CHAPTER 181. PAYMENT FOR RAW MILK - Texas Statutes

AGRICULTURE CODE

TITLE 6. PRODUCTION, PROCESSING, AND SALE OF ANIMAL PRODUCTS

SUBTITLE D. DAIRY PRODUCTS

CHAPTER 181. PAYMENT FOR RAW MILK

Sec. 181.001. DEFINITIONS. In this chapter:

(1) "Cooperative association" means any group in which farmers

act together in the market preparation, processing, or marketing

of farm products or any association organized under Chapter 52 of

this code.

(2) "Dairy farmer" means a farmer engaged in the business of

producing milk for sale to milk processors directly or through a

cooperative association of which the dairy farmer is a member.

(3) "Milk processor" means a person who operates a milk, milk

products, or frozen desserts processing plant that is located in

Texas.

(4) "Purchase price" means an amount of money, based on

estimated butterfat content at the time of delivery, that a milk

processor agrees to pay a dairy farmer for a purchase of raw

milk.

Added by Acts 1987, 70th Leg., ch. 1083, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 676, Sec. 1, eff.

Sept. 1, 1989.

Sec. 181.0015. APPLICABILITY OF CHAPTER. When a dairy farmer

sells or markets milk through a cooperative association of which

the dairy farmer is a member, the cooperative association is

considered a dairy farmer for purposes of this chapter.

Added by Acts 1989, 71st Leg., ch. 676, Sec. 2, eff. Sept. 1,

1989.

Sec. 181.002. PAYMENTS HELD IN TRUST. (a) Except as provided

by Subsections (b) and (g) of this section, a milk processor

shall hold in trust all payments received from the sale of milk

for the benefit of the dairy farmer from whom the milk was

purchased until the dairy farmer has received full payment of the

purchase price for the milk. For the purposes of this subsection,

funds placed in escrow in compliance with Subsections (b) through

(e) of this section are held in trust.

(b) Except as provided by Subsection (g) of this section, a

dairy farmer who sells milk to a milk processor may require the

milk processor to establish an escrow account for the benefit of

the dairy farmer. If a dairy farmer requires a milk processor to

establish an escrow account under this subsection, the milk

processor shall deposit in the escrow account, in the manner

provided by Subsections (c) through (e) of this section, all

payments received from the sale of any milk or dairy product

until the dairy farmer has received full payment of the purchase

price for the milk.

(c) A milk processor required to establish an escrow account

under this section shall, on receipt of a payment from the sale

of milk or dairy products, deposit into the account a sum of

money determined by multiplying the total amount of all payments

received by the milk processor from the sale of milk or dairy

products by the fraction determined by dividing the total

quantity of milk purchased by the milk processor for sale as milk

or dairy products into the quantity of milk sold by the dairy

farmer to the milk processor. The milk processor shall continue

to make payments into the escrow account until the dairy farmer

has received full payment of the purchase price for the milk.

(d) An escrow account required under this section shall be

established for the benefit of the dairy farmer as a segregated,

interest-bearing account with a financial institution located in

this state the deposits of which are insured by the Federal

Deposit Insurance Corporation or the Federal Savings and Loan

Insurance Corporation. If a milk processor is required to

establish more than one escrow account under this section, the

milk processor may combine the accounts into a single account. If

the funds accumulated in a combined escrow account are

insufficient to pay all the dairy farmers who have not received

full payment and for whose benefit the account was established,

the agent of the institution with whom the escrow account is

established shall distribute the funds in proportion to the

amount then due to each dairy farmer.

(e) On presentation of proof of identity satisfactory to an

agent of the institution with which the escrow account is

established, the agent shall promptly distribute any funds

accumulated for the benefit of the dairy farmer to the dairy

farmer or, if required by an applicable federal milk marketing

order, to the federal milk administration.

(f) Funds held in trust by a milk processor or in an escrow

account are the property of the dairy farmer.

(g) A milk processor is not required to establish an escrow

account or maintain payments in trust under Subsection (a) or (b)

of this section for a payment if:

(1) full payment of the purchase price is not received, and the

dairy farmer does not give written notice to the milk processor,

by the end of the 30th day after the final date for payment of

the purchase price as specified by Section 181.003 of this code;

or

(2) a payment instrument received by the dairy farmer is

dishonored, and the dairy farmer does not give written notice to

the milk processor, by the end of the 15th business day after the

day that the notice of dishonor was received.

Added by Acts 1987, 70th Leg., ch. 1083, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 676, Sec. 3, eff.

Sept. 1, 1989.

Sec. 181.003. TIME AND METHOD OF PAYMENT FOR PURCHASE. (a) A

milk processor may not purchase raw milk from a dairy farmer

unless:

(1) payment of the purchase price is made according to the

provisions prescribed by an applicable federal milk marketing

order;

(2) any additional provisions are agreed on by both the dairy

farmer or his agent and the milk processor; and

(3) the medium of exchange used is cash, a check for the full

amount of the purchase price, or a wire transfer of money in the

full amount.

(b) For purposes of this chapter, a payment delivered by a milk

processor to the applicable federal milk market administrator on

behalf of a dairy farmer in compliance with the terms of an

applicable federal milk marketing order is considered to be

delivery of payment to the dairy farmer.

Added by Acts 1987, 70th Leg., ch. 1083, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 676, Sec. 4, eff.

Sept. 1, 1989.

Sec. 181.004. COOPERATIVE TRANSACTIONS. This chapter does not

apply to transactions between a cooperative association, while

acting as a marketing agent, and its members.

Added by Acts 1987, 70th Leg., ch. 1083, Sec. 1, eff. Sept. 1,

1987.

Sec. 181.005. DAMAGES. A milk processor who fails to pay for

raw milk as provided by this chapter is liable to the dairy

farmer for:

(1) the purchase price of the raw milk;

(2) interest on the purchase price at the highest legal rate,

from the date possession is transferred until the date the

payment is made in accordance with this chapter; and

(3) a reasonable attorney's fee for the collection of the

payment.

Added by Acts 1987, 70th Leg., ch. 1083, Sec. 1, eff. Sept. 1,

1987.