Future options of the school milk subsidy scheme: rural proofing impact assessment

Due to the delivery arrangements from the current scheme coming to an end, alongside the established provision of Universal Primary Free School Meals (UPFSM), means tested Free School Meals (eFSM), Free Primary Breakfast provision, and the introduction of the Healthy Eating in Schools (Nutritional Standards and Requirements) (Maintained Primary Schools) (Wales) Regulations 2025, it is appropriate to review the future policy approach to milk provision in schools. 

The school food landscape in Wales has changed significantly since the SMSS was introduced in 1977. Learners now benefit from a broader package of school food support, including UPFSM, eFSM, Free Primary Breakfast provision, and the introduction of the Healthy Eating in Schools (Nutritional Standards and Requirements) (Maintained Primary Schools) (Wales) Regulations 2025. 

Together, these measures support access to nutritious food and drink during the school day and contribute to wider objectives relating to health, wellbeing, educational attainment and reducing inequalities.

As part of this wider school food offer, milk remains available through breakfast and lunch provision delivered in accordance with school food standards. Consequently, access to free milk is no longer solely dependent on a dedicated school milk scheme.

The Welsh Government is considering either: 

• (Option 1): replacing the current assimilated law SMSS implemented through a joint Wales, England and Northern Ireland strategy and administered by the RPA, with a grant-funded model delivered through the Local Authority Education Grant (LAEG) from April 2027, or
• (Option 2): Discontinuing the dedicated milk scheme, while recognising that opportunities for providing milk would remain available through school breakfast and lunch provision for participating learners.

Milk provision should be considered within the wider school food policy landscape. Together, UPFSM, eFSM, school breakfast provision and the underpinning Healthy Eating Regulations provide a comprehensive framework to support access to nutritious foods and drink during the school day. Schools play an important role in promoting healthy eating behaviours and encouraging the consumption of nutritious food and drinks, including milk and dairy products, through a whole-school approach to food. School food provision contributes to learner health and wellbeing, supports the development of healthy dietary habits, and helps maximise participation in nutritious food programmes.

No evidence has been identified to suggest that rural learners currently experience different levels of entitlement to milk through the SMSS compared with learners in urban areas. Welsh Government does not hold evidence on the proportion of participating suppliers' business represented by school milk across Wales.

Describe and explain the impact of the proposal on rural people, businesses and communities

Option 1

Option 1 is expected to have a neutral impact on rural communities. By maintaining the SMSS through a new grant-funded delivery model, the proposal would preserve existing provision for learners while reducing administrative complexity for schools and local authorities.

The option is also expected to maintain demand within the Welsh dairy supply chain, supporting rural producers, processors and suppliers. The transition to LAEG delivery may provide opportunities to align provision with existing local authority school food arrangements and procurement processes.

No significant adverse impacts have been identified, although changes to local delivery arrangements may affect some supplier relationships and procurement practices.

Option 2

Option 2 may have a negative impact on rural businesses and communities within the dairy industry. Discontinuing the SMSS could reduce overall demand for milk supplied to schools, with potential implications for parts of the Welsh dairy supply chain and the rural communities it supports.

The scale of any impact is uncertain and would depend on the extent to which schools and local authorities provide milk across existing school food arrangements and the extent to which Welsh Dairies are reliant on the revenue from milk publicly procured through the scheme when compared with the revenues they get via wider commercial routes.

Welsh Government will engage via a planned consultation with affected stakeholders to consider potential impacts on rural communities, dairy businesses and supply chains as part of the decision-making process. 

Does the proposal impact agriculture?

The SMSS creates a stable source of demand for milk supplied to schools. Continuing the scheme under Option 1 would likely maintain that demand, while discontinuing the scheme under Option 2 could reduce demand for milk supplied through schools and potentially affect dairy producers, processors, distributors and suppliers. The impact is likely relatively modest in the context of the wider dairy market and retail sector, but it is still an agricultural impact. 

Welsh Government are currently aware of two dairy suppliers that administer the SMSS on behalf of some schools: Ddol Fach Dairy and Dairy Link UK, with Ddol Fach being a Welsh supplier.

Is the policy/activity related to support for agriculture, other activities carried out on land used for agriculture, or ancillary activities?

The SMSS has historically supported both the consumption of milk by children and demand for dairy products produced through the agricultural sector. While the proposed Welsh replacement scheme under Option 1 is primarily intended to support child nutrition and school food provision, both options remain related to ancillary agricultural activities because they influence demand for milk produced, processed and distributed through the dairy supply chain.

Option 1 would maintain this demand and continue to provide indirect support for dairy producers, processors, distributors and suppliers, including those operating in rural Wales. Option 2 could reduce demand for milk supplied through schools and may therefore have indirect implications for parts of the dairy sector and associated rural businesses. The scale of any impact is uncertain and would depend on future procurement and consumption patterns.

Is the policy/activity related to the regulation of agriculture, other activities carried out on land used for agriculture, or ancillary activities?

Neither option regulates farming, land management, agricultural production, environmental standards, animal welfare, or ancillary agricultural activities. The proposal concerns the funding and delivery of school milk provision and does not introduce or amend regulatory requirements for agricultural businesses.

Describe and explain the impact of the proposal on agriculture, or other activities carried out on land used for agriculture, or ancillary activities, against the SLM objectives of the Agriculture (Wales) Act 2023

The SMSS has historically supported both child nutrition objectives and agricultural market objectives. While the proposed Welsh replacement scheme is primarily intended to support child nutrition and school food provision, both options remain related to ancillary agricultural activities because they influence demand for milk produced, processed and distributed through the dairy supply chain.

