Date: January 27, 1998 Contact: Dan Smith


Compact Commission Votes to Exempt Milk Sold by Schools Food Service Programs To Ensure Price Regulation Does Not Increase Cost of School Milk

The Northeast Dairy Compact Commission took formal action Monday to exempt milk sold by school food service programs in New England from operation of the compact over-order price regulation. The exemption established by the 26-member commission, made up of representatives of each of the six New England Compact states, 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.

The Commission last summer implemented the regional price regulation to apply to all fluid, or drinking, milk sold in New England, including milk sold in school food programs. (The Commission did establish a single exception for milk sold as part of the WIC Program.) The effect of the regional price regulation is to incrementally raise the regulated price administered by a comprehensive system of federal price regulation which applies to all milk processing companies with sales in New England. The regional regulation also serves to set the price as a flat, rather than variable, amount over time

As a result of its rulemaking procedure completed Monday, the Commission found that milk sold as part of school food programs is provided by processing companies through a competitive bid 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. In response to this finding, the Commission adopted the exemption to allow school food service programs to obtain reimbursement for any documented cost increases.

Michael A. Wiers, Chair of the Compact Commission, said, "The commissionís basic responsibility is to define the public interest in milk price regulation. Assuring the success of child nutrition programs is critical to the public interest. Accordingly, the price regulation must be structured so that it does not raise the cost of school milk at the same time it assures the programs with an adequate supply of fresh milk. The exemption established by the Commission will accomplish this purpose."

Massachusetts Agriculture Commissioner, Jay Healy said, "I congratulate the commission for continuing to be responsive to the concerns of consumers, particularly our school kids. In its deliberation and action on Monday, the commission has again struck the proper balance for the concerns of both farmers and consumers."

The exemption will apply to the 1998-1999 school year. Approximately 4,000 farmers from New England and New York, who receive disbursements under the Compact price regulation must first approve the school exemption before it takes effect.


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