[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2462 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 2462

To amend the Farm Security and Rural Investment Act of 2002 to promote 
growth and opportunity for the dairy industry in the United States, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 23, 2007

  Mr. Holden introduced the following bill; which was referred to the 
Committee on Agriculture, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Farm Security and Rural Investment Act of 2002 to promote 
growth and opportunity for the dairy industry in the United States, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. REPEAL OF DAIRY PRICE SUPPORT PROGRAM.

    (a) In General.--Section 1501 of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 7981) is repealed.
    (b) Conforming Amendment.--Section 1507 of the Farm Security and 
Rural Investment Act of 2002 (7 U.S.C. 7983) is repealed.

SEC. 2. MILK TARGET PRICE PROGRAM.

    Section 1502 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 7982) is amended--
            (1) by striking the section heading and inserting ``milk 
        target price program'';
            (2) in subsection (a), by striking paragraph (1) and 
        inserting the following:
            ``(1) Class iii milk.--The term `Class III milk' means milk 
        (including milk components) classified as milk for 
        manufacturing purposes under a Federal milk marketing order.'';
            (3) by striking subsection (c) and inserting the following:
    ``(c) Amount.--
            ``(1) In general.--Subject to paragraph (3), payments to a 
        producer under this section shall be calculated by multiplying 
        (as determined by the Secretary)--
                    ``(A) the payment quantity for the producer during 
                the applicable month established under subsection (d); 
                by
                    ``(B) the amount equal to--
                            ``(i) $12.00 per hundredweight (as adjusted 
                        under paragraph (2); less
                            ``(ii) the Class III milk price per 
                        hundredweight under the applicable Federal milk 
                        marketing order.
            ``(2) Feed price index and adjustment factor.--
                    ``(A) Feed price index.--The Secretary shall 
                develop a feed price index, using a baseline period of 
                calendar years 2001 through 2005, to reflect the feed 
                cost of producing 100 pounds of milk.
                    ``(B) Feed adjustment factor.--The Secretary shall 
                establish a feed adjustment factor that reflects 
                changes in the feed price index, as determined by the 
                Secretary.
                    ``(C) Adjustment.--Each month that there is an 
                increase in the feed price index, the Secretary shall 
                adjust the amount described in paragraph (1)(B)(i) to 
                reflect any increases in the feed adjustment factor.
            ``(3) Maximum amount.--The maximum annual payment for all 
        producers on a single dairy operation during the months of the 
        applicable fiscal year for which the producers receive payments 
        under this section shall not exceed $50,000.''; and
            (4) in subsections (f) and (g)(1), by striking ``September 
        30, 2007'' both places it appears and inserting ``September 30, 
        2012''.

SEC. 3. DAIRY OPTIONS PROGRAM.

    Subtitle E of title I of the Farm Security and Rural Investment Act 
of 2002 (7 U.S.C. 7981 et seq.) is amended by adding at the end the 
following:

``SEC. 1509. DAIRY OPTIONS PROGRAM.

    ``(a) Establishment.--The Secretary shall carry out a nationwide 
program under similar terms and conditions as the Secretary used to 
carry out the dairy options pilot program established in accordance 
with section 191 of the Federal Agricultural Improvement Reform Act of 
1996 (7 U.S.C. 7331).
    ``(b) Funding.--
            ``(1) Commodity credit corporation.--The Secretary shall 
        use the funds, facilities, and authorities of the Commodity 
        Credit Corporation to carry out this section.
            ``(2) Funding amount.--Of the funds of the Commodity Credit 
        Corporation, the Secretary shall use to carry out this section 
        $25,000,000 for each of fiscal years 2008 through 2012, to 
        remain available until expended.
            ``(3) Budget neutrality.--To the maximum extent 
        practicable, the Secretary shall operate the program in a 
        budget neutral manner.''.

SEC. 4. RECOURSE LOAN PROGRAM FOR COMMERCIAL PRODUCERS OF DAIRY 
              PRODUCTS.

