II 

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. 

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 ‘‘Federal Milk Mar5 keting Improvement Act of 2011’’. 


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1 SEC. 2. PRICES RECEIVED FOR MILK UNDER MILK MAR2 KETING ORDERS. 

3 Section 8c(5)(B) of the Agricultural Adjustment Act 

4 (7 U.S.C. 608c(5)(B)), reenacted with amendments by the 

5 Agricultural Marketing Agreement Act of 1937, is amend6 ed— 

7 (1) in the first clauses (i) and (ii), by inserting 

8 ‘‘(based on the blended price of all milk covered by 

9 the order)’’ after ‘‘uniform prices’’ each place it ap10 pears; and 

11 (2) in clause (b) of the matter following the 

12 first clause (ii), by inserting ‘‘and the component 

13 value’’ after ‘‘quality’’. 

14 SEC. 3. CLASS II MILK PRICING. 

15 Section 8c(5) of the Agricultural Adjustment Act (7 

16 U.S.C. 608c(5)), reenacted with amendments by the Agri17 cultural Marketing Agreement Act of 1937, is amended 

18 by adding at the end the following: 

19 ‘‘(P) CLASS II MILK PRICING.— 

20 ‘‘(i) DEFINITION OF NATIONAL AVER21 AGE COST OF PRODUCTION.—In this sub22 paragraph, the term ‘national average cost 

23 of production’ means the amount, as deter24 mined by the Economic Research Service 

25 of the Department of Agriculture, equal to 

26 the difference between— 


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1 ‘‘(I) the national average of the 

2 operating cost and the allocated over3 head cost of producing all milk in the 

4 48 contiguous States; and 

5 ‘‘(II) the opportunity cost for un6 paid labor of producing all milk in the 

7 48 contiguous States. 

8 ‘‘(ii) MINIMUM PRICE.—The Secretary 

9 shall base the minimum price for Class II 

10 milk on the national average cost of pro11 duction. 

12 ‘‘(iii) SURVEY.—For purposes of de13 termining the national average cost of pro14 duction under clause (i), the Secretary 

15 shall survey dairy producers and associa16 tions of dairy producers subject to Federal 

17 and State milk marketing orders and in all 

18 unregulated areas applicable to all milk. 

19 ‘‘(iv) PRICE ANNOUNCEMENT.— 

20 ‘‘(I) IN GENERAL.—Not later 

21 than November 1 of each calendar 

22 year, the Secretary shall announce the 

23 minimum price for Class II milk for 

24 the next calendar year, as determined 

25 in accordance with clause (ii). 


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1 ‘‘(II) ADJUSTMENTS.—Using the 

2 most currently available national aver3 age cost of production, the Secretary 

4 shall adjust the price announced 

5 under subclause (I) for a calendar 

6 year on April 1, July 1, and October 

7 1 of the calendar year. 

8 ‘‘(III) NOTIFICATION.—Not later 

9 than 15 days prior to the effective 

10 date of a price adjustment under this 

11 clause, the Secretary shall submit no12 tification of the adjusted price to— 

13 ‘‘(aa) the Committee on Ag14 riculture of the House of Rep15 resentatives; 

16 ‘‘(bb) the Committee on Ag17 riculture, Nutrition, and Forestry 

18 of the Senate; 

19 ‘‘(cc) each administrator of 

20 a Federal milk marketing order; 

21 ‘‘(dd) each State agency 

22 that oversees the pricing of milk 

23 paid to dairy producers; and 

24 ‘‘(ee) other applicable Fed25 eral and State agencies. 


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1 ‘‘(IV) PUBLICATION.—After re2 ceiving notification under subclause 

3 (III)(cc), each administrator of a Fed4 eral milk marketing order shall pub5 lish the decision of the Secretary in all 

6 bulletins and publications of the Fed7 eral milk marketing order. 

8 ‘‘(v) BASIC FORMULA PRICE.— 

9 ‘‘(I) IN GENERAL.—The Sec10 retary shall use the Class II milk 

11 price announced under clause (iv) as 

12 the basic formula price for all Federal 

13 and State milk marketing orders and 

14 all unregulated milk production areas. 

15 ‘‘(II) CLASS I MILK.— 

16 ‘‘(aa) IN GENERAL.—The 

17 price of Class I milk in all Fed18 eral and State milk marketing 

19 orders and all unregulated milk 

20 production areas shall be equal 

21 to— 

22 ‘‘(AA) the basic for23 mula price under subclause 

24 (I); plus 


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1 ‘‘(BB) the applicable 

2 Class I milk differential 

3 under Federal and State 

4 milk marketing orders. 

