[Congressional Record Volume 159, Number 43 (Friday, March 22, 2013)]
[Senate]
[Pages S2337-S2338]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 663. A bill to provide for the inclusion of the State of 
California as a separate Federal milk marketing order upon the petition 
and approval of California dairy producers of such inclusion; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Mrs. FEINSTEIN. Mr. President, I rise today, on behalf of myself and 
Senator Boxer, to introduce the California Federal Milk Marketing Order 
Act. This legislation will allow California's dairy industry to operate 
on a system that is consistent with the industry in other states.
  The bill is as simple and straight forward as it gets--it's only two 
paragraphs long.
  The first paragraph allows the California dairy producers to create 
their own ``regional order'' within the existing Federal Milk Marketing 
Order Program, if they elect to do so.
  If California dairy farmers do elect to join the Federal order, the 
second paragraph allows California to maintain its existing ``quota 
system,'' which I will explain in a moment.

[[Page S2338]]

  It is important for me to say up front how non-controversial this 
legislation should be.
  The legislation has broad bi-partisan support among the diverse 
California congressional delegation.
  The bill would likely add no new burden to the Federal taxpayer.
  Congress enacted an identical provision in 1996.
  But the provision expired along with the 1996 Farm Bill. So 
essentially, the legislation I am introducing today is simply the 
reauthorization of that no-cost provision.
  More importantly though, this legislation can help the struggling 
dairy industry. Prices have dipped back to near historic lows, and 
farmers are often milking their cows at or below the cost of 
production.
  In California, this has resulted in a drastic consolidation of the 
industry. Forty-eight dairies went out of business in 2011. Eleven left 
the business in 2010. And 100 more left the business in 2009.
  With only 1,668 dairies left in the state in 2011, those losses 
represent more than a 10 percent contraction in just three years.
  But this legislation has the potential to begin the turnaround for 
California by bringing the milk pricing formulas in line with the rest 
of the nation.
  To explain how the turnaround could occur, I'd like to start with the 
basics.
  USDA operates 10 regional Federal Milk Marketing Orders for dairy 
farmers in 42 States. The order sets up a system to pay farmers a set 
price for their milk, even though food manufacturers pay different 
prices based on how the milk is used. For instance, farmers in the 
Federal order receive the same price for milk that is put in a carton 
for drinking as milk that is converted into dry milk powder. This is 
true even though these products sell for significantly different prices 
at the grocery store.

  However, California, the Nation's largest milk producing State, 
operates under a different system. The State elected to run its own 
milk marketing order, so California farmers are paid different values 
for their products, and they are playing by different rules.
  One unique characteristic of the California Marketing Order, and the 
reason for this legislation, is the system known as ``quota,'' which I 
mentioned earlier.
  Producers who own a portion of the ``quota'' receive a premium for 
their milk, roughly five percent more than other producers. Rights to 
quota can be bought or sold on the open market, and economists estimate 
that the combined value associated with quota is roughly $900 million.
  It is this $900 million value that the California Federal Milk 
Marketing Order Act authorizes to be converted into a Federal order.
  Inclusion of the quota will not come at taxpayer expense. Producers 
who own quota receive a higher price for their milk, but the additional 
payment is offset by a marginal increase in prices paid by dairy 
processors.
  I know that dairy support programs can be convoluted and 
controversial. But I want to make sure that my colleagues know that 
this legislation is not.
  The bill simply gives California dairy farmers the option of entering 
into the Federal order, at the time of their choosing. It does not 
mandate a thing.
  I hope my colleagues will see the sense in this legislation and join 
me in supporting our dairy farmers by enacting this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 663

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``California Milk Marketing 
     Order Act''.

     SEC. 2. INCLUSION OF CALIFORNIA AS SEPARATE MILK MARKETING 
                   ORDER.

       (a) Inclusion Authorized.--Upon the petition and approval 
     of California dairy producers in the manner provided in 
     section 8c of the Agricultural Adjustment Act (7 U.S.C. 
     608c), reenacted with amendments by the Agricultural 
     Marketing Agreement Act of 1937, the Secretary of Agriculture 
     shall designate the State of California as a separate Federal 
     milk marketing order.
       (b) Special Considerations.--If designated under subsection 
     (a), the order covering California shall have the right to 
     reblend and distribute order receipts to recognize quota 
     value.

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