[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE RISING COST OF FOOD AND ITS IMPACT ON FEDERAL CHILD NUTRITION
PROGRAMS
=======================================================================
HEARING
before the
COMMITTEE ON
EDUCATION AND LABOR
U.S. House of Representatives
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, JULY 9, 2008
__________
Serial No. 110-100
__________
Printed for the use of the Committee on Education and Labor
Available on the Internet:
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COMMITTEE ON EDUCATION AND LABOR
GEORGE MILLER, California, Chairman
Dale E. Kildee, Michigan, Vice Howard P. ``Buck'' McKeon,
Chairman California,
Donald M. Payne, New Jersey Senior Republican Member
Robert E. Andrews, New Jersey Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia Peter Hoekstra, Michigan
Lynn C. Woolsey, California Michael N. Castle, Delaware
Ruben Hinojosa, Texas Mark E. Souder, Indiana
Carolyn McCarthy, New York Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts Judy Biggert, Illinois
Dennis J. Kucinich, Ohio Todd Russell Platts, Pennsylvania
David Wu, Oregon Ric Keller, Florida
Rush D. Holt, New Jersey Joe Wilson, South Carolina
Susan A. Davis, California John Kline, Minnesota
Danny K. Davis, Illinois Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona Kenny Marchant, Texas
Timothy H. Bishop, New York Tom Price, Georgia
Linda T. Sanchez, California Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland Charles W. Boustany, Jr.,
Joe Sestak, Pennsylvania Louisiana
David Loebsack, Iowa Virginia Foxx, North Carolina
Mazie Hirono, Hawaii John R. ``Randy'' Kuhl, Jr., New
Jason Altmire, Pennsylvania York
John A. Yarmuth, Kentucky Rob Bishop, Utah
Phil Hare, Illinois David Davis, Tennessee
Yvette D. Clarke, New York Timothy Walberg, Michigan
Joe Courtney, Connecticut [Vacancy]
Carol Shea-Porter, New Hampshire
Mark Zuckerman, Staff Director
Sally Stroup, Republican Staff Director
C O N T E N T S
----------
Page
Hearing held on July 9, 2008..................................... 1
Statement of Members:
Altmire, Hon. Jason, a Representative in Congress from the
State of Pennsylvania, prepared statement of............... 85
Biggert, Hon. Judy, a Representative in Congress from the
State of Illinois, submission for the record:
Statement of Beth Hillson, the American Celiac Disease
Alliance (ACDA)........................................ 85
Hare, Hon. Phil, a Representative in Congress from the State
of Illinois, prepared statement of......................... 86
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio, prepared statement of................... 87
McCarthy, Hon. Carolyn, a Representative in Congress from the
State of New York, prepared statement of................... 87
McKeon, Hon. Howard P. ``Buck,'' Senior Republican Member,
Committee on Education and Labor........................... 4
Prepared statement of.................................... 6
Miller, Hon. George, Chairman, Committee on Education and
Labor...................................................... 1
Prepared statement of.................................... 3
Additional submissions for the record:
Coalition letter to the Environmental Protection
Agency, dated June 23, 2008........................ 75
Statement of Connie Tipton, president and CEO,
International Dairy Foods Association.............. 80
Letter from Flavio Cumpiano, Executive Director,
Federal Affairs Administration, Commonwealth of
Puerto Rico........................................ 83
Statement of Paule T. Pachter, A.C.S.W., L.M.S.W.,
executive director, Long Island Cares, Inc., the
Harry Chapin Food Bank............................. 84
Woolsey, Hon. Lynn C., a Representative in Congress from the
State of California, prepared statement of................. 88
Statement of Witnesses:
Faber, Scott, vice president for Federal affairs, on behalf
of the Grocery Manufacturers Association................... 17
Prepared statement of.................................... 18
Responses to questions for the record.................... 89
Additional submissions for the record:
``Global Agricultural Supply and Demand: Factors
Contributing to the Recent Increase in Food
Commodity Prices''................................. 23
``Another Inconvenient Truth: How biofuel policies
are deepening poverty and accelerating climate
change''........................................... 23
``The Role of Biofuels and Other Factors in
Increasing Farm and Food Prices''.................. 23
``World Economic Outlook,'' October 2007............. 23
``World Bank response to rising food prices''........ 23
Harnett, James J., president & CEO, Family and Children's
Association................................................ 31
Prepared statement of.................................... 33
Responses to questions for the record.................... 90
Additional submission for the record:
``Currents: Summer Camp as Food Relief--Low-Income
Families in U.S. Make the Most of a Vital
Lifeline,'' Wall Street Journal, July 8, 2008...... 36
Houston, Kate, Deputy Under Secretary, Food, Nutrition and
Consumer Services, U.S. Department of Agriculture.......... 13
Prepared statement of.................................... 15
Questions for the record................................. 91
James, Paula, Contra Costa Child Care Council, California
CCFP Roundtable, National CACFP Forum...................... 38
Prepared statement of.................................... 40
Responses to questions for the record.................... 93
Additional submissions for the record:
``The Child and Adult Care Food Program Supports Good
Nutrition in Quality Child Care''.................. 45
Contra Costa Child Care Council ``Nutrition
Edition,'' July 2008............................... 46
Childhood nutrition flyers........................... 52
``Sample Nutrition Policy''.......................... 53
Leibtag, Dr. Ephraim, research economist, U.S. Department of
Agriculture................................................ 8
Prepared statement of.................................... 10
Questions for the record................................. 94
Matustik, Pavel N., CAO, Santa Clarita Valley School Food
Services Agency............................................ 27
Prepared statement of.................................... 29
Wilson, Katie, president-elect of the School Nutrition
Association; food and nutrition coordinator, Onalaska
School District............................................ 24
Prepared statement of.................................... 25
Responses to questions for the record.................... 94
THE RISING COST OF FOOD AND ITS IMPACT ON FEDERAL CHILD NUTRITION
PROGRAMS
----------
Wednesday, July 9, 2008
U.S. House of Representatives
Committee on Education and Labor
Washington, DC
----------
The committee met, pursuant to call, at 10:02 a.m., in Room
2175, Rayburn House Office Building, Hon. George Miller
[chairman of the committee] presiding.
Present: Miller, Kildee, Scott, Woolsey, Hinojosa,
McCarthy, Tierney, Kucinich, Wu, Davis of California, Bishop of
New York, Sarbanes, Sestak, Yarmuth, Courtney, Shea-Porter,
McKeon, Petri, Castle, Platts, Keller, Kline, Foxx, and Kuhl.
Staff present: Tylease Alli, Hearing Clerk; Alejandra Ceja,
Senior Budget/Appropriations Analyst; Denise Forte, Director of
Education Policy; David Hartzler, Systems Administrator; Liz
Hollis, Special Assistant to Staff Director; Lloyd Horwich,
Policy Advisor, Subcommittee on Early Childhood, Elementary and
Secretary Education; Fred Jones, Staff Assistant, Education;
Deborah Koolbeck, Policy Advisor, Subcommittee on Healthy
Families and Communities; Ann-Frances Lambert, Special
Assistant to Director of Education Policy; Sharon Lewis, Senior
Disability Policy Advisor; Stephanie Moore, General Counsel;
Alex Nock, Deputy Staff Director; Joe Novotny, Chief Clerk;
Rachel Racusen, Communications Director; Michele Varnhagen,
Labor Policy Director; Margaret Young, Staff Assistant,
Education; and Mark Zuckerman, Staff Director; Stephanie Arras,
Minority Legislative Assistant; James Bergeron, Minority Deputy
Director of Education and Human Services Policy; Cameron
Coursen, Minority Assistant Communications Director; Kirsten
Duncan, Minority Professional Staff Member; Susan Ross,
Minority Director of Education and Human Services Policy; Linda
Stevens, Minority Chief Clerk/Assistant to the General Counsel;
and Sally Stroup, Minority Staff Director.
Chairman Miller [presiding]. Good morning. A quorum being
present, the hearing will come to order.
And the chair will yield to himself for the purposes of
making an opening statement and then yield to the senior
Republican, Mr. McKeon.
Welcome to today's hearing on ``The Rising Cost of Food and
Its Impact on Federal Child Nutrition Programs.'' Today we will
take a look at soaring food costs and the toll that they are
taking on the nation's child nutrition programs.
From news headlines to the aisles in the grocery store, it
is impossible to ignore the fact that food costs have escalated
dramatically over the past year, making it more and more
difficult for American families to pay grocery bills and put
healthier foods on the table.
Given this tough economic climate, our federal child
nutrition programs have an increasingly important role to play
in providing children with healthy and nutritious foods while
at school, child care, and the summer camp programs.
All together, nearly 50 million children each year are
served by the National School Lunch Program, the School
Breakfast Program, the Child and Adult Care Food Program, and
the summer food service programs, which provide free meals and
snacks to children in low-income communities over the summer
vacation.
But with food prices continuing to rise drastically and no
signs of slowing down any time soon, it is becoming hard for
these programs to continue providing healthy, low-cost meals
that children will want to eat.
As demonstrated by the chart on the wall, the prices of
many staple foods are on the rise. The U.S. Department of
Agriculture reports that the cost of basic essentials like
bread, milk and cheese rose by a staggering 17 percent in 2007.
Yet, during this same period, the federal reimbursement
rate for child nutrition programs increased by only about 3 to
4 percent. Other than annual indexed adjustments, the
reimbursement rate for the National School Lunch Program has
remained stagnant for more than two decades.
With the fall fast approaching, these increases are forcing
school districts operating under already-tight budgets to make
some very tough choices. Many report having to use frozen
vegetables instead of fresh vegetables, processed wheat
products instead of whole grains, and prepackaged foods instead
of more nutritious entrees that involve additional preparation
costs.
In my own district in California, one school nutrition
director reported that produce is up nearly 10 percent, frozen
and dry foods are up nearly 20 percent, and dairy products are
up more than 20 percent.
Other districts report having to scale back the number of
meals they provide and cutting down on staff to reduce labor
costs. For many summer food programs currently struggling to
meet these higher costs, increased food prices has led to
serving fewer kids.
In the wake of waning federal support, states and school
districts are shouldering more of the cost of school meals. The
School Nutrition Association reports that school lunches cost
an average of over $2.90 to prepare. Even with the recent
adjustment announced this month, the federal subsidy for free
meals will still only reimburse schools for $2.57, leaving
school districts to cover the difference.
Schools have limited options to increase revenues or
decrease expenses. Again, as the chart on the wall
demonstrates, a recent USDA study showed that the full cost of
producing school meals exceeds reported costs by an average of
19 percent. According to SNA's estimates, U.S. schools will
incur a loss of about $5 million to $8 million each school day
in order to feed 30 million children.
Without sufficient federal resources, many states and
school districts often have to rely on the sales of popular but
less nutritious foods, like pizza, french fries and sodas, to
help generate the revenue needed to subsidize healthier meal
options.
In some cases, higher food prices are forcing some programs
to question whether they can continue participating in the
federal nutrition program all together, meaning that fewer
children may have access to healthy meals.
Today we will hear from several witnesses who have
firsthand knowledge of the impact of rising food costs on their
programs and the challenge of providing healthy meals. We will
also hear from officials at the U.S. Department of Agriculture,
the agency responsible for running our federal child nutrition
programs. And we will hear from the Grocery Manufacturers
Association.
I would like to thank all of you for joining us today and
look forward to hearing your testimony.
Providing children with access to healthier, nutritious
foods while at child care, school or summer camps is vital to
our efforts to help children learn, succeed and thrive. And at
a time when the U.S. faces staggering rates of childhood
obesity, helping young children develop healthy and nutritious
eating habits must be a top national priority.
And, with that, I would like to yield such time as he may
consume to Mr. McKeon, the senior Republican on the committee.
[The statement of Mr. Miller follows:]
Prepared Statement of Hon. George Miller, Chairman, Committee on
Education and Labor
Good Morning. Welcome to today's hearing on ``The Rising Costs of
Food and Its Impact on Federal Child Nutrition Programs.''
Today we will take a look at soaring food costs, and the toll
they're taking on our nation's child nutrition programs.
From news headlines to the aisles at the grocery store, it's
impossible to ignore the fact that food costs have escalated
dramatically over the past year--making it more and more difficult for
American families to pay the grocery bills and put healthier foods on
the table.
Given this tough economic climate, our federal child nutrition
programs have an increasingly important role to play in providing
children with healthy and nutritious foods while at school, childcare,
or summer camp programs.
Altogether, nearly fifty million children each year are served by
the National School Lunch Program, the School Breakfast Program, the
Child and Adult Care Food Program, and summer food service programs,
which provide free meals and snacks to children in low-income
communities over summer vacation.
But with food prices continuing to rise drastically--with no signs
of slowing down anytime soon--it is becoming tremendously hard for
these programs to continue providing healthy, low-cost meals that
children will want to eat.
As demonstrated by the chart on the wall, the prices of many staple
foods are on the rise. The U.S. Department of Agriculture reports that
the cost of basic essentials like bread, milk, and cheese rose by a
staggering 17 percent in 2007. Yet during this same period the federal
reimbursement rate for child nutrition programs increased by only about
3-4 percent. Other than annual indexed adjustments, the reimbursement
rate for the National School Lunch Program has remained stagnant for
more than two decades.
With the fall fast approaching, these increases are forcing school
districts operating under already-tight budgets to make some very tough
choices.
Many report having to use frozen vegetables instead of fresh
vegetables, processed wheat products instead of whole grains, and
prepackaged foods instead of more nutritious entrees that involve
additional preparation costs.
In my own district in California, one school nutrition director
reported that produce is up nearly 10 percent, frozen and dry foods are
up nearly 20 percent, and dairy products are up more than 20 percent.
Other districts report having to scale back the number of meals
they provide, and cutting down on staff to reduce labor costs.
For many summer food programs currently struggling to meet these
higher costs, increasing food prices has led to serving fewer kids.
In the wake of waning federal support, states and school districts
are shouldering more of the cost of school meals.
The School Nutrition Association reports that school lunches cost
an average of over $2.90 to prepare. Even with the recent adjustment
announced this month, the federal subsidy for free meals will still
only reimburse schools $2.57--leaving school districts to cover the
difference. Schools have limited options to increase revenue or
decrease expenses. As the chart on the wall demonstrates, a recent USDA
study showed that the full cost of producing school meals exceeds
reported costs by an average of 19 percent.
According to the SNA's estimates, U.S. schools will incur a loss of
$5 million to $8 million each school day in order to feed 30 million
children.
Without sufficient federal resources, many states and school
districts often have to rely on the sales of popular but less
nutritious foods, like pizza, french fries, and sodas, to help generate
the revenue needed to subsidize healthier meal options.
In some cases, higher food prices are forcing some programs to
question whether they can continue participating in the federal
nutrition program altogether--meaning that fewer kids may have access
to healthy meals.
Today we will hear from several witnesses who have firsthand
knowledge about the impact of rising food costs on their programs and
the challenge of providing healthy meals. We will also hear from
officials at the U.S. Department of Agriculture, the agency responsible
for running our federal child nutrition programs.
I'd like to thank all of you for joining us today and look forward
to hearing your thoughts.
Providing children with access to healthier, nutritious foods while
at childcare, school, or summer camp is vital to our efforts to help
all children learn, succeed and thrive. And at a time when the U.S.
faces staggering rates of childhood obesity, helping young children
develop healthy and nutritious eating habits must be a top national
priority.
Thank you.
______
Mr. McKeon. Thank you, Chairman Miller. And good morning.
We are here today to examine the rising cost of food and
its impact on federal child nutrition programs. The federal
child nutrition programs are vitally important to our efforts
to promote good health, prevent childhood obesity, and address
hunger and food insecurity.
From the WIC program that helps provide nutritious foods to
pregnant women and young children, to the National School Lunch
and Breakfast Programs which provide healthy meals and snacks
to an estimated 31 million students, these programs make a real
difference in schools and communities where children struggle
with hunger and poor nutrition.
Federal child nutrition programs account for fully one-
quarter of the U.S. Department of Agriculture's domestic food
and nutrition assistance outlays. In fiscal year 2007, USDA
spent $13.4 billion on these programs that provide a
nutritional safety net for children.
Unfortunately, that investment is being undermined by
rapidly rising food costs, which are driven in large part by
exploding energy costs. Make no mistake about it: A major
factor behind rising food prices in the federal child nutrition
programs and on supermarket shelves around the country is the
cost of fuel and the impact of America's energy policies.
I am glad we are here today to discuss the impact of rising
food prices on child nutrition programs, but we shouldn't be
having this conversation in a vacuum. We cannot afford to
ignore the role of energy policy in the food cost equation.
We have energy policies, or a lack thereof, that are
driving up prices at every stage of the process. From greater
competition for land and increased feed costs driven by ethanol
mandates to the higher cost of transporting foods and stocking
grocery shelves and school pantries because of the price at the
pump, food prices are inextricably linked to energy prices.