5 ‘‘(bb) UNREGULATED

6 AREAS.—For purposes of item 

7 (aa)(BB), the Secretary shall as8 sign comparable Class I milk dif9 ferentials to each unregulated 

10 area.’’. 

11 SEC. 4. INVENTORY MANAGEMENT PROGRAM. 

12 Section 8c(5) of the Agricultural Adjustment Act (7 

13 U.S.C. 608c(5)), reenacted with amendments by the Agri14 cultural Marketing Agreement Act of 1937, as amended 

15 by section 3, is amended by adding at the end the fol16 lowing: 

17 ‘‘(Q) INVENTORY MANAGEMENT PRO18 GRAM.— 

19 ‘‘(i) MILK PRODUCTION TOTALS.—Not 

20 later than February 1 of each calendar 

21 year, the Secretary shall determine the 

22 total quantity of all milk produced by each 

23 dairy producer or farming operation during 

24 the 3 preceding calendar years. 

25 ‘‘(ii) PRODUCTION BASE.— 


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1 ‘‘(I) IN GENERAL.—The starting 

2 production base of a dairy producer 

3 shall be the average quantity of milk 

4 produced by the dairy producer during 

5 the 3 calendar years immediately pre6 ceding the date of enactment of this 

7 subparagraph. 

8 ‘‘(II) ADJUSTMENT.—The pro9 duction base of a dairy producer shall 

10 be adjusted on January 1st of each 

11 year. 

12 ‘‘(III) LIMITATION.—The produc13 tion base of a dairy producer shall be 

14 based on the dairy producer, not the 

15 farming operation, and may not be 

16 sold, transferred, bartered, or do17 nated. 

18 ‘‘(IV) NEW DAIRY PRODUCER EX19 CEPTION.—A new dairy producer, as 

20 defined by the Secretary, shall— 

21 ‘‘(aa) during the 1-year pe22 riod beginning on the date on 

23 which the new dairy producer 

24 commences operation, be exempt 

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1 tion relating to the first 

2 3,000,000 pounds of milk pro3 duced by the new dairy producer; 

4 ‘‘(bb) in the case of any 

5 milk produced in excess of 

6 3,000,000 pounds during that 1- 

7 year period, be subject to each 

8 price reduction described in 

9 clauses (vi) and (vii); and 

10 ‘‘(cc) after that 1-year pe11 riod, be subject to each price re12 duction that applies to existing 

13 dairy producers. 

14 ‘‘(iii) ESTIMATION OF ANNUAL MILK

15 PRODUCTION AND DOMESTIC CONSUMP16 TION.—Not later than November 1 of each 

17 calendar year and taking into consideration 

18 the import projections and export projec19 tions for all milk products, the Secretary 

20 shall estimate the quantity of all milk to be 

21 produced in the 48 contiguous States and 

22 marketed by dairy producers for commer23 cial use during the next 12 months. 

24 ‘‘(iv) IDENTIFICATION AND DETER25 MINATION OF DAIRY PRODUCTS.— 


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1 ‘‘(I) IN GENERAL.—Not less fre2 quently than once each quarter, the 

3 Secretary shall— 

4 ‘‘(aa) identify all dairy prod5 ucts (including cheeses, curds, 

6 butter, butterfat, butter oil, but7 termilk, anhydrous milk fat, 

8 dairy spreads, milk, cream, con9 centrated milk, condensed milk, 

10 nonfat dry milk powder, whole 

11 milk powder, skim milk powder, 

12 all other forms of powdered milk, 

13 yogurt, ice cream, whey, whey 

14 powder, dried whey, whey protein 

15 concentrate, all other forms of 

16 whey products, milk protein con17 centrate, milk protein isolate, ca18 sein, caseinates, lactose, food 

19 preps containing milk, and milk 

20 chocolate) imported into, or ex21 ported from, the United States; 

22 and 

23 ‘‘(bb) determine the quantity 

24 of raw milk contained in each 

25 such product. 


