For Immediate Release Contact: Tina Wisell

February 23, 1998 (802) 229-1941

SCHOOL FOOD SERVICE PROGRAM EXEMPTION APPROVED
BY 95.8% OF VOTING PRODUCERS

The amendment adopted by the Northeast Dairy Compact Commission on January 26, 1998 to exempt milk sold by school food service programs in New England from operation of the Compact over-order price regulation was approved by producer referendum today. The exemption assures that the cost of half-pint milk containers sold for school lunch and breakfast programs will not be increased as a result of the regional price regulation. 2,563 out of 2,675 of the verified ballots, or 95.8 percent, were cast in the affirmative.

Last summer the Commission implemented the regional price regulation in the amount of $16.94 per hundredweight to apply to all fluid, or drinking, milk sold in New England, including milk sold in school food service programs. Milk processors must pay the regulated price for the farm milk they purchase for their fluid milk sales. The precise amount of the Compact regulation is actually the difference between $16.94 and the price established monthly by federal regulation for the same milk.

The Commission found as a result of its recent rulemaking procedure that milk sold as part of school food programs is provided by processing companies through a competitive procedure, under law. In some instances, the effect of the regional price regulation has been to raise the cost of this school food program milk.

The amendment approved by referendum today addresses this by establishing a procedure for reimbursing New England school food service programs for any increased costs to their school milk purchases that the programs document as attributable to operation of the compact price regulation. The exemption will apply to the 1998-1999 school year.

"The Commission seeks to define the public interest in all of its rulemaking activities," said Michael Wiers, Commission Chair and Referendum Agent. "Assuring the success of child nutrition programs is critical to that process. The Compact assures consumers in the region of an adequate supply of local milk, and the Commission wanted to make certain that the regulation that enables us to do just that, does not also raise the cost of school milk. We appreciate the vote of the producers today in helping us to accomplish a win-win situation for everyone."

Massachusetts Agriculture Commissioner Jay Healy said, "The way the Compact Commission favorably dealt with the school food service program has been of immeasurable help in retaining the Compact in Massachusetts. Given the fact that the school food service program exemption will slightly reduce the payments to producers, we are very grateful to the farmers for their vote. We look forward to being able to balance the needs of farmers and consumers as the Compact continues in the future."

Mary Kelligrew-Kassler, Commission Secretary and Massachusettsí consumer representative on the Commission, expressed happiness with the result. "The Commissionís decision to exempt the school lunch and breakfast programs makes good sense and is most gratifying. Together with the WIC protection, children in these programs will continue to receive low-cost milk that is so important to their growth and development."

Vermontís consumer representative on the Commission, Bobby Starr, said the result of referendum is an important balance of consumer and producer interests. "Itís great that farmers turned out in support of this exemption that will benefit children across New England. In drafting the Compact we worked hard to establish a process that balanced the concerns of all people, farmers to consumers, and each part of the region, rural and urban. I think everyone will be well-served by this new rule. Itís one more example of how well the Commission works when all sides sit down and talk about the issues."

Rhode Islandís consumer representative Al Bettencourt added, "This is a good move for consumers because it has kept the price stable in the school lunch programs."

The producer referendum completes the legal procedure required for price regulation. To become effective, the school food service program exemption had to be approved by two-thirds of all producers voting by referendum who receive disbursements under the Compact price regulation.

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