AN ACT CONCERNING FINANCIAL RELIEF FOR THE DAIRY INDUSTRY.

This bill establishes a grant program to provide an operating subsidy for state milk producers (dairy farmers). The grants make up the difference between what dairy farmers are paid for milk based on the federally set price and the estimated cost to produce it.

It requires the Department of Agriculture (DOAG) commissioner to adopt regulations to implement the program. In doing so, he must establish a threshold for determining if dairy farmers' production costs exceed federally set milk prices.

Under the bill, “milk producers” are eligible for a grant each month that the “federal pay price” is below the cost of producing the milk (production price). "Milk producers" are people, firms, or corporations registered with DOAG to produce milk for pasteurization that will be sold or used other than on the farm. The “federal pay price” is the monthly uniform price for milk as set by the U. S. Department of Agriculture (USDA) Northeast Federal Milk Marketing Order for Class I milk (see BACKGROUND). (It is the amount milk processors must pay farmers for their milk. )

The commissioner must determine the production price, which cannot be less that the federally determined “minimum sustainable monthly cost of production. ” The “minimum sustainable monthly cost of production” is 82% of the baseline determined by the USDA's Economic Research Service monthly average cost of production for a New England state.

Under the bill, the grant amount is the difference between the production price and the federal pay price multiplied by the amount of milk the dairy farmer's operation produced that month.

To receive grants, the bill requires dairy farmers to report the amount of milk they produce to the DOAG commissioner on a form he prescribes and when he requires.

The bill also requires dairy farmers to have completed an energy audit to receive a grant. They must provide proof of the audit as the DOAG commissioner directs. The audit is based on existing standards. (The law requires the Department of Public Works commissioner and Office of Policy and Management secretary to establish and publish standards for life-cycle cost analysis for state-owned and -financed buildings before they are built or substantially renovated. This analysis estimates the cost of alternative heating, cooling, and other building systems over the building's life. )

Federal law governs the price paid to dairy farmers for milk. Generally, USDA marketing orders set the price for milk and milk products by region. One order prescribes the price paid in New England and the Mid-Atlantic states. The order is broken down into Class 1 (fluid) milk and various other classes of milk products.

Yea

Nay

(03/20/2009)