Requiring milk processors to hold payments in trust for milk producers until full payment is received, with funds in escrow considered held in trust.

Safer milk payments, stricter processor duties

Kansas milk producers gain payment protections, while processors face new duties and nonpayment penalties. Processors must hold milk-sale payments in trust as the producer’s property until the full purchase price is paid. After a missed timely payment, producers can require a separate, interest-bearing escrow account in Kansas with federal deposit insurance. Timely payment means payment within 3 days after the due date under the applicable federal milk marketing order or contract. Escrow deposits follow a formula using payments received and milk quantities, and continue until full payment. Escrow funds are also held in trust; combined accounts pay producers proportional shares if funds run short. To preserve trust or escrow rights for a payment, producers must give written notice by the 30th business day after the final payment date. For a dishonored payment, the deadline is the 15th business day after the producer receives notice of dishonor. Processors must follow applicable federal milk marketing orders, and additional payment terms require mutual agreement. Payment must be cash, a full-price check, or a full-price wire transfer. Payment to the federal milk market administrator under an applicable order counts as payment to the producer. Producers can recover unpaid amounts, interest at the highest legal rate from transfer of possession until payment, and reasonable collection attorney fees. The law excludes transactions between cooperative marketing agents and their own members, but covers cooperatives marketing for separate producers. It takes effect upon publication in the statute book.