Given these facts, one would assume that the House would be
acting aggressively to tackle high energy prices. After all,
there is no shortage of ideas about how to rein in energy costs
and put America on a path to energy independence.
Before the Memorial Day break, House Republicans outlined
an all-of-the-above energy plan to increase production of
American-made energy, encourage more conservation and
efficiency, and promote the use of alternative fuels.
Republicans are also signing discharge petitions so that
important energy reforms that remain bottled up in committees
are finally given the up-or-down vote they deserve.
So what is the majority doing about the energy crisis that
is driving up food costs and making it more difficult to combat
hunger in our schools? According to an article that appeared in
The Hill newspaper just yesterday, ``Worried that a floor vote
on any energy-related measure would trigger a Republican-forced
vote on domestic drilling, the leadership has scrubbed the
floor schedule of the energy legislation that it vowed to
tackle after the Fourth of July recess.''
That is unconscionable, and the American people agree. Poll
after poll has shown that Americans agree and recognize the
need for comprehensive energy solutions.
And a growing majority of Americans now support increased
domestic production. According to a recent CNN poll, 73 percent
of Americans support offshore drilling for oil and natural gas
in the U.S. waters in order to increase the availability of
American-made energy. Yet the Democratic Congress continues to
throw up roadblocks to real energy reform.
I am deeply concerned about food prices. The federal child
nutrition programs serve some of the most vulnerable members of
our society, and we cannot allow high food prices to prevent us
from giving nutritional support to those in need.
It is time to have a real conversation about America's
energy policies, and it is time to take real action to bring
down prices. As today's hearing will demonstrate, the cost
being borne by our children, families, schools and communities
is just too great.
I yield back.
[The statement of Mr. McKeon follows:]
Prepared Statement of Hon. Howard P. ``Buck'' McKeon, Senior Republican
Member, Committee on Education and Labor
Thank you Chairman Miller, and good morning. We're here today to
examine the rising cost of food and its impact on federal child
nutrition programs.
The federal child nutrition programs are vitally important to our
efforts to promote good health, prevent childhood obesity, and address
hunger and food insecurity. From the WIC program that helps provide
nutritious foods to pregnant women and young children to the National
School Lunch and Breakfast Programs, which provide healthy meals and
snacks to an estimated 31 million students, these programs make a real
difference in schools and communities where children struggle with
hunger and poor nutrition.
Federal child nutrition programs account for fully one-quarter of
the U.S. Department of Agriculture's domestic food and nutrition
assistance outlays. In fiscal year 2007, USDA spent $13.4 billion on
these programs that provide a nutritional safety net for children.
Unfortunately, that investment is being undermined by rapidly rising
food costs, which are driven in large part by exploding energy costs.
Make no mistake about it, a major factor behind rising food prices in
the federal child nutrition programs and on supermarket shelves around
the country is the cost of fuel and the impact of America's energy
policies.
I'm glad we're here today to discuss the impact of rising food
prices on child nutrition programs. But we shouldn't be having this
conversation in a vacuum.
We cannot afford to ignore the role of energy policy in the food
cost equation. We have energy policies--or a lack thereof--that are
driving up prices at every stage of the process. From greater
competition for land and increased feed costs driven by ethanol
mandates to the higher cost of transporting foods and stocking grocery
shelves and school pantries because of the price at the pump, food
prices are inextricably linked to energy prices.
Given these facts, one would assume that the House would be acting
aggressively to tackle high energy prices. After all, there's no
shortage of ideas about how to rein in energy costs and put America on
a path to energy independence.
Before the Memorial Day break, House Republicans outlined an ``all
of the above'' energy plan to increase production of American-made
energy, encourage more conservation and efficiency, and promote the use
of alternative fuels.
Republicans are also signing discharge petitions so that important
energy reforms that remain bottled up in committees are finally given
the up-or-down vote they deserve.
So what is the majority doing about the energy crisis that is
driving up food costs and making it more difficult to combat hunger in
our schools? According to an article that appeared in The Hill
newspaper just yesterday--and I quote--``Worried that a floor vote on
any energy-related measure would trigger a Republican-forced vote on
domestic drilling, the leadership has scrubbed the floor schedule of
the energy legislation that it vowed to tackle after the Fourth of July
recess.''
This is unconscionable, and the American people agree. Poll after
poll has shown that Americans recognize the need for comprehensive
energy solutions, and a growing majority of Americans now support
increased domestic production. According to a recent CNN poll, 73
percent of Americans support offshore drilling for oil and natural gas
in U.S. waters in order to increase the availability of American-made
energy. Yet the Democratic Congress continues to throw up road blocks
to real energy reform.
I'm deeply concerned about food prices. The federal child nutrition
programs serve some of the most vulnerable members of our society, and
we cannot allow high food prices to prevent us from giving nutritional
support to those in need.
It's time to have a real conversation about America's energy
policies, and it's time to take real action to bring down prices. As
today's hearing will demonstrate, the cost being borne by our children,
families, schools, and communities is just too great.
I yield back.
______
Chairman Miller. I thank the gentleman for his statement.
And pursuant to committee rule 12-A, any member may submit
an opening statement in writing, which will be made part of the
permanent record.
And, again, I would like to welcome our panel that is here
today to share your thoughts and your expertise with the
committee.
And we will begin with Dr. Leibtag, who is an economist
with the U.S. Department of Agriculture's Economic Research
Service. Mr. Leibtag researches retail food prices and the
dynamics of retail food marketing. And his current projects
include the CPI for food forecasting and analysis, research on
food prices and food purchase behavior, and the supermarket
characteristics.
Kate Houston is the USDA's deputy undersecretary for food,
nutrition and consumer services. Ms. Houston is responsible for
developing and promoting science-based dietary guidance in
administering of USDA's 15 nutrition assistance programs.
Scott Faber is the vice president for federal affairs for
the Grocery Manufacturers Association. Prior to joining the
Grocery Manufacturers Association, Mr. Faber was an expert on
agriculture policy for the Environmental Defense Fund.
Katie Wilson is presently serving as the president-elect of
the School Nutrition Association. She has been a school
nutrition director in Wisconsin for 18 years.
Pavel Matustik is going to be introduced by Mr. McKeon.
Mr. McKeon. Thank you, Mr. Chairman.
I appreciate the opportunity to introduce our next witness.
Pavel Matustik is chief administrative officer for the Santa
Clarita Valley School Food Services Agency in my congressional
district. The agency provides food service for five local
school districts and is the lead agency for the California
Commodities SUPER Co-Op.
Pavel came to the United States in 1982 after his escape
from the formerly communist country of Czechoslovakia. He has
more than 20 years' experience in school food services, having
earned certification in hotel and restaurant management and
been credentialed by the School Nutrition Association.
Pavel served as the president for the California School
Food Services Association and is a recipient of the 2004 Fame
Leadership Award, the 2006 Gold Fame Best Director Award, and
the 2007 Silver Plate Award. It is great having a celebrity in
our district.
He presently serves on the executive board of the American
Commodity Distribution Association.
Welcome, Pavel.
Chairman Miller. Thank you.
I will now recognize Mrs. McCarthy for the purpose of an
introduction.
Mrs. McCarthy. I want to thank the chairman for this
hearing, and I am pleased that I have the opportunity to
introduce a constituent of mine, Mr. James Harnett.
He comes to D.C. from Mineola, New York, where he is the
president and CEO of the Family and Children's Association,
which serves the people of Long Island.
The Family and Children's Association offers 40 programs to
Long Islanders, including a summer food program which feeds
school-aged children. This program is vital for many of the
kids in my district.
However, this is not his first position in service to
others. Mr. Harnett's legacy of service begins with his service
in the Peace Corps. He continued through his service in
nonprofits seeking to improve the lives of honorable people in
New York, most often in management positions. He has even
served as administrator of the Department of Pediatrics at
Columbia University.
Immediately prior to joining Family and Children's
Association, he served as the executive vice president, COO,
and secretary of cooperation of Covenant House, an organization
dedicated to servicing runaway and homeless youth.
I am glad that he is here today to tell us the story of
what it is like to be an on-the-ground provider of meals to
children and the impact of increased food prices on his
operation.
I look forward to learning about these programs from you
today. And welcome.
I also want to mention that, in the past, he has raised
over $100,000 so that he could feed the children of Long
Island. And this happened way before the gas prices went up.
And we cannot drill our way out of this problem.
Thank you.
Chairman Miller. It is a pleasure for me to introduce Paula
James from my congressional district, who is mainly here
because she is the director of the Contra Costa Child Care
Council Child Health and Nutrition Program.
She serves on the board of the national Child and Adult
Care Food Program Forum and chairs the California Child Care
Food Program Roundtable and serves on the California Department
of Education Child Nutrition Advisory Council.
Welcome to the committee, and we look forward to your
testimony and all of our witnesses.
We are going to begin, Dr. Leibtag, with you. When you
begin, a green light in front of you is going to go on. We give
you 5 minutes here. And with 1 minute remaining, a yellow light
will go on. We would like you to see if you could bring your
testimony to a conclusion in a coherent fashion that you are
comfortable with. And then we will have time for questions from
the committee when all of the panelists have testified.
Again, welcome, and thank you for your time and your
expertise.
STATEMENT OF EPHRAIM LEIBTAG, ECONOMIST, U.S. DEPARTMENT OF
AGRICULTURE'S ECONOMIC RESEARCH SERVICE
Mr. Leibtag. Good morning, Mr. Chairman and members of the
committee. My name is Ephraim Leibtag. I work as an economist
with the USDA's Economic Research Service. My main area of
expertise is retail food prices and the dynamics of retail food
markets. And I appreciate the opportunity to speak to you today
about recent trends in U.S. retail food prices.
In 2008, we project the Consumer Price Index for all food
will increase 4.5 to 5.5 percent, the largest increase since
1990. This acceleration in food price inflation is primarily
due to higher food commodity input and energy costs.
The main factors behind higher food commodity costs include
stronger global demand for food, increased U.S. agricultural
exports resulting from that stronger demand, weather-related
production problems in some areas of the world, and the
increased use of some food commodities such as corn and
soybeans for bioenergy uses.
To better analyze recent trends, we need to understand how
food prices and price changes are measured. Food prices are
measured by the federal government through monthly collection
of prices from a representative group of food stores and food
service establishments.
The All-Items CPI is composed of a number of sub-indexes,
including the Food CPI. Within the Food CPI, food indexes
reported for food at home, which consists of foods sold in
retail outlets, and food away from home, which consists of
meals, entrees and other prepared foods sold in eating and
drinking establishments and noncommercial food service outlets.
To obtain the Food CPI, the separate indices of the at-home and
away-from-home segments are combined, using their respective
expenditure shares.
Our current forecasts predict that food-at-home prices will
increase 5 to 6 percent this year, while food-away-from-home
prices are forecasted to increase 3.5 to 4.5 percent in 2008.
As a point of comparison, the All-Foods CPI increased 4
percent between 2006 and 2007, with food-at-home prices
increasing 4.2 percent and food-away-from-home prices
increasing 3.6 percent. The 15-year average increase in food
prices prior to 2007 was 2.5 percent per year.
As I mentioned earlier, food commodity prices have been
rising due to a number of factors. For corn specifically, these
factors helped push prices from under $2 per bushel in 2005 to
$3.40 in 2007 and currently over $7 as of the middle of this
year. This is just one example of how commodity prices have
been increasing.
These higher food commodity costs do pass through to retail
prices but at a lower rate. In general, retail food prices are
much less volatile than farm-level prices and tend to rise by a
fraction of the change in farm prices. The magnitude of
response depends on both the retailing costs beyond the raw
food ingredients and the nature of competition in retail food
markets.
Turning now to some specific retail food categories, fresh
fruit and vegetables, meat and poultry and eggs have relatively
less processing and packaging than other commodities. Changes
in farm-level prices of these products have a larger impact on
retail prices as a result.
There are also seasonality factors contributing to
volatility of produce prices, whose supply and price variation
are influenced by extremes of weather and growing conditions.
Because most produce commodities are highly perishable, supply
and prices are more sensitive to adverse growing conditions.
In contrast to raw commodities, the farm value share in
many processed foods is quite small, and this moderates the
effect of rising prices. For example, an 18-ounce box of
cornflakes contains about 13 ounces of corn. Historically, the
actual value of corn represented in the box of cornflakes was
about 1 percent of the cereal price. The almost 50 percent
increase in corn prices in 2007 would be expected to raise the
price of a box of cereal by about .5 percent, assuming no other
cost increases. This implies that the near 100 percent increase
in corn prices from 2007 to 2008 would increase the cornflakes
price by about 1 percent.
Food service operators sometimes look at the Producer Price
Index, the PPI, since it measures prices received by
processors, suppliers and wholesalers. Both farm and processed
products are included in the PPI, and it more closely
represents the price change in food products purchased by food
retailers and food service operators. For some food
commodities, the PPI is more volatile than the consumer price
indexes for those items.
Food service operators purchase both products with a high
farm value component, such as milk, as well as more highly
processed foods having lower commodity or farm value, such as
cereal or pizza. Suppliers to the food-away-from-home segment
offer both traditional foods requiring additional preparation,
as well as highly processed, value-added foods such as heat-
and-serve entrees.
So a good understanding of all of these price index
measures is important when trying to predict future food costs.
Looking ahead, the department's current long-term
projections indicate that retail food price inflation will
gradually moderate over the next several years.
Continued expansion of biofuels production will likely
maintain corn and soybean prices at historically high levels,
and livestock producers may adjust to the increase in feed
costs by reducing production, leading to higher retail prices
for meat and poultry products in the longer term.
However, in addition, global agricultural production is
expected to rebound, especially for wheat, relieving some of
the pressure on retail food prices for cereal and bakery goods.
Of course, future increases in retail food prices also
depend heavily on energy prices and other food marketing costs
that are independent of the food commodity market.
Mr. Chairman, this concludes my statement. I will be glad
to answer any questions the committee may have.
[The statement of Mr. Leibtag follows:]
Prepared Statement of Dr. Ephraim Leibtag, Research Economist,
U.S. Department of Agriculture
Mr. Chairman and Members of the Committee, my name is Ephraim
Leibtag and I am an economist with the USDA's Economic Research Service
researching retail food prices and the dynamics of retail food markets.
I appreciate the opportunity to speak to you today about trends in U.S.
food prices.
In 2008, the Consumer Price Index (CPI) for all food is projected
to increase 4.5 to 5.5 percent, as retail prices reflect higher
commodity and energy costs. The main factors behind higher food
commodity costs include stronger global demand for food, increased U.S.
agricultural exports resulting from stronger demand, weather-related
production problems in some areas of the world, and the increased use
of some food commodities, such as corn, for bioenergy uses.
Food-at-home prices are forecast to increase 5.0 to 6.0 percent,
while food-away-from-home prices are forecast to increase 3.5 to 4.5
percent in 2008. The all-food CPI increased 4.0 percent between 2006
and 2007, the highest annual increase since 1990. Food-at-home prices,
led by eggs, dairy, and poultry prices, increased 4.2 percent, while
food-away-from-home prices rose 3.6 percent in 2007.
Because a full assessment of crop damage was not available at the
time of this forecast, this update does not explicitly account for
potentially higher corn and soybean prices due to crop damage from
recent flooding in the Midwest. Estimates of the impact of potential
supply disruptions on food prices will be included in this data series
once an assessment of the flood losses becomes available.
Measuring Food Price Change
To better understand recent trends, we need to know how food prices
and price changes are measured. Food prices are measured by the Federal
government through monthly collection of prices from a representative
group of food-stores and foodservice establishments. Items selected for
price measurement cover all consumer goods and services.
The Federal government has two basic measures of price change, both
of which compare prices in a base year to prices in a current year: The
Consumer Price Index (CPI), and the Producer Price Index (PPI). For
products purchased by consumers, the All-Items CPI is used to represent
average increases or decreases in prices paid for retail goods and
services. The All-Items CPI is composed of a number of sub indexes,
including the Food CPI.
There are separate food indexes reported for food-at-home, which
consists of food sold in retail outlets, and food-away-from-home, which
consists of meals, entrees, and other prepared foods sold in eating and
drinking establishments, and non-commercial (institutional) foodservice
outlets. To obtain the Food CPI, the separate indices of the at-home
and away-from-home segments are combined, using their respective
expenditure shares.
Food accounts for 13.8 percent of all expenditures in the All-Items
CPI. Of total expenditures, food-at-home accounts for 7.66 percent
while away-from-home accounts for the remaining 6.17 percent.
May 2008 Retail Food Prices Compared to Last Year
The CPI for all food in May 2008 is 5.1 percent higher than the May
2007 level. The food-at-home index is 5.8 percent above last May, while
the food-away-from-home index is 4.3 percent above last May. The all-
items CPI is currently 4.2 percent above the May 2007 level.
