Dairy Market 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:

Dairy Market 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(a)(2). (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(a)(3). (3)

Alternative market access fee

The term alternative market access fee means a fee described in section 143(a)(4) 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(c). (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

(A)

In general

The term producer means any person engaged in the production of bovine milk for commercial use. (B)

Inclusions

The term producer includes any producer holding a license to produce milk. (10)

Producer Board

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

Program

The term Program means the Dairy Market 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(b) 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 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 Market Stabilization Program that shall apply to all dairy facilities within the contiguous United States that produce milk for sale commercially. (2)

Final order

After providing notice and opportunity for public comment on the proposed order under paragraph (1), but not later than 90 days after publication of the proposed order, the Secretary shall issue an order to establish the Program. (3)

Referendum on continuation of program

(A)

In general

Not later than 3 years after the date of enactment of this subtitle, the Secretary shall conduct a referendum among dairy 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. (B)

Voting procedure

The Secretary shall conduct the following 2 rounds of voting in the referendum: (i)

First round

(I)

In general

In the first round of voting, each dairy producer shall be entitled to cast the vote of the dairy producer. (II)

Prohibition

A cooperative association of dairy producers may not vote on behalf of the members of the association. (ii)

Second round

(I)

In general

In the second round of voting, a cooperative association of dairy producers may vote on behalf of those of the members of the association who did not vote in the first round. (II)

Prohibition

A cooperative association of dairy producers may not vote on behalf of the members of the association who voted in the first round. (C)

Determination

The Program shall be continued after the date of the referendum only if the Secretary determines that the Program has been approved by not less than a majority of the eligible dairy producers voting in the referendum. (D)

Termination

If continuation of the Program is not approved by a majority of the eligible dairy producers voting in the referendum, the Secretary shall— (i)terminate the collection of fees under the Program not later than 180 days after the Secretary determines that termination is favored by a majority of the eligible producers voting in the referendum; and (ii)terminate the Program in an orderly manner as soon as practicable after that 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 15 members, of whom— (A)12 shall be producers, of whom— (i)6 producers shall be elected under paragraph (3)(A) based on region, with 1 member from each of the 6 dairy-producing regions in the United States; and (ii)6 producers shall be elected under paragraph (3)(B) based on the geographical distribution of milk production volume throughout the United States; (B)1 shall represent dairy consumers; (C)1 shall represent fluid milk bottlers; and (D)1 shall represent dairy product processors. (3)

Election

(A)

Regional representation

(i)

In general

The Secretary shall hold an election of dairy producers in each region to select the members of the Producer Board described in paragraph (2)(A)(i). (ii)

Voting

Each dairy producer shall have 1 vote per region in which the dairy producer has a dairy. (iii)

First round

(I)

In general

In the first round of voting, each dairy producer shall be entitled to cast the vote of the dairy producer. (II)

Prohibition

A cooperative association of dairy producers may not vote on behalf of the members of the association. (iv)

Second round

(I)

In general

In the second round of voting, a cooperative association of dairy producers may vote on behalf of those of the members of the association who did not vote in the first round. (II)

Prohibition

A cooperative association of dairy producers may not vote on behalf of the members of the association who voted in the first round. (B)

Geographical distribution of milk production volume

(i)

In general

The Secretary shall determine which of the 6 dairy-producing regions in the United States shall hold an election of dairy producers to select the members of the Producer Board described in paragraph (2)(A)(ii), based on the milk production volume of each region. (ii)

Voting

Each dairy producer in a region selected under clause (i) shall have 1 vote per selected region in which the dairy producer has a dairy. (iii)

Voting procedure

Each region selected under clause (i) shall conduct 2 rounds of voting under similar procedures to the procedures described in subparagraph (A)(iii). (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)

Allowable milk marketings

(A)

In general

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

Establishment of allowable milk marketings during the first year of the program

(i)

Dairy facilities that began marketing milk prior to 2007

In the case of a dairy facility that marketed milk during the period beginning on January 1, 2007, and ending on the date of enactment of this subtitle, the allowable milk marketings for the dairy facility during the first year of operation of the Program shall be, at the option of the dairy facility— (I)the average of the milk marketings for the corresponding quarters of 2007, 2008, and 2009, as adjusted to reflect the allowable milk marketing growth rate; or (II)the milk marketings for the corresponding quarter of 2009. (ii)

Other dairy producers

In the case of a dairy facility that did not market milk during each of the calendar years 2007, 2008, and 2009, but that is marketing milk as of the date of enactment of this Act, the initial establishment of allowable milk marketings shall be— (I)established by the Secretary in an amount determined by the Secretary to be appropriate; and (II)subject to review by the Appeals Committee. (C)

Establishment of allowable milk marketings in subsequent years

Except as otherwise provided in this subsection, the quantity of allowable milk marketings for a dairy facility under this subtitle 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. (D)

Appeal

A dairy producer may appeal to the Secretary the quantity of allowable milk marketings established for the dairy producer. (E)

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— (i)an individual or entity that purchases the dairy facility; or (ii)another dairy facility under the same ownership. (F)

Leap-year adjustment

(i)

In general

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 facility. (ii)

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 facility during the preceding year. (3)

Allowable milk marketing growth rate

(A)

Establishment 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.

(B)

Milk feed ratio

For purposes of this paragraph and paragraph (4), 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 Agricultural Prices report dated January 29, 2010, of the National Agricultural Statistics Service of the Department of Agriculture (including the data and factors noted in footnote 4). (C)

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 3 most recently available monthly figures for the milk-feed ratio. (4)

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 3 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. (5)

Revisions

(A)

In general

The Secretary may make revisions to the calculations of the market access fee and allowable milk marketing growth rate, but only if at least 2/3 of the members of the Producer Board support the revisions. (B)

Considerations

For any revisions, the Secretary shall consider— (i)the economic conditions of the dairy industry in the United States; (ii)the economic conditions of the world dairy market; (iii)the commercial disappearance of fluid and manufactured milk products; (iv)the domestic on-farm cost of producing raw milk, including— (I)the cost of feed; (II)the cost of labor, including the reasonable value of the labor and management of the dairy producer; (III)machinery expenses; (IV)interest expenses; and (V)other cash expenses, including the cost of hauling, veterinary services and medicine, bedding and litter, marketing, custom services and supplies, fuel, lubrication, electricity, machinery and building repairs, labor, association fees, and assessments; (v)(I)the domestic mailbox milk price paid to dairy farmers in the United States; and (II)the margin between that milk price and the domestic on-farm cost of producing milk referred to in subsection (iv); (vi)other economic forces affecting dairy producers; (vii)probable trends in production and consumption of milk and milk products; (viii)the level of dairy farm prices in relation to production costs; (ix)the financial condition of dairy producers; (x)the costs and charges for producing, hauling, handling, processing, distributing, selling, and conducting all other services performed with respect to milk and milk products; (xi)the international value of manufactured dairy products; (xii)the current United States import/export balance in dairy products; (xiii)any foreseen purchases by the Federal Government for nutrition programs; and (xiv)any other economic indicator that the Secretary determines to be appropriate. (b)

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 for 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 (d). (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 (d). (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. (c)

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 the applicable 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. (d)

Administration

Amounts collected by milk handlers under subsection (b) 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.