II 

112TH CONGRESS 

1ST SESSION S. 1715 

To replace current dairy product price support and milk income loss contract 

programs with a program to protect dairy producer income when the 

difference between milk prices and feed costs is less than a specified 

amount, to establish a dairy market stabilization program, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 17, 2011 

Mrs. GILLIBRAND introduced the following bill; which was read twice and 

referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To replace current dairy product price support and milk 

income loss contract programs with a program to protect 

dairy producer income when the difference between milk 

prices and feed costs is less than a specified amount, 

to establish a dairy market stabilization program, 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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Dairy Pricing Reform and Farmer Protection Act of 

6 2011’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents of 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—FEDERAL MILK MARKETING REFORM 

Sec. 101. Federal milk marketing reform. 

TITLE II—DAIRY PRODUCER MARGIN PROTECTION PROGRAM 

Sec. 201. Definitions. 

Sec. 202. Dairy producer margin protection program. 

Sec. 203. Eligibility and registration of dairy producers for program. 

Sec. 204. Establishment of production history of registered dairy producers. 

Sec. 205. Basic margin protection. 

Sec. 206. Supplemental margin protection. 

Sec. 207. No payment limitations. 

Sec. 208. Use of Commodity Credit Corporation. 

Sec. 209. Duration. 

TITLE III—DAIRY MARKET STABILIZATION PROGRAM 

Sec. 301. Definitions. 

Sec. 302. Dairy market stabilization program. 

Sec. 303. Program threshold for implementation and reduction in dairy producer payments. 

Sec. 304. Collection of producer milk marketings information. 

Sec. 305. Calculation of reduced dairy producer payments. 

Sec. 306. Limited availability of amounts remitted to Secretary. 

Sec. 307. Suspension of reduced payment requirement. 

Sec. 308. Audit of producer and handler compliance. 

Sec. 309. Program board. 

Sec. 310. Duration. 

TITLE IV—MISCELLANEOUS 

Sec. 401. Repeals. 

Sec. 402. Regulations. 

Sec. 403. Budgetary effects. 

3 TITLE I—FEDERAL MILK 

4 MARKETING REFORM 

5 SEC. 101. FEDERAL MILK MARKETING REFORM. 

6 (a) IN GENERAL.—Not later than 180 days after the 

7 date of enactment of this Act, the Secretary of Agriculture 

8 shall conduct hearings to assess the implications of 


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1 transitioning Federal milk marketing orders from end2 product pricing to a competitive pay pricing system. 

3 (b) REQUIREMENTS.—In conducting hearings under 

4 this section, the Secretary shall— 

5 (1) ensure that market administrators conduct 

6 a thorough analysis of— 

7 (A) the reforms to the Federal milk mar8 keting orders proposed by the Maine Dairy In9 dustry Advisory Council; and 

10 (B) the reforms included in H.R. 3062, 

11 112th Congress, as introduced on September 

12 23, 2011; 

13 (2) analyze the implications of transitioning 

14 from a 4-class system for milk products to a 2-class 

15 system; 

16 (3) explore methods to improve signals for price 

17 discovery in the short- and long-term to allow dairy 

18 producers to better use risk management tools; 

19 (4) assess whether a 2-class competitive pay 

20 pricing system for milk products would be more or 

21 less transparent than the system in effect as of the 

22 day before the date of enactment of this Act; and 

23 (5) analyze the impact of eliminating a min24 imum regulated price on price volatility in dairy 

25 markets. 


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1 TITLE II—DAIRY PRODUCER 

2 MARGIN PROTECTION PROGRAM 

3 SEC. 201. DEFINITIONS. 

4 In this title: 

5 (1) ACTUAL DAIRY PRODUCER MARGIN.—The 

6 term ‘‘actual dairy producer margin’’ means the dif7 ference between the all-milk price and the average 

8 feed cost, as calculated under section 202(d). 

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

10 price’’ means the average price received, per hun11 dredweight of milk, by dairy producers for all milk 

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

13 reported by the National Agricultural Statistics 

14 Service. 

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

16 feed cost’’ means the average cost of feed used by 

17 a dairy operation to produce a hundredweight of 

18 milk, determined under section 202(c) using the sum 

19 obtained by adding— 

20 (A) the product obtained by multiplying— 

21 (i) 1.192; by 

22 (ii) the price of corn per bushel; 

23 (B) the product obtained by multiplying— 

24 (i) 0.00817; by 


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1 (ii) the price of soybean meal per ton; 

2 and 

3 (C) the product obtained by multiplying— 

4 (i) 0.0152; by 

5 (ii) the price of alfalfa hay per ton. 

