Dairy Price Stabilization Program

The Dairy Production Stabilization Act of 1983 (7 U.S.C. 1421 note; title I of Public Law 98–189) is amended by adding at the end the following new subtitle:

Dairy Price Stabilization Program

141.

Definitions

In this subtitle: (1)

Allowable milk marketing

The term allowable milk marketing means the quantity of milk production that a dairy facility may produce during a quarter without incurring a market access fee, as determined under section 143(b)(1). (2)

Allowable milk marketing growth rate

The term allowable milk marketing growth rate means the allowable milk marketing growth rate established by the Secretary for the applicable quarter under section 143(b)(1). (3)

Alternative market access fee

The term alternative market access fee means a fee described in section 143(b)(2) that is assessed on all milk produced in excess of the allowable milk marketings of a dairy facility. (4)

Appeals Committee

The term Appeals Committee means the producer appeals committee established under section 142(c). (5)

Dairy facility

The term dairy facility means an operation on a property, or set of properties that are contiguous or separated only by a public right-of-way, that is directly related to raising cows or producing milk from cows for the purpose of making a profit or for a livelihood. (6)

Market access fee dividend

The term market access fee dividend means the market access fees collected during an applicable quarter that are redistributed to dairy facilities with allowable milk marketings under section 143(e). (7)

Milk handler

The term milk handler means a person that makes payments to a dairy facility for milk produced in the United States and purchased from the dairy facility for commercial use. (8)

Order

The term order means an order issued by the Secretary under section 142(a). (9)

Producer

The term producer means all persons engaged in the production of bovine milk for commercial use. All producers holding a milk license shall be included. (10)

Producer Board

The term Producer Board means the Producer Board established under section 142(b). (11)

Program

The term Program means the Dairy Price Stabilization Program established under section 142(a). (12)

Quarter

The term quarter means each of the following 4 quarters of a calendar year: (A)January 1 through March 31. (B)April 1 through June 30. (C)July 1 through September 30. (D)October 1 through December 31. (13)

Region

The term region means each of the following (A)Region 1, Northeast, consisting of the States of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and West Virginia. (B)Region 2, Southeast, consisting of the States of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, and Virginia. (C)Region 3, Midwest, consisting of the States of Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. (D)Region 4, South, consisting of the States of Kansas, New Mexico, Oklahoma, and Texas. (E)Region 5, Northwest, consisting of the States of Colorado, Idaho, Montana, Oregon, Utah, Washington, and Wyoming. (F)Region 6, West, consisting of the States of Arizona, California, and Nevada. (14)

Secretary

The term Secretary means the Secretary of Agriculture, acting in consultation with the Appeals Committee or Producer Board (as appropriate). (15)

Standard market access fee

The term standard market access fee means a fee assessed under section 143(d) on all milk produced by a dairy facility.

142.

Establishment

(a)

Issuance of orders

(1)

Proposed order

Not later than 60 days after the date of the enactment of this subtitle, the Secretary shall publish in the Federal Register a proposed order to establish a program to be known as the Dairy Price Stabilization Program that shall apply to all dairy facilities within the contiguous United States that produce milk for sale commercially. (2)

Referendum on proposed order

Not later than 90 days after the date of the enactment of this subtitle, the Secretary shall conduct a referendum among producers who, during a representative period (as determined by the Secretary), have been engaged in the production of milk for commercial use for the purpose of ascertaining whether the proposed order shall take effect. The Program shall be implemented only if the Secretary determines that it has been approved by not less than a majority of the eligible producers voting in the referendum. If implementation of the Program is not approved by a majority of the eligible producers voting in the referendum, the Secretary may not issue a final order to establish the Program. To determine the approval or disapproval of producers, the Secretary shall consider the approval or disapproval by any cooperative association of producers, engaged in a bona fide manner in marketing milk or the products thereof, as the approval or disapproval of the producers who are members of or under contract with such cooperative association of producers. If a cooperative association of producers elects to vote on behalf of its members, such cooperative association shall provide each producer, on whose behalf the cooperative association is expressing approval or disapproval, a description of the question presented in the referendum together with a statement of the manner in which the cooperative association intends to cast its vote on behalf of the membership. Such information shall inform the producer of procedures to follow to cast an individual ballot should the producer so choose within the period of time established by the Secretary for casting ballots. Such notification shall be made at least 30 days before the referendum and shall include an official ballot. The ballots shall be tabulated by the Secretary and the vote of the cooperative association shall be adjusted to reflect the individual votes. (3)

Final order

If the Secretary determines that the proposed order has been approved by not less than a majority of the eligible producers voting in the referendum required by paragraph (2), the Secretary shall issue, not later than 30 days after such determination, a final order to establish the Program. (4)

