Dairy Advancement Act of 2011 - Amends the Food, Conservation, and Energy Act of 2008 to repeal the dairy product price support program.
Directs the Secretary of Agriculture (USDA) to permit dairy producers, as an alternative to receiving milk income loss contract program payments, to receive livestock gross margin insurance that protects against the loss of gross margin (milk market value minus feed costs) for the initial election month through September 30, 2012. Provides for a limited subsidy.
Directs the Secretary to establish a two-class system (fluid and manufacturing milk classes) for classifying milk under federal milk marketing orders.
Amends the Consolidated Farm and Rural Development Act to authorize loans and loan guarantees to provide dairy producers with incentives to invest in new equipment and technologies.
Amends the Farm Credit Act to authorize banks for cooperatives to provide dairy processing cooperatives with lines of credit and accounts receivable financing to develop export opportunities for milk and milk products.
Amends the Agricultural Marketing Act of 1946 to revise dairy product/commodity reporting provisions.