6 (4) CONSECUTIVE 2-MONTH PERIOD.—The term 

7 ‘‘consecutive 2-month period’’ refers to the 2-month 

8 period consisting of the months of January and Feb9 ruary, March and April, May and June, July and 

10 August, September and October, or November and 

11 December, respectively. 

12 (5) DAIRY PRODUCER.—The term ‘‘dairy pro13 ducer’’ means an individual or entity that directly or 

14 indirectly (as determined by the Secretary)— 

15 (A) shares in the risk of producing milk; 

16 and 

17 (B) makes contributions (including land, 

18 labor, management, equipment, or capital) to 

19 the dairy operation of the individual or entity 

20 that are at least commensurate with the share 

21 of the individual or entity of the proceeds of the 

22 operation. 

23 (6) PRODUCTION HISTORY.— 

24 (A) IN GENERAL.—Except as provided in 

25 subparagraph (B), the term ‘‘production hisVerDate Mar 15 2010 02:37 Oct 18, 2011 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1715.IS S1715

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1 tory’’, with respect to a dairy producer, means 

2 the highest annual milk production of the dairy 

3 producer during any 1 of the 3 calendar years 

4 immediately preceding the registration of the 

5 dairy producer with the Secretary for participa6 tion in the program. 

7 (B) NEW PRODUCERS.—If a dairy pro8 ducer has been in operation for less than a 

9 year, the Secretary shall determine the produc10 tion history of the dairy producer by extrapo11 lating the actual milk production for the 

12 months the dairy producer has been in oper13 ation to a yearly production amount. 

14 (7) PROGRAM.—The term ‘‘program’’ means 

15 the dairy producer margin protection program re16 quired by this title. 

17 (8) PROJECTED DAIRY PRODUCER MARGIN.— 

18 The term ‘‘projected dairy producer margin’’ means 

19 the estimate prepared by the Secretary pursuant to 

20 section 202(b). 

21 (9) SECRETARY.—The term ‘‘Secretary’’ means 

22 the Secretary of Agriculture. 

23 (10) UNITED STATES.—The term ‘‘United 

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

25 States. 


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1 SEC. 202. DAIRY PRODUCER MARGIN PROTECTION PRO2 GRAM. 

3 (a) IN GENERAL.—The Secretary shall establish and 

4 administer a dairy producer margin protection program 

5 for the purpose of protecting dairy producer income 

6 through the provision of basic margin protection payments 

7 and, if purchased by a dairy producer, supplemental mar8 gin protection payments when actual dairy producer mar9 gins are less than the threshold levels for the payments. 

10 (b) ESTIMATION OF PROJECTED DAIRY PRODUCER

11 MARGIN.— 

12 (1) IN GENERAL.—The Secretary shall prepare 

13 an estimate of the projected dairy producer margin 

14 for the 5-year period beginning on January 1, 2012, 

15 consisting of the difference between— 

16 (A) an estimate of the average all-milk 

17 price, per hundredweight of milk, for that pe18 riod; and 

19 (B) an estimate of average feed cost for 

20 that period. 

21 (2) PUBLICATION.—The Secretary shall publish 

22 the estimate of the projected dairy producer margin 

23 in the Federal Register as soon as practicable after 

24 the date of enactment of this Act, but in no case 

25 later than 90 days after that date. 


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1 (c) CALCULATION OF AVERAGE FEED COST.—Not 

2 later than the fifth day after the end of each consecutive 

3 2-month period, the Secretary shall calculate the national 

4 average feed cost for that consecutive 2-month period 

5 using the following data: 

6 (1) The price of corn for each month of that 

7 consecutive 2-month period shall be the price re8 ceived during that month by agricultural producers 

9 in the United States for corn, as reported by the 

10 National Agricultural Statistics Service. 

11 (2) The price of soybean meal for each month 

12 of that consecutive 2-month period shall be the price 

13 received during that month by agricultural producers 

14 in the United States for soybean meal, as reported 

15 by the Agricultural Marketing Service. 

16 (3) The price of alfalfa hay for each month of 

17 that consecutive 2-month period shall be the price 

18 received during that month by agricultural producers 

19 in the United States for alfalfa hay, as reported by 

20 the National Agricultural Statistics Service. 

21 (d) CALCULATION OF ACTUAL DAIRY PRODUCER

22 MARGIN.—The Secretary shall calculate the actual dairy 

23 producer margin for each consecutive 2-month period by 

24 subtracting— 


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1 (1) the average feed cost for that consecutive 2- 

2 month period, determined in accordance with sub3 section (c); from 

4 (2) the all-milk price for that consecutive 2- 

5 month period. 

