculture shall— 

13 (1) carry out a review of the milk-feed margin 

14 during the 1-year period ending on the date of en15 actment of this Act; and 

16 (2) not later than September 30, 2013, and 

17 each time a proposed change in the Federal milk 

18 marketing order formulas is considered by the Sec19 retary— 

20 (A) assess the economic impact, over a 1- 

21 and 2-year period, of proposed changes in Fed22 eral milk marketing order formulas on— 

23 (i) milk supply; 

24 (ii) farm profitability; 

25 (iii) consumer demand; and 


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1 (iv) market prices; 

2 (B) submit to the Committee on Agri3 culture of the House of Representatives and the 

4 Committee on Agriculture, Nutrition, and For5 estry of the Senate a report that describes the 

6 results of the assessment; and 

7 (C) consider, and include in the record, the 

8 results of the assessment before making a deci9 sion on any proposed change to the Federal 

10 milk marketing order formulas. 

11 SEC. 5. DAIRY PROCESSING EQUIPMENT LOAN GUARANTEE 

12 FUND. 

13 (a) LOANS.—Section 310B(a) of the Consolidated 

14 Farm and Rural Development Act (7 U.S.C. 1932(a)) is 

15 amended— 

16 (1) by striking the section heading and insert17 ing the following: 

18 ‘‘SEC. 310B. RURAL INDUSTRIALIZATION ASSISTANCE.’’; 

19 and 

20 (2) in paragraph (2)— 

21 (A) in subparagraph (C), by striking 

22 ‘‘and’’ after the semicolon; 

23 (B) in subparagraph (D)— 

24 (i) by striking ‘‘to facilitate’’ and in25 serting ‘‘facilitating’’; and 


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1 (ii) by striking the period at the end 

2 and inserting ‘‘; and’’; and 

3 (C) by adding at the end the following: 

4 ‘‘(E) providing processors of dairy prod5 ucts with incentives for investing in new equip6 ment and technologies by using not more than 

7 $15,000,000 each fiscal year to— 

8 ‘‘(i) make loans to dairy processors 

9 and cooperatives to cover not more than 50 

10 percent of the cost of acquisition and adop11 tion of new equipment, equipment up12 grades, and new technologies— 

13 ‘‘(I) at a fixed rate of interest 

14 not to exceed the prime lending rate 

15 plus 1 percent; and 

16 ‘‘(II) with a term of not to ex17 ceed 15 years; and 

18 ‘‘(ii) guarantee loans made to dairy 

19 processors and cooperatives for the acquisi20 tion and adoption of new dairy equipment, 

21 equipment upgrades, and new technologies, 

22 at a guarantee rate of not more than 90 

23 percent.’’. 

24 (b) LENDING POWER FOR DAIRY PROCESSING CO25 OPERATIVES.—Section 3.7 of the Farm Credit Act of 


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1 1971 (12 U.S.C. 2128) is amended by adding at the end 

2 the following: 

3 ‘‘(g) DAIRY PROCESSING COOPERATIVES.— 

4 ‘‘(1) IN GENERAL.—A bank for cooperatives 

5 may use not more than $15,000,000 each fiscal year 

6 to provide dairy processing cooperatives with work7 ing capital lines of credit and accounts receivable fi8 nancing for the purpose of accessing export mar9 keting opportunities for milk and milk products. 

10 ‘‘(2) LIMITATIONS.—Financing provided by a 

11 bank for cooperatives for a project under paragraph 

12 (1) may not exceed the lesser of— 

13 ‘‘(A) $1,000,000; or 

14 ‘‘(B) 75 percent of the costs of carrying 

15 out the project. 

16 ‘‘(3) TERM.— 

17 ‘‘(A) IN GENERAL.—Except as provided in 

18 subparagraph (B), the term of a line of credit 

19 described in paragraph (1) shall not exceed 2 

20 years. 

21 ‘‘(B) REVOLVING LINES OF CREDIT.—A 

22 revolving line of credit may be used for multiple 

23 transactions. 


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1 ‘‘(4) DUE DATE.—An accounts receivable fi2 nancing loan under this subsection shall be due on 

3 the earlier of— 

4 ‘‘(A) the date on which the receivable is 

5 paid; or 

6 ‘‘(B) 180 days after the date of disburse7 ment. 

