Impacts of the Northeast Interstate Dairy Compact on the WIC Program: Evidence from Boston and Hartford

This paper examines the impacts of the Northeast Interstate Dairy Compact (Compact) on the Women, Infants and Children (WIC) program using an autoregressive-moving average (ARMA) model and data from Boston and Hartford. While the results for Boston indicate that the difference between the net fluid milk price paid by WIC program and the forecasted fluid milk price with no Compact in effect was not significant over the period of July 1997 to June 1998, the results for Hartford suggest that the net price paid by WIC was significantly greater than the forecasted price with no Compact in effect over the same period. A similar analysis of the changes in markups suggests that the increase in the net fluid milk price paid by the WIC program in Hartford was largely due to increased markups. The Northeast Interstate Dairy Compact (Com-pact), as the first regional dairy compact in the U. S., has been the focus of a great deal of attention and speculation since its inception in July 1997 (Bailey and Gamboa 1999; Knutson 1999). De-bates on renewal of the Compact have centered o