6 SEC. 203. ELIGIBILITY AND REGISTRATION OF DAIRY PRO7 DUCERS FOR PROGRAM. 

8 (a) ELIGIBILITY.— 

9 (1) IN GENERAL.—Subject to paragraph (2), all 

10 dairy producers in the United States shall be eligible 

11 to participate in the program. 

12 (2) REQUIREMENT.—A dairy producer shall be 

13 required to be registered with the Secretary before 

14 the producer may— 

15 (A) receive basic margin protection pay16 ments under section 205; and 

17 (B) if purchased by the dairy producer, 

18 supplemental margin protection payments 

19 under section 206. 

20 (b) REGISTRATION.— 

21 (1) IN GENERAL.—The Secretary shall— 

22 (A) register all interested dairy producers 

23 in the program; and 

24 (B) specify the manner and form by which 

25 a dairy producer may register. 


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1 (2) EXISTING DAIRY PRODUCERS.—During the 

2 1-year period beginning on the date of enactment of 

3 this Act, a dairy producer who is actively engaged in 

4 a dairy operation as of that date may register with 

5 the Secretary— 

6 (A) to receive basic margin protection; and 

7 (B) if the dairy producer chooses, to pur8 chase supplemental margin protection. 

9 (3) NEW ENTRANTS.—A dairy producer who 

10 has no existing interest in a dairy operation as of 

11 the date of enactment of this Act, but who, after 

12 that date, establishes a new dairy operation, may 

13 register with the Secretary during the 180-day pe14 riod beginning on the date on which the dairy oper15 ation first markets milk commercially— 

16 (A) to receive basic margin protection; and 

17 (B) if the dairy producer chooses, to pur18 chase supplemental margin protection. 

19 (4) TREATMENT OF MULTI-PRODUCER OPER20 ATIONS.—If a dairy operation consists of more than 

21 1 dairy producer, all of the dairy producers of the 

22 operation shall be treated as a single dairy producer 

23 for purposes of registration— 

24 (A) to receive basic margin protection; and 


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1 (B) at the election of the producers, to 

2 purchase supplemental margin protection. 

3 (5) TREATMENT OF PRODUCERS WITH MUL4 TIPLE DAIRY OPERATIONS.—If a dairy producer op5 erates 2 or more dairy operations, each dairy oper6 ation of the producer shall require a separate reg7 istration— 

8 (A) to receive basic margin protection; and 

9 (B) at the election of the producer, to pur10 chase supplemental margin protection. 

11 (c) RECONSTITUTION.—The Secretary shall ensure 

12 that a dairy producer does not reconstitute a dairy oper13 ation for the sole purpose of receiving basic margin protec14 tion or supplemental margin protection. 

15 SEC. 204. ESTABLISHMENT OF PRODUCTION HISTORY OF 

16 REGISTERED DAIRY PRODUCERS. 

17 (a) ESTABLISHMENT OF PRODUCTION HISTORY.— 

18 (1) ESTABLISHMENT.—When a dairy producer 

19 registers with the Secretary for participation in the 

20 program, the dairy producer shall provide all infor21 mation required by the Secretary to establish the 

22 production history of the dairy operation of the pro23 ducer. 

24 (2) DURATION.—Once the production history is 

25 established for a dairy producer upon registration, 


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1 the production history shall not be changed for the 

2 duration of the participation by the dairy producer 

3 in the program. 

4 (b) TRANSFER OF PRODUCTION HISTORY OF EXIST5 ING DAIRY PRODUCERS.— 

6 (1) TRANSFER BY SALE.— 

7 (A) REQUEST FOR TRANSFER.—If an ex8 isting dairy producer, as described in section 

9 203(b)(2), sells an entire dairy operation to an10 other party, the seller and purchaser may joint11 ly request that the Secretary transfer the pro12 duction history of the seller to the purchaser. 

13 (B) TRANSFER.—If the Secretary deter14 mines that the seller has sold the entire dairy 

15 operation to the purchaser— 

16 (i) the Secretary shall approve the 

17 transfer; and 

18 (ii) after the approval of the transfer, 

19 the seller shall have no interest in that 

20 production history. 

21 (2) TRANSFER BY LEASE.— 

22 (A) REQUEST FOR TRANSFER.—If an ex23 isting dairy producer, as described in section 

24 203(b)(2), leases an entire dairy operation to 

25 another party, the lessor and lessee may jointly 


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1 request that the Secretary transfer the produc2 tion history of the lessor to the lessee for the 

3 duration of the term of the lease. 

4 (B) TRANSFER.—If the Secretary deter5 mines that the lessor has leased the entire dairy 

6 operation to the lessee— 

7 (i) the Secretary shall approve the 

8 transfer; and 

9 (ii) after the approval of the transfer, 

10 the lessor shall have no interest in that 

11 production history for the duration of the 

12 term of the lease. 