Beef prices are 1.5 percent above last May, as higher energy and
feed costs have begun to increase beef prices. Pork prices, while
increasing in recent months, are down 0.6 percent from last May's
level. Strong short-term pork supplies have been the main factor behind
recent retail price declines, but pork prices may rise over the next 2
years as current supplies are sold and future production slows due to
higher production costs. Poultry prices are up 4.5 percent from last
year at this time. Higher feed and energy costs in 2007 and early 2008
have caused poultry prices to rise faster than normal over the past 18
months.
Egg prices are 18.2 percent above the May 2007 level. Increased
demand overseas and higher prices for chicken feed lead to higher egg
prices at grocery stores. Dairy prices are up 11.0 percent from the May
2007 level. Within the dairy category, prices changed as follows: milk
prices are 10.2 percent above last May's prices; cheese prices are 14.0
percent above last May's level; ice cream and related product prices
are 5.9 percent above last May; and butter prices are 3.8 percent above
last May.
Fresh fruit prices are up 4.7 percent from last year at this time,
with apple prices up 7.4 percent and banana prices up 21.7 percent,
while orange prices are down 15.3 percent. Since last year at this
time, fresh vegetable prices are up 1.8 percent, with lettuce prices up
1.0 percent, tomato prices up 4.0 percent, potato prices up 3.5
percent, and other fresh vegetable prices up 0.5 percent.
Cereals and bakery product prices are up 10.5 percent from last
year at this time as higher wheat, corn, and energy prices have pushed
up production costs for these products. Sugar and sweets prices are 5.5
percent above last May. Within the nonalcoholic beverages category,
carbonated drink prices are up 2.8 percent from May 2007; coffee prices
are 8.5 percent higher than last May; and non-frozen noncarbonated
juices and drinks prices 7.7 percent above the May 2007 level.
Why Higher Food Prices?
Record U.S. trade, driven by economic growth in developing
countries and favorable exchange rates, combined with tight global
grain supplies, resulted in record or near-record prices for corn,
wheat, soybeans, and other food and feed grains in 2007 and 2008. For
corn, these factors, along with increased demand for ethanol, helped
push prices from under $2 per bushel in 2005 to $3.40 per bushel in
2007, and over $7 as of the middle of this year. Higher corn prices
motivated farmers to increase corn acreage in 2007 at the expense of
other crops, such as soybeans and cotton, raising their prices as well.
What effect do these higher commodity costs have on retail food
prices? In general, retail food prices are much less volatile than
farm-level prices and tend to rise by a fraction of the change in farm
prices. The magnitude of response depends on both the retailing costs
beyond the raw food ingredients and the nature of competition in retail
food markets.
Several key factors influence how an input cost increase affects
the prices of food under conditions of competition. For a given
increase in an input's cost, the larger will be an increase in the food
product's price when:
The share of the input in the total cost of producing food
products is larger.
The input has fewer good substitutes in the food
production process--that is, few other inputs or processes could be
used to produce the food product.
Consumers have few good substitutes for the food product,
in which case consumers do not decrease purchases substantially when
the price is higher.
Prices are expected to remain high for a long period of
time.
Retail prices for fresh fruits, vegetables, and eggs have a
relatively high farm value share compared to other commodities. Changes
in farm-level prices of these products have a larger impact on retail
prices as a result. There are also seasonality factors contributing to
volatility of produce (fresh fruits and vegetables) prices. Produce
supply and price variation are also influenced by extremes of weather
and growing conditions, such as droughts, floods, freezes, and pests.
Because most produce commodities are highly perishable, supply and
prices are highly sensitive to adverse growing conditions.
In contrast to raw commodities, the farm value share in many
processed products is quite small, which moderates the effect of rising
prices. For example, an 18-ounce box of corn flakes contains about 12.9
ounces of milled field corn. When field corn is priced at $2.28 per
bushel (the 20-year average), the actual value of corn represented in
the box of corn flakes is about 3.3 cents (1 bushel = 56 pounds). (The
remainder is packaging, processing, advertising, transportation, and
other costs.) At $3.40 per bushel, the average price in 2007, the value
is about 4.9 cents. The 49-percent increase in corn prices would be
expected to raise the price of a box of corn flakes by about 1.6 cents,
or 0.5 percent, assuming no other cost increases.
Prices Paid by Food Service
The Producer Price Index, measures prices received by processors,
suppliers, and wholesalers, depending on the product. Both farm and
processed products are included in the PPI. Similar to the CPI, the
indexes are reported monthly and annually. The PPI should more closely
represent the price change in food products purchased by food retailers
and food service operators. For many food commodities, the PPI is much
more volatile compared with consumer price indexes.
Food service operators purchase both products with a high farm
value component, such as milk or apple juice, as well as more highly
processed foods having lower commodity/farm value, such as cereal or
pizza. Suppliers to the food-away-from-home segment offer both
traditional foods requiring additional preparation, as well as highly
processed, value-added foods such as heat-and-serve entrees.
Looking Ahead
The Department's current long-term projections indicate that retail
food price inflation will gradually moderate over the next several
years. Continued expansion of biofuels production will likely maintain
corn and soybean prices at historically high levels and livestock
producers will adjust to the increase in feed costs by reducing
production, leading to higher retail prices for beef and pork in the
longer term. In contrast, future upward movements in retail dairy
product prices may be limited following the strong increase in 2007. In
addition, global agricultural production is expected to rebound,
especially for wheat, relieving some of the pressure on retail food
prices for cereal and bakery products. Of course, future increases in
retail food prices depend heavily on energy prices and other food
marketing costs.
Mr. Chairman, this concludes my statement. I will be glad to answer
any questions the Committee may have.
______
Chairman Miller. Thank you.
Ms. Houston?
STATEMENT OF KATE HOUSTON, DEPUTY UNDER SECRETARY FOR FOOD,
NUTRITION AND CONSUMER SERVICES, U.S. DEPARTMENT OF AGRICULTURE
Ms. Houston. Thank you, Mr. Chairman and members of the
committee. I appreciate the opportunity to join today's
important discussion about the impact of rising food costs on
federal child nutrition programs.
The child nutrition programs provide nutritional assistance
to children in schools, child-care settings, as well as summer
activities sites. They strengthen our country by safeguarding
the health and well-being of the nation's children.
Federal support is critical to the success of these
programs. This administration has continually demonstrated a
strong commitment. For fiscal year 2009, the president has
requested $14.5 billion for child nutrition programs.
The school meal programs are the cornerstone of the child
nutrition programs. Each day, the National School Lunch and
Breakfast Programs serve more than 31 million school meals,
designed to meet the dietary guidelines.
Today I would like to briefly describe how USDA provides
federal support for these programs.
The meals programs are financed through a variety of
revenue streams, which include federal cash reimbursements and
commodity donations, student payments for paid and reduced-
price meals, revenue from a la carte sales, state and in some
cases local funding.
Federal reimbursements are an important source of support,
contributing to just over half of the total resources available
to school food authorities.
Schools receive cash reimbursements on a per-meal basis.
Reimbursements are established by law, and these payments are
adjusted annually to reflect changes in food and labor costs
based on the Food Away From Home series of the Consumer Price
Index.
The cash reimbursement rates for the school year 2009 were
published this week in the Federal Register. The adjusted
reimbursement rates for schools and child-care institutions
will reflect a 4.272 percent increase over the preceding school
year.
Most schools with a relatively high proportion of low-
income students will receive an additional 10 cents or $2.59
for each free meal served, an additional 7 cents or $1.68 for
each free breakfast served in the upcoming school year.
In addition to cash reimbursements, schools participating
in the School Lunch Program receive USDA-donated food for each
lunch served. On the average day, the commodity entitlement
contributes approximately 15 to 20 percent of the food served
in the school lunch line. The value of donated commodities to
be provided in 2009 is 20.75 cents per meal. This is an 11
percent increase over the last school year.
In total, these adjustments will add another $450 million
to the cash reimbursements and commodity entitlements for
school year 2009. That is including our projected increase in
participation for school year 2009.
While the annual adjustments in the cash reimbursements and
commodity entitlements help schools mitigate the effects of
rising costs over time, we will hear today how near-term
increases in food costs are creating challenges for many
schools and other program providers.
It is important to note, however, that food costs are just
one part of the total picture. They account for well under half
of all the food service operational costs.
Like families at home, schools face a real challenge in
providing quality meals on a tight budget. Now more than ever
local program operators must examine opportunities to
effectively manage resources and balance operating costs with
revenue. USDA is committed to assist schools with these
efforts.
For example, we help schools to maximize use of the federal
commodity entitlement. USDA's donated commodities allow schools
to allocate a greater share of their cash revenues to other
operating expenses. We also provide training and technical
assistance in procurement and contracting practices to assist
schools in obtaining quality products and services at the
lowest possible unit cost.
As schools seek to mitigate rising food costs, it is
critical that program operators maintain the nutritional
quality of the meals made available to children. FNS recently
released a fact sheet providing practical suggestions for
strategies that may be helpful in controlling costs without
compromising nutrition.
School districts might also explore opportunities to
increase revenues by examining the amounts of charges for paid
meals and a la carte items and implementing marketing
strategies to increase meal service participation. Schools
establish these prices and can make adjustments as necessary to
ensure that prices reflect the value of meals and other foods
sold and contribute appropriately to the bottom line of food
service operations.
I will end with a little bit of good news. Schools will
soon benefit from additional commodity resources provided in
the 2008 farm bill. The new law incrementally increases the
amounts of resources USDA will obligate for the purchase of
fruit, vegetables and nuts from $393 million in 2009 up to $406
million in 2012 and each year thereafter. We anticipate a
significant portion of these additional resources will be
directed toward schools.
Mr. Chairman, the USDA recognizes that rising food costs
challenge the food security and dietary quality of low-income
individuals and households. At times when people are facing
economic challenges, our programs are available to provide
nutrition assistance, and the school meals programs are a
critical component of the nation's nutrition safety net.
The USDA is committed to continue our work with our state
and local partners for the effective and efficient operation of
child nutrition programs. We want to ensure that our children
have access to healthy meals.
I appreciate the opportunity to testify and look forward to
any questions you may have.
[The statement of Ms. Houston follows:]
Prepared Statement of Kate Houston, Deputy Under Secretary, Food,
Nutrition and Consumer Services, U.S. Department of Agriculture
Good morning, Mr. Chairman and Members of the Committee. I am Kate
Houston, Deputy Under Secretary for Food, Nutrition and Consumer
Services (FNCS) at the U.S. Department of Agriculture (USDA). Thank you
for the opportunity to join you this morning to discuss the impact of
rising food costs on Federal Child Nutrition Programs.
USDA's Food and Nutrition Services (FNS) is responsible for
administering 15 Federal nutrition assistance programs, which serve as
the Nation's first line of defense against hunger and reach one in five
Americans every year. At times when people are facing economic
challenges, our programs are there to provide individuals and
households with nutrition assistance. The Child Nutrition Programs play
a vital role in the Federal nutrition safety net.
This Administration continues to demonstrate strong commitment to
the nutrition assistance programs. Since 2001, funding for the
nutrition assistance programs increased more than 76 percent to $60.1
billion in fiscal year 2008, and accounts for over half of USDA's
annual budget. In fiscal year 2009, the President's budget requested
$14.5 billion for the Child Nutrition Programs.
The school meals programs are the cornerstone of our Child
Nutrition Programs. Each school day, the National School Lunch Program
(NSLP) and School Breakfast Program (SBP) serve more than 31 million
school children of all economic backgrounds with well-balanced, healthy
meals designed to meet the Dietary Guidelines for Americans. The school
meals programs strengthen our country by safeguarding the health and
well-being of the Nation's children.
The school meals programs are largely financed through Federal cash
reimbursements and commodity donations. Federal assistance for school
meals is an important source of revenue, but is not intended to be the
only source of such support to schools. Federal assistance constitutes
just over half of the revenue received by school food authorities.
Student payments for paid and reduced price meals, revenues from a la
carte sales, and State and local funding provide the balance of funds.
In the current environment, the challenge facing school meal
service is to ensure that all of these resources are being used to
their fullest potential to support the service of healthy school meals.
We have, and will continue to, assist schools to make the most
effective use of the full range of available resources. We work with
State and school food service authorities to promote the most effective
use of Federal commodity dollars. Our commodity support allows schools
to take advantage of the Federal government's large volume purchasing
power, often allowing the procurement of commodities at a lower unit
cost than if a school were purchasing product on its own. We also
provide training and technical assistance in procurement and effective
contracting practices to assist schools in obtaining quality products
and services at the lowest cost.
While much of today's discussion may focus on the Federal support
for school meals--and I will now describe how the Federal reimbursement
process works--it is important to keep in mind that this is only one of
the resources available for supporting the school meal service.
Schools receive reimbursements on a per meal basis. School meal
reimbursements are established by law, and as required by law, the
payments are adjusted each year to reflect changes in food and labor
costs based on the Food Away From Home series of the Consumer Price
Index for All Urban Consumers (CPI-U). The CPI-U is a measure of the
average change over time in the prices of consumer items--goods and
services that people buy for day to-day living, based on data on the
prices of thousands of items collected by the Bureau of Labor
Statistics. The CPI-U is the accepted index used by a number of
government programs to adjust the value of payments they provide to
reflect the real cost of goods and services. The Food Away From Home
series reflects changes in the cost of commercial meal service and is
constructed from meal pricing data, which include food and labor costs
gathered from restaurants and other food service establishments
including workplace cafeterias and vending machines. Annual adjustments
in the Food Away From Home series of the CPI-U are based on a twelve
month cycle ending in May of the current year.
Public and nonprofit private schools and residential child care
institutions that participate in the NSLP and SBP receive cash
reimbursements from the USDA for each meal served at the free, reduced-
price and paid levels. The reimbursement rates or National Average
Payments (NAPs) for lunches are adjusted annually pursuant to section 4
and section 11 of the Richard B. Russell National School Lunch Act. The
rates for breakfasts are adjusted annually pursuant to section 4 of the
Child Nutrition Act of 1966. The National School Lunch Act established
a minimum reimbursement rate of 10.5 cents for all lunches served to
children as part of the NSLP in 1981. The rate is adjusted annually
using the CPI-U for Food Away From Home as prescribed by law, and is 23
cents for school year 2007-2008. This base rate is the full amount for
paid meals and a portion of the reimbursement rate for the free and
reduced price lunches. Section 11 of the law provides additional
funding (Special Assistance) for free and reduced price meals. The rate
for free lunches in School Year 2007-2008 is $2.47. The NAP for each
reduced price lunch served is 40 cents less than the reimbursement rate
for the free lunch. The statutes also require that the annual
adjustment of these rates, which is published in July, be rounded down
to the nearest cent.
The reimbursement rates vary depending on a school's economic
circumstances and location. Schools with higher proportions of low-
income students, or greater than 60 percent of students determined to
be eligible for free or reduced price meals, receive higher
reimbursement rates at lunch. At breakfast, schools in which 40 percent
or more of the students are low-income receive a higher reimbursement
rate for meals served. Schools in Alaska and Hawaii receive a higher
reimbursement rate because of higher cost of living.
The NAPs for the upcoming school year, July 1, 2008 to June 30,
2009, were published in the Federal Register on July 7, 2008. The
reimbursement rates for schools and residential child care institutions
for SY 2009 (July 1, 2008 through June 30, 2009) will reflect a 4.272
percent increase in the CPI-U Food Away from Home during the 12-month
period May 2007 to May 2008. Most schools with a relatively high
proportion of low-income students will receive $2.59 for each free
lunch served and $1.68 for each free breakfast served in school year
2009 compared to $2.49 for each free lunch and $1.61 for each free
breakfast served in school year 2008.
Assuming schools serve a comparable number of school meals in the
2009 school year as were served in 2008, about $400 million in
additional reimbursements will be distributed. USDA's budget
projections for 2009 reflect this increase in reimbursement as well as
expected growth in program participation.
In addition to cash reimbursements, schools participating in the
NSLP receive a USDA commodity entitlement for each lunch served. The
value of the commodity entitlement that will be provided in school year
2009 is 20.75 cents per meal, an 11 percent increase compared to 18.75
cents in school year 2008. On an average day, the commodity entitlement
contributes approximately 15 to 20 percent of the product served on the
school lunch line. The remaining 80 to 85 percent is purchased from
commercial markets using the cash assistance provided by USDA, funds
provided by State and local governments, children's payments for
reduced price and paid lunches, proceeds from vending machines,
catering activities and other funds earned by or provided to the school
food service.
Recent data from a USDA study released in April 2008 indicate that
over time combined Federal cash and commodity reimbursements have kept
pace with costs accrued by school food service for the production of
school meals. According to the study, on average, Federal
reimbursements more than cover the costs incurred by school food
service to produce school lunches. The annual adjustments in the cash
and commodity reimbursement rates help schools deal with rising costs
over time; however, near-term cost increases can be challenging to
schools.