8 ‘‘(5) USE OF FINANCING.— 

9 ‘‘(A) WORKING CAPITAL LINE OF CREDIT

10 FINANCING.—Working capital line of credit fi11 nancing under this subsection may be used— 

12 ‘‘(i) to acquire inventory for the pro13 duction of milk products; 

14 ‘‘(ii) to pay direct and indirect costs 

15 (such as design, engineering, labor, and 

16 overhead costs) used for— 

17 ‘‘(I) the manufacture or purchase 

18 of goods, including work-in-process, 

19 for the production of milk products; 

20 or 

21 ‘‘(II) the provision of services for 

22 the production of milk products; or 

23 ‘‘(iii) to support standby letters of 

24 credit used as bid bonds, performance 

25 bonds, or payment guarantees. 


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1 ‘‘(B) ACCOUNTS RECEIVABLE FINANC2 ING.—Accounts receivable financing under this 

3 subsection may be used to finance export ac4 counts receivables for milk and milk products 

5 sold on payment terms of not more than 180 

6 days after the date of arrival at the port of im7 portation, if the finance export accounts receiv8 able have been insured by the Commodity Cred9 it Corporation or other guarantor approved by 

10 the Secretary.’’. 

11 SEC. 6. MANDATORY REPORTING OF DAIRY COMMODITIES. 

12 (a) DEFINITIONS.—Section 272 of the Agricultural 

13 Marketing Act of 1946 (7 U.S.C. 1637a) is amended to 

14 read as follows: 

15 ‘‘SEC. 272. DEFINITIONS. 

16 ‘‘In this subtitle: 

17 ‘‘(1) DAIRY COMMODITY.— 

18 ‘‘(A) IN GENERAL.—The term ‘dairy com19 modity’ means a product manufactured from 

20 milk or a milk-derived ingredient. 

21 ‘‘(B) INCLUSIONS.—The term ‘dairy com22 modity’ includes— 

23 ‘‘(i) fluid milk; 

24 ‘‘(ii) cheese; 

25 ‘‘(iii) butter; 


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1 ‘‘(iv) nonfat dry milk; 

2 ‘‘(v) skim milk; 

3 ‘‘(vi) whey products; 

4 ‘‘(vii) dry proteins (such as a milk 

5 protein concentrate, casein, and a casein6 ate); 

7 ‘‘(viii) a lactose product; and 

8 ‘‘(ix) a fresh dairy product (such as 

9 yogurt and ice cream). 

10 ‘‘(2) DAIRY PROCESSOR.—The term ‘dairy proc11 essor’ means a person or legal entity that commer12 cially processes a monthly average of at least 

13 250,000 pounds of milk into cheese, butter, fresh 

14 dairy products, nonfat dry milk, or other dairy sol15 ids. 

16 ‘‘(3) SECRETARY.—The term ‘Secretary’ means 

17 the Secretary of Agriculture.’’. 

18 (b) MANDATORY REPORTING.—Section 273 of the 

19 Agricultural Marketing Act of 1946 (7 U.S.C. 1637b) is 

20 amended— 

21 (1) by redesignating subsections (c) through (e) 

22 as subsections (d) through (f), respectively; 

23 (2) by striking subsections (a) and (b) and in24 serting the following: 

25 ‘‘(a) DAILY REPORTING.— 


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1 ‘‘(1) IN GENERAL.—The corporate officers or 

2 officially designated representatives of each dairy 

3 processor shall report to the Secretary at least once 

4 each reporting day, not later than 10:00 a.m. Cen5 tral Time, for each sales transaction involving a 

6 dairy commodity, information concerning— 

7 ‘‘(A) the sales price; 

8 ‘‘(B) the quantity sold; 

9 ‘‘(C) the location of the sales transaction; 

10 and 

11 ‘‘(D) product characteristics, including— 

12 ‘‘(i) moisture level; 

13 ‘‘(ii) packaging size; 

14 ‘‘(iii) grade; 

15 ‘‘(iv) if appropriate, fat or protein 

16 level; 

17 ‘‘(v) heat level for dried products; and 

18 ‘‘(vi) other defining product character19 istics. 

20 ‘‘(2) PUBLICATION.—The Secretary shall make 

21 the information reported under paragraph (1) avail22 able to the public not less frequently than once each 

23 reporting day, categorized by location and product 

24 characteristics. 