13 (3) COVERAGE LEVEL.—A purchaser or lessee 

14 to whom the Secretary transfers a production his15 tory under this subsection may not obtain a different 

16 level of basic margin protection or supplemental 

17 margin protection coverage than the basic margin 

18 protection or supplemental margin protection cov19 erage held by the seller or lessor from whom the 

20 purchaser or lessee obtained the production history. 

21 (c) TRANSFER OF PRODUCTION HISTORY OF NEW

22 ENTRANTS.—The Secretary may not transfer the produc23 tion history of a dairy producer described in section 

24 203(b)(3) to another person. 


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1 (d) MOVEMENT AND TRANSFER OF PRODUCTION

2 HISTORY.— 

3 (1) MOVEMENT AND TRANSFER AUTHOR4 IZED.—Subject to paragraph (2), if a dairy producer 

5 moves from 1 location to another location, the dairy 

6 producer may maintain the production history asso7 ciated with the operation. 

8 (2) NOTIFICATION REQUIREMENT.—A dairy 

9 producer shall notify the Secretary of any move of 

10 a dairy operation under paragraph (1). 

11 (3) SUBSEQUENT OCCUPATION OF VACATED LO12 CATION.—A party subsequently occupying a dairy 

13 operation location vacated as described in paragraph 

14 (1) shall have no interest in the production history 

15 previously associated with the operation at the loca16 tion. 

17 SEC. 205. BASIC MARGIN PROTECTION. 

18 (a) ELIGIBILITY.—Each dairy producer registered to 

19 participate in the program shall be eligible to receive basic 

20 margin protection under the program through a 2-tier sys21 tem described in subsection (c). 

22 (b) NO COST TO DAIRY PRODUCER.—Basic margin 

23 protection shall be provided to a registered dairy producer 

24 at no cost to the dairy producer. 

25 (c) PAYMENT THRESHOLD.— 


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1 (1) FIRST TIER.—All registered dairy producers 

2 shall receive a basic margin protection payment for 

3 the first 2,985,000 pounds of actual milk production 

4 of the dairy producer for the calendar year whenever 

5 the average actual dairy producer margin for a con6 secutive 2-month period is less than $6.00 per hun7 dredweight of milk (referred to in this section as the 

8 ‘‘first tier payment threshold’’). 

9 (2) SECOND TIER.—All registered dairy pro10 ducers shall receive a basic margin protection pay11 ment for all pounds of actual milk production of the 

12 dairy producer for the calendar year that is in excess 

13 of 2,985,000 pounds whenever the average actual 

14 dairy producer margin for a consecutive 2-month pe15 riod is less than $4.00 per hundredweight of milk 

16 (referred to in this section as the ‘‘second tier pay17 ment threshold’’). 

18 (d) BASIC MARGIN PROTECTION PAYMENT.— 

19 (1) PAYMENT REQUIRED.—The Secretary shall 

20 make a basic margin protection payment to each 

21 registered dairy producer for a consecutive 2-month 

22 period whenever the payment is required by sub23 section (c) for that period. 

24 (2) AMOUNT OF PAYMENT.—The basic margin 

25 protection payment for the dairy operation of a 


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1 dairy producer for a consecutive 2-month period 

2 shall be equal to (as determined by the Secretary) 

3 the product obtained by multiplying— 

4 (A) the difference between— 

5 (i) the average actual dairy producer 

6 margin for the consecutive 2-month period; 

7 and 

8 (ii)(I) in the case of milk under the 

9 first tier payment threshold, $6.00; and 

10 (II) in the case of milk under the sec11 ond tier payment threshold, $4.00; and 

12 (B) the lesser of— 

13 (i) the quotient obtained by dividing— 

14 (I)(aa) in the case of milk under 

15 the first tier payment threshold, 90 

16 percent of the production history of 

17 the dairy producer; and 

18 (bb) in the case of milk under the 

19 second tier payment threshold, 70 

20 percent of the production history of 

21 the dairy producer; by 

22 (II) 6; and 

23 (ii) the actual amount of milk pro24 duced by the dairy operation of the dairy 


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1 producer during the consecutive 2-month 

2 period. 

3 SEC. 206. SUPPLEMENTAL MARGIN PROTECTION. 

4 (a) ELECTION OF SUPPLEMENTAL MARGIN PROTEC5 TION.—At the time of program registration of a dairy pro6 ducer, the dairy producer may purchase supplemental 

7 margin protection under the program. 