To address financial pressures resulting from higher costs,
individual school districts make a number of decisions that influence
the cost of operating the school meals programs. For example, schools
may choose to examine procurement practices and other opportunities to
maximize use of available resources, and to gain greater administrative
efficiencies in their food service operations.
Decisions by school districts also affect their ability to balance
costs with revenue. One facet schools may choose to examine is the
amount charged for a paid meal. According to the most recent available
research data from the USDA School Lunch and Breakfast Cost Study II,
on average, the combination of reimbursements and student charges for
paid meals equals only 82 percent of the reimbursement that schools
receive to support the service of a free meal. This suggests that in
some schools, Federal reimbursement for meals served to low income
students are effectively subsidizing meals served to higher income
students. Another area schools may choose to review is their charges
for a la carte items. Schools establish these prices and can make
adjustments as necessary to ensure that a la carte contributes
appropriately to the cost of the food service operations.
USDA supports schools with guidance and training to assist them in
responding to tight budgets and rising costs without compromising the
nutritional quality of school meals. FNS recently released ``Meeting
the Challenge of Rising Food Costs,'' a fact sheet providing practical
suggestions for strategies that may be helpful in controlling costs.
This fact sheet also contains links to other financial management
resources which may be helpful to schools.
Furthermore, schools will benefit from new funding provided in the
Farm Bill. The Farm Bill increased the amount of funds for purchases of
fruits, vegetables, and nuts from $200 million in FY 2007 to $390
million in FY 2008, $393 million in 2009, $399 million in 2010, $403
million in 2012, and $406 million each year thereafter. A significant
portion of the additional purchases of these products will be directed
to schools, with the remaining funds used for other domestic nutrition
assistance programs.
In conclusion, I want to reiterate USDA's commitment to help ensure
that no one in America goes hungry. We recognize that our nutrition
assistance programs, especially the NSLP, are critical to ensuring our
children get a good healthy meal. State and local agencies play a vital
role in ensuring the effective and efficient preparation of nutritious
school meals, the healthier alternative, for our children. We will
continue to work with our State partners and local school districts to
identify creative ways to maximize their resources. I appreciate the
opportunity to testify before the Committee today and would be happy to
answer any questions.
______
Chairman Miller. Thank you.
Mr. Faber?
STATEMENT OF SCOTT FABER, VICE PRESIDENT FOR FEDERAL AFFAIRS,
GROCERY MANUFACTURERS ASSOCIATION
Mr. Faber. Thank you, Mr. Chairman.
As we have already heard, food prices are rising at twice
the rate of inflation, or the fastest level in almost two
decades. And there are many factors contributing to the
increased price of commodities and ultimately the increased
price of food, including poor weather, export restrictions put
in place by other nations, rising demand for food globally,
especially in places like China and India, the weak dollar,
higher energy prices certainly a factor, and changes in the
commodities markets.
But the most significant new factor since 2006 and the only
factor affecting food and feed prices that is under the control
of the Congress is the significant and sudden increase in food-
to-fuel production. This year, corn ethanol production will
divert roughly one-third of the U.S. corn crop, up from 24
percent in 2007.
And the rapid expansion of corn ethanol production just in
the last few years is the dominant factor in the 200 percent
increase in corn prices since the 2005 crop year. Experts,
including former USDA chief economist Keith Collins, estimate
that ethanol production is responsible for as much as 60
percent of the increase in corn prices between the 2006 and
2008 crop years.
And this expansion not only impacts the price of corn, but
also creates a competition for land that increases the price of
other commodities, including soybeans, ultimately vegetable
oils. And I am sorry to say this problem is not going to get
better; it is going to get significantly worse in the coming
years.
As food-to-fuel production increases in response to
recently enacted federal mandates and existing subsidies and
more corn and more vegetable oil are diverted to our fuel
supplies, food prices will continue to increase. In the next
few years, roughly 40 percent of our corn crop and about 30
percent of our vegetable oils will be diverted to our fuel
supplies to comply with recently enacted congressional
mandates.
And experts predict that annual food inflation will average
9 percent, up from 6 percent this year, between 2008 and 2012,
as the impact of rising commodity prices are slowly reflected
in retail food prices. In particular, the price of milk, meat
and eggs will rise dramatically in response to higher feed
prices and in response to reductions in herd size.
Unfortunately, this significant increase in food-to-fuel
production has done very little to displace gasoline. Overall
ethanol production in 2007 displaced less than 4 percent of the
nation's gasoline supplies when energy values are considered.
And we think that freezing these food-to-fuel mandates and
revisiting these subsidies to address runaway food inflation
and to address some new environmental concerns that have been
raised would certainly not increase gasoline prices. In fact,
failing to freeze these mandates could actually increase
gasoline prices, as the cost of producing ethanol increases in
response to high corn prices.
One problem with these mandates, Mr. Chairman, is that
ethanol takes up the same share of the corn crop regardless of
supply. So, in other words, ethanol is not only eating more of
the corn crop, ethanol gets to eat first.
And this year serves as a perfect example of that problem.
The wet spring and flooding have reduced expected corn yields
from roughly 12 billion bushels to roughly 11 billion bushels.
But because of our federal food-to-fuel mandates, ethanol will
still use 4 billion bushels, forcing food and feed to compete
for the balance, driving up food prices.
And this problem is exacerbated by the fact that commodity
stocks are at their second-lowest level in 49 years.
Let me just conclude by reiterating that many factors are
contributing to high food prices, including dramatic increases
in global demand and the rising cost of energy. Food-to-fuel
production is certainly not the only culprit in runaway food
inflation, but it is precisely because of these other factors
that we would revisit policies that artificially and needlessly
increase the price of food.
And I urge members of this committee to work with members
of the Committee on Energy and Commerce and the Committee on
Ways and Means to consider ways to freeze and perhaps re-
evaluate our food-to-fuel mandates, to lift tariffs on imported
biofuels, especially biofuels that hold enormous promise to
meet some of our energy needs without pitting our energy needs
against our hunger and environmental needs, and to reform our
tax credits to promote the development of these second-
generation or cellulosic and advanced biofuels.
And, again, let me just reiterate that we certainly support
biofuels, we certainly see a place for biofuels in our fuel
mix. But we think it is critically important that our biofuels
policy doesn't pit our energy needs against the needs of the
hungry and the environment.
Thank you, Mr. Chairman.
[The statement of Mr. Faber follows:]
Prepared Statement of Scott Faber, Vice President for Federal Affairs,
Grocery Manufacturers Association
Thank you for the opportunity to testify on the rising cost of food
and its impact on federal child nutrition programs. The Grocery
Manufacturers Association strongly supports child nutrition programs,
such as the Women, Infants and Children Program and the National School
Lunch Program, and recognizes the strain that runaway food inflation
places on their successful implementation.
In general, there are seven factors contributing to the sharp
increase in US and global food prices: poor weather, export
restrictions, rising demand for food globally, the weak dollar, higher
energy prices, and changes in commodities markets. In particular,
strong foreign economic growth has increased demand for US exports and
contributed to high grain and oilseed prices. Between 2003 and 2007,
annual average real GDP increased by 4.6 percent, compared with 3.2
percent in the prior five years. In emerging and developing economies,
annual average real GDP increased by 7.3 percent, compared with 4.1
percent for the prior five years.\1\ As households improve their
incomes and purchasing power, they shift from traditional staples to
high-value foods, such as meat and dairy products.\2\ In addition, many
nations have placed limits on food exports to manage domestic food
inflation, pushing international market prices higher than supply and
demand conditions would otherwise dictate.\3\
However, the most significant new factor and the only factor
affecting food and feed prices that is under the control of the
Congress, is the sudden and significant increase in food-to-fuel
production. I have attached analyses by the World Bank,\4\ IMF,\5\ UN
FAO,\6\ CRS,\7\ USDA-ERS,\8\ IFPRI,\9\ Oxfam\10\ and by former USDA
Chief Economist Keith Collins\11\ which document the combination of
factors contributing to US and global food prices and the significant
role of food-to-fuel production. In general, the rapid expansion of
corn ethanol and bio-diesel production has increased demand for corn
and vegetable oil, increased the price of products which use corn and
vegetable oil as ingredients, and increased the price of other crops
that compete with corn and soybeans for land.
Commodity prices are rising at dramatic rates. Since the 2005-2006
crop year, farm-level corn prices have increased more than 200 percent,
and farm-level soybean prices have increased more than 135 percent.\12\
Although there are many factors contributing to increases in commodity
prices, the recent surge in ethanol production is one of the most
significant factors. Between 2006 and 2008, US corn ethanol production
accounted for 75 percent of the growth in global demand for coarse
grain and 50 percent of the growth in demand for all grains.\13\
Collins estimates that corn ethanol could be responsible for as much as
60 percent of the expected increase in corn prices between the 2006 and
2008 crop years.\14\ As Collins notes, ``the increase in corn demand
due to ethanol is rising faster than growth in corn yields per acre. So
long as that situation continues, corn will have to attract acreage
from other crops to meet its expanding demand. This shift will mean
higher prices for all crops that compete, directly or indirectly, for
acreage with corn.'' \15\
Food prices are now rising at twice the overall rate of inflation.
Because the price of basic commodities has dramatically increased,
domestic food prices rose by 4.9 percent during 2007--twice as fast as
inflation and the largest increase in 17 years. Food prices for the
previous three months have increased at a seasonally adjusted
annualized rate of 6.3 percent, and studies predict that annual food
price inflation will average 9 percent between 2008 and 2012 as the
impact of rising commodity prices are slowly reflected in retail
prices.\16\ Although there are many factors contributing to food price
inflation, the rising cost of commodities--driven in large measure by
growing food-to-fuel production--is expected to cause food prices to
rise 23 to 35 percent faster than historical increases in food
prices.\17\ In particular, the price of animal products will continue
to rise dramatically in response to higher feed prices.\18\ Between May
2005 and May 2008, food-to-fuel production contributed to increases in
the costs of basic staples like eggs (62.8 percent), whole milk (17.2
percent), and whole chicken (13.5 percent).\19\ The price of these
products is particularly sensitive to the rising cost of feed grains.
Rising food prices fall most heavily on the poor. These price
increases fall most heavily on the poorest 20 percent of Americans who
spend roughly one-third of their after-tax income on food and on the
global poor who spend as much as 70 percent of their income on food.
Rising commodity prices have pushed global food prices up 83 percent
over the last three years\20\--and by 57 percent in the last year--
pushing 50 million people into poverty in 2007 alone, according to the
UN FAO. In combination, rising prices and declining commodity stocks
have forced global food aid programs to ration food, and have
contributed to food riots and protests in more than 30 countries.
Rising food inflation in the developing world is not merely a food
security issue, but is a national security issue. The World Bank warns
that 33 nations are at risk of social unrest because of the rising
price of food.\21\
Rising food prices pose significant budgetary challenges. Although
potential outlays are difficult to estimate, government spending will
increase significantly as food prices rise. Many federal programs
linked entirely or in part to the Consumer Price Index (CPI), including
anti-hunger assistance programs and child nutrition programs. The CPI
is often used to adjust federal payments, determine program
eligibility, and to provide cost-of-living adjustments to millions of
workers. Overall, the CPI affects the income of about 80 million
people, including 51.6 million Social Security beneficiaries, 21.3
million food stamp recipients, about 4.6 million military and civil
service retirees or survivors, and more than 2 million workers impacted
by collective bargaining agreements. In particular, changes in the CPI
affect the cost of school lunches for 28.4 million children.\22\ Rising
food prices will impact federal outlays in three ways: by automatically
increasing federal expenditures on programs linked all or in part to
the CPI; by reducing the number of households and students that can be
served by programs, such as the WIC program; and by forcing
appropriators to reduce discretionary spending for other programs to
address shortfalls.
Rising feed prices are causing severe economic harm for livestock
producers. Although some crop farmers have benefited from high
commodity prices, many more livestock producers are facing
unprecedented losses. The higher costs of corn and soybean meal \23\
have translated directly into higher feed costs for all livestock
producers.\24\ Feed costs climbed by over $15 billion between 2005 and
2008 due to higher prices for corn and other grains.\25\ Moreover, feed
costs will continue to remain well above historic levels through 2017
as food-to-fuel mandates are fully implemented.\26\ In 2008-09, for
example, food-to-fuel mandates are estimated to increase the cost of
livestock production by as much as $17.7 billion.\27\ Ultimately, the
increased cost of feed will be passed on to consumers in the form of
higher food prices. As feed costs rise, meat and poultry production
will decline and many livestock farmers will be forced out of business.
Producers at greatest risk of failure are poultry, dairy, hog and beef
producers who do not produce their own feed grains.\28\
Historically low commodity stocks pose severe economic
consequences. Global stocks of several major commodities are at or near
historic lows--particularly when measured as a share of total
usage.\29\ For example, global end-of-year stocks for coarse grains and
wheat are projected to drop by mid-2008 to the lowest levels since
1977, while ending stocks of total grains will fall to the lowest
levels since 1981. In particular, a rapid increase in the production of
ethanol combined with a decline in corn plantings will likely result in
the second lowest level of corn stocks relative to consumption in 49
years. Increasing the use of corn for ethanol by 33 percent in 2008
will contribute to a 40 percent reduction in the corn inventory.\30\
For most commodities, annual prices tend to have a strong negative
correlation with the ending stocks-to-use ratio.\31\ Reduced yields in
2008 caused by a wet spring and flooding combined with surging ethanol
production and low commodity stocks are already resulting in dramatic
increases in crop prices.
Food prices will continue to rise as more and more corn and soybean
oil are diverted to our fuel supplies. Unless the Congress and the
Administration act this year to revise federal food-to-fuel mandates,
commodity prices will continue to rise as more and more food is
diverted to our fuel supplies. In 2008, roughly one-third of U.S. corn
supplies will be diverted to produce fuel. In the coming years, 40
percent or more of the U.S. corn crop and as much as 30 percent of U.S.
vegetable oils will be diverted from our food supplies to our fuel
supplies. Because commodity prices will remain high in response to
these mandates, food prices are expected to increase by 9 percent
annually between 2008 and 2012.\32\
Unfortunately, food-to-fuel policies have no impact on gasoline
prices. Because ethanol displaces a small fraction of the US gasoline
supply and a tiny fraction of global crude supplies, food-to-fuel
mandates will have no impact on gasoline prices. Overall, ethanol
production in 2007 displaced less than 4 percent of the nation's
gasoline supplies in 2007, when relative energy values are considered.
Consequently, freezing the mandate at the levels blended in 2007--that
is, reducing the mandate from 9 and 10.5 billion gallons to levels
blended into fuel supplies in 2007--would not increase gasoline prices.
In fact, failure to revise food-to-fuel mandates could marginally
increase gasoline prices under some scenarios. Eventually, rising
demand for corn to produce ethanol will increase the cost of producing
ethanol and result in higher prices at the pump.\33\
And, food-to-fuel policies harm the environment. Diverting food
crops to our fuel supplies has artificially increased the price of
commodities, accelerating the conversion of pasture and forest lands to
crop production at home and around the globe. Current and expected
conversion of pasture and forest lands will release carbon into the
atmosphere and reduce the availability of carbon ``sinks'' that help
sequester carbon. In addition, increased production of row crops of
uncultivated land has increased water pollution, compounded water
shortages, and contributed to the loss of habitat for wildlife. In
particular, increased fertilizer use associated with expanded crop
production has increased the amount of nitrogen and phosphorous being
washed into rivers and bays, including the Chesapeake Bay and the Gulf
of Mexico, and will increase ground-level ozone in some regions.
Increasing the use of distiller's grain--a byproduct of ethanol
production that is fed to animals but has less nutritional value than
feed--increases the amount of phosphorous reaching waterways.
Although this Committee does not have jurisdiction over food-to-
fuel mandates, subsidies, and tariffs, I urge you to work with the
Committee on Energy and Commerce and the Committee on Ways and Means to
revisit and restructure our food-to-fuel policies to accelerate the
development of fuels that do not pit our energy needs against the needs
of the hungry and the environment.
Congress should freeze food-to-fuel mandates. In light of crop
reports and perilously low commodity stocks, Congress and the
Administration should act now to reduce the federal food-to-fuel
mandate for 2008 and 2009 to production levels for 2007 and should
revisit and revise food-to-fuel mandates, subsidies and tariffs to
reflect changing economic conditions and new questions regarding the
economic and environmental costs of fuels made from food crops.
Freezing the mandate would result in immediate reductions in the price
of corn. A recent study by FAPRI estimated that implementation of the
RFS increased corn prices by 19 percent.\34\ A separate study by IFPRI
concluded that a freeze of biofuel production at 2007 levels would
reduce global corn prices.\35\ These studies do not take into account
significant declines in yields in 2008, which are amplifying the impact
of increased ethanol production on corn prices.
