§9051. Definitions
In this part:
(1) Actual dairy production margin
The term “actual dairy production margin” means the difference between the all-milk price and the average feed cost, as calculated under section 9052 of this title.
(2) All-milk price
The term “all-milk price” means the average price received, per hundredweight of milk, by dairy operations for all milk sold to plants and dealers in the United States, as determined by the Secretary.
(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 section 9052 of this title using the sum of the following:
(A) The product determined by multiplying 1.0728 by the price of corn per bushel.
(B) The product determined by multiplying 0.00735 by the price of soybean meal per ton.
(C) The product determined by multiplying 0.0137 by the price of alfalfa hay per ton.
(4) Dairy operation
(A) In general
The term “dairy operation” means, as determined by the Secretary, 1 or more dairy producers that produce and market milk as a single dairy operation in which each dairy producer-
(i) shares in the risk of producing milk; and
(ii) makes contributions (including land, labor, management, equipment, or capital) to the dairy operation of the individual or entity, which are at least commensurate with the individual or entity’s share of the proceeds of the operation.
(B) Additional ownership structures
The Secretary shall determine additional ownership structures to be covered by the definition of dairy operation.
(5) Dairy margin coverage
The term “dairy margin coverage” means the dairy margin coverage program required by section 9053 of this title.
(6) Dairy margin coverage payment
The term “dairy margin coverage payment” means a payment made to a participating dairy operation under dairy margin coverage pursuant to section 9056 of this title.
(7) Participating dairy operation
The term “participating dairy operation” means a dairy operation that registers under section 9054 of this title to participate in dairy margin coverage.
(8) Production history
The term “production history” means the production history determined for a participating dairy operation under subsection (a) or (b) of section 9055 of this title.
(9) Secretary
The term “Secretary” means the Secretary of Agriculture.
(10) United States
The term “United States”, in a geographical sense, means the 50 States, the District of Columbia, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, and any other territory or possession of the United States.
§9055. Production history of participating dairy operations
(a) Production history
Except as provided in subsection (b), the production history of a dairy operation for dairy margin coverage is equal to the highest annual milk marketings of the participating dairy operation during any 1 of the 2021, 2022, or 2023 calendar years.
(b) Election by new dairy operations
In the case of a participating dairy operation that has been in operation for less than a year, the participating dairy operation shall elect 1 of the following methods for the Secretary to determine the production history of the participating dairy operation:
(1) The volume of the actual milk marketings for the months the participating dairy operation has been in operation extrapolated to a yearly amount.
(2) An estimate of the actual milk marketings of the participating dairy operation based on the herd size of the participating dairy operation relative to the national rolling herd average data published by the Secretary.
(c) Required information
A participating dairy operation shall provide all information that the Secretary may require in order to establish the production history of the participating dairy operation for purposes of participating in dairy margin coverage.
(d) Limitation on changes to business structure
The Secretary may not make dairy margin coverage payments to a participating dairy operation if the Secretary determines that the participating dairy operation has reorganized the structure of such operation solely for the purpose of qualifying as a new operation under subsection (b).
§9056. Dairy margin coverage payments
(a) Coverage level threshold and coverage percentage
(1) Coverage level threshold
(A) In general
For purposes of receiving dairy margin coverage payments for a month, a participating dairy operation shall annually elect a coverage level threshold that is equal to $4.00, $4.50, $5.00, $5.50, $6.00, $6.50, $7.00, $7.50, $8.00, $8.50, $9.00, or $9.50.
(B) Applicability
Except as provided in subparagraph (C), the coverage level threshold elected under subparagraph (A) shall apply to the covered production elected by the participating dairy operation under paragraph (2).
(C) Second coverage election for tier II
In the case of a participating dairy operation that elects a coverage level threshold of $8.50, $9.00, or $9.50 under subparagraph (A)-
(i) that coverage level threshold shall apply to the first 6,000,000 pounds of milk marketings included in the covered production elected by the participating dairy operation; and
(ii) the participating dairy operation shall elect a coverage level threshold that is equal to $4.00, $4.50, $5.00, $5.50, $6.00, $6.50, $7.00, $7.50, or $8.00 to apply to milk marketings in excess of 6,000,000 pounds included in the covered production elected by the participating dairy operation.
(2) Coverage percentage
For purposes of receiving dairy margin coverage payments for a month, a participating dairy operation shall annually elect a percentage of coverage, in 5-percent increments, not exceeding 95 percent of the production history of the participating dairy operation.
(b) Payment threshold
A participating dairy operation shall receive a dairy margin coverage payment whenever the average actual dairy production margin for a month is less than the coverage level threshold selected by the participating dairy operation.
(c) Amount of payment
The dairy margin coverage payment for the participating dairy operation shall be determined as follows:
(1) The Secretary shall calculate the amount by which the coverage level threshold selected by the participating dairy operation exceeds the average actual dairy production margin for the month.
(2) The amount determined under paragraph (1) shall be multiplied by-
(A) the coverage percentage selected by the participating dairy operation; and
(B) the production history of the participating dairy operation divided by 12.
