Dairy market stabilization program

(a)

In general

The Dairy Production Stabilization Act of 1983 (Public Law 98–180; 97 Stat. 1128) is amended by adding at the end the following:

Dairy market stabilization program

141.

Definitions

In this subtitle:(1)

Allowable milk marketings

The term allowable milk marketings means the quantity of milk production that a producer may produce during a quarter without incurring a market access fee, as determined under section 143(a)(3).(2)

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 producer.(3)

Appeals Committee

The term Appeals Committee means the Producer Appeals Committee established under section 142(c).(4)

Floor price

The term floor price means the minimum price that a producer shall receive for milk, as established under section 142(b)(5)(B).(5)

Market access fee dividend

The term market access fee dividend means the market access fees collected during an applicable quarter that are redistributed to producers with allowable milk marketings under section 143(c).(6)

Milk handler

The term milk handler means a person that makes payments to a producer for milk produced in the United States and purchased from the producer for commercial use.(7)

National Board

The term National Board means the National Dairy Producer Board established under section 142(b).(8)

National production base

The term national production base means the total quantity of milk production that all producers may produce in all regions during a calendar year, as determined under section 143(a)(2).(9)

Order

The term order means an order issued by the Secretary under section 142(a).(10)

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.(C)

Exclusion

The term producer does not include a person engaged in the production of bovine milk for commercial use on a certified organic farm or certified organic handling operation (as those terms are defined in section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 6502)).(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.(G)Region 7, Noncontiguous, consisting of any States and territories that elect to participate in the Program pursuant to section 142(e), if at least 1 State or territory elects to participate.(14)

Regional Board

The term Regional Board means a Regional Milk Marketing Order Board established under section 142(d).(15)

Regional production base

The term regional production base means the total quantity of milk production that all producers may produce in a region during a calendar year, as determined under section 143(a)(2).(16)

Secretary

The term Secretary means the Secretary of Agriculture.(17)

Standard market access fee

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

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 producers 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 5 years after the date of 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.(B)

Voting procedure

For purposes of voting in the referendum—(i)each producer shall be entitled to cast the vote of the producer; and(ii)a cooperative association of producers may not vote on behalf of the members of the association.(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 producers voting in the referendum.(D)

Termination

If continuation of the Program is not approved by a majority of the eligible 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)

National Dairy Producer Board

(1)

In general

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

Composition

The National Board shall be composed of the following members:(A)2 producers appointed with respect to each region by the Secretary, under the advisement of the applicable Regional Board.(B)1 representative of dairy consumers appointed by the Secretary.(C)1 representative of fluid milk bottlers appointed by the Secretary.(D)1 representative of dairy product processors appointed by the Secretary.(3)

Terms

Each member of the National Board shall serve for a term of 3 years.(4)

Advisor

(A)

In general

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

Nonvoting member

The individual appointed under subparagraph (A) shall be a nonvoting member of the National Board.(5)

Specific duties

(A)

Estimates of milk production and consumption

The Secretary, under the advisement of the National Board and in coordination with the Economic Research Service, shall annually estimate the total quantity of milk produced and consumed in the contiguous United States.(B)

Floor price

Each quarter, the Secretary, under the advisement of the National Board, shall establish a variable floor price for milk, based on the herd size of each dairy, which shall take into account—(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, based on herd size, 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)the cost of land;(V)interest expenses; and(VI)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 producers in the United States; and(II)the margin between that milk price and the domestic on-farm cost of producing raw milk referred to in clause (iv);(vi)other economic forces affecting 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 producers; and(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.(C)

Production base

The Secretary, under the advisement of the National Board, shall administer the system of national production base and regional production base in accordance with section 143(a)(2).(c)

Producer Appeals Committee

The order shall require the Secretary, under the advisement of the National Board, to establish a committee, to be known as the Producer Appeals Committee, to advise the Secretary on appeals of decisions made under the Program.(d)