Congress should accelerate the development of sustainable bio-
fuels. Congress should revisit and reform food-to-fuel mandate
schedules, subsidies and tariffs to gradually reduce our reliance on
food as an energy feedstock, and to accelerate the development of bio-
fuels that do not pit our energy needs against the needs of the hungry
or the environment. In particular, Congress should accelerate the
development of cellulosic and advanced bio-fuels derived from fuel
feedstocks that do not increase food or fiber prices and that and
improve the environment. To accelerate the development of such fuels,
which could displace far more gasoline than corn ethanol, Congress
should eliminate the 54 cent tariff on imported bio-fuels and should
consider reforms to federal tax credits to reward the production of
sustainable bio-fuels.
Congress should accelerate global agricultural development.
Congress should take steps to expand hunger assistance programs to help
address the impact of food inflation at home and abroad. What's more,
Congress should also provide new funds to increase the productivity and
sustainability of agricultural lands in the developing world. Between
2003 and 2007, global usage of coarse grains like corn grew by 3.4
percent. At the same time, annual growth in agricultural productivity
is slowing. Between 1970 and 1990, production rose by an average of 2.2
percent per year. Since 1990, the growth rate has declined to about 1.3
percent. Projections for US and world agriculture see the rate
declining to 1.2 percent per year between 2009 and 2017.\36\
In conclusion, we urge Congress to revisit the food-to-fuel
mandates in light of dramatic increases in food prices and new
questions about the environmental costs of fuels derived from food
crops. Although there are many factors contributing to record food
inflation--including increasing global demand, export restrictions,
poor weather, commodity speculation, and higher energy prices--a
significant new factor and the only factor affecting food and feed
prices that is under the control of Congress is food-to-fuel mandates
and subsidies diverting food into our fuel supplies.
ENDNOTES
\1\ Collins, Keith. ``The Role of Biofuels and Other Factors in
Increasing Farm and Food Prices,'' prepared for Kraft Global Food, June
2008.
\2\ CRS, High Agricultural Prices: What are the Issues?, May 6,
2008, at 17 (hereinafter ``CRS'')
\3\ CRS, at 21
\4\ ``Rising Food Prices: Policy Options and World Bank Response,''
World Bank, April 2008.
\5\ International Monetary Fund, ``World Economic Outlook,
Globalization and Inequality,'' October 2007.
\6\ UN FAO, Soaring Food Prices: Facts, Perspectives, Impacts and
Required Actions, June 2008.
\7\ CRS, High Agricultural Prices: What are the Issues?, May 6,
2008.
\8\ USDA, ERS, Global Agricultural Supply and Demand: Factors
Contributing to The Recent Increase in Food Commodity Prices, May 2008.
\9\ Von Braun, Joachim. ``Biofuels, International Food Prices, and
the Poor.'' International Food Policy Research Institute (IFPRI). June
12, 2008.
\10\ ``Another Inconvenient Truth: How biofuel policies are
deepening poverty and accelerating climate change,'' Oxfam
International, June 26, 2008.
\11\ Collins, Keith. ``The Role of Biofuels and Other Factors in
Increasing Farm and Food Prices,'' prepared for Kraft Global Food, June
2008. (Hereinafter ``Collins'')
\12\ USDA, World Agricultural Supply and Demand Estimates, June
2008.
\13\ Id.
\14\ Collins. Collins finds that ethanol could account for 60
percent of the expected increase in corn prices between 2006/07 and
2008/09 when market demand and supply are inelastic with respect to
price--that is, a period when stocks are very low, feed use is slow to
respond, export demand is strong due to foreign agricultural policies,
and acreage is very constrained.
\15\ Id.
\16\ Advanced Economic Solutions, Rising Commodity Prices and their
Impact on US Food Inflation, June 2008.
\17\ Collins. If food-to-fuel production accounts for 60 percent of
the expected increased in feed grain and oilseed product costs between
2006/07 and 2008/09, and these increases are passed on to retail
consumers, these increases would increase baseline US expenditures on
food by 1.8 percent over a 2-3 year period. This increase is
significant in light of the fact that long-term annual average food
inflation is about 2.5 percent. Thus, the increase in retail food
prices due to biofuels is estimated to be 23-35 percent above the
normal increase in food prices that would occur over 2-3 years.
\18\ Elam, Thomas, ``Biofuels Support Policy Costs to the U.S.
Economy,'' FarmEcon LLC, March 24, 2008 (Hereinafter ``Elam'')
\19\ Consumer Price Index--Average Price Data (retrieved for most
requested statistics), Bureau of Labor Statistics, available at http://
www.bls.gov/data/home.htm.
\20\ Bob Davis and Douglas Belkin, Food Inflation, Riots Spark
Worries for World Leaders,'' Wall Street Journal, April 14, 2008. A1.
\21\ ``The World Food Crisis,'' New York Times, Editorial, April
10, 2008.
\22\ BLS, at http://www.bls.gov/dolfaq/bls--ques1.htm
\23\ Elevated corn prices in response to increasing biofuels demand
also contribute to the historically high prices of soybeans because
soybean cropland must compete with corn for cropland. Indeed, the price
of soybeans has risen even though stockpiles of soybean oil are also at
near record levels. USDA reported that the price of soybeans per bushel
was $6.43 in 2006/2007, but shot up to $9.00 in 2007/2008. USDA
Projections, at 35 (Table 7). Prices of soybeans and soybean-derived
products (e.g., soybean meal and soybean oil) are projected to increase
and remain well over 2006/2007 levels over the long-term due to
continued increased demand for biofuels, with even greater price
increases likely as a result of the strengthened biofuels mandates
enacted by Congress in 2007. USDA Projection, at 23 and 41 (Table 13).
\24\ Food and Agricultural Policy Research Institute, 2008 U.S.
Baseline Briefing Book (March 2008) (hereinafter ``FAPRI Report''), at
3, available at http://www.fapri.missouri.edu/outreach/publications/
2008/FAPRI--MU--Report--03--08.pdf.
\25\ FAPRI Report, at 60.
\26\ FAPRI Report, at 60. See also USDA Projections, at 4, 49 and
60. In fact, USDA acknowledges that its own projections likely
underestimate the anticipated increases in costs of animal feed
because, although they account for the biofuels mandates created by the
Energy Policy Act of 2005, they do not account for the strengthening of
those mandates by Congress in December 2007, which has added to the
unprecedented demand for corn. USDA Projections, at 23.
\27\ Elam at 28,
\28\ Elam at 28. See also FAPRI Report, at 42 (suggesting that beef
producers will experience financially difficult times in the next few
years as they face high and rising input costs); see also FAPRI Report,
at 50 (stating that higher feed costs have contributed to increases in
the costs of producing milk).
\29\ CRS, High Agricultural Prices: What are the Issues?, May 6,
2008.
\30\ USDA-ERS, Feed Outlook, May 13, 2008.
\31\ CRS, High Agricultural Prices: What are the Issues?, May 6,
2008.
\32\ Advanced Economic Solutions, The Impact of Rising Commodity
Prices on Food Inflation, June 2008
\33\ Elam, Thomas, ``Biofuels Support Policy Costs to the U.S.
Economy,'' FarmEcon LLC, March 24, 2008.
\34\ FAPRI-MU, The Energy Independence and Security Act of 2007:
Preliminary Evaluation of Selected Provisions, January 2008.
\35\ Rosegrant, Biofuels and Grain Prices: Impacts and Policy
Responses, May 5, 2008.
\36\ USDA, ERS, Global Agricultural Supply and Demand: Factors
Contributing to The Recent Increase in Food Commodity Prices, May 2008.
______
[Additional submissions from Mr. Faber follow:]
[``Global Agricultural Supply and Demand: Factors
Contributing to the Recent Increase in Food Commodity Prices,''
may be accessed at the following Internet address:]
http://www.ers.usda.gov/Publications/WRS0801/WRS0801.pdf
______
[``Another Inconvenient Truth: How biofuel policies are
deepening poverty and accelerating climate change,'' may be
accessed at the following Internet address:]
http://www.oxfam.org/policy/another-inconvenient-truth
______
[``The Role of Biofuels and Other Factors in Increasing
Farm and Food Prices,'' may be accessed at the following
Internet address:]
http://www.foodbeforefuel.org/facts/studies/role-biofuels-and-other-
factors-increasing-farm-and-food-prices
______
[``World Economic Outlook,'' October 2007, may be accessed
at the following Internet address:]
http://www.imf.org/external/pubs/ft/weo/2007/02/index.htm
______
[``World Bank Response to rising food prices,'' may be
accessed at the following Internet address:]
http://siteresources.worldbank.org/NEWS/Resources/risingfoodprices--
backgroundnote--apr08.pdf
______
Chairman Miller. Dr. Wilson?
STATEMENT OF KATIE WILSON, PRESIDENT-ELECT OF THE SCHOOL
NUTRITION ASSOCIATION, FOOD AND NUTRITION COORDINATOR FOR THE
ONALASKA SCHOOL DISTRICT
Ms. Wilson. Good morning, Chairman Miller, members of the
committee. I am Dr. Wilson, president-elect of the School
Nutrition Association, and I have also been a practitioner as a
school nutrition director in Wisconsin for over 20 years.
Our 55,000 members serve 30 million students every day.
And, members of this committee, Mr. Chairman, I am here to tell
you we are struggling to make ends meet.
While the increase in the cost of food, as you have heard
today, is very dramatic, we also have many compounded other
hidden expenses. Meeting the dietary guidelines for Americans,
an important goal for the school nutrition program, has been
difficult due to the lack of funding to purchase fresh fruits,
vegetables and whole grains that we are expected to serve.
The lack of uniform national nutrition standards is
increasing the cost of our meal programs. When the same product
is produced with different standards, it costs all of us money.
We simply don't have the funds to continue on with this.
Finally, we are being charged increased indirect costs,
such as electricity, gas, water, trash removal, and, in many
cases, we are being charged for expenses not associated with
the school nutrition program, such as school district
administrative salaries.
As you have heard, USDA just announced the reimbursement
rate for $2.57 for free meals, while in many school districts,
the cost of preparing that meal is well over $3.
In order to cope with these costs, 75 percent of the
respondents of our survey reported raising the price of the
school meals for the paying student. While that may seem like a
viable solution, we are concerned that the working families can
no longer afford these meals. We see it on the homefront every
day.
With all of these factors swirling together, it seems as if
a perfect storm is developing.
A few examples: Mr. Chairman, in Antioch, California, the
cost to produce a meal is increasing from $2.27 to $2.92. The
district will look not only to increase meal prices, it will
also reduce its labor force.
In San Diego, meal costs are increasing from $2.47 to
$2.97. It will be a total of an extra $6.3 million in the 2008-
2009 year to run that program.
The Miami-Dade County Public Schools' Food and Nutrition
Department saw an additional $4.9 million in milk cost alone in
the 2007-2008 school year.
A good summation of this problem is a new school nutrition
director from Pittsburgh, California, saying, ``My expenses
will increase with declining revenues. Next year will be a
tough year, and I am not sure how I will accomplish it.''
So, Mr. Chairman, how do we deal with these crucial issues?
Let me suggest four items to begin with.
Number one, more frequent and realistic cost-of-living
updates. Once a year does not reflect my monthly price
fluctuations. Most vendors will not lock in prices for more
than 6 months.
Number two, cap indirect costs and give clear directions as
to what is allowable for districts to charge the school
nutrition programs.
Number three, give us commodities for the School Breakfast
Program to help to hold down food costs. We are provided
commodities for school lunch, but not breakfast.
And, finally, support and move forward legislation for
national nutrition standards to control the costs we see.
In closing, along with the food cost increases that we are
talking about today, we must deal with complexity of issues. I
look forward to working with you to develop an action plan to
mitigate some of these expenses.
Mr. Chairman, members of the committee, thank you very much
for allowing SNA to participate in this hearing, and I would be
pleased to answer any questions.
[The statement of Ms. Wilson follows:]
Prepared Statement of Katie Wilson, President-Elect of the School
Nutrition Association, Food and Nutrition Coordinator for the Onalaska
School District
Chairman Miller, Members of the Committee, we deeply appreciate
this hearing and the opportunity to discuss how the school nutrition
programs are being effected by the steep increase in food prices. I am
Katie Wilson, PhD, the President-Elect of the School Nutrition
Association (SNA) from Onalaska, Wisconsin. I also serve as the
Chairman of the Nutrition Standards Committee for SNA.
When SNA testified before the Committee just a few months ago on
the subject of nutrition standards and the beef recall, we noted the
``USDA currently reimburses local schools $2.47 for every ``free''
lunch provided to a child with income below 130% of the poverty line *
* * less than the price of a latte at the neighborhood coffee shop.''
Even the increase for the new school year--$2.57--which was announced
this week, fails to meet the true cost of providing school lunches, and
on a percentage basis is smaller than the food cost increases we are
experiencing.
Our 55,000 members serve 30 million students every day. We believe
we can no longer work the magic. You can only stretch the food dollar
so far. The increase in the cost of food we are all experiencing is
very dramatic and compounded by several other factors:
We are all trying very hard to respond to the obesity
epidemic by making needed changes in the school food service menu but
the changes are expensive. The Food and Nutrition Service has asked
schools to develop meals that meet the 2005 Dietary Guidelines for
Americans, but has not factored in the added cost of meeting this
critical goal. Fresh fruits and vegetables are expensive. Whole
grains--if they are even available--cost more than products made with
white flour. Our members report that it is not uncommon to pay 5 to 6
cents more for a single serving of whole grain bread over a serving of
white bread.
As the cost of fuel increases, many local school
administrators are charging the school food service program more and
more for the ``indirect expenses'' of running the school. These
expenses include utilities such as electricity, gas, water, and trash
removal. According to SNA's School Nutrition Operations Report: The
State of School Nutrition 2007; 46.6% of the programs have seen an
increase in their indirect costs.
It goes without saying that fuel costs are also increasing
transportation costs. In many areas, this is impacting food bills, as
food distributors are adding surcharges to make up for additional fuel
expenses.
The cost of labor has also been increasing for school
nutrition employees for several years now. Many states and school
districts require their employees to be provided with healthcare and
other benefits. This is great for our employees, but unfortunately
means that the school nutrition program budget must cover the costs of
the mandated benefits. In some places, health care costs have risen as
much as 7-10 percent.
The historic February 2008 beef recall, which we testified
about, is still having an effect on school nutrition programs. Many
programs spent money to destroy the recalled beef and order new product
to replace it but still have not been reimbursed by USDA.
Finally, as we mentioned at the last hearing, the lack of
a uniform national interpretation of the Dietary Guidelines is
increasing the cost of the meal program. The multiplicity of different
state and local nutrition standards is driving up the cost of producing
food products and this increase is being passed on to local school food
programs. We simply do not have the money to pay for many different
interpretations of the Dietary Guidelines. We urge the Congress to
establish a uniform national standard for the Dietary Guidelines.
A recent survey of school nutrition directors reveals even more
about the state of school nutrition programs. SNA is still collecting
results, as many school districts finalize their bids and menus during
June and July. Very preliminary findings, however, show that the cost
of preparing a school meal will jump $0.30 per meal, per day, per
child, to a national average of $2.88. Last year there were 5 Billion
lunches served. When you multiply 30 cents by 5 billion, the national
impact is approximately $1.5 Billion.
In many school districts, the cost of preparing a meal is well over
$3.00. In order to cope with the rise in costs, districts are weighing
a variety of options. Approximately 75% of respondents to our survey
are raising the price of a school meal for paying students. Reducing
the number of employees, while undesirable during difficult economic
times is another option 62% of directors are considering. What is most
disconcerting, though, are the 69% of directors who are dipping into
their financial reserves. School nutrition programs keep these rainy
day funds on hand for capital equipment purchases since equipment
assistance is no longer provided. (Equipment assistance was eliminated
by Congress in the early 1980s). Instead, many directors are using
their capital improvement reserves for day-to-day operations, which
will have a profound effect in the years ahead.
As food costs continue to rise, we are challenged to do more with
much less. With all of these factors swirling together, it seems as if
a perfect storm is developing. Take a look at these examples from
districts around the country:
In Ponca City, Oklahoma, there is a $25,000 to $30,000
increase in food contracts from the 2007-08 school year to the 2008-09
school year. The district's school nutrition director noted that at the
end of the school year, many vendors gave 30 day notices stating they
could not meet agreements on pricing. Many other school districts echo
similar comments from their vendors.
This year, the growing food costs have pushed Florida's
Polk County School District $1 million into the red. This is the
district's biggest loss on record.
The price of milk has increased more than 32 percent since
2006 in the Hoover School District in Alabama. Next year, the district
will pay $72,000 more for milk.
