The price dairy farmers in Minnesota receive for milk is set by a complex formula that includes a monthly base price announced by the federal milk marketing order system plus premiums offered by processors. House File 12 (First Special Session 2001) proposes the creation of a milk control board that would establish minimum prices paid to dairy farmers for milk and production quota and revenue pooling systems to keep supply and demand in relative balance.

Section
1	Citation. This law may be cited as the Minnesota dairy supply management act.
2	Application. Specifies the bill does not apply to foreign or interstate commerce except as it would comply with federal law and constitution.
3	Definitions.
	Subd. 1. Scope. Definitions in this section apply to the dairy supply management act.
	Subd. 2. Administrative function. Administrative functions of the board mean its enforcement obligations.
	Subd. 3. Administrator. The administrator is the executive of the board.
	Subd. 4. Board. The board is the milk control board.
	Subd. 5. Class I to Class IV milk. The various classes of milk are defined in federal regulation.
	Subd. 6. Distributor. A distributor buys and sells bulk or packaged milk from Minnesota producers intended for consumption in the state. Jobbers and independent contractors are also distributors, but retailers are not.
	Subd. 7. Legislative function. The legislative function of the board includes the establishment of rules, orders, and directives.
	Subd. 8. Processor. A processor manufactures or processes dairy products for sale from milk by Minnesota producers.
	Subd. 9. Producer. A producer operates a dairy herd in Minnesota for commercial milk production and sells the milk to a distributor or processor.
	Subd. 10. Producer price. Producer price is the price at which a producer's milk is sold in bulk to a distributor or processor.
4	Duties and powers of administrator. The administrator and staff and agents are to enforce the chapter in coordination with the board.
5	Milk control board.
	Subd. 1. Creation, membership, appointment. The milk control board is created with five members appointed by the governor. The members must have no connection with the dairy industry.
	Subd. 2. Assignment, fiscal agent. The board is housed in the department of agriculture, and the commissioner is fiscal agent to the board.
6	Fees and assessments. The board may levy fees on producers and distributors. Fees to be paid by producers and processors and distributors are to be set annually by the board. Fees must be paid monthly and deposited in the milk price control account.
7	Producer committee. A producer committee having from 10 to 15 members is elected by district to deal with producer issues.
8	Regulation of milk prices.
	Subd. 1. Establishment of minimum prices. The board is to fix minimum producer prices for each class of milk. The minimum price for Class I milk must be no lower than $15.50 per hundredweight.
	Subd. 2. Formulas. The board is required to establish minimum and maximum prices by formula to reflect changes in the costs of production, supply, processing, distribution, and retailing. A number of factors that must be considered in establishing the formulas are specified.
	Subd. 3. Quota plan. Processors, distributors, or producers can petition the board to hold a hearing to consider the advisability for a production quota plan. If evidence at the hearing indicates its reasonableness, the board is to establish a quota plan.
	Subd. 4. Payment pooling plan. Producers, processors, or distributors can petition the board to hold a hearing to consider the need for a statewide pooling plan to equitably distribute producer payments. An order for a pooling plan must be approved by a simple majority of voters who vote in a referendum.
9	Enforcement.
	Subd. 1. Reports of dealers, accounting system, records. The board may require reports from milk producers, processors, and distributors. The board must adopt uniform accounting systems for distributors. Required information is listed.
	Subd. 2. Cooperation with other governmental agencies. The board must cooperate with the programs of other states and the Secretary of Agriculture of the United States.