Regional Milk Marketing Order Boards

(1)

In general

The order shall provide for the establishment of a board of directors for each region, each of which to be known as a Regional Milk Marketing Order Board, to advise the Secretary on the administration of the Program with respect to the region for which the Regional Board is established.(2)

Composition

Each Regional Board shall be composed of 15 members, of whom—(A)12 shall be producers;(B)1 shall represent dairy consumers;(C)1 shall represent fluid milk bottlers; and(D)1 shall represent dairy product processors.(3)

Election

(A)

In general

The Secretary shall hold an election of producers in each region to select the members of each Regional Board.(B)

Voting

For purposes of voting in the election—(i)each producer shall have 1 vote per region in which the dairy producer has a dairy; and(ii)a cooperative association of producers may not vote on behalf of the members of the association.(4)

Terms

Each member of a Regional Board shall serve for a term of 5 years.(5)

Accountability

(A)

In general

The Secretary, under the advisement of the National Board, shall establish for the Regional Boards minimum requirements for transparency and accountability, including—(i)requirements for regular county- and State-level meetings; and(ii)requirements to conduct public hearings.(B)

GAO reviews

The Comptroller General of the United States shall conduct reviews—(i)to assess the adequacy of the requirements established under subparagraph (A); and(ii)to assess the compliance of Regional Boards with those requirements.(6)

Administrative fee

(A)

In general

The Secretary, under the advisement of the National Board, shall establish an administrative fee to be paid by each producer in a region to fund the activities of the Regional Board for that region.(B)

Amount

The amount of an administrative fee established under subparagraph (A) shall be such amount as is necessary for a Regional Board to carry out its activities.(C)

GAO reviews

The Comptroller General of the United States shall conduct reviews to assess the amount of an administrative fee established under subparagraph (A).(7)

Duties

The Secretary, under the advisement of each Regional Board, shall, with respect to a region—(A)in accordance with the floor price and the system of national production base and regional production base established under section 143(a)(2)—(i)purchase milk from producers and sell the milk to milk handlers; and(ii)coordinate milk handling logistics from dairies to milk handlers, including by licensing milk haulers;(B)adjust producer pay prices at higher rates than the floor price based on—(i)regional costs; and(ii)milk component ratios (butterfat and protein), quality, or other factors; and(C)create an exemption and attestation requirement for producers that market directly to consumers who receive a higher price for their milk than such amount as is established by the Secretary, under the advisement of the National Board. (e)

Election of noncontiguous States and territories To participate

(1)

In general

The Governor of a noncontiguous State or territory of the United States may elect to participate in the Program by submitting to the Secretary a notification of that election. (2)

Revision of order

On the submission of a notification by a State or territory under paragraph (1), the Secretary shall revise the order as appropriate to provide for the participation of the State or territory in the Program in accordance with this subtitle. (3)

Appointment

On the submission of a notification by the first State or territory under paragraph (1), the Secretary, under the advisement of the applicable Regional Board, shall appoint 2 members to the National Board under subsection (b)(2)(A) to represent Region 7.

143.

Operation of the Program

(a)

Establishment of production bases and allowable milk marketings

(1)

In general

The order shall provide for the establishment of a national production base, regional production bases, and allowable milk marketings in accordance with this subsection.(2)

National and regional production bases

(A)

In general

At least 30 days before the first day of each calendar year, the Secretary, under the advisement of the National Board, shall—(i)establish the national production base for that calendar year;(ii)allocate to each region a regional production base for that calendar year; and(iii)notify each Regional Board of the regional production base allocated to the applicable region.(B)

First year of the program

For the first year of operation of the Program—(i)the regional production base for each region shall be determined by aggregating the allowable milk marketings for each producer in the region determined under paragraph (3)(B); and(ii)the national production base shall be determined by aggregating each of the regional production bases determined under clause (i).(C)