Miami-Dade County Public Schools Food and Nutrition
Department has seen a 7 cent increase in the price they pay for whole
grain bread from the 2006-2007 school year to the 2007-2008 school
year--representing almost a half a million dollars more they had to
spend. During the same timeframe a case of trans fat-free margarine
went from $12.12 to $21.96 representing an increase of over $125,000
while a \1/2\ pint carton of milk increased from 17 cents to 26 cents--
costing the nutrition program an additional $4.9 million.
Some school districts will stop offering universal free
breakfasts in the fall. Next school year, the Rowan-Salisbury School
District in North Carolina will stop offering free breakfasts to
students at six district schools due to rising food costs. While
students eligible for free meals will continue to receive breakfast,
all other students must now pay. This is an unfortunate consequence, as
there is a strong link between breakfast and improved academic
achievement.
Despite the challenges, school nutrition professionals are NOT
sacrificing nutritious school meals. We are still dedicated to
providing our students with healthy, balanced, low cost breakfasts and
lunches. We must meet the nutrition guidelines set by the U.S.
Department of Agriculture and many of our home states. To do so, school
nutrition professionals nationwide are cutting budgets and looking for
alternative items. In some cases this requires exercising a little
creativity. For instance:
The Wayne Township School District in Indiana cannot raise
meal prices this year, since they raised them during the previous
school term for the first time in 8 years. Instead, the district's
school nutrition director is reviewing every non-food related cost,
looking to save money on paper goods and packaging.
To avoid raising lunch prices, Utah's Davis County School
District is purchasing food earlier and in bulk. Buying in bulk allows
the school district to save a considerable amount of money. In some
places, school districts are banding together to form purchasing
cooperatives. By joining a cooperative, school nutrition programs have
greater buying power and can purchase items at a lower cost.
Some nutrition programs are downgrading menu selections to
less expensive options. For example, students in the Charlotte-
Mecklenburg schools in North Carolina will be served spaghetti in place
of lasagna this year. In the Spring Independent School District,
outside of Houston, Texas, baby carrots will be replaced with carrots
cut on site.
The Alvord Unified School District in California will
eliminate meat and cheese from salad bars and will instead offer a
produce bar with four cold fruit and vegetable choices and crackers as
a supplement to students' entrees.
I could continue. These are only a few examples of the ingenuity
displayed by my colleagues around the country. At the end of the day,
however, what school nutrition directors are doing to lessen the impact
of rising costs is still not enough. Our programs need additional help
in order to provide the highest quality, healthiest meals available to
students each day.
In an effort to mitigate the rapid increase in the cost of food, we
would like to make several suggestions for your consideration:
1. As you know, the National School Lunch Act updates the various
reimbursements annually. Given how fast food prices are escalating, by
the time the new rates are implemented they are out of date. SNA
believes that the statute should be amended to require adjustments
twice a year, or every six months.
2. The current index formula is based on ``food away from home.''
The question in our mind is whether that is the correct index, or
whether there is a more appropriate index. We would appreciate your
guidance on that question.
3. As I mentioned, many school districts are increasing the
``indirect expenses'' that are being charged against the school food
service account. For example, in many cases, the percentage of the
lighting bill or the sanitation bill, or even the salary of the school
administrator, being charged to us, the school food service account, is
far out of proportion to reality. Unlike many other programs, there is
no maximum in the statute or the regulation as to what a school can
charge us (the food service account). The appropriations bill, each
year, states that the money is to fund the National School Lunch and
Breakfast Programs. In reality, however, the money is used for many
other school expenses. It has gotten out of hand and we feel that the
statute should require USDA to establish a maximum indirect expense
charge and one that is based on our true cost and expense to the
school. Such a change would greatly improve the financial integrity of
the school meal program and allow us to improve meal quality.
4. Finally, the School Breakfast Program still does not receive any
USDA commodity assistance. The Lunch Program receives USDA commodities,
but not the breakfast program. It would greatly assist our programs,
and help us expand the breakfast program, if the Congress amended the
statute to provide commodity assistance. Our suggestion is to provide
ten cents (.10) per breakfast. Again, this would greatly assist us in
trying to cope with the cost of food. Let me also note, however, that
even though the School Lunch Program receives commodity assistance,
it's much less than in previous years. Because of changes in the
agriculture economy, ``bonus commodities'' have all but stopped.
Traditionally, our ``entitlement'' commodities were supplemented by
bonus commodities, or extra surplus commodities. That is no longer
happening to the same extent. We hope you will take this change into
consideration in deciding on the level of commodity assistance for
breakfast and lunch.
Thank you very much, Chairman Miller, for convening this important
hearing and for allowing SNA to participate. I would be pleased to
answer any questions.
______
Chairman Miller. Thank you.
Mr. Matustik?
STATEMENT OF PAVEL N. MATUSTIK, CHIEF ADMINISTRATIVE OFFICER,
SANTA CLARITA VALLEY SCHOOL FOOD SERVICES AGENCY
Mr. Matustik. Mr. Chairman, members of the committee, I am
honored to appear before you today. And thank you for the
invitation to address the rising cost of food and its impact on
federal child nutrition programs.
I will summarize my written testimony, which I have
submitted for the record.
My name is Pavel Matustik, and when I escaped from then-
communist Czechoslovakia 26 years ago, I didn't even dream that
one day I would be testifying in front of this august body.
Today I am the chief administrative officer for the Santa
Clarita Valley School Food Services Agency. Our agency is a
joint powers agency; in some other states, it would be called
an intergovernmental agency. It was established by five local,
relatively small school districts for providing school meals
for their students.
It shall be mentioned that before they started the JPA,
these school districts were regularly losing together around
$300,000 a year. Today our operation is so successful that just
this past school year we gave back $700,000 to our members.
This is an improvement of $1 million a year.
Our operation in Santa Clarita has been hit with the same
woes as the rest of the school food service industry in the
country. The horrendous increases in the cost of fuel, energy
and agricultural commodities are starting to have a rather
negative impact on our bottom line. I am sure that the
committee members are well aware of these facts, and you can
find some of the numbers and charts in my report.
Thanks to the slowing economy and lower tax receipts, the
school district budgets are hit hard as well. And it will be
hard for them to fiscally support their food service
operations.
The question in front of all of us is: How can you and our
government help, and how can we help ourselves?
Before I start asking for more funds, which would certainly
help the child nutrition entities across the country, let me
share with you how our organization copes with these
challenges.
It in my opinion that the JPA is a business model which
should be copied all across the country. The savings could be
enormous. The JPA immediately wins increased purchasing power,
increased flexibility, and positive cash flow.
It is a philosophy of our agency to fight the reverse Robin
Hood syndrome. There is no reason, other than political, for
school districts to charge for the paid meals less than what
the federal government reimbursement rate is. You can see a
chart also attached.
Two years ago, using direct shipments from the USDA
commodities, we started to prepare our own homemade, lower-fat,
whole grain, fresh pizza, which we deliver daily to all our
schools as a part of our daily five menu offerings.
Two hundred large and small school districts in California
created a commodity processing and procurement cooperative.
This co-op established long-term, 2-, 3-year contracts with
over 50 manufacturers with guaranteed pricing, which is 99
percent better than the rest of California's schools.
There are also ways for you, our representatives, to help
the American school child nutrition operations without any
additional financial obligations.
Help eliminate no-value-added costs from our programs. The
USDA delivers the commodities to processors or our warehouses
for free. California charges an additional $1 per case; they
never touch. The state receives over $1.3 million from USDA for
food distribution. Only, from our co-op, and therefore from our
children, the state of California is taking an additional $1
million a year.
USDA shall require each state to roll over unspent or
overspent entitlement to the district responsible. The USDA has
been working for some time now on a pilot program to allow
districts to use the entitlement dollars for purchasing fresh,
pre-cut produce from commercial channels. This program can
become a great benefit to all districts. Work with the USDA to
eliminate any remaining hurdles.
An increase of 1 penny per serving negatively affects
school meal programs by $54 million a year. And the costs of
meals in California went up on average by 4 cents, or 20
percent, from 2006-2007 levels.
There is an obvious question which will probably anger
every dairy farmer in America and, therefore, a sane person
would never ask. But because I am a foreigner born and a
canceled Czech who doesn't know any better, I will. [Laughter.]
Why do we have to offer milk with every breakfast and every
lunch?
And please try to research a possibility of national
science-based nutrition standards. As Katie mentioned, it would
save a huge amount of dollars for all of us.
In conclusion, I would like to reiterate that there is a
need to find a unifying solution to the impact our schools feel
because of these fairly sudden increases in food and energy
costs. I believe that a long-term solution can only be found if
school districts and Congress consider some of the proposals I
have spoken about. Let's remember that every dollar saved from
the general fund can go back to the classrooms.
Mr. Chairman, Mr. McKeon, thank you for this opportunity to
testify.
[The statement of Mr. Matustik follows:]
Prepared Statement of Pavel N. Matustik, CAO, Santa Clarita Valley
School Food Services Agency
My name is Pavel N. Matustik and I am the Chief Administrative
Officer for the Santa Clarita Valley School Food Services Agency
(SCVSFSA.) Our organization is a Joint Powers Agency (in some other
states it would be called an Intergovernmental Agency) established by
five local (relatively small) school districts for providing school
meals to their students. It is important to mention that before they
started the JPA these five school districts were regularly supporting
their food service operation from their general funds. The districts
joined together and borrowed over $5.5 million to start the Agency.
Today our operation is so successful that we have repaid $4.8 million
to the member districts--just this past school year (07/08) we paid
back $700,000 to our members.
Presently we provide food for 42 schools with an enrollment of over
30,000 students. Some of our schools have attendance over 1,000
students; others have as few as 250 pupils. We serve about 15,000
lunches and 4,000 breakfasts a day. In the elementary schools we offer
5 menu choices daily, and in secondary schools there are a minimum of
ten choices. We have salad bars in all of our schools. Our JPA employs
172 people and the majority (about 75%) are part time workers. The
Agency reports to the Board of Directors--each member district has one
representative on the Board. This is usually a superintendent or the
business manager.
It needs to be noted, that the school food service operation is the
only public school segment that is expected to be fiscally self-
sufficient and operate without any help from the districts' general
funds. It is the only school district's department, that is expected to
be run as a business. As one of my mentors, Mr. De Burgh, likes to say:
I don't know a school food administrator fired for serving a fat-
burger, but I certainly know many who lost their job because of their
negative cash flow * * *
Our operation in Santa Clarita has been hit with the same woes as
the rest of the school food service industry in the country: the
horrendous increases in the cost of fuel, energy and agricultural
commodities are starting to have a rather negative impact on our
``bottom line''. I'm sure that the committee members are well aware of
these facts and you can find some of the numbers and charts in the
appendix. (Appendix I)
As I previously mentioned (and every other presenter today has the
same message) the costs of labor, statutory benefits, energy and
agricultural commodities are rising faster than the core inflation. The
other incoming conundrum is the fact that thanks to the slowing economy
and lower tax receipts the school district budgets are hit hard as well
and it will be hard for them to fiscally support their food service
operation. The question in front of all of us is: How can you and our
government help, and how can we help ourselves?
Before I start asking for more funds, which would certainly help
the child nutrition entities across the country, let me share with you
how our organization copes with these challenges.
1. Five small local school districts established a new joint
governmental entity with one goal: to provide affordable nutritional
meals to their students without any encroachment on their general
funds. The JPA immediately gained:
Increased purchasing power;
Fundamentally sound and knowledgeable administration;
Ability to train staff and increase the employees' professional
knowledge and attitude;
Eliminated any encroachments on districts' general funds.
Consequently, the JPA is able to return some of the funds back to the
districts.
It is my opinion that this is a business model, which should be
copied all across the country--the savings for our education entities
would be enormous.
2. It was always a philosophy of our organization to fight the
``reverse Robin Hood'' syndrome. There is no reason (other than
political) for school district charge for the paid meals less than what
the Federal Government sees as a necessary reimbursement rate.
(Appendix II)
3. A well-run USDA commodity program can represent as much as 20%
of any school food service operation's food budget. Thanks to your
guidance and the USDA's leadership the commodity programs today are a
huge advantage to school systems that know how to use them. The
national processing agreements, direct diversion programs, the fresh
fruit and vegetable programs, the additional funds ($40 million for
2008 and $50 million for 2009 released just a week ago) are all helping
to meet our challenges.
4. About eighteen months ago, using direct shipments of the USDA
commodity low fat mozzarella cheese and USDA commodity fresh tomatoes
we started to prepare are own (``home made'') lower fat, whole grain
fresh pizza, which we deliver daily to all our schools as a part of our
daily five menu offerings. the commercial distribution cost going up
(fuel) and manufacturing coup, we were able to save over $150,000 in
that period of time and at the same time were able to serve a healthier
product. This year we started with healthier, lower fat (``home made'')
burritos a la Chipotle and the students' response is very positive.
5. 200 school districts in CA created a commodity processing and
procurement cooperative. This co-op established long term (2-3 years)
contracts with 50 manufacturers with guaranteed pricing, which is 99%
better than the rest other CA school operations. Yes, we have some
manufacturers trying to renegotiate the contracts, but so far we were
able to keep most of the prices within our agreements.
It is my opinion that all school districts, but especially the
smaller entities, should look into establishing commodity processing
and procurement cooperatives. To this day the commodity processing and
procurement decisions are often left with the individual state
distribution agencies, which may or may not know the needs of the
school districts.
There are also ways for you, our representatives, to help the
school child nutrition operations across the country without any
additional financial obligations.
Help eliminate no value costs from our programs. The USDA delivers
the commodities to processors (or our warehouses) for free, but many
states charge the schools a ``handling fee''. In California, for
example, it is $1 for every case of any commodity we send to our
manufacturers or receive directly from the USDA to our warehouses--the
state literally doesn't touch these cases at all. This is on the top of
the funds (SAE) the state is receiving from the USDA. California's take
(discretionary and non-discretionary funds) is over $20 million. Over
$1.3 million is for food distribution! Only from our co-op (and
therefore our children) the state of California is taking over
$1,000,000 a year!
Every year the USDA ``rolls over'' the commodity entitlement for
each state regardless of whether the state under-spent or overspent
during the preceding year. Because the price of the purchases changes,
it is impossible for a state to ``hit'' the entitlement figure exactly.
The USDA recognizes this and allows the state to carry over unspent
dollars or to take overspent dollars out of the next year's
entitlement. However, quite a few states do not allocate the overspent
or under spent dollars based on the district previous year's
performance. Therefore, it can happen that a district that didn't spend
its entitlement one year will never see its funds again. The USDA
should be required to have the states roll over entitlement (both over
and under) to the districts that have the differences. This should be
done for at least one year before the state is allowed to spend the
money randomly.
The USDA has been working for some time now on a pilot program to
allow districts to use the entitlement dollars for purchasing fresh
pre-cut produce from commercial channels. This program can become a
great benefit to all districts. Work with the USDA to eliminate any
remaining hurdles.
As you all probably well know, milk must be offered with every
lunch and every breakfast. An increase of 1 penny per serving
negatively affects our operation by $27,000 a year--this represents
almost 1% of our labor cost. Nationwide, the number is even more
staggering--1 penny could increase the cost of providing school meals
by $54,000,000 a year! And the cost of milk in California went up on
average by $0.04--20% from 2006/07 levels! (Appendix III) There is an
obvious question which will probably anger every dairy farmer in
America and therefore a sane person would never ask; but because I'm a
foreigner and a canceled Czech who doesn't know any better I will: do
we have to really offer milk with every breakfast and every lunch we
serve?
Consider researching a national science based nutritional standard.
Right now we are in danger of having 50 different nutritional standards
all created for the good of our children, all of them just a slight
variation from each other but making it more expensive for the
manufacturers and therefore for the schools as well.
In conclusion I would like to reiterate that there is a need to
find a unifying solution to the impact our schools feel because of
these fairly sudden increases in food and energy costs. I believe that
a long-term solution can only be found if school districts and Congress
consider some of the proposals I have spoken about--let's remember that
every dollar saved from the general fund can go back to the classroom.
Thank you for this opportunity to testify in front of your very
essential committee.
______
Chairman Miller. Thank you.
Mr. Harnett?
STATEMENT OF JAMES HARNETT, PRESIDENT AND CEO, FAMILY AND
CHILDREN'S ASSOCIATION
Mr. Harnett. Thank you, Mr. Chairman, members of the
committee.
Congresswoman McCarthy, thank you for that introduction.
I am Jim Harnett, the president of Family and Children's
Association, which serves 20,000 children, family and seniors
in Nassau County in New York. We work to protect vulnerable
children and families. And we welcome this opportunity to offer
our recommendations on the afterschool and summer lunch
programs.
As Congresswoman McCarthy knows well, while Nassau County
is perceived, understandably, as a well-off suburb, in the
Village of Hempstead, where we operate our nutrition programs,
every school meets the 50 percent eligibility requirement for
the School Lunch Program. And across Long Island, all the way
out to Congressman Bishop's district, in 2006-2007, 167,000
children were enrolled in the School Lunch Program. Need and
hunger recognize no political boundary.