    Subtitle E of title I of the Farm Security and Rural Investment Act 
of 2002 (7 U.S.C. 7981 et seq.) (as amended by section 3) is amended by 
adding at the end the following:

``SEC. 1510. RECOURSE LOAN PROGRAM FOR COMMERCIAL PRODUCERS OF DAIRY 
              PRODUCTS.

    ``(a) Definition of Eligible Dairy Products.--In this section, the 
term `eligible dairy products' means cheddar cheese, butter, and nonfat 
dry milk.
    ``(b) Program.--Effective beginning on September 30, 2007, the 
Secretary shall make recourse loans available to commercial processors 
of eligible dairy products--
            ``(1) to assist the processors to manage inventories of 
        eligible dairy products; and
            ``(2) to ensure a greater degree of price stability for the 
        dairy industry.
    ``(c) Amount of Loan.--
            ``(1) In general.--The Secretary shall establish a loan 
        rate for eligible dairy products, that reflects a milk 
        equivalent value of $9.90 per hundredweight of milk containing 
        3.67 percent butterfat, as determined by the Secretary.
            ``(2) Interest.--The Secretary shall charge a processor 
        that receives a recourse loan under this section a rate of 
        interest that is not less than the rate of interest that the 
        Secretary of the Treasury charges the Commodity Credit 
        Corporation, as determined by the Secretary.
    ``(d) Period of Loan.--
            ``(1) In general.--The original term of a recourse loan 
        made under this section may not extend beyond the end of the 
        fiscal year in which the loan is made.
            ``(2) Extension.--At the end of a fiscal year, the 
        Secretary may extend a recourse loan for an additional period 
        not to exceed the end of the next fiscal year.''.

SEC. 5. MILK REVENUE INSURANCE PILOT PROGRAM.

    Section 523 of the Federal Crop Insurance Act (7 U.S.C. 1523) is 
amended by adding at the end the following:
    ``(f) Milk Revenue Insurance Pilot Program.--
            ``(1) In general.--During each of crop years 2008 through 
        2012, the Corporation shall carry out a pilot program under 
        which producers on a dairy farm may elect to receive insurance 
        against loss of revenue due to natural disasters and price 
        fluctuations, as determined by the Corporation, based on the 
        average revenue received by producers for each cow during the 
        5-year period ending the preceding crop year.
            ``(2) Requirements.--The Corporation shall carry out the 
        pilot program under this section using similar terms and 
        conditions as were contained in the crop insurance policy 
        proposal entitled `Milk Revenue Policy (from bovine animals)' 
        submitted to the Board on April 26, 2007, in accordance with 
        section 508(h).''.

SEC. 6. FEDERAL MILK MARKETING ORDERS.

    (a) 2-Class System for Classifying Milk.--
            (1) In general.--Not later than September 30, 2008, the 
        Secretary of Agriculture shall conduct a study of the economic 
        benefits to milk producers of establishing a 2-class system for 
        classifying milk under Federal milk marketing orders issued 
        under section 8c(5) of the Agricultural Adjustment Act (7 
        U.S.C. 608c(5)), reenacted with amendments by the Agricultural 
        Marketing Agreement Act of 1937, consisting of a fluid milk 
        class and a manufacturing grade milk class (with the price for 
        both classes determined using the component prices of 
        butterfat, protein, and other solids).
            (2) Amendment to orders.--If the Secretary determines (on 
        the basis of the study conducted under paragraph (1)) that a 2-
        class system for classifying milk under Federal milk marketing 
        orders would have a positive impact on milk producers, the 
        Secretary shall amend Federal milk marketing orders to 
        implement the 2-class system for classifying milk.
    (b) Deadline for Issuance of Orders.--Section 8c(4) of the 
Agricultural Adjustment Act (7 U.S.C. 608c(4)), reenacted with 
amendments by the Agricultural Marketing Agreement Act of 1937, is 
amended by striking ``After'' and inserting ``Not later than 30 days 
after''.
    (c) Advanced Pricing.--Section 8c(5) of the Agricultural Adjustment 
Act (7 U.S.C. 608c(5)), reenacted with amendments by the Agricultural 
Marketing Agreement Act of 1937, is amended by adding at the end the 
following:
                    ``(P) Advanced pricing.--Not later than September 
                30, 2007, in calculating the advanced price of Class I 
                butterfat milk and Class I and II skim milk under 
                Federal milk marketing orders, the Secretary shall use 
                the 4-week component prices that are used to calculate 
                prices for Class III and Class IV milk, as determined 
                by the Secretary.''.
    (d) Economic Impact Assessment.--The Secretary of Agriculture 
shall--
            (1) carry out a review of the milk-feed ratio during the 1-
        year period ending on the date of enactment of this Act; and
            (2) not later than September 30, 2008, and each time a 
        proposed change in the Federal milk marketing order formulas is 
        considered by the Secretary--
                    (A) assess the economic impact, over a 1- and 2-
                year period, of proposed changes in Federal milk 
                marketing order formulas on--
                            (i) milk supply;
                            (ii) farm profitability;
                            (iii) consumer demand; and
                            (iv) market prices;
                    (B) submit to the Committee on Agriculture of the 
                House of Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry a report that 
                describes the results of the assessment; and
                    (C) consider, and include in the record, the 
                results of the assessment before making a decision on 
                any proposed change to the Federal milk marketing order 
                formulas.