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1 ‘‘(II) INCLUSIONS.—In identi2 fying dairy products under subclause 

3 (I)(aa), the Secretary shall include 

4 any current or projected future im5 ports or exports of a product used for 

6 dairy, a dairy substitute, or ingre7 dient, including any product that does 

8 not have the status of ‘generally rec9 ognized as safe’, as determined by the 

10 Commissioner of Food and Drugs. 

11 ‘‘(v) EXCESS PRODUCTION DETER12 MINATION.—Not more than once every 2 

13 months, if the Secretary, acting through 

14 the Commodity Credit Corporation, has 

15 purchased the maximum quantity of milk 

16 and milk products as required by law to 

17 administer programs including child nutri18 tion programs (as defined in section 25(b) 

19 of the Richard B. Russell National School 

20 Lunch Act (42 U.S.C. 1769f(b)), feeding 

21 programs administered by the Secretary of 

22 Defense, institutional programs, and any 

23 other mandated Federal food or feeding 

24 programs, the Secretary shall determine 

25 whether an excess quantity of milk and 


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1 milk products is being produced for the na2 tional domestic market. 

3 ‘‘(vi) REDUCTION IN PRICE RE4 CEIVED.— 

5 ‘‘(I) IN GENERAL.—Subject to 

6 subclauses (II), (IV), and (V), if the 

7 Secretary determines under clause (v) 

8 that there is excess production, the 

9 Secretary shall provide for a reduction 

10 in the price received by all dairy pro11 ducers for not more than 5 percent of 

12 all milk produced in the 48 contiguous 

13 States and marketed by dairy pro14 ducers for commercial use. 

15 ‘‘(II) NOTIFICATION.—Not later 

16 than 15 days prior to the implementa17 tion of a reduction in price in accord18 ance with subclause (I), the Secretary 

19 shall submit notification of, and jus20 tification for, the reduction in price 

21 to— 

22 ‘‘(aa) the Committee on Ag23 riculture of the House of Rep24 resentatives; 


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1 ‘‘(bb) the Committee on Ag2 riculture, Nutrition, and Forestry 

3 of the Senate; 

4 ‘‘(cc) each administrator of 

5 a Federal milk marketing order; 

6 ‘‘(dd) each State agency 

7 that oversees the pricing of milk 

8 paid to dairy producers; and 

9 ‘‘(ee) other applicable Fed10 eral and State agencies. 

11 ‘‘(III) PUBLICATION.—After re12 ceiving notification under subclause 

13 (II)(cc), each administrator of a Fed14 eral milk marketing order shall pub15 lish the decision of the Secretary in all 

16 bulletins and publications of the Fed17 eral milk marketing order. 

18 ‘‘(IV) LIMITATION.—The Sec19 retary shall not provide for a reduc20 tion in the price received by a dairy 

21 producer under subclause (I) unless 

22 the Secretary determines under this 

23 subparagraph that there exists a posi24 tive trade balance in dairy products 


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1 that are imported into, or exported 

2 from, the United States, based on— 

3 ‘‘(aa) dollar value; and 

4 ‘‘(bb) the quantity of milk 

5 represented by imports and ex6 ports, as determined under this 

7 subparagraph. 

8 ‘‘(V) AMOUNT.—The amount of 

9 the reduction under subclause (I) in 

10 the price received by dairy producers 

shall not exceed 1 11 ⁄2 the minimum price 

12 of Class II milk. 

13 ‘‘(vii) ADDITIONAL REDUCTION.— 

14 ‘‘(I) IN GENERAL.—If the Sec15 retary determines that the reduction 

16 described in clause (vi) is insufficient 

17 to reduce excess production, subject to 

18 subclauses (II) and (III) and clause 

19 (ii)(IV), the Secretary shall reduce the 

20 price received by any dairy producer 

21 or farming operation that has in22 creased the production of all milk in a 

23 calendar quarter, as compared to the 

24 average quantity of milk produced in 


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1 the corresponding calendar quarter in 

2 the previous 3 years. 

3 ‘‘(II) APPLICATION.—A reduction 

4 in price under subclause (I) shall 

5 apply only to the quantity of milk pro6 duced in excess of the average quan7 tity of milk produced in the cor8 responding calendar quarters in the 

9 previous 3 years. 

10 ‘‘(III) NOTIFICATION.—Not later 

11 than 15 days prior to the implementa12 tion of a reduction in price in accord13 ance with subclause (I), the Secretary 

14 shall submit notification of, and jus15 tification for, the reduction in price 

16 to— 

17 ‘‘(aa) the Committee on Ag18 riculture of the House of Rep19 resentatives; 

20 ‘‘(bb) the Committee on Ag21 riculture, Nutrition, and Forestry 

22 of the Senate; 

23 ‘‘(cc) each administrator of 

24 a Federal milk marketing order; 


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1 ‘‘(dd) each State agency 

2 that oversees the pricing of milk 

3 paid to dairy producers; and 

4 ‘‘(ee) other applicable Fed5 eral and State agencies. 

