[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1741 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 1741
To establish a dairy producer margin insurance program for the purpose
of protecting dairy producer income by paying participating dairy
producers margin insurance payments when actual dairy producer margins
are less than a threshold level, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 25, 2013
Mr. Goodlatte (for himself and Mr. David Scott of Georgia) introduced
the following bill; which was referred to the Committee on Agriculture
_______________________________________________________________________
A BILL
To establish a dairy producer margin insurance program for the purpose
of protecting dairy producer income by paying participating dairy
producers margin insurance payments when actual dairy producer margins
are less than a threshold level, and for other purposes.
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 ``Dairy Freedom Act''.
SEC. 2. DAIRY PRODUCER MARGIN INSURANCE PROGRAM.
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 new section:
``SEC. 1511. DAIRY PRODUCER MARGIN INSURANCE PROGRAM.
``(a) Definitions.--In this section:
``(1) Actual dairy producer margin.--The term `actual dairy
producer margin' means the difference between the all-milk
price and the average feed cost, as calculated under subsection
(b)(2).
``(2) All-milk price.--The term `all-milk price' means the
average price received, per hundredweight of milk, by dairy
producers for all milk sold to plants and dealers in the United
States, as reported by the National Agricultural Statistics
Service.
``(3) Average feed cost.--The term `average feed cost'
means the average cost of feed used by a dairy operation to
produce a hundredweight of milk, determined under subsection
(b)(1) using the sum of the following:
``(A) The product determined by multiplying--
``(i) 1.0728; by
``(ii) the price of corn per bushel.
``(B) The product determined by multiplying--
``(i) 0.00735; by
``(ii) the price of soybean meal per ton.
``(C) The product determined by multiplying--
``(i) 0.0137; by
``(ii) the price of alfalfa hay per ton.
``(4) Consecutive 2-month period.--The term `consecutive 2-
month period' refers to the 2-month period consisting of the
months of January and February, March and April, May and June,
July and August, September and October, or November and
December, respectively.
``(5) Dairy producer.--The term `dairy producer' means an
individual or entity that directly or indirectly (as determined
by the Secretary)--
``(A) shares in the risk of producing milk; and
``(B) makes contributions (including land, labor,
management, equipment, or capital) to the dairy
operation of the individual or entity that are at least
commensurate with the share of the individual or entity
of the proceeds of the operation.
``(6) Margin insurance program.--The term `margin insurance
program' means the dairy producer margin insurance program
required by this section.
``(7) Participating dairy producer.--The term
`participating dairy producer' means a dairy producer that
registers under subsection (d)(2) to participate in the margin
insurance program.
``(8) Production history.--The term `production history'
means the quantity of annual milk marketings determined for a
dairy producer under subsection (e)(1).
``(9) United states.--The term `United States', in a
geographical sense, means the 50 States.
``(b) Calculation of Average Feed Cost and Actual Dairy Producer
Margins.--
``(1) Calculation of average feed cost.--The Secretary
shall calculate the national average feed cost for each month
using the following data:
``(A) The price of corn for a month shall be the
price received during that month by agricultural
producers in the United States for corn, as reported in
the monthly Agriculture Prices report by the Secretary.
``(B) The price of soybean meal for a month shall
be the central Illinois price for soybean meal, as
reported in the Market News--Monthly Soybean Meal Price
Report by the Secretary.
``(C) The price of alfalfa hay for a month shall be
the price received during that month by agricultural
producers in the United States for alfalfa hay, as
reported in the monthly Agriculture Prices report by
the Secretary.
``(2) Calculation of actual dairy producer margins.--The
Secretary shall calculate the actual dairy producer margin for
each consecutive 2-month period by subtracting--
``(A) the average feed cost for that consecutive 2-
month period, determined in accordance with paragraph
(1); from
``(B) the all-milk price for that consecutive 2-
month period.
``(c) Establishment of Dairy Producer Margin Insurance Program.--
The Secretary shall establish and administer a dairy producer margin
insurance program for the purpose of protecting dairy producer income
by paying participating dairy producers margin insurance payments when
actual dairy producer margins are less than the threshold levels for
the payments.
``(d) Eligibility and Registration of Dairy Producers for Margin
Insurance Program.--
``(1) Eligibility.--All dairy producers in the United
States shall be eligible to participate in the margin insurance
program.