SEC. 7. DAIRY FORWARD PRICING PROGRAM.

    Section 23 of the Agricultural Adjustment Act (7 U.S.C. 627), 
reenacted with amendments by the Agricultural Marketing Agreement Act 
of 1937, is amended--
            (1) in the section heading by striking ``pilot'';
            (2) in subsection (a)--
                    (A) by striking ``Pilot Program Required.--'' and 
                all that follows through ``pilot'' and inserting ``In 
                General.--The Secretary of Agriculture shall carry out 
                a'';
                    (B) by striking ``under which milk producers'' and 
                inserting ``under which--
            ``(1) milk producers''.; and
                    (C) by striking ``handlers.'' and inserting 
                ``handlers; and
            ``(2) proprietary processors and cooperatives regulated 
        under Federal milk marketing orders are authorized to 
        voluntarily enter into forward price contracts with the members 
        of the processors and cooperatives.'';
            (3) by striking subsections (d) and (e); and
            (4) by adding at the end the following:
    ``(d) Funding.--
            ``(1) Commodity credit corporation.--The Secretary shall 
        use the funds, facilities, and authorities of the Commodity 
        Credit Corporation to carry out this section.
            ``(2) Funding amount.--The Secretary shall use such funds 
        of the Commodity Credit Corporation as are necessary to carry 
        out this section for each of fiscal years 2008 through 2012, to 
        remain available until expended.''.

SEC. 8. DAIRY PROCESSING EQUIPMENT LOAN GUARANTEE FUND.

    (a) Loans.--
            (1) In general.--Section 310B(a) of the Consolidated Farm 
        and Rural Development Act (7 U.S.C. 1932(a)) is amended--
                    (A) by designating the first through fifth 
                sentences as paragraphs (1) through (5), respectively;
                    (B) by striking ``Sec. 310B. (a) The Secretary'' 
                and inserting the following:

``SEC. 310B. RURAL INDUSTRIALIZATION ASSISTANCE.