Subsequent years

For each year after the first year of operation of the Program, the Secretary, under the advisement of the National Board, shall—(i)determine whether—(I)the national production base for the previous year exceeded the national demand for milk; or(II)the national demand for milk exceeded the national production base for the previous year; and(ii)adjust the national production base and each regional production base—(I)for the purpose of aligning milk supply and demand;(II)for the purpose of ensuring each producer with allowable milk marketings receives, at a minimum, a floor price matching the average cost-of-production based on the herd size of their dairy; and(III)based on any adjustments to the allowable milk marketings under paragraph (3)(C).(3)

Allowable milk marketings

(A)

In general

Of the regional production base for a calendar year, the Secretary, under the advisement of the applicable Regional Board, shall allocate to each producer in the applicable region a quantity of milk production that the producer may produce during each quarter of that calendar year.(B)

First year of the program

(i)

Producers that market milk 3 years preceding the enactment of this subtitle

In the case of a producer that marketed milk during each of the 3 calendar years preceding the date of enactment of this subtitle, the allowable milk marketings for the producer during the first year of operation of the Program shall be, at the option of the dairy producer—(I)the average of the milk marketings for the corresponding quarters of the previous 3 calendar years; or(II)the milk marketings for the corresponding quarter of the calendar year preceding the date of enactment of this subtitle.(ii)

Other producers

In the case of a producer that did not market milk during each of the 3 calendar years preceding the date of enactment of this subtitle, but that is marketing milk as of the date of enactment of this subtitle, the initial establishment of allowable milk marketings shall be—(I)established by the Secretary, under the advisement of the Regional Board, in an amount determined to be appropriate; and(II)subject to review by the Appeals Committee.(C)

Subsequent years

(i)

In general

The Secretary, under the advisement of each Regional Board, shall adjust the allowable milk marketings for producers—(I)for the purpose of aligning milk supply with demand, including in the case of an affirmative determination under paragraph (2)(C)(i); and(II)in the case of new producers that are beginning milk marketing.(ii)

New producers

(I)

Waitlist

The Secretary, under the advisement of each Regional Board, shall maintain for each region a waitlist of new producers that are requesting to market milk in the region.(II)

Eligibility

To receive an allocation of allowable milk marketings, a new producer shall demonstrate sufficient experience and expertise in dairy farming.(III)

Priority

In allocating allowable milk marketings to producers who are beginning milk marketing, the Secretary, under the advisement of each Regional Board, shall prioritize producers who have not previously commercially marketed milk.(iii)

Increases in production base

If the Secretary, under the advisement of the National Board, increases the national production base under paragraph (2)(C)(ii), the Secretary, under the advisement of the applicable Regional Board, in allocating the additional allowable milk marketings, shall prioritize allocations to new producers that are beginning milk marketing.(iv)

Decreases in production base

(I)

In general

If the Secretary, under the advisement of the National Board, decreases the national production base under paragraph (2)(C)(ii), the Secretary, under the advisement of the applicable Regional Board, shall prioritize reductions in allowable milk marketings from producers that possess the most allowable milk marketings.(II)

Limitation

The Secretary shall not reduce the allowable milk marketings of a producer by more than 10 percent for any calendar year.(D)

Limitation

The allowable milk marketings of a producer shall not be greater than 1,000 percent of the national average of the allowable milk marketings for all producers.(E)

Appeal

A dairy producer may appeal to the Secretary, under the advisement of the National Board, the quantity of allowable milk marketings established for the dairy producer.(F)

Sharing of allowable milk marketings

Producers on the same dairy may share allowable milk marketings allocated to the producers.(G)

Transfers of allowable milk marketings

(i)

In general

Subject to subparagraph (H) and clauses (ii) and (iii), a producer may transfer allowable milk marketings allocated to the producer to 1 or more other producers for the purpose of—(I)downsizing or increasing the size of a dairy; or(II)transferring allowable milk marketings to 1 or more other producers on the same dairy.(ii)