``(2) Registration process.--
``(A) Registration.--
``(i) In general.--The Secretary shall
register all interested dairy producers in the
margin insurance program.
``(ii) Manner and form.--The Secretary
shall specify the manner and form by which a
dairy producer shall register for the margin
insurance program.
``(B) Treatment of multi-producer operations.--If a
dairy operation consists of more than 1 dairy producer,
all of the dairy producers of the operation shall be
treated as a single dairy producer for purposes of--
``(i) purchasing margin insurance; and
``(ii) payment of producer premiums under
subsection (f)(4).
``(C) Treatment of producers with multiple dairy
operations.--If a dairy producer operates 2 or more
dairy operations, each dairy operation of the producer
shall require a separate registration to participate
and purchase margin insurance.
``(3) Time for registration.--
``(A) Existing dairy producers.--During the 1-year
period beginning on the date of enactment of this
section, a dairy producer that is actively engaged in a
dairy operation as of that date may register with the
Secretary to participate in the margin insurance
program.
``(B) New entrants.--A dairy producer that has no
existing interest in a dairy operation as of the date
of enactment of this section, but that, after that
date, establishes a new dairy operation, may register
with the Secretary during the 180-day period beginning
on the date on which the dairy operation first markets
milk commercially to participate in the margin
insurance program.
``(4) Retroactivity.--
``(A) Notice of availability of retroactive
protection.--Not later than 30 days after the effective
date of this section, the Secretary shall publish a
notice in the Federal Register to inform dairy
producers of the availability of retroactive margin
insurance, subject to the condition that interested
producers must file a notice of intent (in such form
and manner as the Secretary specifies in the Federal
Register notice) to participate in the margin insurance
program.
``(B) Retroactive margin insurance.--
``(i) Availability.--If a dairy producer
files a notice of intent under subparagraph (A)
to participate in the margin insurance program
before the initiation of the sign-up period for
the margin insurance program and subsequently
signs up for the margin insurance program, the
producer shall receive margin insurance
retroactive to the effective date of this
section.
``(ii) Duration.--Retroactive margin
insurance under this paragraph for a dairy
producer shall apply from the effective date of
this section until the date on which the
producer signs up for the margin insurance
program.
``(C) Notice of intent and obligation to
participate.--In no way does filing a notice of intent
under this paragraph obligate a dairy producer to sign
up for the margin insurance program once the program
rules are final, but if a producer does file a notice
of intent and subsequently signs up for the margin
insurance program, that dairy producer is obligated to
pay premiums for any retroactive margin insurance
selected in the notice of intent.
``(5) Reconstitution.--The Secretary shall ensure that a
dairy producer does not reconstitute a dairy operation for the
sole purpose of purchasing margin insurance.
``(e) Production History of Participating Dairy Producers.--
``(1) Determination of production history.--
``(A) In general.--The Secretary shall determine
the production history of the dairy operation of each
participating dairy producer in the margin insurance
program.
``(B) Calculation.--Except as provided in
subparagraph (C), the production history of a
participating dairy producer shall be equal to the
highest annual milk marketings of the dairy producer
during any 1 of the 3 calendar years immediately
preceding the registration of the dairy producer for
participation in the margin insurance program.
``(C) New producers.--If a dairy producer has been
in operation for less than 1 year, the Secretary shall
determine the production history of the dairy producer
by extrapolating the actual milk marketings for the
months that the dairy producer has been in operation to
a yearly amount.
``(2) Required information.--A participating dairy producer
shall provide all information that the Secretary may require in
order to establish the production history of the dairy
operation of the dairy producer.
``(3) Transfer of production history.--
``(A) Transfer by sale.--
``(i) Request for transfer.--If an existing
dairy producer sells an entire dairy operation
to another party, the seller and purchaser may
jointly request that the Secretary transfer to
the purchaser the interest of the seller in the
production history of the dairy operation.
``(ii) Transfer.--If the Secretary
determines that the seller has sold the entire
dairy operation to the purchaser, the Secretary
shall approve the transfer and, thereafter, the
seller shall have no interest in the production
history of the sold dairy operation.
