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107TH CONGRESS

1ST SESSION H. R. 1878

To provide supplemental payments to dairy producers based upon their annual

milk marketings and to provide additional payments to dairy producers

for any month in which the prices received by producers for milk for

the preceding three months is less than a target price of $12.50 per

hundredweight.

IN THE HOUSE OF REPRESENTATIVES

MAY 16, 2001

Mr. KIND introduced the following bill; which was referred to the Committee

on Agriculture

A BILL

To provide supplemental payments to dairy producers based

upon their annual milk marketings and to provide additional payments to dairy producers for any month in

which the prices received by producers for milk for the

preceding three months is less than a target price of

$12.50 per hundredweight.

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 ‘‘National Family Farm

5 Dairy Equity Act of 2001’’.
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1 SEC. 2. DIRECT PAYMENTS TO DAIRY PRODUCERS BASED

2 ON ANNUAL MILK MARKETINGS.

3 (a) PAYMENTS REQUIRED.—The Secretary of Agri4 culture shall make payments under this section to quali5 fied producers on a farm for milk produced in the United

6 States and marketed by the producers for commercial use.

7 (b) AMOUNT OF PAYMENT.—Subject to the produc8 tion limitations in subsection (c), the total amount paid

9 to producers on a farm under this section for a calendar

10 year shall be equal to $0.50 per hundredweight on the

11 smaller of—

12 (1) the producers’ total milk production during

13 that calendar year; and

14 (2) 2,600,000 pounds.

15 (c) PRODUCTION AGREEMENT.—To be eligible to re16 ceive a payment under this section, the producers on a

17 farm shall enter into an agreement with the Secretary to

18 limit total milk marketings from the farm during the cal19 endar year to not more than the sum of—

20 (1) the base milk production history for the

21 farm, as determined under subsection (d); and

22 (2) the demand adjustment factor for the farm,

23 as determined under subsection (e).

24 (d) BASE PRODUCTION HISTORY.—

25 (1) DETERMINATION.—The base milk produc26 tion history for a farm for a calendar year shall be
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1 equal to the average annual quantity of milk pro2 duced and marketed from the farm for commercial

3 use, determined using the production and marketing

4 records for the previous two calendar years. After

5 the first year in which payments are made under

6 this section to producers on a farm, the base produc7 tion history for the farm for each subsequent year

8 shall be adjusted by the percentage change in the

9 demand adjustment factor for the previous year.

10 (2) NEW PRODUCERS.—In the case of a farm

11 that does not have a production history for the pre12 vious two calendar years, the Secretary shall estab13 lish an appropriate production base for the farm

14 based on the size of the dairy operation.

15 (e) DEMAND ADJUSTMENT FACTOR.—The demand

16 adjustment factor applicable to a farm for a calendar year

17 is the amount equal to the product of—

18 (1) the base production history in effect for the

19 farm; and

20 (2) the percentage change in the estimated

21 United States consumption of milk and dairy prod22 ucts on a per-capita basis and the percentage change

23 in the population of the United States during the

24 previous calendar year, as determined by the Sec25 retary.
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1 (f) REPAYMENT.—If the Secretary determines that

2 annual milk marketings on a farm exceed the quantity

3 permitted for the farm under the agreement entered into

4 under subsection (c), the Secretary shall require the pro5 ducers on the farm to repay all payments made under this

6 section to the producers for that calendar year. The

7 amount repaid shall include interest calculated at the rate

8 equal, to the extent practicable, to the cost to the Com9 modity Credit Corporation of borrowings from the United

10 States Treasury for the relevant time period.

11 (g) RELATION TO OTHER PAYMENT AUTHORITY.—

12 Payments under this section for a calendar year do not

13 count toward the $50,000 per farm limitation in section

14 3(d)(1).

15 (h) TIME FOR PAYMENTS.—Payments required

16 under this section shall be made on a quarterly basis dur17 ing the calendar year.

18 SEC. 3. ADDITIONAL PAYMENTS TO DAIRY PRODUCERS TO

19 OFFSET LOW MILK PRICES.

20 (a) DEFINITIONS.—In this section:

21 (1) AVERAGE MILK PRICE.—The term ‘‘average

22 milk price’’ means the average price under the Fed23 eral milk marketing orders of Class III milk (or milk

24 used to produce cheese) and Class IV milk (or milk
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1 used to produce butter and nonfat dry milk) for the

2 preceding three-month period.

3 (2) CLASS I MILK.—The term ‘‘Class I milk’’

4 means milk classified as Class I milk under a Fed5 eral milk marketing order.