    ``(a) Loans.--
            ``(1) In general.--The Secretary'';
                    (C) by striking ``for the purposes of (1) 
                improving'' and inserting ``for the purposes of--
                    ``(A) improving'';
                    (D) by striking ``abatement and control, (2) the 
                conservation'' and inserting ``abatement and control;
                    ``(B) the conservation'';
                    (E) by striking ``rural areas, (3) reducing'' and 
                inserting ``rural areas;
                    ``(C) reducing'';
                    (F) by striking ``rural areas, and (4) to 
                facilitate economic'' and inserting ``rural areas;
                    ``(D) facilitating economic''; and
                    (G) by striking ``foreign trade.'' and inserting 
                ``foreign trade; and
                    ``(E) providing processors of dairy products with 
                incentives for investing in new equipment and 
                technologies by using not more than $15,000,000 each 
                fiscal year to--
                            ``(i) make loans to dairy processors and 
                        cooperatives to cover not more than 50 percent 
                        of the cost of acquisition and adoption of new 
                        equipment, equipment upgrades, and new 
                        technologies--
                                    ``(I) at a fixed rate of interest 
                                not to exceed the prime lending rate 
                                plus 1 percent; and
                                    ``(II) with a term of not to exceed 
                                15 years; and
                            ``(ii) guarantee loans made to dairy 
                        processors and cooperatives for the acquisition 
                        and adoption of new dairy equipment, equipment 
                        upgrades, and new technologies, at a guarantee 
                        rate of 90 percent.''.
            (2) Conforming amendments.--
                    (A) Section 307(a)(6)(B)(ii) of the Consolidated 
                Farm and Rural Development Act (7 U.S.C. 
                1927(a)(6)(B)(ii)) is amended by striking ``clause (1) 
                of section 310B(a)'' and inserting ``section 
                310B(a)(1)(A)''.
                    (B) Section 333A(g)(1)(B) of the Consolidated Farm 
                and Rural Development Act (7 U.S.C. 1983a(g)(1)(B)) is 
                amended by striking ``310B(a)(1)'' and inserting 
                ``310(a)(1)(A)''.
                    (C) Section 381E(d)(3)(B) of the Consolidated Farm 
                and Rural Development Act (7 U.S.C. 2009d(d)(3)(B)) is 
                amended by striking ``310B(a)(1)'' and inserting 
                ``310B(a)(1)(A)''.
    (b) Lending Power for Dairy Processing Cooperatives.--Section 3.7 
of the Farm Credit Act of 1971 (12 U.S.C. 2128) is amended by adding at 
the end the following:
    ``(g) Dairy Processing Cooperatives.--
            ``(1) In general.--The banks for cooperatives may use not 
        more than $15,000,000 each fiscal year to provide dairy 
        processing cooperatives with working capital lines of credit 
        and accounts receivable financing for the purpose of accessing 
        export marketing opportunities for milk and milk products.
            ``(2) Limitations.--Financing provided by the banks for 
        cooperatives for a project under paragraph (1) may not exceed 
        the lesser of--
                    ``(A) $1,000,000; or
                    ``(B) 75 percent of the costs of carrying out the 
                project.
            ``(3) Term.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term of a line of credit 
                described in paragraph (1) shall not exceed 24 months.
                    ``(B) Revolving lines of credit.--A revolving line 
                of credit may be used for multiple transactions.
            ``(4) Due date.--An accounts receivable financing loan 
        under this subsection shall be due on the earlier of--
                    ``(A) the date on which the receivable is paid; or
                    ``(B) 180 days after the date of disbursement.
            ``(5) Use of financing.--
                    ``(A) Working capital line of credit financing.--
                Working capital line of credit financing under this 
                subsection may be used--
                            ``(i) to acquire inventory for the 
                        production of milk;
                            ``(ii) to pay direct and indirect costs 
                        (such as design, engineering, labor, and 
                        overhead costs) used for--
                                    ``(I) the manufacture or purchase 
                                of goods, including work-in-process, 
                                for the production of milk; or
                                    ``(II) for the provision of 
                                services for the production of milk; or
                            ``(iii) to support standby letters of 
                        credit used as bid bonds, performance bonds, or 
                        payment guarantees.
                    ``(B) Accounts receivable financing.--Accounts 
                receivable financing under this subsection may be used 
                to finance export accounts receivables for milk and 
                milk products sold on payment terms of not more than 
                180 days after the date of arrival at the port of 
                importation, if the finance export accounts receivable 
                have been insured by the Commodity Credit Corporation 
                or other guarantor approved by the Secretary.''.

SEC. 9. FEDERAL LOAN FORGIVENESS PROGRAM.

    The National Agricultural Research, Extension, and Teaching Policy 
Act of 1977 (7 U.S.C. 3101 et seq.) is amended by adding at the end the 
following:

         ``Subtitle P--Federal Dairy Education Loan Forgiveness

``SEC. 1495. SHORT TITLE.