``(B) Transfer by lease.--
``(i) Request for transfer.--If an existing
dairy producer leases an entire dairy operation
to another party, the lessor and lessee may
jointly request that the Secretary transfer to
the lessee for the duration of the term of the
lease the interest of the lessor in the
production history of the dairy operation.
``(ii) Transfer.--If the Secretary
determines that the lessor has leased the
entire dairy operation to the lessee, the
Secretary shall approve the transfer and,
thereafter, the lessor shall have no interest
for the duration of the term of the lease in
the production history of the leased dairy
operation.
``(C) Coverage level.--A purchaser or lessee to
whom the Secretary transfers a production history under
this paragraph may not obtain a different level of
margin insurance coverage held by the seller or lessor
from whom the transfer was obtained.
``(D) New entrants.--The Secretary may not transfer
the production history determined for a dairy producer
described in subsection (d)(3)(B) to another person.
``(4) Movement and transfer of production history.--
``(A) Movement and transfer authorized.--Subject to
subparagraph (B), if a dairy producer moves from 1
location to another location, the dairy producer may
maintain the production history associated with the
operation.
``(B) Notification requirement.--A dairy producer
shall notify the Secretary of any move of a dairy
operation under subparagraph (A).
``(C) Subsequent occupation of vacated location.--A
party subsequently occupying a dairy operation location
vacated as described in subparagraph (A) shall have no
interest in the production history previously
associated with the operation at that location.
``(f) Margin Insurance.--
``(1) In general.--At the time of the registration of a
dairy producer in the margin insurance program under subsection
(d) and annually thereafter during the duration of the margin
insurance program, an eligible dairy producer may purchase
margin insurance.
``(2) Selection of payment threshold.--A participating
dairy producer purchasing margin insurance shall elect a
coverage level in any increment of $0.50, with a minimum of
$4.00 and a maximum of $8.00.
``(3) Selection of coverage percentage.--A participating
dairy producer purchasing margin insurance shall elect a
percentage of coverage, equal to not more than 80 percent nor
less than 25 percent, of the production history of the dairy
operation of the participating dairy producer.
``(4) Producer premiums.--
``(A) Premiums required.--A participating dairy
producer that purchases margin insurance shall pay an
annual premium equal to the product obtained by
multiplying--
``(i) the percentage selected by the dairy
producer under paragraph (3);
``(ii) the production history applicable to
the dairy producer; and
``(iii) the premium per hundredweight of
milk, as specified in the applicable table
under paragraph (B) or (C).
``(B) Premium per hundredweight for first 4 million
pounds of production.--For the first 4,000,000 pounds
of milk marketings included in the annual production
history of a participating dairy operation, the premium
per hundredweight corresponding to each coverage level
specified in the following table is as follows:
------------------------------------------------------------------------
``Coverage Level Premium per Cwt.
------------------------------------------------------------------------
$4.00 $0.000
$4.50 $0.01
$5.00 $0.02
$5.50 $0.035
$6.00 $0.045
$6.50 $0.09
$7.00 $0.18
$7.50 $0.60
$8.00 $0.95.
------------------------------------------------------------------------
``(C) Premium per hundredweight for production in
excess of 4 million pounds.--For milk marketings in
excess of 4,000,000 pounds included in the annual
production history of a participating dairy operation,
the premium per hundredweight corresponding to each
coverage level is as follows:
------------------------------------------------------------------------
``Coverage Level Premium per Cwt.
------------------------------------------------------------------------
$4.00 $0.030
$4.50 $0.045
$5.00 $0.066
$5.50 $0.11
$6.00 $0.185
$6.50 $0.29
$7.00 $0.38
$7.50 $0.83
$8.00 $1.06.
------------------------------------------------------------------------
``(D) Time for payment.--
``(i) First year.--As soon as practicable
after a dairy producer registers to participate
in the margin insurance program and purchases
margin insurance, the dairy producer shall pay
the premium determined under subparagraph (A)
for the dairy producer for the first calendar
year of the margin insurance.
``(ii) Subsequent years.--
``(I) In general.--When the dairy
producer first purchases margin
insurance, the dairy producer shall
also elect the method by which the
dairy producer will pay premiums under
this subsection for subsequent years in
accordance with 1 of the schedules
described in subclauses (II) and (III).
``(II) Single annual payment.--The
participating dairy producer may elect
to pay 100 percent of the annual
premium determined under subparagraph
(A) for the dairy producer for a
calendar year by not later than January
15 of the calendar year.