6 ‘‘(IV) PUBLICATION.—After re7 ceiving notification under subclause 

8 (III)(cc), each administrator of a Fed9 eral milk marketing order shall pub10 lish the decision of the Secretary in all 

11 bulletins and publications of the Fed12 eral milk marketing order. 

13 ‘‘(viii) AMOUNTS DERIVED FROM RE14 DUCTION IN PRICES PAID TO DAIRY PRO15 DUCERS.— 

16 ‘‘(I) IN GENERAL.—Not later 

17 than 30 days after the end of each 

18 quarter, the Secretary shall pay to the 

19 special dairy producer account estab20 lished under subclause (II) any 

21 amounts derived from a reduction in 

22 milk prices paid to dairy producers 

23 under clauses (vi) and (vii). 

24 ‘‘(II) SPECIAL DAIRY PRODUCER

25 ACCOUNT.—The Commodity Credit 


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1 Corporation shall establish a special 

2 dairy producer account in which 

3 amounts described in subclause (I) 

4 shall be credited. 

5 ‘‘(ix) APPEALS.— 

6 ‘‘(I) IN GENERAL.—A dairy pro7 ducer subject to an additional reduc8 tion under clause (vii) may appeal to 

9 the Federal or State milk marketing 

10 administrator to provide evidence that 

11 the dairy producer did not increase 

12 production in the calendar year that 

13 the reduction was in effect when com14 pared to the average quantity of milk 

15 produced during the 3 previous years. 

16 ‘‘(II) RETURN OF AMOUNTS.—If 

17 a dairy producer proves that the dairy 

18 producer did not increase total pro19 duction for the effective calendar year, 

20 the Secretary shall return to the dairy 

21 producer any amounts collected for 

22 any overproduction of any quarter of 

23 the affected year. 

24 ‘‘(III) SUBMISSION OF APPEAL.— 

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1 regulated milk handler may submit 

2 any appeal of the dairy producer to 

3 the Secretary or to the designated 

4 representative of the Secretary. 

5 ‘‘(x) EXTRAORDINARY CIR6 CUMSTANCES.—In deciding an appeal sub7 mitted by a dairy producer under clause 

8 (ix), a Federal or State milk marketing ad9 ministrator (or, in the case of an appeal 

10 under clause (ix)(III), the Secretary or the 

11 designated representative of the Secretary) 

12 shall take into consideration production 

13 losses due to, at a minimum, fire, severe 

14 weather conditions, or severe disease out15 breaks. 

16 ‘‘(xi) COLLECTION.—Except as pro17 vided in clause (xii), reductions in price re18 quired under clause (vi) or (vii) shall be 

19 collected by Federal and State milk mar20 keting administrators and timely remitted 

21 to the Commodity Credit Corporation to 

22 offset the cost of purchasing excess milk 

23 products. 

24 ‘‘(xii) COLLECTION IN UNREGULATED

25 AREAS.—Reductions in price required for 


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1 unregulated areas under subclause (IV) or 

2 (VI) shall be collected by the Secretary and 

3 timely remitted to the Commodity Credit 

4 Corporation to offset the cost of pur5 chasing excess milk products. 

6 ‘‘(R) PROHIBITION ON CERTAIN

7 CHARGES.—In carrying out this Act, the Sec8 retary shall not impose charges on dairy pro9 ducers for the cost of the conversion of raw 

10 milk to manufactured products. 

11 ‘‘(S) RESPONSIBILITIES OF MILK PUR12 CHASING HANDLERS.—A milk handler that pur13 chases milk from a dairy producer shall assume 

14 title for the milk at the time at which the milk 

15 is pumped into a milk truck provided by or oth16 erwise delivered to the milk handler. 

17 ‘‘(T) APPLICABILITY.—Subparagraphs (P) 

18 through (S) apply to all dairy producers and 

19 handlers of milk in the 48 contiguous States.’’. 

20 SEC. 5. AMENDMENTS TO FEDERAL MILK MARKETING OR21 DERS. 

22 Section 8c(17) of the Agricultural Adjustment Act (7 

23 U.S.C. 608c(17)), reenacted with amendments by the Ag24 ricultural Marketing Agreement Act of 1937, is amended 

25 by adding at the end the following: 


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1 ‘‘(H) ORDERS COVERING MILK AND MILK

2 PRODUCTS.—In the case of an order covering 

3 milk or milk products, disapproval of an amend4 ment to the order shall not be considered to be 

5 disapproval of— 

6 ‘‘(i) the order; or 

7 ‘‘(ii) other terms of the order.’’. 

Æ 


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