WASHINGTON -- In response to recent recommendations by the Office of the Inspector General, the National Fluid Milk Processor Education Program Board here will restructure the management that oversees the Milk Mustache campaign.
These changes in the program's organization follow federal accusations late last year in which government investigators claimed the milk board spent $127 million on the "milk mustache" advertising campaign without the approval of the U.S. Department of Agriculture.
The USDA's Agricultural Marketing Service has been responsible for reviewing and approving the board's budget, under a 1990 law. Officials at MilkPEP downplayed last year's charges, saying that they revolved around procedural formalities having to do with funding for the popular campaign, which is bankrolled entirely by processors and receives no money whatsoever from any government sources.
"The processors who pay for this campaign are pleased with the way things have been running, and in fact recently passed a referendum to continue the campaign for five years," said Scottie Mayfield, chairman of the MilkPEP Board. "These changes to the management structure for our program are a part of our continual effort to improve and streamline operations, to address OIG concerns and to place the best people in the right assignments to best serve the processor community."
The MilkPEP board is working closely with the AMS to restructure the responsibilities of those currently involved with the program. According to Dr. Enrique Figueroa, administrator for the AMS, negotiations involving MilkPEP and the OIG with regard to the recommended changes are still under discussion.
"OIG's initial report on MilkPEP resulted in a list of recommendations for the program," said Figueroa. "Of those recommendations, seven have reached resolution."
The issue of restructuring, which includes the current management changes, is ongoing, he added.
He stressed that the OIG did not find a misappropriation of funds or anything egregious, it simply performed an investigation and supplied suggestions. Negotiations between the OIG, the AMS and MilkPEP are scheduled to end March 23.
The new system calls for former MilkPEP executive director, Kurt Graetzer, to step into the role of chief executive officer. Reporting directly to the MilkPEP Board, Graetzer will now handle all program activities. His efforts will be supported by the program's new chief financial officer, Ron Rubin. Rubin and his accounting firm, Rubin & Associates, have been involved with the program since its beginning. The firm handles financial matters for the board, such as assessment collections and dispersements and financial reports, and also conducts internal reviews of the International Dairy Foods Association, Washington, and its primary contractors to ensure performance and compliance.
"The change in management structure is a result of the board becoming more directly involved in the program, without having to go through a contractor," said Graetzer. "IDFA is a major contractor and previously I was reporting to both them and the board. With the new structure, I will report only to the board."
Mayfield said the MilkPEP board will continue to work with the IDFA to hire agencies, consultants, research firms and other suppliers, with board authorization and USDA approval.
"The IDFA has done an excellent job and offers a highly professional and knowledgeable staff to service this important industry initiative," continued Mayfield. "They are key to the effective and efficient operation of the program."
About 200 companies are responsible for funding the organization, including Cincinnati-based Kroger Co. and Lakeland, Fla.-based Publix Super Markets. According to a referendum, each company must contribute a mandatory 20 cents for each 100 pounds of milk processed.
MilkPEP said that equals about $105 million annually (see Milk Moustache Drive Combing Retail Scene, SN, Nov. 16, 1998).
MilkPEP is funded by the nation's fluid milk processors and overseen by a 20-member board of directors.