I want to describe the impact that rising costs will have
on the summer food program and on the low-income children and
families who are struggling with these rising costs. But I also
want to remind us of the obvious. I have brought a couple of
photos with me today to remind us this is about children.
That little boy will benefit from the 2009 reauthorization.
He looks young, but he is already in one of our programs, and
he will be with us for a long time. The children with all those
nice fresh fruits started our summer camp program on Monday,
and I describe that program in my written testimony.
It is important that we keep in mind, at the end of the
day, we nurture our children now or we will pay an awful price
later. These children represent millions of children who today
benefit from the meals that, for most of them, are the best
meals they will have today and, for too many of them, the only
meal they will have.
For children, no nutrition means no energy. No energy
brings us to a topic that others have addressed better than I
can, the price of fuel. But we cannot let this complex
interplay affect the children. The fact, as the chairman noted,
that some of the most common staples of milks and fruit and
bread, cheese, the price has increased 17 percent, has an
immediate and direct impact on the programs that we are talking
about.
The summer food reimbursement rate does not cover the full
cost of meals in our county. And, fortunately for us, our
county made a decision to use local public dollars to cover the
program, so that over 2,600 children will participate each day
in the summer food program. The cost of that program to the
county will be about 21 percent.
Obviously, the financial loss of operating the summer food
program makes sustainability of this program a key issue. And
although I do not have time to fully or adequately describe the
impact of these rising costs on a family of four with less than
$1,000 a month for all of their needs except for rent, I would
ask that my written testimony be amended with the Wall Street
Journal article from yesterday which did, I think, a very fine
job of explaining how the summer food camp program is
benefiting poor families.
There is no question that next year the committee will be
able to make significant improvements to the afterschool and
summer nutrition programs through the Child Nutrition
reauthorization.
I have polled my colleagues, even over a busy holiday
weekend, across the state, from Erie and Niagara all the way
out to the East End in Congressman Bishop's district. And I can
tell you, we all are in agreement that we would ask you to
consider these changes in the programs.
Increase the food snack allowance for hungry teenagers in
the afterschool snack program. Make the afterschool supper
program available to all states, so that school-aged children
through age 19 may receive supper at an afterschool program
located in low-income areas.
Change the eligibility requirement to 40 percent from the
current 50 percent so that afterschool and summer programs
serving low-income children, especially in rural districts--my
colleagues emphasize this. Rural districts have a much harder
time meeting the standard than we do in suburban and city
districts.
Increase the current reimbursement rates for providing
nutritious snacks and a healthy breakfast and/or lunch to
offset these rising costs of food and fuel.
Make the pilot program you created in California in the
last reauthorization available to all states, allowing year-
round local government agencies and nonprofits to use the
summer food service program to feed children 365 days of the
year. And expand the program so that children can be eligible
for suppers after school and meals on weekends and school
holidays.
Increase the summer food service program, which reaches
less than one in five, about 20 percent of the children who are
enrolled in the National School Lunch Program during the school
year. The summer food program needs to be strengthened with
additional funding to offset the prices of food,
transportation, outreach, startup and expansion.
And, by all means, reduce the paperwork and streamline the
program so that more and more of the funds can be spent on
food.
Please use the 2009 reauthorization to improve these vital
federal child nutrition programs so they can better meet the
needs of our children and teenagers, especially those that are
the poorest and most vulnerable, both after school and
throughout the summer.
Thank you.
[The statement of Mr. Harnett follows:]
Prepared Statement of James J. Harnett, President & CEO, Family and
Children's Association
Good morning, Mr./Madame Chairperson and Members of the Committee.
I am Jim Harnett, the President of Family and Children's
Association, a social service agency serving vulnerable and needy
families and children in Nassau County, New York. Family and Children's
is a leading human service agency on Long Island helping over 20,000 of
our neighbors each year. We work to protect and strengthen Long
Island's most vulnerable individuals especially children, seniors and
families.
The Agency serves people who often have no where else to turn;
particularly those who struggle with social, emotional and/or economic
challenges and lack adequate support systems. In addition to our
Afterschool and Summer Nutrition Programs we offer 40 programs
including the only shelter for runaway teens in Nassau County, provide
the PINS (Person in Need of Supervision) Diversion Service for the
County, family-focused programs to help parents and their children
avoid foster care or court-appointed supervision; high school
equivalency diploma & school enrichment programs to help young people
succeed; outreach and in-home service to senior citizens to protect our
most vulnerable neighbors; and many, many more programs. Our various
counseling and referral services not only strengthen our clients, they
often save families and individuals who are on the brink of disaster.
We operate a countywide program to assist children with mental illness
to remain with their families, two outpatient mental health clinics and
two chemical dependency programs and four transitional and mental
health residential programs.
Our Summer Camp is an extension of our Promise Project. The Promise
Project offers afterschool services to 6th, 7th and 8th graders from a
middle school in the Hempstead School District. The Promise Scholars
meet each school day to receive homework assistance, attend workshops
and participate in activities geared towards promoting positive youth
development, academic performance, and community connections. The
project will work with these children until they complete high school.
Upon graduation, each student will be awarded a $2,500 scholarship to
the college or vocational school of his or her choice.
The program began October, 2007 and the group's first community
service project was an inter-generational holiday party with the senior
residents of the Greenwich Street Apartments. The Promise Scholars
helped serve food to the seniors who attended the holiday event and
delivered dinners to the homebound who could not join in the
celebration.
Community volunteers and students from local colleges and
universities have shared their skills and talents with the program. The
children have received instruction in culinary arts, step dancing and
physical education. There is a group for young men and a Girls
Empowerment group. Plans for the upcoming year include a science club,
additional instruction in the performing and visual arts and the
Positive Action (tm) character education program. The Promise Project
is staffed with professional staff and six youth counselors who are
students at Hempstead High School.
The Summer Camp will use the Olympics as a theme, not only for its
obvious athletic activities, but as an opportunity for the children to
learn as much as possible about China's people, culture, language,
history, and current events.
I appreciate this opportunity to offer our recommendations about
the Afterschool and Summer Nutrition Programs for your consideration.
As Congresswoman McCarthy knows very well, while Nassau County is
perceived, understandably, as a well off suburb, in the Village of
Hempstead, where we operate our nutrition programs, every school meets
the 50% eligibility requirement for the school lunch program and,
across Long Island in the 2006/7 school year, 167,000 children were
enrolled. Need recognizes no political boundary.
My purpose today is to describe the impact that rising food costs
will have on our Summer Food Programs, and on the low-income children
and families who are struggling with rising food costs, but I want to
remind us of the obvious: the federal Child Nutrition Programs address
the basic nutritional needs of disadvantaged children who count on
these programs for their best, most nutritious meals of the day.
I have brought with me some photos of children who participate in
our Summer Feeding Programs in the Village of Hempstead. The first
photo is of a boy already in our day care program and sure to benefit
from the reauthorization. The second is a group of children in the
Promise Project Summer Camp taken last Monday, on the first day of
camp. Lastly, this is a group of our teenagers who are enjoying a well
balanced meal.
These children represent the millions of children who today benefit
from the meals that for most of them will be their best meals of the
day, and for too many their ONLY meals of the day! For years Congress
has commendably seen fit to protect these children and assure they have
at least a basic level of nutrition so they can go about their
important business of learning and playing.
Yes, playing, our programs place a special emphasis on play because
that is what we all know makes children creative, inquisitive, and
imaginative, the very qualities they--and our country--need to compete
in the future, if they and we are going to maintain our leadership
position in the world.
No nutrition means no energy! No energy brings me to fuel.
Those speaking before me today have ably explained the interaction
and economics of food and fuel. What I want to talk about is the impact
of these rising costs have on my program. Many of the foods that are
staples in the Summer Food Program have increased at a disproportionate
rate, which makes it harder to provide meals without losing money. For
example, from April 2007 to 2008, the cost of milk increased by 13.5%.
The impact of this on meal costs is substantial since all Summer Food
meals must include milk. Bread increased by 14.1%, which significantly
increases our costs since many of our meals include sandwiches. And
cheese, a favorite with our kids, increased by 12%. These numbers are
much higher than the 5.9% percent average increase in the cost of food.
This summer, the Summer Food reimbursement rate will not cover the
full cost of the meals, but our County has made the decision to support
Summer Food with our very limited local public dollars. The County will
cover 21% of the cost of operating the Summer Food Program. We choose
to do this, because we are committed to providing nutritious meals to
the children who participate in our summer camps. We expect that 2,650
children will participate each day.
Obviously, the financial loss of operating the Summer Food Program
makes sustainability an issue, but we all realize that the rising food
costs, which are increasing the cost of summer meals, are hitting our
low-income families really hard. Too many families in our community are
struggling with rising food and transportation costs. These economic
conditions make the Summer Food Program even more important for our
community.
Imagine the impact of these rising costs on a family of four with
fewer than $1,000 to spend each month for everything they need except
rent! These families were already struggling and things are just
getting harder for them. What happens if they live in a community that
is unable to subsidize the Summer Food Program or must significantly
reduce the quality of the meals in order to run the program without
losing money?
I worry for the Summer Food sponsors that do not have the capacity
to subsidize the Summer Food Program. I wonder what will happen to the
children who used to eat at these sites before the sponsors were forced
to close their doors. The children still need access to those meals to
get through their long summer vacation.
Our children cannot wait for these matters to right themselves.
They need good nutrition now. This past weekend, as we celebrated some
of the inalienable rights we hold sacred as a nation, I could not help
but think that for me--thanks to the wisdom of Congress--one of these
rights is that our country will not let our poorest and most vulnerable
children go hungry. We believe children must, at the very least, have
one (better two: breakfast and lunch) good, decent, nutritious meal a
day! Congress leads the way in this regard, and I hope and suspect I am
preaching to the choir when I implore you to make some much needed
adjustments in the budget for the afterschool and summer nutrition
programs, ensuring that our children can continue to learn and grow to
become the very people who will sit in your seats tomorrow!
Though I realize it is not the purpose of today's hearing, and it
is not within the Committee's jurisdiction, I would be remiss if I did
not use this opportunity to urge Congress to at least temporarily
increase food stamps at the earliest possible date. The low-income
families that participate in my feeding programs would benefit greatly
from immediate Congressional action designed to reverse the impact of
this recession. Specifically, boosting the food stamp allotment by 20%
(as the Senate proposed in the last economic stimulus package) would
immediately increase the food purchasing power of the families we
serve. Food Stamp benefits, which average $1 per person per meal, have
not kept pace with the sky-rocketing cost of food, which is only going
to get more costly. A boost in food stamp allotments would immediately
result in more food--and more nutritious food--on the table of these
families.
Next year, the Committee will be able to make significant
improvements to the Afterschool and Summer Nutrition Programs through
the Child Nutrition Reauthorization. Improving these programs is
crucial. Nonprofit agencies like mine will not be able to bear these
costs and will begin to drop out of these critically needed programs.
Even over a busy holiday weekend, our New York State Association of
Family Service Agencies responded to my inquiry and endorsed the
following proposals for reauthorization to improve these programs. Of
course, we gladly support any improvements that can be made prior to
reauthorization, such as through the appropriations process:
The Afterschool Snack Program is an important resource,
but it often does not provide children, especially teenagers, with
enough food to get through the afternoon. If you have a teenager at
home, I do not have to remind you how voracious an appetite they have
after school and how important it is that they eat nutritionally
balanced snacks--not just junk!
Many afterschool programs are operating longer hours to
better serve working families, which makes providing adequate nutrition
even more important. Programs need to have the option of providing an
evening meal if the program stretches into the late afternoon or
evening hours.
The Afterschool Supper Program allows school-age children through
age 19 to receive supper at an afterschool program located in a low-
income area in ONLY eight states. (Fortunately, my state is one of
them.) In most states only children under age 13 may receive supper.
The states which provide this option for older children are required to
do significant administrative work for that privilege. I ask that you
expand the Afterschool Supper Program with a minimum amount of
paperwork for children through age 19 in all states and allow schools
to provide suppers through the National School Lunch Program.
Many afterschool and summer programs serving low-income
children cannot participate in the federal nutrition programs, because
they are not located in an area where 50% or more of the children are
eligible for free or reduced-priced meals. The 50% requirement is not
consistent with eligibility requirements for other federal afterschool
and summer programs, most notably, the 21st Century Community Learning
Center Program--the largest federal funding source for afterschool and
summer programs--which requires 40%. It is especially difficult to meet
the 50% requirement in rural communities, which do not have the same
concentration of poverty found in metropolitan and suburban areas. I
ask that you lower the threshold to 40% across the board.
Providing nutritious snacks for $0.68 cents or a healthy
lunch for $2.98 is an enormous challenge in our area and elsewhere not
close to the sources of food. Increasing fuel prices will drive up the
cost of meals and snacks in the coming months. We would also love to
serve our children fresh fruits and vegetables, whole grains, and low-
fat milk, but the current reimbursement rates for the afterschool and
summer nutrition programs make that next to impossible. Please increase
these rates, so that we can all provide our children more nutritious
meals and snacks.
As I am sure you know, many schools, local government
agencies, and nonprofit organizations operate both afterschool and
summer programs. Schools can provide meals to children year-round
through the National School Lunch Program, which is terrific.
Unfortunately, local government agencies and many nonprofits must
switch back and forth between the Child and Adult Care Food Program and
the Summer Food Service Program, if they want to feed children year
round. Again, this greatly increases administrative work, because each
program has different applications, eligibility rules, and
requirements. Your last reauthorization created a pilot in California
which allowed year round local government agencies (not including
schools) and nonprofits to use the Summer Food Service Program to feed
children 365 days a year. I urge that this pilot be extended to all the
states.
Colleagues tell me that the California pilot can and should also be
improved. Currently, only snacks can be served during the school year.
I recommend that children be eligible for suppers after school and
meals on weekends and school holidays so that children will receive the
nutrition their bodies need 365 days a year.
Lastly, I implore you to give additional support to the
Summer Food Service Program, which reaches fewer than one in five
children who rely on the National School Lunch Program during the
school year. The Summer Food Program needs to be strengthened with
additional funding for food, transportation, outreach, start-up and
expansion.
The 2009 Reauthorization of these nutrition programs provides the
critical opportunity to improve the Afterschool and Summer Nutrition
Programs so our most vulnerable children can learn and play after
school and during the summer.
The nutritional value is obvious but must not be taken for granted.
Across our country, these food programs have the important, added
benefit of drawing children into quality programs like ours, which keep
them engaged, safe and out of trouble, while their parents work. They
boost student achievement and reduce juvenile crime and other at-risk
behaviors.
We need more afterschool and summer programs to participate in
these nutrition programs, so that more eligible children have access to
nutritious food as well as food for their minds. I believe if the
paperwork and administration are streamlined and the reimbursement for
real costs modified, more nonprofits and faith-based organizations will
step up to make these programs available to more children.
Please consider these recommendations and the others you are
receiving and use the 2009 Reauthorization to improve these vital
federal child nutrition programs. These programs need to be
strengthened to better serve our children and teens both after school
and during the summer.
Thank you so much for your consideration.
______
[Additional submission from Mr. Harnett follows:]
[From the Wall Street Journal, July 8, 2008]
Currents: Summer Camp as Food Relief--Low-Income Families in U.S. Make
the Most of a Vital Lifeline
By Roger Thurow and Anna Prior
Lombard, Ill.--Summer camp at the York Community Resource Center in
suburban Chicago offers all the usual activities: arts and crafts,
sports, computer games, new adventures in reading. But the prime
attraction for Elizabeth Castro, who drops off her two children every
morning, is the activity that begins at noon: lunch.
``Food is very expensive this summer,'' says Ms. Castro, who sells
shoes at a department store. ``Milk, bread, eggs, everything is going
up and up. Except my income.''
The severity of the global food crisis, born of increased demand
and dwindling stockpiles around the world, can be measured in many
ways: rioting in developing countries, rising barriers on the free
trade of agricultural goods, and the inexorable creep of hunger in
places like the Horn of Africa. In the U.S., where the impact has so
far been less dramatic but no less acute for the nearly 13 million
households struggling to put enough food on the table, an unlikely
barometer has emerged: Day camps, parents' traditional antidote for
summer idleness, are now also a bulwark against soaring food prices.
To combat hunger in America, summer camps are spreading the word:
There is such a thing as a free lunch.
``Free Meals this Summer for Kids and Teens,'' shouted a flyer
distributed to Illinois students by a number of hunger-fighting groups
as school ended last month. ``Don't let your children miss out!''
It wasn't long before the Illinois Hunger Coalition's Hunger
Hotline was besieged by parents asking about free-lunch sites. Through
June, the number of calls had jumped more than 50% over last year's
volume.
