Reform of Federal milk marketing orders

(a)

Terms and conditions of milk and milk products orders

Section 8c of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, is amended— (1)in subsection (5)— (A)by striking paragraphs (C), (D), (H), (I), (J), and (K); (B)by amending paragraph (A) to read as follows:

(A)Fixing a differential which all handlers of milk used for fluid purposes shall pay with respect to such milk, and the time when payments shall be made, for milk purchased from producers or associations of producers. Such differential shall be uniform as to all such handlers, subject only to adjustment for the locations at which delivery of such milk is made to such handlers.

;

(C)by amending paragraph (B) to read as follows:

(B)Providing for the payment to all producers and associations of producers delivering milk to any fluid milk handler regulated by the order, or to any non-fluid milk handler which supplies milk to such fluid milk handler in conformity with such requirements as the Secretary may establish, a proportionate share, based on volume of delivered milk, of all differentials required to be paid under paragraph (A) of this subsection (5), subject only to adjustment for the locations at which delivery of such milk is made.

;

(D)by amending paragraph (F) to read as follows:

(F)Nothing contained in this subsection is intended or shall be construed to prevent a cooperative marketing association qualified under the provisions of the Act of Congress of February 18, 1922, known as the Capper-Volstead Act (7 U.S.C. 291 et seq.), engaged in making collective sales or marketing of milk or its products for the producers thereof, from blending the net proceeds of all of its sales of milk or its products in all markets, and making distribution thereof to its producers in accordance with the contract between the association and its producers.

;

(E)by amending paragraph (L) to read as follows:

(L)Providing that adjustments in payments by handlers under paragraph (A) need not be the same as adjustments to producers under paragraph (B).

;

(F)by amending paragraph (M) to read as follows:

(M)(i)

Application of requirements

Notwithstanding any other provision of this section, a milk handler described in clause (ii) shall be subject to all of the fluid milk differential requirements of a Federal milk marketing order issued pursuant to this section applicable to the county in which the plant of the handler is located, if the handler has packaged fluid milk product route dispositions, or sales of packaged fluid milk products to other plants, in a marketing area located in a State that requires handlers to pay minimum prices for raw milk purchases. (ii)

Covered milk handlers

Except as provided in clause (iv), clause (i) applies to a handler of Class I milk products (including a producer-handler or producer operating as a handler) that— (I)operates a plant that is located within the boundaries of a Federal order milk marketing area (as those boundaries are in effect as of April 11, 2006); (II)has packaged fluid milk product route dispositions, or sales of packaged fluid milk products to other plants, in a milk marketing area located in a State that requires handlers to pay fluid milk differentials for raw milk purchases; and (III)is not otherwise obligated by a Federal milk marketing order, or a regulated milk pricing plan operated by a State, to pay minimum class prices or fluid milk differentials for the raw milk that is used for such dispositions or sales. (iii)

Obligation to pay fluid milk differentials

For purposes of clause (ii)(III), the Secretary may not consider a handler of Class I milk products to be obligated by a Federal milk marketing order to pay fluid milk differentials for raw milk unless the handler operates the plant as a fully regulated fluid milk distributing plant under a Federal milk marketing order. (iv)

Certain handlers exempted

Clause (i) does not apply to— (I)a handler (otherwise described in clause (ii)) that operates a nonpool plant (as defined in section 1000.8(e) of title 7, Code of Federal Regulations, as in effect on the date of the enactment of this subparagraph); (II)a producer-handler (otherwise described in clause (ii)) for any month during which the producer-handler has route dispositions, and sales to other plants, of packaged fluid milk products equaling less than 3,000,000 pounds of milk; or (III)a handler (otherwise described in clause (ii)) for any month during which— (aa)less than 25 percent of the total quantity of fluid milk products physically received at the plant of the handler (excluding concentrated milk received from another plant by agreement for other than Class I use) is disposed of as route disposition or is transferred in the form of packaged fluid milk products to other plants; or (bb)less than 25 percent in aggregate of the route disposition or transfers are in a marketing area or areas located in one or more States that require handlers to pay minimum prices for raw milk purchases.

; and

(G)by amending paragraph (N) to read as follows:

(N)

Exemption for certain milk handlers

Notwithstanding any other provision of this section, no handler with distribution of Class I milk products in the marketing area described in Order No. 131 shall be exempt during any month from any fluid milk differential requirement established by the Secretary under this subsection if the total distribution of Class I products during the preceding month of any such handler’s own farm production exceeds 3,000,000 pounds.

; and

(2)by amending subsection (18) to read as follows:

(18)

Fluid milk differentials

The Secretary of Agriculture, in prescribing any term in any marketing agreement or order, or amendment thereto, relating to milk or its products, if such term is to fix the differential to be paid to producers or associations of producers, shall fix such differential as follows. Such differentials shall during the first year after the effective date of the Dairy Pricing Deregulation Act be equal to the differentials for milk used for fluid purposes as they existed under federal milk marketing orders on January 1, 2011, subject to all location adjustments as they existed under federal milk marketing orders on such date. Such differentials shall in each successive year be reduced by an amount equal to 20 percent of the differentials that existed during the first year after the effective date of such Act, and shall be discontinued in the fifth year after the effective date of such Act.

(b)

Conforming amendment

Section 10(b)(2)(i) of the Agricultural Adjustment Act (7 U.S.C. 610(b)(2)(i)), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, is amended by striking each handler subject thereto and inserting each fluid milk handler subject thereto and each non-fluid milk handler which supplies milk to such fluid milk handler. (c)

Notice and comment

The Secretary of Agriculture shall use the notice and comment procedures provided in section 553 of title 5, United States Code, to implement the requirements of the amendments made by subsection (a) of this section. (d)

Surveys

(1)

In general

The Secretary of Agriculture shall survey and publish on a regular basis data regarding the payments made by all handlers of milk used for any purpose for milk purchased from producers or associations of producers. (2)

Bases for publication

The Secretary shall publish such data on a national weighted-average basis and on a regional basis with respect to as many multi-state regions as the Secretary determines to be of practical use. (3)

Mandatory participation

Participation in such surveys by handlers shall be mandatory.