II 112th CONGRESS 1st Session S. 1682 IN THE SENATE OF THE UNITED STATES October 12, 2011 Mr. Casey introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To amend the Food, Conservation, and Energy Act of 2008 to promote growth and opportunity for the dairy industry in the United States, and for other purposes.

1.

Short title

This Act may be cited as the Dairy Advancement Act of 2011.

2.

Repeal of dairy product price support program

Section 1501 of the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8771) is repealed.

3.

Livestock gross margin insurance for dairy

Subtitle E of title I of the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8771 et seq.) is amended by adding at the end the following:

1511.

Livestock gross margin insurance for dairy

(a)

In general

As an alternative to receiving milk income loss contract program payments under section 1506, the Secretary shall give the producers on a dairy farm an opportunity to make an irrevocable election to instead receive livestock gross margin insurance for dairy and receive a subsidy from the Secretary for an insurance policy that provides the producers on the dairy farm protection against the loss of gross margin (the market value of milk minus feed costs) for specified portions of milk produced by dairy cows of the producers, for the initial month for which the election is made through September 30, 2012. (b)

Subsidy

(1)

In general

Except as provided in paragraph (2), the Secretary shall provide to the dairy producers on a farm under this section a subsidy at the $1.50-deductible level for not more than 3,000,000 pounds of milk for each year. (2)

Producer options

The producers on a dairy farm may, at the expense of the producers, reduce the deductible level or increase the quantity of covered pounds for a subsidy provided under this section.

.

4.

Federal milk marketing orders

(a)

2-Class system for classifying milk

(1)

In general

Not later than September 30, 2014, the Secretary of Agriculture shall establish 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 milk class (with the price for both classes determined using the component prices of butterfat, protein, and other solids). (2)

Amendment to orders

(A)

In general

The Secretary shall submit a report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate that includes the text of proposed amendments to the Federal milk marketing orders to implement the 2-class system for classifying milk. (B)

Effective date

The proposed amendments described in subparagraph (A) shall take effect not earlier than the date that is 180 days after the date on which the report is submitted under that subparagraph. (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)

Economic impact assessment

The Secretary of Agriculture shall— (1)carry out a review of the milk-feed margin during the 1-year period ending on the date of enactment of this Act; and (2)not later than September 30, 2013, 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 of the Senate 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.

5.

Dairy processing equipment loan guarantee fund

(a)

Loans

Section 310B(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(a)) is amended— (1)by striking the section heading and inserting the following:

310B.

Rural industrialization assistance

; and(2)in paragraph (2)— (A)in subparagraph (C), by striking and after the semicolon; (B)in subparagraph (D)— (i)by striking to facilitate and inserting facilitating; and (ii)by striking the period at the end and inserting ; and; and (C)by adding at the end the following: (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 not more than 90 percent. . (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

A bank 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 a bank 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 2 years. (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 products; (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 products; or (II)the provision of services for the production of milk products; 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. .

6.

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:

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 a monthly average of at least 250,000 pounds of milk into cheese, butter, fresh dairy products, 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) through (e) as subsections (d) through (f), respectively; (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 the 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 the each month, not later than 10:00 a.m. Central Time, categorized by location and product characteristics. ; and (3)in subsection (d) (as redesignated by paragraph (2))— (A)in paragraph (3), by adding at the end the following: (C)

Cold storage survey

(i)

In general

For purposes of the cold storage survey of the National Agricultural Statistics Service, each facility storing dairy products shall report to the Secretary each month information on the quantity of dairy products stored. (ii)

Audit

Subject to the availability of appropriations, the Secretary shall take such measures as are necessary to audit the survey described in clause (i) and ensure compliance with the reporting requirement. (D)

Dairy products survey

(i)

In general

For purposes of the dairy products survey of the National Agricultural Statistics Service, each manufacturer storing dairy products shall report to the Secretary each month information on the quantity of dairy products stored. (ii)

Audit

The Secretary shall take such measures as are necessary to audit the survey described in clause (i) and ensure compliance with the reporting requirement. ; and (B)by adding at the end the following (7)

Survey products

In carrying out this section, the Secretary shall require each manufacturer and other appropriate person to report to the Secretary, at a periodic interval determined by the Secretary, information on the products in the cold storage survey and the dairy products survey of the National Agricultural Statistics Service. (8)

Exemption

The Secretary may exempt from all reporting requirements under this section any manufacturer or facility that stores less than an average of 10,000 pounds monthly on an annual basis. (9)

Collection and publication of data

The Secretary shall collect and publish data on actual milk prices paid by dairy processors. .

7.

Budgetary effects

The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled Budgetary Effects of PAYGO Legislation for this Act, submitted for printing in the Congressional Record by the Chairman of the Senate Budget Committee, provided that such statement has been submitted prior to the vote on passage.