MILK INCOME LOSS CONTRACT PROGRAM.23

SEC. 1506. [7 U.S.C. 8773] MILK INCOME LOSS CONTRACT PROGRAM. (a) Definitions.—In this section: (1) Class i milk.—The term “Class I milk” means milk (including milk components) classified as Class I milk under a Federal milk marketing order. (2) Eligible production.—The term “eligible production” means milk produced by a producer in a participating State. (3) Federal milk marketing order.—The term “Federal milk marketing order” means an order issued under section 8c of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937. (4) Participating state.—The term “participating State” means each State. (5) Producer.—The term “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 farming 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) Termination date.—The term “termination date” means the earlier of the following: (A) The date on which the Secretary certifies to Congress that the margin protection program required by section 1403 of the Agricultural Act of 2014 is operational. (B) September 1, 2014. (b) Payments.—The Secretary shall offer to enter into contracts with producers on a dairy farm located in a participating State under which the producers receive payments on eligible production. (c) Amount.—Payments to a producer under this section shall be calculated by multiplying (as determined by the Secretary)— (1) the payment quantity for the producer during the applicable month established under subsection (e); (2) the amount equal to— (A) $16.94 per hundredweight, as adjusted under subsection (d); less (B) the Class I milk price per hundredweight in Boston under the applicable Federal milk marketing order; by (3)(A) for the period beginning October 1, 2007, and ending September 30, 2008, 34 percent; (B) for the period beginning October 1, 2008, and ending August 31, 2013, and for the period beginning February 1, 2014, and ending on the termination date, 45 percent; and (C) for the period beginning September 1, 2013, and ending January 31, 2014, 34 percent. (d) Payment Rate Adjustment for Feed Prices.— (1) Initial adjustment authority.—During the period beginning on January 1, 2008, and ending on August 31, 2013, if the National Average Dairy Feed Ration Cost for a month during that period is greater than $7.35 per hundredweight, the amount specified in subsection (c)(2)(A) used to determine the payment rate for that month shall be increased by 45 percent of the percentage by which the National Average Dairy Feed Ration Cost exceeds $7.35 per hundredweight. (2) Subsequent adjustment authority.—During the period beginning on September 1, 2013, and ending on January 31, 2014, if the National Average Dairy Feed Ration Cost for the month is greater than $9.50 per hundredweight, the amount specified in subsection (c)(2)(A) used to determine the payment rate for that month shall be increased by 45 percent of the percentage by which the National Average Dairy Feed Ration Cost exceeds $9.50 per hundredweight. (3) Final adjustment authority.—During the period beginning on February 1, 2014, and ending on the termination date, if the National Average Dairy Feed Ration Cost for a month during that period is greater than $7.35 per hundredweight, the amount specified in subsection (c)(2)(A) used to determine the payment rate for that month shall be increased by 45 percent of the percentage by which the National Average Dairy Feed Ration Cost exceeds $7.35 per hundredweight. (4) National average dairy feed ration cost.—For each month, the Secretary shall calculate a National Average Dairy Feed Ration Cost per hundredweight using the same procedures (adjusted to a hundredweight basis) used to calculate the feed components of the estimated price of 16% Mixed Dairy Feed per pound noted on page 33 of the USDA March 2008 Agricultural Prices publication (including the data and factors noted in footnote 4). (e) Payment Quantity.— (1) In general.—Subject to paragraph (2), the payment quantity for a producer during the applicable month under this section shall be equal to the quantity of eligible production marketed by the producer during the month. (2) Limitation.— (A) In general.—The payment quantity for all producers on a single dairy operation for which the producers receive payments under subsection (b) shall not exceed— (i) for the period beginning October 1, 2007, and ending September 30, 2008, 2,400,000 pounds; (ii) for the period beginning October 1, 2008, and ending August 31, 2013, and for the period beginning February 1, 2014, and ending on the termination date, 2,985,000 pounds for each fiscal year; and (iii) for the period beginning September 1, 2013, and ending January 31, 2014, 2,400,000 pounds per fiscal year. (B) Standards.—For purposes of determining whether producers are producers on separate dairy operations or a single dairy operation, the Secretary shall apply the same standards as were applied in implementing the dairy program under section 805 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001 (as enacted into law by Public Law 106–387; 114 Stat. 1549A–50). (3) Reconstitution.—The Secretary shall ensure that a producer does not reconstitute a dairy operation for the sole purpose of receiving additional payments under this section. (f) Payments.—A payment under a contract under this section shall be made on a monthly basis not later than 60 days after the last day of the month for which the payment is made. (g) Signup.—The Secretary shall offer to enter into contracts under this section until the termination date. (h) Duration of Contract.— (1) In general.—Except as provided in paragraph (2), any contract entered into by producers on a dairy farm under this section shall cover eligible production marketed by the producers on the dairy farm during the period starting with the first day of month the producers on the dairy farm enter into the contract and ending on the termination date. (2) Violations.—If a producer violates the contract, the Secretary may— (A) terminate the contract and allow the producer to retain any payments received under the contract; or (B) allow the contract to remain in effect and require the producer to repay a portion of the payments received under the contract based on the severity of the violation.