Referendum on continuation of Program

Not later than 3 years after the date of the enactment of this subtitle, the Secretary shall conduct a referendum among producers who, during a representative period (as determined by the Secretary), have been engaged in the production of milk for commercial use, for the purpose of ascertaining whether the Program then in effect shall be continued. The program shall be continued only if the Secretary determines that it has been approved by not less than a majority of the eligible producers voting in the referendum. If continuation of the Program is not approved by a majority of the eligible producers voting in the referendum, the Secretary shall terminate collection of fees under the Program within six months after the Secretary determines that such action is favored by a majority of the eligible producers voting in the referendum and shall terminate the program in an orderly manner as soon as practicable after such determination. (b)

Producer Board

(1)

In general

The order shall provide for the establishment of a board of directors to be known as the Producer Board to advise the Secretary on administration of the Program. (2)

Composition

The Producer Board shall be composed of 30 members, of whom— (A)24 shall be producers, of whom— (i)12 producers shall be appointed based upon region, with 2 members from each of the 6 dairy producing regions in the United States; and (ii)12 producers shall be appointed based upon the geographical distribution of milk production volume throughout the United States; (B)2 shall represent dairy consumers; (C)2 shall represent fluid milk bottlers; and (D)2 shall represent dairy product processors. (3)

Appointment

The Secretary shall appoint the members of the Producer Board after considering any nominations submitted by interested parties. (4)

Advisor

(A)

In general

The Secretary shall appoint a dairy economist to advise the Producer Board. (B)

Nonvoting member

The individual appointed under subparagraph (A) shall be a nonvoting member of the Producer Board. (c)

Producer Appeals Committee

The order shall require the Producer Board to establish a committee to be known as the Producer Appeals Committee to advise the Secretary on appeals of decisions made during the first year of operation of the Program.

143.

Operation of the Program

(a)

Establishment of rates, fees, dividends, and initial allowable milk marketings

(1)

In general

The order shall provide for the establishment of rates and fees and the payment of dividends in accordance with this section. (2)

Initial establishment of allowable milk marketings

The initial establishment of allowable milk marketings for a dairy facility under this subtitle shall based on the highest of the annual milk marketings of the dairy facility from the calendar year ending— (A)December 31, 2007; (B)December 31, 2008; or (C)December 31, 2009. (b)

Establishment of rates and fees

(1)

Allowable milk marketing growth rate

(A)

Calculation of allowable milk marketing

The allowable milk marketings of a dairy facility for a quarter shall be equal to the quantity of milk commercially produced by the dairy facility during the corresponding quarter during the previous calendar year, as adjusted to reflect the allowable milk marketing growth rate for the quarter. (B)

Calculation of allowable milk marketing growth rate

At least 30 days before the first day of each quarter, the Secretary, after considering any recommendations made by the Producer Board, shall establish the allowable milk marketing growth rate for the upcoming quarter based on the following table: Milk Feed RatioAllowable milk marketing growth rate (in percent) Milk Feed Ratio greater than/equal to 2.00 3.00 Milk Feed Ratio 1.75–1.99 0.00 Milk Feed Ratio less than/equal to 1.74 −3.00

(C)

Milk feed ration

For purposes of this paragraph and paragraph (2)(A), the Secretary shall calculate a milk feed ratio for a month using the same procedures used to calculate the milk feed ratio on page 64 of the USDA January 2010 Agricultural Prices publication (including the data and factors noted in footnote 4). (D)

Quarterly announcement of the allowable milk marketing growth rate

For the purpose of announcing the quarterly allowable milk marketing growth rate, the Secretary shall use the simple average of the three most recently available monthly figures for the milk feed ratio. (2)

Standard and alternative market access fees

(A)

Standard market access fee

(i)

In general

At least 30 days before the first day of each quarter, the Secretary shall establish the standard market access fee to be assessed on all commercial milk production of a dairy facility for that quarter. (ii)

Requirement

The standard market access fee shall be based on the number of hundredweights of raw milk produced for commercial use, as determined by the Secretary. (iii)

Calculation of standard market access fee

The standard market access fee shall be determined using the following table: Milk Feed RatioMarket Access Fee Milk Feed Ratio greater than/equal to 3.00 $0.03 Milk Feed Ratio 2.50–2.99 $0.13 Milk Feed Ratio 2.00–2.49 $0.25 Milk Feed Ratio less than/equal to 1.99 $0.50

(iv)

Quarterly announcement of the market access fee

For the purpose of announcing the quarterly standard market access fee, the Secretary shall use the simple average of the three most recently available monthly figures for the milk feed ratio. (B)

Alternative access fee

The amount of the alternative market access fee to be assessed on all commercial milk production of a dairy facility that exceeds the allowable milk marketings of the dairy facility for a quarter shall be equal to the product obtained by multiplying— (i)5; by (ii)the standard market access fee amount per hundredweight of milk. (3)