Limitation on transfer

If a producer transfers allowable milk marketings to one or more other producers that possess allowable milk marketings, of the allowable milk marketings being transferred—(I)the producer shall transfer not more than 50 percent to the one or more other producers; and(II)the Secretary, under the advisement of the applicable Regional Board, shall distribute the remainder to new producers that are beginning milk marketing.(iii)

Limitation on receipt

If a producer transfers allowable milk marketings to one or more other producers that possess allowable milk marketings, the producer receiving the allowable milk marketings shall not receive more than 50 percent of the allowable milk marketings of that producer prior to the transfer.(H)

Prohibitions on monetization

(i)

In general

The order shall include prohibitions on monetizing, leasing, selling, or trading allowable milk marketings for financial or material gain.(ii)

Penalties

The order shall include penalties for violations of the prohibitions established under clause (i), which may include—(I)permanent reduction of allowable milk marketings;(II)fines equal to not less than 105 percent of the gain from monetizing, leasing, selling, or trading allowable milk marketings;(III)increased market access fees; and(IV)any other penalties that the Secretary, under the advisement of the National Board, determine to be appropriate.(I)

Leap-year adjustment

(i)

In general

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

Subsequent year

Following a year described in clause (i), 1/91 of the allowable milk marketings shall be subtracted from the allowable milk marketings of each producer during the preceding year.(4)

Online database

The Secretary, under the advisement of the National Board, shall establish an online database that—(A)allows producers to access information related to allowable milk marketings;(B)facilitates the transfer of allowable milk marketings in accordance with paragraph (3)(G); and(C)provides such other information relating to the Program as the Secretary, under the advisement of the National Board, determines to be appropriate.(b)

Collection of market access fees

(1)

In general

The order shall provide that the Secretary, under the advisement of each Regional Board, shall be responsible for establishing appropriate market access fees that—(A)disincentivize overproduction of milk in accordance with this subsection; and(B)are in amounts that are greater than the income derived by a producer in marketing milk in excess of the allowable milk marketings of the producer.(2)

Alternative market access fee

During any quarter, a producer that produces and markets milk in a quantity that is greater than the allowable milk marketings of the producer 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 producer notifies in writing the appropriate Regional Board of the intent of the producer to pay the alternative market access fee in lieu of the standard market access fee.(3)

Notice

Not later than 25 days after the end of a quarter during which a producer exceeded the allowable milk marketings of the producer, the Secretary, under the advisement of the appropriate Regional Board, shall send to the producer and to each of the milk handlers of the producer a notice that describes the market access fee to be assessed against the producer during the following quarter.(4)

Milk handlers

(A)

In general

Each milk handler of a producer notified under paragraph (3) shall—(i)during the quarter for which the milk handler receives the notice, collect an assessment per hundredweight of milk from the producer in the amount of the market access fee described in the notice; and(ii)deposit the assessment amounts into the protected account established by subsection (d).(B)

Alternative market access fee

If a producer notifies the appropriate Regional Board under paragraph (2) of an intent to pay the alternative market access fee, the amount of the assessment described in the notice under paragraph (3) shall be—(i)deducted from the revenues of the producer in 3 equal monthly installments; and(ii)deposited into the protected account established by subsection (d).(5)

Responsibility

The milk handler for the 1 or more owners of the milk-producing cows at a dairy that receives a notice under paragraph (3) shall give notice to the owners that the market access fees shall be—(A)deducted from the proceeds of the dairy; and(B)submitted to the appropriate Regional Board.(c)

Payment of market access fee dividends

(1)

In general

The order shall provide for the payment of market access fee dividends in accordance with this subsection.(2)

Receipt of dividend

During any quarter, a producer that produces and markets a quantity of milk that is less than or equal to the allowable milk marketings of the producer 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 by the producer; bears to (B)total hundredweights produced by all producers that did not exceed the applicable allowable milk marketings during that quarter.(3)

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.(4)

Distribution

(A)

