Kansas House Bill HB2254

Kansas 2025-2026 Regular Session

• Introduced: 2/4/25
• Refer: 2/4/25
• Report Pass: 2/18/25
• Engrossed: 2/25/25
• Refer: 2/26/25
• Report Pass: 3/13/25
• Enrolled: 3/21/25
• Passed: 4/10/25

Caption

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

Summary

HB 2254 creates a payment-protection framework for raw milk transactions in Kansas. It requires milk processors to hold proceeds from milk sales in trust for the benefit of the milk producer until the producer is paid in full, and it allows a producer to require the processor to establish a segregated, interest-bearing escrow account at a Kansas financial institution. Funds placed in escrow are treated as trust funds, and the bill specifies how deposits are calculated, how combined accounts are handled, and how funds are distributed if multiple producers are owed money. The bill also limits when these trust and escrow requirements apply. It ties payment terms to applicable federal milk marketing orders and any additional terms agreed to by the parties, and it requires payment by cash, check for the full amount, or wire transfer. The measure excludes transactions between a cooperative association acting as a marketing agent and its members, and it relieves processors from the escrow/trust requirements if the producer does not give timely written notice after nonpayment or dishonor. If a processor fails to pay as required, the bill makes the processor liable for the purchase price, interest at the highest legal rate, and reasonable attorney fees.

Impact

HB 2254 would amend Kansas law governing milk marketing and payment practices by imposing statutory trust obligations on milk processors and creating a producer-controlled escrow option. It expands the definition of milk producer to include cooperative associations marketing milk on behalf of members, and it establishes enforceable rights for producers to recover unpaid amounts, interest, and attorney fees. The bill would primarily affect milk processors, dairy producers, cooperatives, and financial institutions holding escrow accounts, while reinforcing compliance with federal milk marketing order payment structures.

Sentiment

The bill appears to have been broadly supported and noncontroversial in the legislative process. It passed the House on emergency final action by a unanimous 123-0 vote and later passed the Senate consent calendar unanimously 40-0. The lack of recorded committee testimony in the provided materials also suggests there was little visible opposition or debate in the available record.

Contention

The main policy issue in the bill is how strongly to protect milk producers against delayed or unpaid processor obligations. Supporters would likely view the trust and escrow provisions, plus interest and attorney-fee remedies, as necessary safeguards for dairy farmers and cooperatives. Potential points of contention include the administrative burden on processors, the requirement to use Kansas-based insured financial institutions for escrow, and the bill’s notice deadlines that can limit the protections if producers do not act promptly after nonpayment or dishonor. The cooperative exemption also reflects a distinction between independent producer transactions and cooperative marketing arrangements.