6 (3) CLASS II MILK.—The term ‘‘Class II milk’’

7 means milk classified as Class II milk under a Fed8 eral milk marketing order.

9 (4) CLASS III MILK.—The term ‘‘Class III

10 milk’’ means milk classified as Class III milk under

11 a Federal milk marketing order.

12 (5) CLASS IV MILK.—The term ‘‘Class IV milk’’

13 means milk classified as Class IV milk under a Fed14 eral milk marketing order.

15 (6) FEDERAL MILK MARKETING ORDER.—The

16 term ‘‘Federal milk marketing order’’ means a milk

17 marketing order issued under section 8c of the Agri18 cultural Adjustment Act (7 U.S.C. 608c), reenacted

19 with amendments by the Agricultural Marketing

20 Agreement Act of 1937.

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

22 the Secretary of Agriculture.

23 (8) TARGET PRICE.—The term ‘‘target price’’

24 means $12.50 per hundredweight for milk con25 taining 3.50 percent butterfat.
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1 (b) PAYMENTS REQUIRED.—The Secretary shall

2 make a payment under this section to producers on a farm

3 for any month in which the average milk price applicable

4 to that month is less than the target price. Producers shall

5 be eligible for payments regardless of whether they market

6 their milk within the Federal milk marketing order sys7 tem. Payments for producers operating outside the Fed8 eral order system shall be calculated to be equivalent to

9 payments for producers operating within the Federal

10 order system.

11 (c) AMOUNT OF PAYMENT.—Subject to subsection

12 (d), the amount of the payment to be made to producers

13 on a farm under subsection (b) for a month shall be equal

14 to the following:

15 (1) The difference between the target price and

16 the average Class III milk price multiplied by the

17 percentage of milk used as Class III milk of the

18 total amount of milk marketed by the producer, as

19 determined by the Secretary.

20 (2) The difference between the target price and

21 the average Class IV milk price multiplied by the

22 percentage of milk used as Class IV milk of the total

23 amount of milk marketed by the producer, as deter24 mined by the Secretary.
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1 (3) The difference between the target price and

2 the average Class I milk price multiplied by the per3 centage of milk used as Class I milk of the total

4 amount of milk marketed by the producer, as deter5 mined by the Secretary.

6 (4) The difference between the target price and

7 the average Class II milk price multiplied by the

8 percentage of milk used as Class II milk of the total

9 amount of milk marketed by the producer, as deter10 mined by the Secretary.

11 (d) LIMITATIONS.—

12 (1) PAYMENT LIMITATION.—Maximum pay13 ments under this section for a calendar year may

14 not exceed $50,000 per farm.

15 (2) QUANTITY LIMITATION.—The producers on

16 a farm shall be eligible for payments under this sec17 tion for a month for not more than the smaller of

18 the following:

19 (A) The producers’ average monthly pro20 duction, determined using the production dur21 ing the previous calendar year and the current

22 calendar year.

23 (B) 216,666 pounds produced monthly.

24 (C) Some other production base for the

25 farm considered appropriate by the Secretary.
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1 (3) NEW PRODUCERS.—In the case of pro2 ducers on a farm who do not have a production base

3 for the previous calendar year, the quantity limita4 tion otherwise applicable under paragraph (2)(A)

5 shall be based on current monthly production only.

6 (e) TIME FOR PAYMENTS.—Payments required under

7 this section for a month shall be made not later than the

8 21st day after the end of the month.

9 SEC. 4. GENERAL PROVISIONS.

10 (a) FARM RECONSTITUTION.—The Secretary shall

11 carry out this Act in such a manner that there are no

12 additional outlays under section 2 or 3 as a result of the

13 reconstitution of a farm that the Secretary determines oc14 curred in whole or in part for the purpose of increasing

15 the amounts received as payments under such section.

16 (b) ADMINISTRATION; FUNDING SOURCE.—The Sec17 retary shall carry out this Act using the funds, facilities,

18 and authorities of the Commodity Credit Corporation.

19 (c) PERIOD OF EFFECTIVENESS.—This Act shall be

20 effective only during the period beginning on January 1,

21 2002, and ending on December 31, 2006.

22 (d) COMPTROLLER GENERAL REPORT.—Not later

23 than three years after the date of the enactment of this

24 Act, the Comptroller General shall submit to Congress a

25 report that analyzes the effect of the operation of this Act
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1 on farm income, milk production levels, milk prices, and

2 Government and consumer costs.

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