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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1645 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1645

 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

                             August 6, 2009

  Mr. Specter 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 2009''.

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) Minimum price.--The Secretary shall 
                        base the minimum price for Class II milk on the 
                        average cost of producing all milk in the 48 
                        contiguous States, as determined by the 
                        Economic Research Service of the Department of 
                        Agriculture in accordance with clause (ii) 
                        (referred to in this subparagraph as the 
                        `national average cost of production').
                            ``(ii) National average cost of 
                        production.--For purposes of this subparagraph, 
                        the national average cost of production shall 
                        equal the national average of the operating 
                        cost and the allocated overhead cost of 
                        producing all milk.
                            ``(iii) Survey.--For purposes of clause 
                        (ii), the Secretary shall survey producers and 
                        associations of 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 (i).
                                    ``(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.
                            ``(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.
                            ``(vi) 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 producers for commercial use 
                        during the next 12 months.
                            ``(vii) Inventory management program.--
                                    ``(I) Identification and 
                                determination of dairy products.--
                                            ``(aa) 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.

                                            ``(bb) Inclusions.--In 
                                        identifying dairy products 
                                        under item (aa)(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.
                                    ``(II) 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 producer or farming operation 
                                during the preceding calendar year.
                                    ``(III) 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.
                                    ``(IV) Reduction in price 
                                received.--
                                            ``(aa) In general.--Subject 
                                        to item (bb), if the Secretary 
                                        determines under subclause 
                                        (III) that there is excess 
                                        production, the Secretary may 
                                        provide for a reduction in the 
                                        price received by producers for 
                                        not more than 5 percent of all 
                                        milk produced in the 48 
                                        contiguous States and marketed 
                                        by producers for commercial 
                                        use.
                                            ``(bb) Limitation.--The 
                                        Secretary shall not provide for 
                                        a reduction in the price 
                                        received by a producer under 
                                        item (aa) unless the Secretary 
                                        determines that there exists a 
                                        positive trade balance in dairy 
                                        products described in subclause 
                                        (I)(aa)(AA) 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 
                                                subclause (I)(aa)(AA).

                                    ``(V) Amount.--The amount of the 
                                reduction under subclause (IV) in the 
                                price received by producers shall not 
                                exceed half the minimum price of Class 
                                II milk.
                                    ``(VI) Additional reduction.--If 
                                the Secretary determines that the 
                                reduction described in subclause (IV) 
                                is insufficient to reduce excess 
                                production, subject to subclauses (VII) 
                                and (VIII), the Secretary may reduce 
                                the price received by any producer or 
                                farming operation that has increased 
                                the production of all milk in a 
                                calendar year, as compared to the 
                                immediately preceding calendar year.
                                    ``(VII) Application.--A reduction 
                                in price under subclause (VI) shall 
                                apply only to the quantity of milk 
                                produced in excess of the quantity of 
                                milk produced during the previous 
                                calendar year.
                                    ``(VIII) New producer exception.--A 
                                new producer, as defined by the 
                                Secretary, shall--
                                            ``(aa) during the 1-year 
                                        period beginning on the date on 
                                        which the new producer 
                                        commences operation, be exempt 
                                        from any applicable price 
                                        reduction relating to the first 
                                        3,000,000 pounds of milk 
                                        produced by the new 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 
                                        subclauses (IV), (V), and (VI); 
                                        and
                                            ``(cc) after that 1-year 
                                        period, be subject to each 
                                        price reduction that applies to 
                                        existing producers.
                                    ``(IX) Appeals.--
                                            ``(aa) In general.--A 
                                        producer subject to an 
                                        additional reduction under 
                                        subclause (VI) may appeal to 
                                        the Federal or State milk 
                                        marketing administrator to 
                                        provide evidence that the 
                                        producer did not increase 
                                        production in the calendar year 
                                        that the reduction was in 
                                        effect when compared to the 
                                        immediately preceding calendar 
                                        year.
                                            ``(bb) Submission of 
                                        appeal.--A producer that ships 
                                        to an unregulated milk handler 
                                        may submit any appeal of the 
                                        producer to the Secretary or to 
                                        the designated representative 
                                        of the Secretary.
                                    ``(X) Extraordinary 
                                circumstances.--In deciding an appeal 
                                submitted by a producer under subclause 
                                (IX), a Federal or State milk marketing 
                                administrator (or, in the case of an 
                                appeal under subclause (IX)(bb), 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 subclause (XII), reductions 
                                in price required under subclause (IV) 
                                or (VI) 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.
                            ``(viii) Prohibition on certain charges.--
                        In carrying out this Act, the Secretary shall 
                        not impose charges on producers for the cost of 
                        the conversion of raw milk to manufactured 
                        products.
                            ``(ix) Responsibilities of milk purchasing 
                        handlers.--A milk handler that purchases milk 
                        from a 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.
                            ``(x) Applicability.--This subparagraph 
                        applies to all producers and handlers of milk 
                        in the 48 contiguous States.''.

SEC. 4. 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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