8 (b) PAYMENT THRESHOLD AND PERCENTAGE OF

9 PRODUCTION HISTORY COVERED.— 

10 (1) ELECTION OF PAYMENT THRESHOLD.—A 

11 dairy producer purchasing supplemental margin pro12 tection may elect a coverage level that is higher, in 

13 any increment of $0.50, than the payment threshold 

14 for basic margin protection specified in section 

15 205(c), but not to exceed the lesser of— 

16 (A) the projected dairy producer margin; 

17 or 

18 (B) $8.00. 

19 (2) ELECTION OF PRODUCTION HISTORY PER20 CENTAGE.—A dairy producer purchasing supple21 mental margin protection shall elect a percentage, 

22 equal to not more than 90 percent nor less than 25 

23 percent, of the production history of the producer to 

24 be covered by supplemental margin protection. 


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1 (c) PRODUCER PREMIUMS.—Not later than January 

2 15 of each year for which supplemental margin protection 

3 is available, a dairy producer purchasing supplemental 

4 margin protection shall pay a premium equal to the prod5 uct obtained by multiplying— 

6 (1) the percentage of production history elected 

7 by the producer under subsection (b)(3); 

8 (2) the production history of the producer for 

9 the calendar year; and 

10 (3) the premium per hundredweight of milk, as 

11 follows: 

Coverage Level Premium per Cwt. 

$4.50 $0.015

$5.00 $0.036

$5.50 $0.081

$6.00 $0.155

$6.50 $0.230

$7.00 $0.434

$7.50 $0.590

$8.00 $0.922. 

12 (d) PREMIUM OBLIGATIONS OF PRODUCER.— 

13 (1) PRO-RATION OF FIRST YEAR PREMIUM.—A 

14 dairy producer who purchases supplemental margin 

15 protection after initial program registration shall 

16 pay a prorated premium for the first year based on 

17 the date on which the producer purchases the cov18 erage. 

19 (2) SUBSEQUENT PREMIUMS.—Except as other20 wise provided in paragraph (1), the annual premium 


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1 for a dairy producer shall be fixed at the level deter2 mined under subsection (c) for each year of the pro3 gram. 

4 (3) LEGAL OBLIGATION.— 

5 (A) IN GENERAL.—Except as provided in 

6 subparagraphs (B) and (C), a dairy producer 

7 who elects to purchase supplemental margin 

8 protection shall be legally obligated to pay the 

9 applicable premiums for the entire period of the 

10 program, and may not opt out of the program. 

11 (B) DEATH OF DAIRY PRODUCER.—If a 

12 dairy producer dies, the estate of the deceased 

13 may cancel the supplemental margin protection 

14 and shall not be responsible for any further pre15 mium payments. 

16 (C) RETIREMENT OF DAIRY PRODUCER.— 

17 If a dairy producer retires, the producer may 

18 request that the Secretary cancel the supple19 mental margin protection if the producer has 

20 terminated the dairy operation entirely and cer21 tifies under oath that the producer will not be 

22 actively engaged in any dairy operation for at 

23 least the subsequent 7 years. 

24 (4) LOSS OF BENEFITS; REPAYMENT.—A dairy 

25 producer who is in arrears on premium payments for 


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1 supplemental margin protection for more than 90 

2 days shall— 

3 (A) remain legally obligated to pay the pre4 miums; 

5 (B) repay supplemental margin protection 

6 payments previously paid to the producer; and 

7 (C) lose the right to receive any further 

8 supplemental margin protection payments. 

9 (e) SUPPLEMENTAL PAYMENT THRESHOLD.—A 

10 dairy producer who has purchased supplemental margin 

11 protection shall receive a payment whenever the average 

12 actual dairy producer margin for a consecutive 2-month 

13 period is less than the coverage level elected by the dairy 

14 producer under subsection (b)(2). 

15 (f) SUPPLEMENTAL MARGIN PROTECTION PAY16 MENTS.— 

17 (1) IN GENERAL.—The supplemental margin 

18 protection payment for a dairy producer shall be— 

19 (A) made on the actual milk production of 

20 the dairy producer for the calendar year; and 

21 (B) in addition to the basic margin protec22 tion payment that is made on the actual milk 

23 production of the dairy producer for the cal24 endar year. 


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1 (2) AMOUNT OF PAYMENT.—The supplemental 

2 margin protection payment for the dairy operation 

3 of a dairy producer shall be equal to (as determined 

4 by the Secretary) the product obtained by multi5 plying— 

6 (A) the difference between the elected cov7 erage level under subsection (b)(2) and the 

8 greater of— 

9 (i) the average actual dairy producer 

10 margin for the consecutive 2-month period; 

11 or 

12 (ii) $6.00; 

13 (B) the percentage of production history 

14 elected by the dairy producer under subsection 

15 (b)(3); and 

16 (C) the lesser of— 

17 (i) the quotient obtained by dividing— 

18 (I) the production history of the 

19 dairy producer for the calendar year; 

20 by 

21 (II) 6; and 

22 (ii) the actual amount of milk pro23 duced by the dairy operation of the dairy 

24 producer during the consecutive 2-month 

25 period. 


