A consumer nutrition group yesterday asked the Agriculture Department to repeal milk marketing regulations that it said inflate the price of reconstituted milk products by between 7 and 19 cents.

"These dairy-derived fluid milk alternatives are produced by combining nonfat dry milk powder with water and either milk or vegetable fats," the Community Nutrition Institute said in announcing its filing.

"In most of the country, reconstituted products could be purchased at prices far below those required to buy fluid milk," said Ellen Haas, CNI's policy director. "Yet existing regulations effectively eliminate this product from commerce, thereby denying all consumers, and especially the poor and the fixed income elderly, equally nutritious but lower-cost alternatives to fluid milk."

DOA's milk marketing order regulations are designed to protect milk producers and avoid fluctuations in the industry because of traditional production cycles.

The regulations currently require a processor who makes a reconstituted milk product to make a sizable payment into a regional "equalization fund," to protect the fluid milk prices from competition. Reconstituted milk is sold as a fluid on the shelf.

"These regulations," Haas said, "ensure that reconstituted milk products will never reach grocery store shelves. In effect, the government places a tax on the products which undermines the economic incentive for their production and sale to consumers."

She argued that the fight against inflation justifies an end to such government regulation, and called for the government to do its best to make the least expensive, yet still equally nutritious, foods available to the public.