100 
(1) the basic production history of the partici-
pating dairy operation under subsection (a); and 
(2) the production history of the participating 
dairy operation whenever the participating dairy op-
eration purchases supplemental production margin 
protection under section 1415. 
(d) TRANSFER OF PRODUCTION HISTORIES.— 
(1) TRANSFER BY SALE OR LEASE.—In promul-
gating the rules to initiate the production margin 
protection program, the Secretary shall specify the 
conditions under which and the manner by which the 
production history of a participating dairy operation 
may be transferred by sale or lease. 
(2) COVERAGE LEVEL.— 
(A) BASIC PRODUCTION MARGIN PROTEC-
TION.—A purchaser or lessee to whom the Sec-
retary transfers a basic production history 
under this subsection shall not obtain a dif-
ferent level of basic production margin protec-
tion than the basic production margin protec-
tion coverage held by the seller or lessor from 
whom the transfer was obtained. 
(B) SUPPLEMENTAL PRODUCTION MARGIN 
PROTECTION.—A purchaser or lessee to whom 
the Secretary transfers an annual production 
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101 
history under this subsection shall not obtain a 
different level of supplemental production mar-
gin protection coverage than the supplemental 
production margin protection coverage in effect 
for the seller or lessor from whom the transfer 
was obtained for the calendar year in which the 
transfer was made. 
(e) MOVEMENT
AND TRANSFER
OF PRODUCTION 
HISTORY.— 
(1) MOVEMENT
AND
TRANSFER
AUTHOR-
IZED.—Subject to paragraph (2), if a participating 
dairy operation moves from 1 location to another lo-
cation, the participating dairy operation may trans-
fer the basic production history and annual produc-
tion history associated with the participating dairy 
operation. 
(2) NOTIFICATION REQUIREMENT.—A partici-
pating dairy operation shall notify the Secretary of 
any move of a participating dairy operation under 
paragraph (1). 
(3) SUBSEQUENT OCCUPATION OF VACATED LO-
CATION.—A party subsequently occupying a partici-
pating dairy operation location vacated as described 
in paragraph (1) shall have no interest in the basic 
production history or annual production history pre-
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102 
viously associated with the participating dairy oper-
ation at such location. 
SEC. 1414. BASIC PRODUCTION MARGIN PROTECTION. 
(a) PAYMENT THRESHOLD.—The Secretary shall 
make a payment to participating dairy operations in ac-
cordance with subsection (b) whenever the average actual 
dairy production margin for a consecutive 2-month period 
is less than $4.00 per hundredweight of milk. 
(b) BASIC PRODUCTION MARGIN PROTECTION PAY-
MENT.—The basic production margin protection payment 
for a participating dairy operation for a consecutive 2- 
month period shall be equal to the product obtained by 
multiplying— 
(1) the difference between the average actual 
dairy production margin for the consecutive 2-month 
period and $4.00, except that, if the difference is 
more than $4.00, the Secretary shall use $4.00; by 
(2) the lesser of— 
(A) 80 percent of the production history of 
the participating dairy operation, divided by 6; 
or 
(B) the actual quantity of milk marketed 
by the participating dairy operation during the 
consecutive 2-month period. 
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SEC. 1415. SUPPLEMENTAL PRODUCTION MARGIN PROTEC-
TION. 
(a) ELECTION
OF
SUPPLEMENTAL
PRODUCTION 
MARGIN PROTECTION.—A participating dairy operation 
may annually purchase supplemental production margin 
protection to protect, during the calendar year for which 
purchased, a higher level of the income of a participating 
dairy operation than the income level guaranteed by basic 
production margin protection under section 1414. 
(b) SELECTION OF PAYMENT THRESHOLD.—A par-
ticipating dairy operation purchasing supplemental pro-
duction margin protection for a year shall elect a coverage 
level that is higher, in any increment of $0.50, than the 
payment threshold for basic production margin protection 
specified in section 1414(a), but not to exceed $8.00. 
(c) COVERAGE PERCENTAGE.—A participating dairy 
operation purchasing supplemental production margin 
protection for a year shall elect a percentage of coverage 
equal to not more than 90 percent, nor less than 25 per-
cent, of the annual production history of the participating 
dairy operation. 
(d) PREMIUMS
FOR SUPPLEMENTAL PRODUCTION 
MARGIN PROTECTION.— 
(1) PREMIUMS
REQUIRED.—A participating 
dairy operation that purchases supplemental produc-
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tion margin protection shall pay an annual premium 
equal to the product obtained by multiplying— 
(A) the coverage percentage elected by the 
participating dairy operation under subsection 
(c); 
(B) the annual production history of the 
participating dairy operation; and 
(C) the premium per hundredweight of 
milk, as specified in the applicable table under 
paragraph (2) or (3). 
(2) PREMIUM PER HUNDREDWEIGHT FOR FIRST 
4 MILLION POUNDS OF PRODUCTION.—For the first 
4,000,000 pounds of milk marketings included in 
the annual production history of a participating 
dairy operation, the premium per hundredweight 
corresponding to each coverage level specified in the 
following table is as follows: 
Coverage Level 
Premium per Cwt. 
$4.50 
$0.01
$5.00 
$0.02
$5.50 
$0.035
$6.00 
$0.045
$6.50 
$0.09
$7.00 
$0.40
$7.50 
$0.60
$8.00 
$0.95. 
(3) PREMIUM PER HUNDREDWEIGHT FOR PRO-
DUCTION IN EXCESS OF 4 MILLION POUNDS.—For 
milk marketings in excess of 4,000,000 pounds in-
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