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1 SEC. 207. NO PAYMENT LIMITATIONS. 

2 Notwithstanding any other provision of law, basic 

3 margin protection payments and supplemental margin 

4 protection payments received by a dairy producer under 

5 the program shall not be subject to limitations for any 

6 reason. 

7 SEC. 208. USE OF COMMODITY CREDIT CORPORATION. 

8 The Secretary shall use the funds, facilities, and the 

9 authorities of the Commodity Credit Corporation to carry 

10 out this title. 

11 SEC. 209. DURATION. 

12 The Secretary shall conduct the program during the 

13 period beginning on January 1, 2012, and ending on De14 cember 31, 2017. 

15 TITLE III—DAIRY MARKET 

16 STABILIZATION PROGRAM 

17 SEC. 301. DEFINITIONS. 

18 In this title: 

19 (1) DAIRY PRODUCER.—The term ‘‘dairy pro20 ducer’’ means an individual or entity that directly or 

21 indirectly (as determined by the Secretary)— 

22 (A) shares in the risk of producing milk; 

23 and 

24 (B) makes contributions (including land, 

25 labor, management, equipment, or capital) to 

26 the dairy farming operation of the individual or 


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1 entity that are at least commensurate with the 

2 share of the individual or entity of the proceeds 

3 of the operation. 

4 (2) HANDLER.— 

5 (A) IN GENERAL.—The term ‘‘handler’’ 

6 means a person making payment to a dairy pro7 ducer for milk produced in the United States 

8 and marketed for commercial use. 

9 (B) PRODUCER-HANDLER.—The term in10 cludes a producer-handler. 

11 (3) PROGRAM.—The term ‘‘program’’ means 

12 the dairy market stabilization program established 

13 under this title. 

14 (4) PROGRAM BASE.—The term ‘‘program 

15 base’’, with respect to a dairy producer, means the 

16 program base calculated for the producer under sec17 tion 302(b). 

18 (5) PROGRAM BOARD.—The term ‘‘program 

19 board’’ means the board of directors appointed by 

20 the Secretary under section 309. 

21 (6) SECRETARY.—The term ‘‘Secretary’’ means 

22 the Secretary of Agriculture. 

23 (7) UNITED STATES.—The term ‘‘United 

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

25 States. 


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1 SEC. 302. DAIRY MARKET STABILIZATION PROGRAM. 

2 (a) IN GENERAL.—The Secretary shall establish and 

3 administer a dairy market stabilization program applicable 

4 to all dairy producers in the United States for the purpose 

5 of balancing the supply of milk with demand when the 

6 total percent production growth in milk products in a Fed7 eral milk marketing order exceeds the combined percent 

8 growth in Class I, II, and III milk products. 

9 (b) ELECTION OF PROGRAM BASE CALCULATION

10 METHOD.— 

11 (1) DEADLINE FOR ELECTION.—Not later than 

12 January 15, 2012, each dairy producer shall inform 

13 the Secretary of the method by which the program 

14 base for the producer for 2012 will be calculated 

15 under paragraph (5). 

16 (2) CHANGE IN CALCULATION METHOD.—For 

17 each year after 2012, a dairy producer may change 

18 the program base calculation method to be used for 

19 a calendar year by notifying the Secretary of the 

20 change not later than January 15 of that year. 

21 (3) TREATMENT OF MULTI-PRODUCER OPER22 ATIONS.—If a dairy operation consists of more than 

23 1 dairy producer, all of the dairy producers of the 

24 operation shall jointly make the election under para25 graph (1) with respect to the operation and jointly 


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1 make any change to that election under paragraph 

2 (2). 

3 (4) TREATMENT OF PRODUCERS WITH MUL4 TIPLE DAIRY OPERATIONS.—If a dairy producer op5 erates 2 or more dairy operations, each dairy oper6 ation of the producer shall require a separate elec7 tion under paragraph (1). 

8 (5) CALCULATION METHODS.—A dairy pro9 ducer may elect either of the following methods for 

10 calculation of the program base for the producer: 

11 (A) The volume of the average monthly 

12 milk marketings of the dairy producer for the 

13 3 months immediately preceding the announce14 ment by the Secretary that the program will be15 come effective. 

16 (B) The volume of the monthly milk mar17 ketings of the dairy producer for the same 

18 month in the preceding year as the month for 

19 which the Secretary has announced the pro20 gram will become effective. 

