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1 1 (May 17, 1996)

handle is hein.crs/crsaafd0001 and id is 1 raw text is: 96-440 ENR May 17, 1996 Dairy Provisions of the Enacted 1996 Farm Bill Ralph M. Chite Specialist in Agricultural Policy Environment and Natural Resources Policy Division Summary The Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127, the enacted 1996 farm bill) contains provisions (Title I, Subtitle D, Chapter 1) that significantly modify the two major federal policy tools used to support milk markets: the dairy price support program and federal milk marketing orders. The new law reduces the level of price support under the dairy price support program in each year (1997 through 1999), until the program is terminated at the end of 1999. In return, the deficit reduction assessment paid by milk producers is eliminated almost immediately. The dairy price support program is replaced on January 1, 2000 by a recourse loan program for dairy processors to assist them in managing their inventories. The enacted 1996 farm bill requires a reduction in the number of milk marketing orders, to at least 10 but no more than 14 -- and gives USDA three years to administratively achieve this goal. Other dairy provisions in the 1996 law: 1) give the New England states temporary authority to enter into a regional dairy compact, pending a USDA determination that there is a compelling public interest in a compact; 2) allow California to retain its minimum nonfat solids standards for fluid milk at its current level; 3) establish a maximum manufacturing allowance for states; 4) extend the authority for the processor- funded promotion program through 2002; and 5) fully fund the dairy export incentive program at the maximum level allowed under the Uruguay Round agreement. Dairy Price Support Program The dairy price support program is intended to protect farmers from price declines that might force them out of business and to protect consumers from seasonal imbalances of supply and demand. USDA's Commodity Credit Corporation (CCC) supports milk prices by its standing offer to purchase surplus nonfat dry milk, cheese, and butter from dairy processors. Government purchases of these storable dairy products indirectly support the market price of milk for all dairy farmers. Per-pound prices paid to the processors for Government purchases of cheese, butter, and nonfat dry milk are set administratively at a level that will permit processors to pay dairy farmers at least the federal support price for their milk. Congressional Research Service o*o The Library of Congress CRS Report for Congress Received through the CRS Web

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