Milk Production and Marketing Act of 1985

Milk Production and Marketing Act of 1985 - Amends the Agricultural Act of 1949 to set milk price support levels at $11.60 per hundredweight for the period October 1, 1985, through December 31, 1987.

Establishes permanent milk support levels based on purchase levels and previous year's support prices.

Extends milk marketing assessment authority through 1987. Replaces the 50 cent per hundredweight assessment with an assessment not in excess of 50 cents per hundredweight.

Transfers specified assessment funds to the Dairy Research Trust Fund and the Commodity Credit Corporation.

Extends the milk diversion program through 1987.

Limits the maximum amount of payments per producer to the sum of $100,000 and the aggregate amount of funds represented by the price reduction during such producer's contract.

Prohibits the Secretary of Agriculture from making any contract modifications that would result in aggregate annual marketing reductions of less than 4,000,000 pounds.

Sets forth marketing history provisions for 1986 and 1987.

Imposes a civil penalty upon a person who purchases one or more dairy cattle for slaughter and fails to slaughter such cattle within a reasonable time.

Amends the Dairy Production Stabilization Act of 1983 to establish in the Department of Agriculture a National Dairy Research Endowment Institute to provide a permanent system for funding dairy market-expansion research activities.

Establishes in the Treasury a Dairy Research Trust Fund.

Extends through FY 1989: (1) the dairy indemnity program; and (2) the program authorizing dairy products to be transferred to the military and to veterans' hospitals.

Makes authority permanent for: (1) milk producer-initiated marketing order amendment hearings; and (2) dairy base plans.

States that the legal status of producer handlers of milk shall remain the same upon enactment of this Act as it was before such date.

Prohibits the Secretary from purchasing milk or milk products from handlers who pay milk producers a price which: (1) is increased to reflect reductions; or (2) is not adjusted to reflect price support decreases.

Amends the Dairy Production Stabilization Act of 1983 to provide for assessment payments by dairy importers.

Increases the membership of the National Dairy Promotion and Research Board from 36 to 37. Provides for importer membership.

Provides for mandatory import relief for milk protein products.

Provides that for purposes of the Federal Food, Drug, and Cosmetic Act a cheese substitute food shall be deemed misbranded if its label contains the word "cheese."