    ``This subtitle may be cited as the `Federal Dairy Education Loan 
Forgiveness Act'.

``SEC. 1496. DEFINITIONS.

    ``In this subtitle:
            ``(1) Family dairy farm.--The term `family dairy farm' 
        means the real property of a dairy farm--
                    ``(A) owned by--
                            ``(i) 1 or more immediate family members; 
                        or
                            ``(ii) a family dairy farm corporation; and
                    ``(B) used for the production, for commercial 
                purposes, of milk or milk products.
            ``(2) Family dairy farm corporation.--The term `family 
        dairy farm corporation' means a corporation--
                    ``(A) at least 75 percent of the assets of which 
                are devoted to active involvement in farming; and
                    ``(B) at least 75 percent of each class of stock of 
                which is continuously owned by 1 or more immediate 
                family members.
            ``(3) Immediate family member.--The term `immediate family 
        member' means a spouse, child, stepchild, parent, stepparent, 
        grandparent, brother, stepbrother, sister, stepsister, or 
        similar relative-in-law of an owner of real property, as 
        determined by the Secretary.
            ``(4) Institution of higher education.--The term 
        `institution of higher education' has the meaning given the 
        term in section 101(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1001(a)).
            ``(5) Program.--The term `program' means the Federal dairy 
        education loan forgiveness program established under section 
        1497(a).
            ``(6) Qualified applicant.--The term `qualified applicant' 
        means a resident of the United States who, as determined by the 
        Secretary--
                    ``(A) holds a 2- or 4-year degree in a field 
                related to the production of agricultural products from 
                an institution of higher education;
                    ``(B) on or after January 1, 2008, has commenced 
                the first year of full-time ownership or operation of a 
                family dairy farm; and
                    ``(C) is the borrower of an outstanding qualified 
                loan as a result of pursuing a degree described in 
                subparagraph (A).
            ``(7) Qualified loan.--The term `qualified loan' means--
                    ``(A)(i) a loan made, insured, or guaranteed under 
                section 428 or 428H of the Higher Education Act of 1965 
                (20 U.S.C. 1078, 1078-8);
                    ``(ii) a Federal Direct Stafford Loan or a Federal 
                Direct Unsubsidized Stafford Loan made under section 
                455 of that Act (20 U.S.C. 1087e); or
                    ``(iii) a consolidation loan under section 428C of 
                that Act (20 U.S.C. 1078-3), or a Federal Direct 
                Consolidation Loan under section 455 of that Act (20 
                U.S.C. 1087e), to the extent that the amount of the 
                loan was used to repay a loan described in clause (i) 
                or (ii); and
                    ``(B) a loan under part B or D of title IV of that 
                Act (20 U.S.C. 1070 et seq.); or
                    ``(C) a loan under a guaranteed student loan 
                program of the Department.

``SEC. 1497. FEDERAL DAIRY EDUCATION LOAN FORGIVENESS PROGRAM.

    ``(a) In General.--Subject to the availability of appropriations, 
the Secretary shall carry out a Federal dairy education loan 
forgiveness program under which the Secretary shall assume the 
obligation to repay an amount calculated in accordance with subsection 
(c) for 1 or more qualified loans made to eligible qualified applicants 
in accordance with this section.
    ``(b) Eligibility.--A qualified applicant shall submit to the 
Secretary an application and such documentation of continued 
eligibility as the Secretary determines to be appropriate.
    ``(c) Maximum Amount.--The maximum amount that the Secretary may 
repay under the program for each qualified applicant shall be equal to 
the average annual cost of tuition at land-grant colleges and 
universities (as determined by the Secretary annually), for each year 
that the qualified applicant--
            ``(1) is an owner or operator of a family dairy farm; and
            ``(2) has not otherwise received loan repayment on behalf 
        of the qualified applicant under this section or any other 
        Federal or State program.
    ``(d) Prohibition.--Nothing in this section authorizes the 
refunding of any repayment of a qualified loan.
    ``(e) Exclusion From Income.--Any payment to, or on behalf of, a 
qualified applicant under this subtitle shall not be included in the 
gross income of the qualified applicant for purposes of the Internal 
Revenue Code of 1986.
    ``(f) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        such sums as are necessary to carry out this subtitle.
            ``(2) Insufficient funds.--If the total amount of funds 
        appropriated to carry out this subtitle is insufficient to 
        provide loan repayment under the program for all eligible 
        qualified applicants, the Secretary shall provide loan 
        repayment to eligible qualified applicants on a pro rata 
        basis.''.

