II 115th CONGRESS 2d Session S. 3113 IN THE SENATE OF THE UNITED STATES June 21, 2018 Ms. Baldwin introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To promote dairy product innovation, including in specialty cheese, and value-added dairy product development for the economic benefit of United States dairy farmers and their communities.

1. Short title This Act may be cited as the Dairy Business Innovation Act of 2018 . 2. Dairy product and business innovation initiatives (a) Definitions In this section: (1) Dairy business The term dairy business means a business that develops, produces, markets, or distributes dairy products. (2) Dairy product The term dairy product means a food that contains as a primary ingredient, or is derived from, the lacteal secretion, practically free from colostrum, obtained by the complete milking of one or more hooved mammals. (3) Initiative The term initiative means a dairy product and business innovation initiative established under subsection (b). (4) Secretary The term Secretary means the Secretary of Agriculture. (b) Establishment The Secretary shall establish not less than 3 regionally located dairy product and business innovation initiatives for the purposes of— (1) utilizing regional milk production; (2) creating higher-value uses for dairy products; (3) promoting business development that diversifies farmer income through processing and marketing innovation; and (4) diversifying dairy product markets to reduce risk. (c) Selection of initiatives An initiative— (1) shall be located in a region with a history of dairy farming; (2) shall be positioned in proximity to existing dairy industry resources, including research capacity, academic and industry expertise, a density of dairy farms or farmland suitable for dairying, and dairy businesses; (3) may serve a certain product niche, such as artisanal cheese, or serve dairy businesses with dairy products derived from a specific type of dairy animal; and (4) shall serve dairy businesses in other regions. (d) Entities eligible To host initiative (1) In general Any of the following entities may submit to the Secretary an application to host an initiative: (A) A State department of agriculture or other State entity. (B) A nonprofit entity with capacity to provide consultation, expertise, and grant distribution and tracking. (C) An institution of higher education. (D) A cooperative extension service. (2) Partners An entity described in paragraph (1) may establish partners prior to the submission of the application under that paragraph, or add partners on consultation with the Secretary, which may include— (A) a generic program to promote and provide research and information for dairy and dairy products (commonly known as a dairy checkoff program ); (B) a foundation; and (C) any other entity described in subparagraphs (A) through (D) of that paragraph. (e) Activities of initiatives (1) Direct assistance to dairy businesses An initiative shall provide assistance to dairy businesses in accordance with the following: (A) Provision of direct assistance Assistance may be provided directly to dairy businesses in a private consultation or through widely available distribution, and may be provided— (i) directly by the entity that hosts the initiative under subsection (d)(1); (ii) through contracting with industry experts; (iii) through the provision of technical assistance, such as informational websites, webinars, conferences, trainings, plant tours, and field days; and (iv) through research institutions, including cooperative extension services. (B) Types of assistance Eligible forms of assistance include— (i) business consulting, including business plan development for processed dairy products; (ii) accounting and financial literacy training; (iii) market evaluation; (iv) strategic planning assistance; (v) product innovation, including relating to value-added products; (vi) marketing and branding assistance, including market messaging, consumer assessments, and evaluation of regional, national, and international markets; (vii) innovation in emerging market opportunities, including agritourism, and marketing communication methods; (viii) packaging, distribution, and supply chain innovation; (ix) food safety training; (x) dairy product production training, including in new, rare, or innovative techniques; and (xi) process and processing facility improvement, including planning for and implementing plant upgrades, food safety modernization, energy and water efficiency, byproduct reprocessing and use maximization, and waste treatment. (2) Competitive grants to dairy businesses An initiative shall provide competitive grants for new and existing dairy businesses for the purposes of— (A) modernization, specialization, and grazing transition on dairy farms; (B) value chain and commodity innovation and facility and process updates for dairy processors; and (C) product development, packaging, and marketing of dairy products. (f) Distribution of funds (1) In general Of the funds made available to carry out this section, the Secretary shall provide not less than 3 awards to eligible entities described in subsection (d)(1) for the purposes of carrying out the activities under subsection (e). (2) Multiyear funding The Secretary is encouraged— (A) to award funds under paragraph (1) in multiyear funding allocations; and (B) to require frequent reporting, as appropriate. (3) Use of funds (A) In general The funds awarded to an eligible entity under paragraph (1) may be used— (i) for program administration of an initiative, including staff costs; and (ii) for workshops or other informational sessions that— (I) directly benefit dairy businesses and entrepreneurs; or (II) enhance the capacity of providers of technical assistance to dairy businesses. (B) Allocation Not less than 50 percent of the funds awarded to an eligible entity under paragraph (1) shall be allocated to directly benefit new dairy businesses or dairy businesses that wish to update their products or processes using a grant under subsection (e)(2). (4) Priority An eligible entity shall give priority the provision of direct assistance under subsection (e)(1) and grants under subsection (e)(2) to— (A) small- and medium-sized dairy farms and dairy businesses; (B) employee-owned dairy businesses; (C) cooperatives; (D) dairy businesses that establish contracting mechanisms that return profits to farmers who supply their milk; (E) dairy businesses that, in addition to salary and wage compensation, return profits to employees; and (F) dairy businesses that seek to create dairy products that add substantial value in processing or marketing, such as specialty cheeses. (5) Requirement In the case of direct assistance under subsection (e)(1) or a grant under subsection (e)(2) that is provided to a specific dairy business and does not benefit the general public, as determined by the Secretary, the assistance or grant shall exclusively be available to dairy businesses owned in the United States. (6) Supplementation To the extent practicable, the Secretary shall ensure that funds provided to an initiative supplement, and do not duplicate or replace, existing dairy product research, development, and promotion activities. (g) Matching funding (1) In general The Secretary shall encourage, but not require, an eligible entity described in subsection (d)(1) to provide matching funding to carry out this section. (2) Additional funding After an initial term of funding provided to an eligible entity described in subsection (d)(1) under this section, the Secretary is encouraged to work with the eligible entity to develop additional funding streams to supplement the Federal investment, including from funds of a generic program to promote and provide research and information for a specific agricultural commodity, if the provision of funds is approved by the members of the generic program. (h) Reporting (1) In general Not later than 1 year after the date of enactment of this Act, the Secretary shall submit to Congress a report describing the implementation of this section. (2) Innovation reports The Secretary, in coordination with the Chief Economist, shall publish an annual report on the status of— (A) innovation in dairy products; (B) product development under the program under this section; (C) growth areas for dairy product development; and (D) barriers inhibiting majority member-owned domestic dairy firms from— (i) updating capacity; (ii) performing competitively in the marketplace; and (iii) returning gains to members or reinvesting the gains in ways that benefit the long-term financial stability of the majority member-owned domestic dairy firm and the members of that firm. (i) Funding (1) Mandatory funding Of the funds of the Commodity Credit Corporation, the Secretary shall use to carry out this section $50,000,000, to remain available until expended. (2) Authorization of appropriations There is authorized to be appropriated to carry out this section $20,000,000 for each fiscal year.