``(III) Semi-annual payments.--The
participating dairy producer may elect
to pay--
``(aa) 50 percent of the
annual premium determined under
subparagraph (A) for the dairy
producer for a calendar year by
not later than January 15 of
the calendar year; and
``(bb) the remaining 50
percent of the premium by not
later than June 15 of the
calendar year.
``(5) Producer premium obligations.--
``(A) Pro-ration of first year premium.--A
participating dairy producer that purchases margin
insurance after initial registration in the margin
insurance program shall pay a pro-rated premium for the
first calendar year based on the date on which the
producer purchases the coverage.
``(B) Subsequent premiums.--Except as provided in
subparagraph (A), the annual premium for a
participating dairy producer shall be determined under
paragraph (4) for each year in which the margin
insurance program is in effect.
``(C) Legal obligation.--
``(i) In general.--Except as provided in
clauses (ii) and (iii), a participating dairy
producer that purchases margin insurance shall
be legally obligated to pay the applicable
premiums for the entire period of the margin
insurance program (as provided in the payment
schedule elected under paragraph (4)(B)), and
may not opt out of the margin insurance
program.
``(ii) Death.--If the dairy producer dies,
the estate of the deceased may cancel the
margin insurance and shall not be responsible
for any further premium payments.
``(iii) Retirement.--If the dairy producer
retires, the producer may request that
Secretary cancel the margin insurance if the
producer has terminated the dairy operation
entirely and certifies under oath that the
producer will not be actively engaged in any
dairy operation for at least the next 7 years.
``(6) Payment threshold.--A participating dairy producer
with margin insurance shall receive a margin insurance payment
whenever the average actual dairy producer margin for a
consecutive 2-month period is less than the coverage level
threshold selected by the dairy producer under paragraph (2).
``(7) Margin insurance payments.--
``(A) In general.--The Secretary shall make a
margin insurance protection payment to each
participating dairy producer whenever the average
actual dairy producer margin for a consecutive 2-month
period is less than the coverage level threshold
selected by the dairy producer under paragraph (2).
``(B) Amount of payment.--The margin insurance
payment for the dairy operation of a participating
dairy producer shall be determined as follows:
``(i) The Secretary shall calculate the
difference between--
``(I) the coverage level threshold
selected by the dairy producer under
paragraph (2); and
``(II) the average actual dairy
producer margin for the consecutive 2-
month period.
``(ii) The amount determined under clause
(i) shall be multiplied by--
``(I) the percentage selected by
the dairy producer under paragraph (3);
and
``(II) the lesser of--
``(aa) the quotient
obtained by dividing--
``(AA) the
production history
applicable to the
producer under
subsection (e)(1); by
``(BB) 6; and
``(bb) the actual quantity
of milk marketed by the dairy
operation of the dairy producer
during the consecutive 2-month
period.
``(g) Effect of Failure To Pay Premiums.--
``(1) Loss of benefits.--A participating dairy producer
that is in arrears on premium payments for margin insurance--
``(A) remains legally obligated to pay the
premiums; and
``(B) may not receive margin insurance until the
premiums are fully paid.
``(2) Enforcement.--The Secretary may take such action as
is necessary to collect premium payments for margin insurance.
``(h) Duration.--The Secretary shall conduct the margin insurance
program during the period beginning on October 1, 2014, and ending on
September 30, 2018.''.
SEC. 3. REPEAL OR REAUTHORIZATION OF OTHER DAIRY-RELATED PROVISIONS.
(a) 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.
(b) Repeal of Milk Income Loss Contract Program.--Section 1506 of
the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8773) is
repealed.
(c) Repeal Dairy Export Incentive Program.--Section 153 of the Food
Security Act of 1985 (15 U.S.C. 713a-14) is repealed.
(d) Conforming Amendments.--Section 902(2) of the Trade Sanctions
Reform and Export Enhancement Act of 2000 (22 U.S.C. 7201(2)) is
amended--
(1) by striking subparagraph (D); and
(2) by redesignating subparagraphs (E) and (F) as
subparagraphs (D) and (E), respectively.
(e) Effective Date.--The repeals under subsections (a), (b), and
(c) and the amendments made by subsection (d) shall take effect on
October 1, 2013.
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