§9057. Premiums for dairy margin coverage
(a) Calculation of premiums
For purposes of participating in dairy margin coverage, a participating dairy operation shall pay an annual premium equal to the product obtained by multiplying-
(1) the coverage percentage elected by the participating dairy operation under section 9056(a)(2) of this title;
(2) the production history of the participating dairy operation; and
(3) the premium per hundredweight of milk imposed by this section for the coverage level selected.
(b) Tier I: premium per hundredweight for first 6,000,000 pounds of production
(1) In general
For the first 6,000,000 pounds of milk marketings included in the production history of a participating dairy operation, the premium per hundredweight for each coverage level is specified in the table contained in paragraph (2).
(2) Producer premiums
Except as provided in subsection (g), the following annual premiums apply:
| Coverage Level | Premium per Cwt. |
|---|---|
| $4.00 | None |
| $4.50 | $0.0025 |
| $5.00 | $0.005 |
| $5.50 | $0.030 |
| $6.00 | $0.050 |
| $6.50 | $0.070 |
| $7.00 | $0.080 |
| $7.50 | $0.090 |
| $8.00 | $0.100 |
| $8.50 | $0.105 |
| $9.00 | $0.110 |
| $9.50 | $0.150 |
(c) Tier II: premium per hundredweight for production in excess of 6,000,000 pounds
(1) In general
For milk marketings in excess of 6,000,000 pounds included in the production history of a participating dairy operation, the premium per hundredweight for each coverage level is specified in the table contained in paragraph (2).
(2) Producer premiums
Except as provided in subsection (g), the following annual premiums apply:
| Coverage Level | Premium per Cwt. |
|---|---|
| $4.00 | None |
| $4.50 | $0.0025 |
| $5.00 | $0.005 |
| $5.50 | $0.100 |
| $6.00 | $0.310 |
| $6.50 | $0.650 |
| $7.00 | $1.107 |
| $7.50 | $1.413 |
| $8.00 | $1.813 |
(d) Time for payment of premium
The Secretary shall provide more than 1 method by which a participating dairy operation may pay the premium required under this section in any manner that maximizes participating dairy operation payment flexibility and dairy margin coverage integrity.
(e) Premium obligations
(1) Pro-ration of premium for new participants
In the case of a participating dairy operation that first registers to participate in dairy margin coverage for a calendar year after the start of the calendar year, the participating dairy operation shall pay a pro-rated premium for that calendar year based on the portion of the calendar year for which the participating dairy operation purchases the coverage.
(2) Legal obligation
A participating dairy operation in dairy margin coverage for a calendar year shall be legally obligated to pay the applicable premium for that calendar year, except that the Secretary may waive that obligation, under terms and conditions determined by the Secretary, for any participating dairy operation in the case of death, retirement, permanent dissolution of a participating dairy operation, or other circumstances as the Secretary considers appropriate to ensure the integrity of dairy margin coverage.
(f) Repayment of premiums
(1) In general
Each dairy operation described in paragraph (2) shall be eligible to receive a repayment from the Secretary in an amount equal to the difference between-
(A) the total amount of premiums paid by the participating dairy operation under this section for each applicable calendar year; and
(B) the total amount of payments made to the participating dairy operation under section 9056 of this title for that calendar year.
(2) Eligibility
A dairy operation that is eligible to receive a repayment under paragraph (1) is a dairy operation that-
(A) participated in the margin protection program, as in effect for any of calendar years 2014 through 2017; and
(B) submits to the Secretary an application for the repayment at such time, in such manner, and containing such information as the Secretary may require.
(3) Method of repayment
A dairy operation that is eligible to receive a repayment under paragraph (1) shall elect to receive the repayment-
(A) in an amount equal to 75 percent of the repayment calculated under that paragraph as credit that may be used by the dairy operation for dairy margin coverage premiums; or
(B) in an amount equal to 50 percent of the repayment calculated under that paragraph as a direct cash repayment.
(4) Applicability
Paragraph (1) shall only apply to a calendar year during the period of calendar years 2014 through 2017 for which the amount described in subparagraph (A) of that paragraph is greater than the amount described in subparagraph (B) of that paragraph.
(g) Premium discount
The premium per hundredweight specified in the tables contained in subsections (b) and (c) for each coverage level shall be reduced by 25 percent in accordance with the following:
(1) In general
For each of calendar years 2026 through 2031, for a participating dairy operation that makes a 1-time election of coverage level in a tier and of a percentage of coverage under section 9056(a) of this title for the 5-year period beginning in January 2026.
(2) New dairy operations
For each applicable calendar year through 2031, for a participating dairy operation that-
(A) establishes a production history pursuant to section 9055(b) of this title; and
(B) makes a 1-time election of coverage level in a tier and of a percentage of coverage under section 9056(a) of this title for the period beginning with the first available calendar year and ending in December 2031.
(3) Full participation required
Notwithstanding the annual elections under section 9056(a) of this title-
(A) a 1-time enrollment under this subsection shall remain in effect for the full duration applicable to a participating dairy operation in accordance with paragraph (1) or (2)(B), as applicable; and
(B) a participating dairy operation that makes a 1-time enrollment under this subsection and is noncompliant under section 9058 of this title shall be subject to that section.
[4] 7 U.S.C. 9057(b)
[5] 7 U.S.C. 9057(c)
[6] 7 U.S.C. 9057(g)
§9059. Duration
Dairy margin coverage shall end on December 31, 2031.