To produce food and other goods in a sustainable manner

Option 1 supports this objective by maintaining demand for milk supplied through Welsh schools, providing continued support for dairy producers and associated supply chains. Delivery through the LAEG may also provide opportunities to align provision with wider school food procurement arrangements.

Option 2 may make a weaker contribution to this objective because discontinuing the SMSS could reduce demand for milk supplied to schools. The scale of any impact is uncertain and would depend on future procurement and consumption patterns. Welsh Government will engage via a planned consultation with affected stakeholders to consider potential impacts on rural communities, dairy businesses and supply chains as part of the decision-making process.

To mitigate and adapt to climate change

Neither option directly changes agricultural practices or land management. Option 1 is expected to maintain broadly existing production, transport and consumption patterns. Under Option 2, any effect on greenhouse gas emissions is uncertain and would depend on what happens to overall milk production and consumption, and on future supply and distribution arrangements. If milk currently supplied through the scheme is instead sold through alternative markets, any reduction in emissions from ending the dedicated school supply route may be limited, different distribution routes, transport distances or packaging formats could also affect the outcome. The assessment therefore does not assume a clear carbon benefit from discontinuing the scheme.

To maintain and enhance the resilience of ecosystems and the benefits they provide

As outlined in the Biodiversity Impact Assessment, neither option is expected to have a significant impact on habitats, biodiversity, ecosystems or natural resource management. The overall impact against this objective is therefore assessed as neutral.

To conserve and enhance the countryside and cultural resources and to promote public access to and engagement with them, and to sustain the Welsh language and promote and facilitate its use

Neither option directly affects access to the countryside, cultural resources or the Welsh language.

However, Option 1 supports the economic viability of the Welsh dairy sector, which forms an important part of many rural communities and contributes to the cultural and economic fabric of rural Wales. By maintaining demand for milk supplied through schools, the proposal may provide support for rural businesses and communities where agriculture remains a significant source of employment and economic activity.

Option 2 may have a small adverse impact on some rural businesses if demand for school milk decreases. While the effect is expected to be modest, reduced demand could weaken support for some parts of the rural dairy supply chain over time.

Consider how your policy will be implemented in the way that best contributes to achieving the SLM objectives 

The proposal in option 1 is primarily concerned with child nutrition and school food provision rather than agricultural support or land management. However, implementation has been considered against the Sustainable Land Management (SLM) objectives.

To produce food and other goods in a sustainable manner

Option 1 would make the strongest contribution by maintaining demand for milk supplied to schools and supporting continuity within the Welsh dairy supply chain. Delivery through the LAEG may also allow alignment with wider school food procurement arrangements, including sustainable procurement objectives where appropriate.

Option 2 would make a weaker contribution, as discontinuing the SMSS could reduce demand for milk supplied through schools. The scale of any impact remains uncertain. Welsh Government will engage via a planned consultation with affected stakeholders to consider potential impacts on rural communities, dairy businesses and supply chains as part of the decision-making process.

To mitigate and adapt to climate change

As outlined in the Carbon Impact Assessment, Option 1 is expected to maintain broadly existing emissions associated with school milk provision. The effect of Option 2 is uncertain and depends on future production, consumption, procurement and supply-chain patterns, discontinuation should not therefore be assumed to deliver a clear carbon benefit. 

To maintain and enhance the resilience of ecosystems and the benefits they provide

As outlined in the Biodiversity and Natural Resources Assessments, neither option is expected to have a significant impact on biodiversity, ecosystems or natural resource management. The overall contribution to this objective is therefore assessed as neutral.

To conserve and enhance the countryside and cultural resources and to promote public access to and engagement with them, and to sustain the Welsh language and promote and facilitate its use

Neither option directly affects access to the countryside, cultural heritage assets or opportunities for public engagement with the natural environment.

However, the Welsh dairy sector forms an important part of the social, cultural and economic fabric of many rural communities. Through maintaining demand for milk supplied to schools, Option 1 supports rural businesses and helps sustain economic activity within communities where agriculture remains an important employer and contributor to local identity.

The Welsh Language Impact Assessment identified no direct impacts on the Welsh language.

How will the proposal affect greenhouse gas emissions?

• No significant change in emissions

Officials have considered the carbon implications of both options.

Option 1 is expected to maintain broadly existing levels of school milk provision and therefore existing production, transport and consumption patterns. While the proposal maintains demand for milk supplied through schools, it does not substantially increase provision beyond current arrangements. Any emissions associated with dairy production, packaging and distribution are therefore expected to remain broadly unchanged. Delivery through the LAEG may also provide opportunities to align provision with wider local authority procurement arrangements, although any resulting carbon benefits are expected to be small and have not been quantified.

Option 2 could result in a reduction in milk supplied through the dedicated SMSS. Whether this would reduce greenhouse gas emissions overall is uncertain. Dairies may identify alternative commercial markets for some of the milk currently supplied through the scheme, and those markets may differ in price, reliability, volume and distribution requirements. If the same milk continues to be produced and is sold elsewhere, any reduction in emissions from ending the dedicated school supply route may be limited. Conversely, if overall milk production and consumption fall, emissions associated with dairy production, packaging and distribution could reduce. Replacement markets could also involve different distribution routes, transport distances or packaging formats, which may alter the carbon impact. It is therefore not possible to assume a clear carbon benefit from discontinuation, the effect would depend on future production, consumption, procurement and supply-chain patterns.

Option 2 may also result in a modest reduction in waste associated with the dedicated school milk scheme, including packaging waste from individual milk containers and associated distribution activities. The scale of any benefit is uncertain, as milk would remain available through wider school food provision and schools may continue to provide milk through alternative arrangements. Consequently, any reduction in waste or packaging is expected to be limited and has not been quantified.

Officials have high confidence that neither option would result in a significant change in greenhouse gas emissions.