II 

110TH CONGRESS 

1ST SESSION S. 1722 

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 

JUNE 27, 2007 

Mr. SPECTER (for himself and 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 2007’’. 


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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, less— 

9 ‘‘(I) the opportunity cost of un10 paid labor for producing all milk; and 

11 ‘‘(II) the cost of custom services, 

12 as determined by the Secretary. 

13 ‘‘(iii) SURVEY.—For purposes of car14 rying out clause (ii), the Secretary shall 

15 survey producers and associations of pro16 ducers subject to Federal and State milk 

17 marketing orders and in all unregulated 

18 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 (i). 


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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 ‘‘(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.—The price 

16 of Class I milk in all Federal and 

17 State milk marketing orders and all 

18 unregulated milk production areas 

19 shall be equal to— 

20 ‘‘(aa) the basic formula 

21 price under subclause (I); plus 

22 ‘‘(bb) the opportunity cost of 

23 unpaid labor for producing all 

24 milk. 


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1 ‘‘(vi) ESTIMATION OF ANNUAL MILK

2 PRODUCTION AND DOMESTIC CONSUMP3 TION.—Not later than November 1 of each 

4 calendar year and taking into consideration 

5 the import projections for all milk prod6 ucts, the Secretary shall estimate the 

7 quantity of all milk to be produced in the 

8 48 contiguous States and marketed by pro9 ducers for commercial use during the next 

10 12 months. 

11 ‘‘(vii) INVENTORY MANAGEMENT PRO12 GRAM.— 

13 ‘‘(I) IN GENERAL.—In any case 

14 in which the dollar value of exported 

15 milk products is equal to the dollar 

16 value of imported milk products, the 

17 Secretary shall carry out this clause 

18 in a manner that is necessary to man19 age the inventory of all milk in the 

20 United States. 

21 ‘‘(II) MILK PRODUCTION TO22 TALS.—Not later than February 1 of 

23 each calendar year, the Secretary 

24 shall determine the total quantity of 


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1 all milk produced by each producer 

2 during the preceding calendar year. 

3 ‘‘(III) EXCESS PRODUCTION DE4 TERMINATION.—Not more than once 

5 every 2 months, if the Secretary, act6 ing through the Commodity Credit 

7 Corporation, has purchased the max8 imum quantity practicable of excess 

9 milk and milk products, the Secretary 

10 may determine whether an excess 

11 quantity of milk and milk products is 

12 being produced for the national do13 mestic market. 

14 ‘‘(IV) REDUCTION IN PRICE RE15 CEIVED.—If the Secretary determines 

16 under subclause (III) that there is ex17 cess production, the Secretary may 

18 provide for a reduction in the price re19 ceived by producers for not more than 

20 5 percent of all milk produced in the 

21 48 contiguous States and marketed by 

22 producers for commercial use. 

23 ‘‘(V) AMOUNT.—The amount of 

24 the reduction under subclause (IV) in 

25 the price received by producers shall 


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1 not exceed half the minimum price of 

2 Class II milk. 

3 ‘‘(VI) ADDITIONAL REDUC4 TION.—If the Secretary determines 

5 that the reduction described in sub6 clause (IV) is insufficient to reduce 

7 excess production, subject to sub8 clauses (VII) and (VIII), the Sec9 retary may reduce the price received 

10 by any producer that has increased 

11 the production of all milk in a cal12 endar year as compared to the imme13 diately preceding calendar year. 

14 ‘‘(VII) APPLICATION.—A reduc15 tion in price under subclause (VI) 

16 shall apply only to the quantity of 

17 milk produced in excess of the quan18 tity of milk produced during the pre19 vious calendar year. 

20 ‘‘(VIII) NEW PRODUCER EXCEP21 TION.—A new producer, as defined by 

22 the Secretary, may produce up to the 

23 average annual production of milk 

24 under the Federal or State milk mar25 keting order of the producer or the 


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1 unregulated area of the producer 

2 without being subject to an additional 

3 reduction under subclause (VI). 

4 ‘‘(IX) APPEALS.—A producer 

5 subject to an additional reduction 

6 under subclause (VI) may appeal to 

7 the Federal or State milk marketing 

8 administrator to provide evidence that 

9 the producer did not increase produc10 tion in the calendar year that the re11 duction was in effect when compared 

12 to the immediately preceding calendar 

13 year. 

14 ‘‘(X) EXTRAORDINARY CIR15 CUMSTANCES.—In deciding an appeal 

16 under subclause (IX), a Federal or 

17 State milk marketing administrator 

18 may take into consideration produc19 tion losses due to severe weather con20 ditions or severe disease outbreaks. 

21 ‘‘(XI) COLLECTION.—Except as 

22 provided in subclause (XII), reduc23 tions in price required under sub24 clause (IV) or (VI) shall be collected 

25 by Federal and State milk marketing 


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1 administrators and timely remitted to 

2 the Commodity Credit Corporation to 

3 offset the cost of purchasing excess 

4 milk products. 

5 ‘‘(XII) COLLECTION IN UNREGU6 LATED AREAS.—Reductions in price 

7 required for unregulated areas under 

8 subclause (IV) or (VI) shall be col9 lected by the Secretary and timely re10 mitted to the Commodity Credit Cor11 poration to offset the cost of pur12 chasing excess milk products. 

13 ‘‘(viii) PROHIBITION ON CERTAIN

14 CHARGES.—In carrying out this Act, the 

15 Secretary shall not impose charges on pro16 ducers for the cost of hauling milk or the 

17 conversion of raw milk to manufactured 

18 products. 

19 ‘‘(ix) RESPONSIBILITIES OF MILK

20 PURCHASING HANDLERS.—A milk handler 

21 that purchases milk from a producer 

22 shall— 

23 ‘‘(I) assume title for the milk at 

24 the time at which the milk is pumped 

25 into a milk truck provided by or othVerDate Aug 31 2005 23:45 Jun 28, 2007 Jkt 059200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1722.IS S1722

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1 erwise delivered to the milk handler; 

2 and 

3 ‘‘(II) incur all transportation 

4 costs of the purchased milk. 

5 ‘‘(x) APPLICABILITY.—This subpara6 graph applies to all producers and handlers 

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

8 SEC. 4. AMENDMENTS TO FEDERAL MILK MARKETING OR9 DERS. 

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

11 U.S.C. 608c(17)), reenacted with amendments by the Ag12 ricultural Marketing Agreement Act of 1937, is amended 

13 by adding at the end the following: ‘‘In the case of an 

14 order covering milk or milk products, disapproval of an 

15 amendment to the order shall not be considered dis16 approval of the order or of other terms of the order.’’. 

Æ 


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