The Wang Nam Yen Dairy Cooperative in Sa Kaeo is in the hot seat after its UHT milk produced for free distribution to local schools was found for sale in Cambodia.
Teeraphat Prayoonsit, permanent secretary for agriculture, said the cooperative had violated the contract which restricts producers to supplying it to schools in the country, according to Daily News online.
Cooperatives joining the programme to promote milk drinking for pupils are not allowed to export the product, the official added.
Mr Teeraphat did not say what penalty the cooperative would face for breaking the contract.
The project is financially supported by taxpayers through the Agriculture Ministry. It pays cooperatives joining the programme in exchange for them supplying the UHT milk to schools for free.
The milk from Wang Nam Yen became an issue when pictures of the product at Asia Supermarket in Siem Reap were posted by a follower of the Chumchon Khon Tongtin Facebook page on Thursday. The package showed the 'Milk for School' brand being sold at 50 US cents.
The Milk for School brand is used by all cooperatives that join the project.
The school milk programme has been the source of frequent problems over the years, mostly to do with corruption and the provision of expired milk to children.
The Milk Board, which is overseen by the Agriculture Ministry, has an annual budget of 15 billion baht to manage the school milk scheme nationwide. It aims to supply 7.6 million students in about 40,000 public schools, from kindergarten to primary level.
Amnuay Tongkok, the Wang Nam Yen Dairy Cooperative chairman, admitted on Friday that the product in Cambodia came from his group to help generate revenue for members.
The cooperative had a contract to produce 90,000 boxes of UHT milk for pupils in schools in the district. But after the quota was slashed to 40,000 boxes, it tried to find ways to sell the surplus, he said.
"The cooperative sold the surplus to Cambodia for seven baht per box with all money coming back to support dairy farmers. It was better than leaving the milk to spoil," he said.
Mr Amnuay said the cooperative did not break any of the rules for the school milk programme and had ''all the evidence to prove it".