II 

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. 

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 2009’’. 


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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) MINIMUM PRICE.—The Secretary 

21 shall base the minimum price for Class II 

22 milk on the average cost of producing all 

23 milk in the 48 contiguous States, as deter24 mined by the Economic Research Service 

25 of the Department of Agriculture in ac26 cordance with clause (ii) (referred to in 


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1 this subparagraph as the ‘national average 

2 cost of production’). 

3 ‘‘(ii) NATIONAL AVERAGE COST OF

4 PRODUCTION.—For purposes of this sub5 paragraph, the national average cost of 

6 production shall equal the national average 

7 of the operating cost and the allocated 

8 overhead cost of producing all milk. 

9 ‘‘(iii) SURVEY.—For purposes of 

10 clause (ii), the Secretary shall survey pro11 ducers and associations of producers sub12 ject to Federal and State milk marketing 

13 orders and in all unregulated areas appli14 cable to all milk. 

15 ‘‘(iv) PRICE ANNOUNCEMENT.— 

16 ‘‘(I) IN GENERAL.—Not later 

17 than November 1 of each calendar 

18 year, the Secretary shall announce the 

19 minimum price for Class II milk for 

20 the next calendar year, as determined 

21 in accordance with clause (i). 

22 ‘‘(II) ADJUSTMENTS.—Using the 

23 most currently available national aver24 age cost of production, the Secretary 

25 shall adjust the price announced 


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1 under subclause (I) for a calendar 

2 year on April 1, July 1, and October 

3 1 of the calendar year. 

4 ‘‘(v) BASIC FORMULA PRICE.— 

5 ‘‘(I) IN GENERAL.—The Sec6 retary shall use the Class II milk 

7 price announced under clause (iv) as 

8 the basic formula price for all Federal 

9 and State milk marketing orders and 

10 all unregulated milk production areas. 

11 ‘‘(II) CLASS I MILK.— 

12 ‘‘(aa) IN GENERAL.—The 

13 price of Class I milk in all Fed14 eral and State milk marketing 

15 orders and all unregulated milk 

16 production areas shall be equal 

17 to— 

18 ‘‘(AA) the basic for19 mula price under subclause 

20 (I); plus 

21 ‘‘(BB) the applicable 

22 Class I milk differential 

23 under Federal and State 

24 milk marketing orders. 


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1 ‘‘(bb) UNREGULATED

2 AREAS.—For purposes of item 

3 (aa)(BB), the Secretary shall as4 sign comparable Class I milk dif5 ferentials to each unregulated 

6 area. 

7 ‘‘(vi) ESTIMATION OF ANNUAL MILK

8 PRODUCTION AND DOMESTIC CONSUMP9 TION.—Not later than November 1 of each 

10 calendar year and taking into consideration 

11 the import projections and export projec12 tions for all milk products, the Secretary 

13 shall estimate the quantity of all milk to be 

14 produced in the 48 contiguous States and 

15 marketed by producers for commercial use 

16 during the next 12 months. 

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

19 ‘‘(I) IDENTIFICATION AND DE20 TERMINATION OF DAIRY PRODUCTS.— 

21 ‘‘(aa) IN GENERAL.—Not 

22 less frequently than once each 

23 quarter, the Secretary shall— 

24 ‘‘(AA) identify all dairy 

25 products (including cheeses, 


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1 curds, butter, butterfat, but2 ter oil, buttermilk, anhy3 drous milk fat, dairy 

4 spreads, milk, cream, con5 centrated milk, condensed 

6 milk, nonfat dry milk pow7 der, whole milk powder, 

8 skim milk powder, all other 

9 forms of powdered milk, yo10 gurt, ice cream, whey, whey 

11 powder, dried whey, whey 

12 protein concentrate, all other 

13 forms of whey products, 

14 milk protein concentrate, 

15 milk protein isolate, casein, 

16 caseinates, lactose, food 

17 preps containing milk, and 

18 milk chocolate) imported 

19 into, or exported from, the 

20 United States; and 

21 ‘‘(BB) determine the 

22 quantity of raw milk con23 tained in each such product. 

24 ‘‘(bb) INCLUSIONS.—In 

25 identifying dairy products under 


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1 item (aa)(AA), the Secretary 

2 shall include any current or pro3 jected future imports or exports 

4 of a product used for dairy, a 

5 dairy substitute, or ingredient, 

6 including any product that does 

7 not have the status of ‘generally 

8 recognized as safe’, as deter9 mined by the Commissioner of 

10 Food and Drugs. 

11 ‘‘(II) MILK PRODUCTION TO12 TALS.—Not later than February 1 of 

13 each calendar year, the Secretary 

14 shall determine the total quantity of 

15 all milk produced by each producer or 

16 farming operation during the pre17 ceding calendar year. 

18 ‘‘(III) EXCESS PRODUCTION DE19 TERMINATION.—Not more than once 

20 every 2 months, if the Secretary, act21 ing through the Commodity Credit 

22 Corporation, has purchased the max23 imum quantity of milk and milk prod24 ucts as required by law to administer 

25 programs including child nutrition 


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1 programs (as defined in section 25(b) 

2 of the Richard B. Russell National 

3 School Lunch Act (42 U.S.C. 1769f 

4 (b)), feeding programs administered 

5 by the Secretary of Defense, institu6 tional programs, and any other man7 dated Federal food or feeding pro8 grams, the Secretary shall determine 

9 whether an excess quantity of milk 

10 and milk products is being produced 

11 for the national domestic market. 