SEC. 10. MANDATORY REPORTING OF DAIRY COMMODITIES.

    (a) Definitions.--Section 272 of the Agricultural Marketing Act of 
1946 (7 U.S.C. 1637a) is amended to read as follows:

``SEC. 272. DEFINITIONS.

    ``In this subtitle:
            ``(1) Dairy commodity.--
                    ``(A) In general.--The term `dairy commodity' means 
                a product manufactured from milk or a milk-derived 
                ingredient.
                    ``(B) Inclusions.--The term `dairy commodity' 
                includes--
                            ``(i) fluid milk;
                            ``(ii) cheese;
                            ``(iii) butter;
                            ``(iv) nonfat dry milk;
                            ``(v) skim milk;
                            ``(vi) whey products;
                            ``(vii) dry proteins (such as a milk 
                        protein concentrate, casein, and a caseinate);
                            ``(viii) a lactose product; and
                            ``(ix) a fresh dairy product (such as 
                        yogurt and ice cream).
            ``(2) Dairy processor.--The term `dairy processor' means a 
        person or legal entity that commercially processes milk into 
        cheese, butter, nonfat dry milk, or other dairy solids.
            ``(3) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture.''.
    (b) Mandatory Reporting.--Section 273 of the Agricultural Marketing 
Act of 1946 (7 U.S.C. 1637b) is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by striking subsections (a) and (b) and inserting the 
        following:
    ``(a) Daily Reporting.--
            ``(1) In general.--The corporate officers or officially-
        designated representatives of each dairy processor shall report 
        to the Secretary at least once each reporting day, not later 
        than 10:00 a.m. Central Time, for each sales transaction 
        involving a dairy commodity, information concerning--
                    ``(A) the sales price;
                    ``(B) the quantity sold;
                    ``(C) the location of the sales transaction; and
                    ``(D) product characteristics, including--
                            ``(i) moisture level;
                            ``(ii) packaging size;
                            ``(iii) grade;
                            ``(iv) if appropriate, fat or protein 
                        level;
                            ``(v) heat level for dried products; and
                            ``(vi) other defining product 
                        characteristics.
            ``(2) Publication.--The Secretary shall make the 
        information reported under paragraph (1) available to the 
        public not less frequently than once each reporting day, 
        categorized by location and product characteristics.
    ``(b) Weekly Reporting.--
            ``(1) In general.--The corporate officers or officially-
        designated representatives of each dairy processor shall report 
        to the Secretary, on the first reporting day of each week, not 
        later than 9:00 a.m. Central Time, for the prior week 
        information concerning--
                    ``(A) the sales prices for sales transactions 
                involving dairy commodities, categorized by product 
                characteristics; and
                    ``(B) the quantities of dairy commodities sold.
            ``(2) Publication.--The Secretary shall make the 
        information reported under paragraph (1) available to the 
        public on the first reporting day of each week, not later than 
        10:00 a.m. Central Time, categorized by location and product 
        characteristics.
            ``(3) Federal order prices.--The Secretary shall use weekly 
        prices published under paragraph (2) to calculate Federal milk 
        marketing order prices.
    ``(c) Monthly Reporting.--
            ``(1) In general.--The corporate officers or officially-
        designated representatives of each dairy processor shall report 
        to the Secretary, on the first reporting day of each month, not 
        later than 9:00 a.m. Central Time, the quantity of all dairy 
        commodities processed by the dairy processor during the prior 
        month.
            ``(2) Publication.--The Secretary shall make the 
        information reported under paragraph (1) available to the 
        public on the first reporting day of each month, not later than 
        10:00 a.m. Central Time, categorized by location and product 
        characteristics.''.
                                 <all>