Dairy Security Act of 2011 - Directs the Secretary of Agriculture (USDA) to establish a dairy producer margin protection program to protect dairy producer income by paying participating producers: (1) basic margin protection payments when actual dairy producer margins are less than the threshold levels for such payments, and (2) supplemental margin protection payments if purchased by a participating producer.
Makes all registering U.S. dairy producers eligible for such program.
Authorizes a producer to purchase supplemental margin protection at the time of program registration.
Directs the Secretary to establish: (1) a dairy market stabilization program for all U.S. dairy producers in order to balance the supply of milk with demand when dairy producers are experiencing low or negative operating margins, and (2) a board of directors for the program.
Requires milk handlers to reduce payments to each participating producer from whom the handler receives milk during any month in which stabilization program payment reductions are in effect.
Directs the Secretary to conduct the margin protection and stabilization programs from January 1, 2012, through December 31, 2017.
Directs the Secretary to amend each federal milk marketing order as provided for by this Act.
Eliminates the: (1) dairy product price support program, (2) the milk income loss contract program, (3) permanent price support authority for milk, and (4) the dairy export incentive program.