21 SEC. 303. PROGRAM THRESHOLD FOR IMPLEMENTATION 

22 AND REDUCTION IN DAIRY PRODUCER PAY23 MENTS. 

24 (a) IN GENERAL.—The Secretary shall announce 

25 that the program is in effect and order reduced payments 


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1 to any dairy producer who exceeds the applicable percent2 age of the program base of the producer whenever the 

3 total percent production growth in milk products in a Fed4 eral milk marketing order exceeds the combined percent 

5 growth in Class I, II, and III milk products for the imme6 diately preceding 2 months. 

7 (b) EFFECTIVE DATE FOR IMPLEMENTATION OF

8 PAYMENT REDUCTIONS.—Reductions in dairy producer 

9 payments shall commence beginning on the first day of 

10 the month immediately following the announcement by the 

11 Secretary under subsection (a). 

12 SEC. 304. COLLECTION OF PRODUCER MILK MARKETINGS 

13 INFORMATION. 

14 (a) COLLECTION BY HANDLERS.—For each month 

15 during which the program is in effect, each handler shall 

16 calculate the following: 

17 (1) The volume of milk marketings the handler 

18 has received from each dairy producer during that 

19 month. 

20 (2) The volume of milk marketings the handler 

21 has received from each dairy producer during the 

22 same month of the preceding year. 

23 (3) The volume of milk marketings the handler 

24 has received from each dairy producer during each 

25 of the 3 months preceding the month in which the 


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1 Secretary makes the announcement that the pro2 gram will be in effect. 

3 (b) EFFECT OF CHANGING HANDLERS.—If a dairy 

4 producer changes handlers, the producer shall ensure that 

5 milk marketings data required to make the calculations 

6 under subsection (a) is provided to the new handler. 

7 SEC. 305. CALCULATION OF REDUCED DAIRY PRODUCER 

8 PAYMENTS. 

9 (a) REDUCED PRODUCER PAYMENTS REQUIRED.— 

10 During any month in which payment reductions are in ef11 fect under the program, each handler shall— 

12 (1) reduce payments to each dairy producer 

13 from whom the handler receives milk, if payment re14 ductions are required by this section; and 

15 (2) remit to the Secretary the amount by which 

16 payments are reduced. 

17 (b) RECONSTITUTION.—The Secretary shall ensure 

18 that a dairy producer does not reconstitute a dairy oper19 ation for the sole purpose of altering the level of payment 

20 reductions required by this section. 

21 SEC. 306. LIMITED AVAILABILITY OF AMOUNTS REMITTED 

22 TO SECRETARY. 

23 (a) AVAILABILITY FOR PROGRAM BOARD ACTIVI24 TIES.—As soon as practicable after the end of each month 

25 during which payment reductions are in effect under the 


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1 program, the Secretary shall make available to the pro2 gram board 50 percent of the amounts remitted to the 

3 Secretary under section 305 during that month. 

4 (b) USE OF REMAINING AMOUNTS.—The Secretary 

5 shall deposit all amounts remitted to the Secretary under 

6 section 305 that are not made available to the program 

7 board under subsection (a) into the general fund of the 

8 Treasury. 

9 SEC. 307. SUSPENSION OF REDUCED PAYMENT REQUIRE10 MENT. 

11 (a) SUSPENSION THRESHOLDS.—The Secretary shall 

12 suspend the program whenever the Secretary determines 

13 that the price in the United States for either cheddar 

14 cheese or skim milk powder (non-fat dry milk) is more 

15 than 20 percent above the world price for that same com16 modity for 2 consecutive months. 

17 (b) IMPLEMENTATION BY HANDLERS.—Handlers 

18 shall cease reducing payments to dairy producers under 

19 the program upon receiving notice of the suspension of 

20 the program from the Secretary. 

21 SEC. 308. AUDIT OF PRODUCER AND HANDLER COMPLI22 ANCE. 

23 (a) IN GENERAL.—If determined by the Secretary to 

24 be necessary to ensure dairy producer and handler compliVerDate Mar 15 2010 02:37 Oct 18, 2011 Jkt 019200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\S1715.IS S1715

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1 ance with the program, the Secretary may conduct peri2 odic audits of participating dairy operations and handlers. 

3 (b) SAMPLE OF DAIRY PRODUCERS.—Any audit con4 ducted under subsection (a) shall include, at a minimum, 

5 investigation of a statistically valid and random sample of 

6 dairy producers. 

7 SEC. 309. PROGRAM BOARD. 

8 (a) IN GENERAL.—The Secretary shall establish a 

9 board of directors for the program for the purpose of— 

10 (1) administering the amounts remitted to the 

11 Secretary under section 305 that are made available 

12 to the program board under section 306; and 

13 (2) determining the most effective use of such 

14 funds. 