Revisions

The Secretary may make revisions to the calculations of the market access fee and allowable milk marketing growth rate, but only if at least two-thirds of the members of the Producer Board support the revisions. For any revisions, the Secretary shall consider— (A)the economic conditions of the dairy industry in the United States; (B)the economic conditions of the world dairy market; (C)the commercial disappearance of fluid and manufactured milk products; (D)the domestic on-farm cost of producing raw milk; (E)the domestic farm-gate milk price paid to dairy farmers in the United States; (F)the international value of manufactured dairy products; (G)the current United States import/export balance in dairy products; (H)any foreseen purchases by the Federal Government for nutrition programs; and (I)any other economic indicator that the Secretary determines to be appropriate. (c)

Allowable milk marketings

(1)

In general

At least 30 days before the first day of each quarter, the Secretary shall— (A)establish the quantity of allowable milk marketings for each dairy facility; and (B)notify each dairy facility of the quantity. (2)

Appeal

A dairy facility may appeal to the Secretary any discrepancy in the quantity of allowable milk marketings established for the dairy facility. (3)

Transfers of allowable milk marketings

The 1 or more owners of the milk-producing cows at a dairy facility may transfer, in full, the allowable milk marketings associated with the dairy facility to— (A)an individual or entity that purchases the dairy facility; or (B)another dairy facility under the same ownership. (4)

Leap-year adjustment

(A)

Effect of leap year

During a calendar year that consists of 366 days, 1⁄90th of the allowable milk marketings for the first quarter shall be added to the allowable milk marketings of each dairy producer. (B)

Subsequent year

Following a year described in subparagraph (A), 1⁄91st of the allowable milk marketings shall be subtracted from the allowable milk marketings of each dairy producer during the preceding year. (d)

Collection of market access fees

(1)

In general

During any quarter, a dairy facility that produces and markets milk in a quantity that is greater than the allowable milk marketings of the dairy facility for that quarter shall be assessed the standard market access fee in the following quarter unless, not later than 7 days after the end of the quarter, the dairy facility notifies in writing the appropriate local office of the Farm Services Agency of the intent of the dairy facility to pay the alternative market access fee in lieu of the standard market access fee. (2)

Notice

Not later than 25 days after the end of a quarter during which a dairy facility exceeded the allowable milk marketings of the dairy facility, the Secretary shall send to the dairy facility and to each of the milk handlers of the dairy facility a notice that describes the market access fee to be assessed against the dairy facility during the following quarter. (3)

Milk handlers

(A)

In general

Each milk handler of a dairy facility notified under paragraph (2) shall— (i)during the quarter in which the milk handler receives the notice, collect an assessment per hundredweight of milk from the dairy facility in the amount of the market access fee described in the notice; and (ii)deposit the assessment amounts into the protected account described in subsection (f). (B)

Alternative market access fee

If a dairy facility notifies the appropriate local office of the Farm Services Agency under paragraph (1) of an intent to pay the alternative market access fee, the amount of the assessment described in the notice under paragraph (2) shall be— (i)deducted from the revenues of the dairy facility in 3 equal monthly installments; and (ii)deposited into the protected account described in subsection (f). (4)

Subsequent overages

If a dairy facility exceeds the allowable milk marketings of the dairy facility in a quarter and any of the 4 subsequent quarters, the dairy facility shall be assessed a market access fee in an amount that is equal to the lesser of— (A)the market access fee announced after the first quarter in which the dairy facility exceeded the allowable milk marketings; or (B)the market access fee announced for the 4 quarters in which the dairy facility subsequently exceeds the allowable milk marketings of the dairy facility. (5)

Responsibility

The milk handler for the 1 or more owners of the milk-producing cows at a dairy facility that receives a notice under paragraph (2) shall give notice to the owners that the market access fees shall be— (A)deducted from the proceeds of the dairy facility; and (B)submitted to the local office of the Farm Services Agency with which the owners have registered. (e)

Payment of market access fee dividends

(1)

In general

During any quarter, a dairy facility that produces and markets a quantity of milk that is less than or equal to the allowable milk marketings of the dairy facility for that quarter shall be entitled to receive a market access fee dividend in an amount based on the ratio that— (A)each hundredweight of allowable milk marketings produced during that quarter at the dairy facility; bears to (B)total hundredweights produced by all facilities that did not exceed their allowable milk marketings during that quarter. (2)

Total amount

The total amount of market access fee dividends available during a quarter shall be equal to the cumulative market access fees collected under this subtitle for a quarter. (3)

Distribution

(A)

In general

The market access fee dividends for a quarter shall be distributed to each qualifying dairy facility not later than 30 days after the last day of the following quarter. (B)

Eligibility

The 1 or more owners of the milk-producing cows at a dairy facility described in paragraph (1) shall be eligible to receive any market access fee dividends paid to the dairy facility under this subsection. (C)

Payment

Payment of market access fee dividends shall be by check or direct deposit. (f)

Administration

Amounts collected by milk handlers under subsection (d) shall be deposited into a protected account established by the Secretary from which amounts may not be withdrawn other than for distribution as market access fee dividends.