12 ‘‘(IV) REDUCTION IN PRICE RE13 CEIVED.— 

14 ‘‘(aa) IN GENERAL.—Sub15 ject to item (bb), if the Secretary 

16 determines under subclause (III) 

17 that there is excess production, 

18 the Secretary may provide for a 

19 reduction in the price received by 

20 producers for not more than 5 

21 percent of all milk produced in 

22 the 48 contiguous States and 

23 marketed by producers for com24 mercial use. 


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1 ‘‘(bb) LIMITATION.—The 

2 Secretary shall not provide for a 

3 reduction in the price received by 

4 a producer under item (aa) un5 less the Secretary determines 

6 that there exists a positive trade 

7 balance in dairy products de8 scribed in subclause (I)(aa)(AA) 

9 that are imported into, or ex10 ported from, the United States, 

11 based on— 

12 ‘‘(AA) dollar value; and 

13 ‘‘(BB) the quantity of 

14 milk represented by imports 

15 and exports, as determined 

16 under subclause (I)(aa)(AA). 

17 ‘‘(V) AMOUNT.—The amount of 

18 the reduction under subclause (IV) in 

19 the price received by producers shall 

20 not exceed half the minimum price of 

21 Class II milk. 

22 ‘‘(VI) ADDITIONAL REDUC23 TION.—If the Secretary determines 

24 that the reduction described in sub25 clause (IV) is insufficient to reduce 


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1 excess production, subject to sub2 clauses (VII) and (VIII), the Sec3 retary may reduce the price received 

4 by any producer or farming operation 

5 that has increased the production of 

6 all milk in a calendar year, as com7 pared to the immediately preceding 

8 calendar year. 

9 ‘‘(VII) APPLICATION.—A reduc10 tion in price under subclause (VI) 

11 shall apply only to the quantity of 

12 milk produced in excess of the quan13 tity of milk produced during the pre14 vious calendar year. 

15 ‘‘(VIII) NEW PRODUCER EXCEP16 TION.—A new producer, as defined by 

17 the Secretary, shall— 

18 ‘‘(aa) during the 1-year pe19 riod beginning on the date on 

20 which the new producer com21 mences operation, be exempt 

22 from any applicable price reduc23 tion relating to the first 

24 3,000,000 pounds of milk pro25 duced by the new producer; 


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1 ‘‘(bb) in the case of any 

2 milk produced in excess of 

3 3,000,000 pounds during that 1- 

4 year period, be subject to each 

5 price reduction described in sub6 clauses (IV), (V), and (VI); and 

7 ‘‘(cc) after that 1-year pe8 riod, be subject to each price re9 duction that applies to existing 

10 producers. 

11 ‘‘(IX) APPEALS.— 

12 ‘‘(aa) IN GENERAL.—A pro13 ducer subject to an additional re14 duction under subclause (VI) 

15 may appeal to the Federal or 

16 State milk marketing adminis17 trator to provide evidence that 

18 the producer did not increase 

19 production in the calendar year 

20 that the reduction was in effect 

21 when compared to the imme22 diately preceding calendar year. 

23 ‘‘(bb) SUBMISSION OF AP24 PEAL.—A producer that ships to 

25 an unregulated milk handler may 


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1 submit any appeal of the pro2 ducer to the Secretary or to the 

3 designated representative of the 

4 Secretary. 

5 ‘‘(X) EXTRAORDINARY CIR6 CUMSTANCES.—In deciding an appeal 

7 submitted by a producer under sub8 clause (IX), a Federal or State milk 

9 marketing administrator (or, in the 

10 case of an appeal under subclause 

11 (IX)(bb), the Secretary or the des12 ignated representative of the Sec13 retary) shall take into consideration 

14 production losses due to, at a min15 imum, fire, severe weather conditions, 

16 or severe disease outbreaks. 

17 ‘‘(XI) COLLECTION.—Except as 

18 provided in subclause (XII), reduc19 tions in price required under sub20 clause (IV) or (VI) shall be collected 

21 by Federal and State milk marketing 

22 administrators and timely remitted to 

23 the Commodity Credit Corporation to 

24 offset the cost of purchasing excess 

25 milk products. 


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1 ‘‘(XII) COLLECTION IN UNREGU2 LATED AREAS.—Reductions in price 

3 required for unregulated areas under 

4 subclause (IV) or (VI) shall be col5 lected by the Secretary and timely re6 mitted to the Commodity Credit Cor7 poration to offset the cost of pur8 chasing excess milk products. 

9 ‘‘(viii) PROHIBITION ON CERTAIN

10 CHARGES.—In carrying out this Act, the 

11 Secretary shall not impose charges on pro12 ducers for the cost of the conversion of raw 

13 milk to manufactured products. 

14 ‘‘(ix) RESPONSIBILITIES OF MILK

15 PURCHASING HANDLERS.—A milk handler 

16 that purchases milk from a producer shall 

17 assume title for the milk at the time at 

18 which the milk is pumped into a milk truck 

19 provided by or otherwise delivered to the 

20 milk handler. 

21 ‘‘(x) APPLICABILITY.—This subpara22 graph applies to all producers and handlers 

23 of milk in the 48 contiguous States.’’. 


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1 SEC. 4. AMENDMENTS TO FEDERAL MILK MARKETING OR2 DERS. 

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

4 U.S.C. 608c(17)), reenacted with amendments by the Ag5 ricultural Marketing Agreement Act of 1937, is amended 

6 by adding at the end the following: 

7 ‘‘(H) ORDERS COVERING MILK AND MILK

8 PRODUCTS.—In the case of an order covering 

9 milk or milk products, disapproval of an amend10 ment to the order shall not be considered to be 

11 disapproval of— 

12 ‘‘(i) the order; or 

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

Æ 


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