15 (b) APPOINTMENT OF DIRECTORS.— 

16 (1) NUMBER AND QUALIFICATIONS.—The Sec17 retary shall appoint 24 members to serve on the pro18 gram board, who shall be representative of the 

19 United States dairy producer community, taking 

20 into account geographical diversity, cooperative 

21 membership, and volumes of milk produced in var22 ious States and regions. 

23 (2) REIMBURSEMENT OF EXPENSES.—From 

24 the amounts made available to the program board 

25 under section 306, the Secretary shall reimburse 


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1 members of the program board for those costs of 

2 service on the program board that the Secretary de3 termines reasonable and appropriate. 

4 (c) DECISIONMAKING.—The program board shall 

reach decisions by an affirmative vote of 2 5 ⁄3 of the mem6 bers of the program board. 

7 (d) REMOVAL OF DAIRY PRODUCTS AND EXPANSION

8 OF DEMAND.— 

9 (1) SPENDING AUTHORITY.—The program 

10 board may use amounts made available to the pro11 gram board under section 306— 

12 (A) to purchase dairy products through 

13 commercial sources for donation to food banks 

14 and other food programs that the Board deter15 mines appropriate, not later than 3 months 

16 after the date on which the Secretary collected 

17 the funds; and 

18 (B) to expand consumption and build de19 mand for dairy products. 

20 (2) NO DUPLICATION OF EFFORT.—The pro21 gram board shall ensure that projects supported 

22 under paragraph (1) are compatible with, and do not 

23 duplicate, programs supported by the dairy research 

24 and promotion activities conducted under the Dairy 


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1 Production Stabilization Act of 1983 (7 U.S.C. 4501 

2 et seq.). 

3 (3) MANAGEMENT CONTRACT.—The program 

4 board may enter into a contract with a managing 

5 entity to carry out this subsection. 

6 (e) PROGRAM EVALUATION.— 

7 (1) CONTRACT AUTHORITY.— 

8 (A) IN GENERAL.—Using amounts made 

9 available to the program board under section 

10 306, the program board shall enter into a con11 tract for an evaluation of the program after the 

12 program has been in operation for 2 years. 

13 (B) REQUIREMENTS.—The evaluation shall 

14 include the use of established dairy economic 

15 models to ascertain the effectiveness and oper16 ation of the program. 

17 (2) SUBMISSION OF RESULTS.— 

18 (A) IN GENERAL.—The program board 

19 shall submit to the Secretary the results of eval20 uations conducted under paragraph (1). 

21 (B) RECOMMENDATIONS.—The Secretary 

22 shall review the evaluations under paragraph 

23 (1) and submit to Congress such recommenda24 tions as the Secretary considers appropriate re25 garding the program. 


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1 SEC. 310. DURATION. 

2 The Secretary shall conduct the program during the 

3 period beginning on January 1, 2012, and ending on De4 cember 31, 2017. 

5 TITLE IV—MISCELLANEOUS 

6 SEC. 401. REPEALS. 

7 (a) DAIRY PRODUCT PRICE SUPPORT PROGRAM, 

8 DAIRY FORWARD PRICING PROGRAM, AND MILK INCOME

9 LOSS CONTRACT PROGRAM.—Sections 1501, 1502, and 

10 1506 of the Food, Conservation, and Energy Act of 2008 

11 (7 U.S.C. 8771, 8772, 8773) are repealed. 

12 (b) DAIRY EXPORT INCENTIVE PROGRAM.— 

13 (1) IN GENERAL.—Section 153 of the Food Se14 curity Act of 1985 (15 U.S.C. 713a–14) is repealed. 

15 (2) CONFORMING AMENDMENTS.—Section 

16 902(2) of the Trade Sanctions Reform and Export 

17 Enhancement Act of 2000 (22 U.S.C. 7201(2)) is 

18 amended— 

19 (A) by striking subparagraph (D); and 

20 (B) by redesignating subparagraphs (E) 

21 and (F) as subparagraphs (D) and (E), respec22 tively. 

23 (c) APPLICATION.—The amendments made by this 

24 section apply beginning on the date on which the regula25 tions required under section 402 take effect. 


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1 SEC. 402. REGULATIONS. 

2 Not later than 270 days after the date of enactment 

3 of this Act, the Secretary of Agriculture shall promulgate 

4 such regulations as are necessary to carry out this Act 

5 and the amendments made by this Act. 

6 SEC. 403. BUDGETARY EFFECTS. 

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

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

9 shall be determined by reference to the latest statement 

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

11 Act, submitted for printing in the Congressional Record 

12 by the Chairman of the Senate Budget Committee, pro13 vided that such statement has been submitted prior to the 

14 vote on passage. 

Æ 


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