In general

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

Payment

Payment of market access fee dividends shall be by check or direct deposit.(5)

Actively engaged in farming

(A)

In general

To be eligible to receive a payment under this subsection, a producer shall be actively engaged in farming.(B)

Definitions

In this paragraph:(i)

Actively engaged in farming

(I)

In general

The term actively engaged in farming, with respect to a natural person who is a shareholder in an authorized legal entity, an officer, a director, or an employee of an authorized legal entity, a member or manager of an authorized legal entity, a partner in an authorized legal entity, a beneficiary or trustee of an authorized legal entity, or any other individual, means—(aa)regularly and frequently making or taking an important part in making management decisions substantially contributing to or affecting the operation of a farm; or(bb)performing physical work, which significantly contributes to cultivation, stewardship, crop or livestock production, or food production.(II)

Exclusion

The term actively engaged in farming does not include solely providing capital.(ii)

Authorized legal entity

The term authorized legal entity means a legal entity that meets each of the following requirements:(I)The legal entity is not a subsidiary of, or owned in any part by, a multilayered subsidiary entity.(II)The shareholders, partners, members, or beneficial owners of the legal entity do not exceed 25.(III)The shareholders, partners, members, or beneficial owners of the legal entity are all natural persons who are actively engaged in farming.(d)

Protected account

There is established in the Treasury of the United States a protected account for the purpose of receiving market access fees under subsection (b) and paying dividends under subsection (c).(e)

Transition period for large dairies

(1)

In general

During the first 2 years of operation of the program, a producer that has allowable milk marketings that exceed 1,000 percent of the national average shall not be subject to any market access fees or eligible to receive any market access fee dividends under this section.(2)

Establishment of allowable milk marketings

For each producer described in paragraph (1), the Secretary, under the advisement of the National Board, shall establish allowable milk marketings consistent with this section.(3)

Resources

The Secretary may use such sums as are necessary of the funds of the Commodity Credit Corporation to incentivize producers described in paragraph (1) to reduce milk production and the allowable milk marketings to less than 1,000 percent of the national average, including—(A)buying a portion of the allowable milk marketings of the producer;(B)providing an additional premium per dairy cow sold to producers that have allowable milk marketings that are less than 1,000 percent of the national average;(C)assisting the producer in restructuring loans that will assist their dairy operations in downsizing; and(D)any other incentive the Secretary, under the advisement of the National Board, determines to be appropriate.

(b)

Suspension of programs

During any period in which the Dairy Market Stabilization Program established under section 142(a) of the Dairy Production Stabilization Act of 1983 (Public Law 98–180; 97 Stat. 1128) is in effect, the following shall apply:(1)

Dairy Margin Coverage

Part I of subtitle D of title I of the Agricultural Act of 2014 (7 U.S.C. 9051 et seq.) shall have no force or effect.(2)

Dairy Revenue Protection

The Federal Crop Insurance Corporation shall not offer the Dairy Revenue Protection plan of insurance or any substantially similar policy or plan of insurance under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.) relating to dairy.(3)

Agricultural Act of 1949

None of the following provisions of the Agricultural Act of 1949 shall be applicable to milk:(A)Section 101 (7 U.S.C. 1441).(B)Section 103(a) (7 U.S.C. 1444(a)).(C)Section 105 (7 U.S.C. 1444b).(D)Section 107 (7 U.S.C. 1445a).(E)Section 110 (7 U.S.C. 1445e).(F)Section 112 (7 U.S.C. 1445g).(G)Section 115 (7 U.S.C. 1445k).(H)Section 201 (7 U.S.C. 1446).(I)Title III (7 U.S.C. 1447 et seq.).(J)Title IV (7 U.S.C. 1421 et seq.), other than sections 404, 412, and 416 (7 U.S.C. 1424, 1429, 1431).(K)Title V (7 U.S.C. 1461 et seq.).(L)Title VI (7 U.S.C. 1471 et seq.).