25 ‘‘(b) WEEKLY REPORTING.— 


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1 ‘‘(1) IN GENERAL.—The corporate officers or 

2 officially designated representatives of each dairy 

3 processor shall report to the Secretary, on the first 

4 reporting day of each week, not later than 9:00 a.m. 

5 Central Time, for the prior week information con6 cerning— 

7 ‘‘(A) the sales prices for sales transactions 

8 involving dairy commodities, categorized by 

9 product characteristics; and 

10 ‘‘(B) the quantities of dairy commodities 

11 sold. 

12 ‘‘(2) PUBLICATION.—The Secretary shall make 

13 the information reported under paragraph (1) avail14 able to the public on the first reporting day of the 

15 each week, not later than 10:00 a.m. Central Time, 

16 categorized by location and product characteristics. 

17 ‘‘(3) FEDERAL ORDER PRICES.—The Secretary 

18 shall use weekly prices published under paragraph 

19 (2) to calculate Federal milk marketing order prices. 

20 ‘‘(c) MONTHLY REPORTING.— 

21 ‘‘(1) IN GENERAL.—The corporate officers or 

22 officially designated representatives of each dairy 

23 processor shall report to the Secretary, on the first 

24 reporting day of each month, not later than 9:00 

25 a.m. Central Time, the quantity of all dairy comVerDate Mar 15 2010 05:53 Oct 13, 2011 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1682.IS S1682

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1 modities processed by the dairy processor during the 

2 prior month. 

3 ‘‘(2) PUBLICATION.—The Secretary shall make 

4 the information reported under paragraph (1) avail5 able to the public on the first reporting day of the 

6 each month, not later than 10:00 a.m. Central Time, 

7 categorized by location and product characteristics.’’; 

8 and 

9 (3) in subsection (d) (as redesignated by para10 graph (2))— 

11 (A) in paragraph (3), by adding at the end 

12 the following: 

13 ‘‘(C) COLD STORAGE SURVEY.— 

14 ‘‘(i) IN GENERAL.—For purposes of 

15 the cold storage survey of the National Ag16 ricultural Statistics Service, each facility 

17 storing dairy products shall report to the 

18 Secretary each month information on the 

19 quantity of dairy products stored. 

20 ‘‘(ii) AUDIT.—Subject to the avail21 ability of appropriations, the Secretary 

22 shall take such measures as are necessary 

23 to audit the survey described in clause (i) 

24 and ensure compliance with the reporting 

25 requirement. 


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1 ‘‘(D) DAIRY PRODUCTS SURVEY.— 

2 ‘‘(i) IN GENERAL.—For purposes of 

3 the dairy products survey of the National 

4 Agricultural Statistics Service, each manu5 facturer storing dairy products shall report 

6 to the Secretary each month information 

7 on the quantity of dairy products stored. 

8 ‘‘(ii) AUDIT.—The Secretary shall 

9 take such measures as are necessary to 

10 audit the survey described in clause (i) and 

11 ensure compliance with the reporting re12 quirement.’’; and 

13 (B) by adding at the end the following 

14 ‘‘(7) SURVEY PRODUCTS.—In carrying out this 

15 section, the Secretary shall require each manufac16 turer and other appropriate person to report to the 

17 Secretary, at a periodic interval determined by the 

18 Secretary, information on the products in the cold 

19 storage survey and the dairy products survey of the 

20 National Agricultural Statistics Service. 

21 ‘‘(8) EXEMPTION.—The Secretary may exempt 

22 from all reporting requirements under this section 

23 any manufacturer or facility that stores less than an 

24 average of 10,000 pounds monthly on an annual 

25 basis. 


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1 ‘‘(9) COLLECTION AND PUBLICATION OF

2 DATA.—The Secretary shall collect and publish data 

3 on actual milk prices paid by dairy processors.’’. 

4 SEC. 7. BUDGETARY EFFECTS. 

5 The budgetary effects of this Act, for the purpose of 

6 complying with the Statutory Pay-As-You-Go Act of 2010, 

7 shall be determined by reference to the latest statement 

8 titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 

9 Act, submitted for printing in the Congressional Record 

10 by the Chairman of the Senate Budget Committee, pro11 vided that such statement has been submitted prior to the 

12 vote on passage. 

Æ 


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