The free lunch comes from an underused federal benefit called the
Summer Food Service Program permanently created by Congress in 1975 and
administered by the U.S. Department of Agriculture. It was designed to
fill the hole when school ends and children no longer receive the free
and reduced-price breakfasts and lunches available in school under
other federal programs.
Within two years, 2.8 million children were signed up for the
summer meals. But that was where the program crested, hindered by a
lack of sites and the scarcity of summer bus service. In the past 30
years, summer meals never again approached three million while the
school-year free and reduced-price meals feed nearly 18 million
children.
The gap between school and summer meals rarely cried out for
attention until this year when food costs began exploding at a
spectacular rate not seen since the early 1970s. A gallon of whole milk
in May was up 15.4% over a year earlier, American cheese up 5.3%, a
pound of white bread up 14.9%, eggs up 28%, government figures show.
The price increases hit low-income households especially hard, since
food costs comprise 10.5% of their total consumption compared with 5.5%
for the richer households, according to a May report from Goldman Sachs
Group Inc.
The USDA reported that 1.5 million more people were receiving food
stamps in March than a year earlier. America's Second Harvest, the
nation's food-bank network, surveyed 180 member agencies and found a
20% increase in the number of people coming into food banks this spring
compared to a year ago.
Enter the summer camps, which are proliferating in number and
expanding enrollment across the country. The Food Bank of Northern
Nevada reports that it is feeding twice as many children this summer,
more than 6,000 a day, than last summer. The Bay Area Food Bank
covering counties in Alabama and Mississippi served more than 12,000
lunches this June, which is nearly double the number a year earlier.
For lower-income families, the food-cost crunch is being
exacerbated by the soaring fuel prices. In fact, the cost of gas is
creating an odd pattern in the summer food programs. The Bay Area Food
Bank, for example, has recorded a 40% drop in lunches served at more
remote rural sites compared with a doubling at urban sites. Darcy Long,
the food bank's child-nutrition manager, says parents claim high gas
prices are keeping them from driving their children to the sites, some
of which might be miles away from their homes. The choice facing those
parents: gas or milk?
Krish Patel, who earns $7.75 an hour working nights at a fast-food
chain, says he gave up driving when gas hit $3.40 a gallon. He now
walks nearly a mile from his apartment to the York Community Resource
Center with his 10-year-old son, Deep.
``My son, he likes to eat. And the cost of everything he likes is
up,'' says Mr. Patel, who says his food bill consumes nearly 15% of the
family income.
When lunch is served, Deep goes straight for the chocolate milk. At
another table, 10-year-old America Torres puts down her book--Dr.
Seuss's ``Oh, the Places You'll Go''--and tears into the meal: A
peanut-better and jelly sandwich, carrot sticks with buttermilk ranch
dressing dip, two plums, a packet of sunflower kernels and a half pint
of milk. ``Sometimes, my lunch is also my breakfast,'' she says.
``We call it brunch,'' says a friend sitting across the table.
Mariela Soejarto, the director of the community center, which is
housed in the basement of the Church of the Brethren, serves about 40
meals every day provided by the Northern Illinois Food Bank. ``I know
some of the parents don't have enough food in the house, or they don't
have time to prepare it because they are working,'' she says. ``For
some of the children, this is the only place for them to come and
eat.''
Even schools are pitching in. In Chicago, there is the odd
phenomenon of children going to school in the summer even when they
aren't taking classes.
A sign on the front door of the Michael Faraday Elementary School
announces to the community, ``Meals are served'' and lists the times of
breakfast and lunch below a drawing of two children sharing a cupcake.
Under a new state law signed last fall, all neighborhood children are
welcome to eat at schools in low-income areas that are offering summer
classes.
``We know a lot of our children aren't getting meals unless they're
eating at school,'' says Faraday lunchroom manager Leola Smiley, who is
feeding more than 120 this summer. ``Dinner is potato chips, sodas,
[Cheetos] Flamin' Hots,'' she says. ``Vegetables? They don't get any if
they don't get them here.''
This summer, Michelle Cox is feeding 300 children at two sites in
the city of Waukegan at the Boys and Girls Club of Lake County, Ill. A
waiting list stretches up to 100 children; a third site had just opened
in the neighboring city of North Chicago. ``The food component of our
program is absolutely vital for the parents and the kids,'' says Ms.
Cox, the director of operations.
Arriving at one of the clubhouses in Waukegan, Tera and Reginald
Hooks get the rundown from their three children on what they had for
lunch: a cheese sandwich, crackers, cherries, cucumbers, a granola bar
and milk.
``I'm so thankful they're getting milk. We go through a gallon a
day at home, and a gallon of milk now costs almost as much as a gallon
of gas,'' says Ms. Hooks, who works at the township office.
Kenneth Norels, who works at a cable company, needs the program so
much that when he drops his boys off at the club every morning, he
admonishes them to be on their best behavior. ``Now don't give them any
problems,'' he tells them.
______
Chairman Miller. Thank you.
Ms. James?
STATEMENT OF PAULA JAMES, DIRECTOR, CONTRA COSTA CHILD CARE
COUNCIL CHILD HEALTH AND NUTRITION PROGRAM
Ms. James. Thank you, Chairman Miller and members of the
committee, for this opportunity to testify about the rapidly
rising cost of food and its impact on the child and adult care
food program and, more importantly, the young children and
families it serves.
Rising food costs have more than ever increased the need
for the child-care food program and, at the same time, have
decreased access to the program and threatened to reduce the
quality of meals served to young children. At a time when
prevention of childhood obesity is of paramount concern
nationally, we can afford neither.
As families struggle to make ends meet, the Child Care Food
Program becomes all the more important to help fill the ever-
widening gap between what foods families can afford to buy and
what we know young children need to grow strong and healthy.
More and more cash-strapped working families depend on the
child-care setting to fill some of that gap through meals
served while their child is in care. As a family child-care
provider in Los Angeles stated, ``On Monday the kids are
famished. They eat like they are starving. I don't know what
they are eating on the weekends, but I have to plan big meals
for Mondays.'' And a child-care center director in Concord,
California, said, ``There is always the issue of hunger for our
kids. They come to the center hungry, and they will eat
anything.''
The Child and Adult Care Food Program's good nutrition is
important, not just because it provides enough food but because
it provides the right food, the healthy food. In a recent USA
Today-Gallup poll, 46 percent of those surveyed said that the
higher cost of food is creating a financial hardship, primarily
noticing an increase in the cost of milk, fruits, vegetables,
meat, bread and eggs. These are the same foods that comprise
the meal pattern for the Child Care Food Program.
A center director from San Diego stated, ``I will need to
downgrade my great center menus because we can't afford all of
the variety, especially of fresh fruits and vegetables.'' And a
San Mateo Head Start program, which serves over 800 low-income
children, said, ``Last year our food costs increased 15
percent. Are we still able to feed our children nutritious
meals? Yes. But it comes with a price of reducing the quality
of our educational services.''
At the same time need is increasing, access to the Child
and Adult Care Food Program is declining and nutrition quality
is jeopardized. For some child-care providers and centers, the
balance has shifted. The cost of the gap between the
reimbursement level and the cost of meeting the meal pattern
and required paperwork is finally pushing them off the program.
Participation in the family child-care portion of the
program has declined precipitously since tiering as part of
welfare reform, and now we are seeing another significant
decline. And for the first time, center participation has
decreased. Only about 41 percent of children in licensed family
child care are in a home providing Child and Adult Care Food
Program meals and snacks. And I am concerned about the
nutritional value of meals available to the other 59 percent.
A recent California study compared meals served by homes
that participated in the Child and Adult Care Food Program to
meals brought from home and found that meals from home were of
a significantly lower quality. Meals brought from home mostly
contained juice and juice drinks, not milk; chips and cookies
were common, and there were very few vegetables and sources of
lean protein. And we expect these results to be confirmed in a
larger statewide survey funded by the Robert Wood Johnson
Foundation.
A family child-care provider from Los Angeles had this to
say: ``I shop at discount stores and try to stretch the money.
I try to buy fresh fruits and vegetables, but the cost is going
up. Everything we use--apples, broccoli, even the canned
stuff--is going up. Milk has doubled.''
We really need the food program. So many kids will suffer
if we don't have it. And then learning will suffer. Yet I talk
to providers every day who are leaving the program because they
can't afford to buy the foods the program requires.
A sponsoring organization in Alameda County noted that,
``Providers are cutting back on seconds. They are serving more
crackers instead of vegetables as snacks, and less milk because
it is too expensive. The quality of food choices has changed.''
Rising food and fuel costs have also threatened access by
exacerbating longstanding pressures on an already-fragile
child-care food program support system, the community-based
organizations that sponsor the Child and Adult Care Food
Program participation for family child-care homes.
California has seen half of the program's sponsors drop out
in the last 12 years. Nationally, 27 percent have dropped. In
my own organization, the Contra Costa Child Care Council, our
board of directors has authorized $100,000 of other agency
funds to subsidize the cost of administering our Child Care
Food Program.
So what are some of the solutions for protecting access and
quality of meals for our very young children in this time of
increasing need?
First, we would support the recommendation to insert a
trigger requiring a mid-year adjustment for child nutrition
programs if the CPI rises above a certain level.
Secondly, the 2009 Child Nutrition Program reauthorization
will be an important opportunity to improve the program. And I
have outlined many of those recommendations in my written
testimony. I would, however, like to highlight two.
The first is to increase, obviously, the Child and Adult
Care Food Program reimbursement to reflect the increased costs
of meeting the program requirements and hopefully the dietary
guidelines.
And the second would be to enhance sponsoring
organizations' reimbursement rate for serving family child-care
homes in low-income areas to cover the additional costs of
visits and time spent in helping providers overcome literacy
and language issues.
Again, I want to thank you for this opportunity to share
what we know about the impact of rising costs on the Child and
Adult Care Food Program. Clearly it is in the best interest of
millions of young children in child care to act to protect the
Child and Adult Care Food Program access and quality in this
time of increasing need.
And I would like to close with a quote from a child-care
center director in Congressman Miller's district, who said,
``We worked really hard to make really good changes to our
menus to provide nutritious meals for our kids. We can't go
back on them, and we won't, even if it means the money we had
for instructional materials has to be spent on food.''
Thank you for this opportunity.
[The statement of Ms. James follows:]
Prepared Statement of Paula James, Contra Costa Child Care Council,
California CCFP Roundtable, National CACFP Forum
I appreciate the opportunity to talk this morning about the impact
of rapidly rising food prices on the Child and Adult Care Food Program,
young children in child care, their families and child care providers.
The Child and Adult Care Food Program, a federal nutrition program,
is a key source of support for child care in family child care homes,
Head Start and child care centers. The program provides reimbursement
for food and meal preparation costs, ongoing training in the
nutritional needs of children, and onsite technical assistance in
meeting the program's strong nutritional requirements. The Child and
Adult Care Food Program (CACFP) provides high quality nutrition and
learning experiences for three million children each working day: 2.3
million children in child care centers and 850,000 children in child
care homes.
I. The impact of rising food costs
Rising food costs have increased the need for the Child and Adult
Care Food Program, decreased access to the program and threaten to
reduce meal quality.
A. Rising food costs are increasing the need for CACFP
The urgent need for CACFP has increased as families struggle to
make ends meet in the face of rising food costs. CACFP becomes even
more important to help fill the ever widening gap between what families
can afford to buy and what young children need to stay healthy and grow
strong. More and more children are coming to child care hungry.
I would like to share two stories, both indicative of what we are
hearing from child care providers and centers around the country:
A child care center director using CACFP to serve 150
children from a very low-income Latino community said, ``Our milk bill
increased 25 percent this year. There were huge increases in all the
other foods that form the basis of good nutrition. If we are having
trouble buying milk imagine what it must be like for our families.
There is still the issue of hunger. Children come to our center hungry
and they will eat anything.''
``This program is really important.'' said a CACFP family
child care provider, commenting of the impact of rising food costs.
``On Mondays the kids are famished. They eat like they are starving. I
don't know what they are eating over the weekends, but I have to plan
big meals for Mondays.''
``The kids are hungrier and they eat more food.'' Said a
provider describing the impact of the rising cost of food on the
children she serves.
These hungry children are experiencing food access problems at a
crucial period of growth, when healthy bones and muscles are formed and
the brain is learning to make important connections. In this era of
rising food prices CACFP is an absolutely essential support for child
care centers and providers working to provide plenty of healthy
nutritious food to the young children in their care.
Studies have documented the importance of good nutrition, and
CACFP, to young children's development and achievement. For example,
USDAs' Evaluation of the Child and Adult Care Food Program found that
children in CACFP received meals that were nutritionally superior to
those served to children in child care settings without CACFP. For a
summary of other research demonstrating the positive impact of CACFP
please see the attachment fact sheet.
I would like to highlight the positive findings of our recently
completed California study. When comparing the meals and snacks
children brought from home to eat in child care without CACFP to the
meals and snacks served in child care with CACFP, we found that meals
and snacks brought from home had significantly poorer quality than
meals and snacks served by CACFP providers. (Children were sent to
child care with a wide range of foods including a McDonald's McGriddle
with sausage.) Meal quality was higher for the CACFP meals which
generally featured more fruits and vegetables, lean meat and milk. For
example, none of the meals and snacks from home included milk.
CACFP's good nutrition is important not just because it provides
enough food but because it provides the right foods. As we pointed out
earlier, families are being squeezed by increased costs in many areas,
trying to keep their children housed, clothed and fed requires hard
choices. Contributing to the difficulty is the fact that many of the
healthier foods have increased in cost even faster than less healthy
foods. The April 2008 Journal of the American Dietetic Association
article, Increasing Food Costs for Consumers and Food Programs
Straining Pocketbooks, pointed out that ``Recent research looking at
the price changes in low- and high-calorie foods also indicate that
food price increases vary by food category. Low-calorie food (primarily
fruits and vegetables) cost 20% more in 2006 compared to 2004, while
calorie-dense foods including potato chips, cookies, and candy bars
cost 2% less over the same 2-year time span.''
Nutrition problems start early. The number of overweight preschool
children has grown significantly. According to the Centers for Disease
Control and Prevention 5 percent of children age 2-5 were overweight in
1980. By 2004, that number had grown to 14 percent. Research has shown
that these children are much more likely to be overweight as teenagers
and that overweight teenagers are more likely to be overweight adults.
Many children are in care over eight hours each day and eat the
majority of their meals at child care. Child care plays a central role
in providing healthy food and shaping the nutrition habits of young
children. Since many of the habits learned in the preschool years will
last a lifetime, CACFP can help to make sure that these nutrition
habits are good ones.
We believe it is especially important now to strengthen nutrition
program supports, as well as connect more families to CACFP and other
federal nutrition programs, that can help them stretch their limited
funds and access to healthy foods.
B. Rising food costs are threatening access to CACFP
1. access to cacfp is declining and nutrition quality is threatened as
child care providers and centers are pressed to the limit by rising
food prices
At the same time need is increasing, access to CACFP is declining
and nutrition quality is threatened. We risk a deterioration in the
quality of nutrition served and providers dropping out because, to the
degree reimbursement levels are too low to begin with, even with an
index for inflation, the cost of the un-reimbursed part of the program
is rising rapidly and deterring participation or quality improvements.
The rising costs generate additional pressure in an already delicate
balance between the value of CACFP to child care centers and providers
and the ``real costs'' to participate including excessive and for some
difficult paperwork. If providers and centers choose not to
participate, then children have no choice.
The cost of food is rising rapidly, with the cost of food necessary
to meet the CACFP meal pattern requirements rising even faster. For the
2008-2009 year the inflation adjustment for child care centers
reimbursement rates is 4.272 percent (based on changes in the Consumer
Price Index for Food Away for Home) and 5.773 percent for child care
homes (based on changes in the Consumer Price Index for Food at Home.)
The price of milk, a key component of CACFP's nutritious meals, has
risen 10 percent in the last year.
Here are some quotes typical of the stories playing out across the
country:
``I shop at discount stores and try to stretch the
money.'' Said a long time CACFP family child care provider. ``I try to
buy fresh fruits and vegetables, whatever is in the store that week,
but the cost is going up. The cost of apples is way up. Bananas, you
couldn't even get them for awhile. Everything we use: apples, broccoli
* * * is going up. Even the canned stuff is going up and the fresh is
even higher when you can get it. Milk has doubled, and that's every
day. Plus I buy soy milk for the kids who can't drink milk. We really
need the food program. So many kids will suffer if we don't have it.
And then the learning will suffer. I'm not out buying a Cadillac with
my check. I buy food and I supplement it with my own money.''
``We are taking away from our instructional materials
funding to feed our kids. It is essential with the obesity crisis, that
we take the responsibility to insure they have healthy meals. We really
serve low-cost meals and serve lots of beans.'' A CACFP low-income
child care center director explains. ``In November and December we buy
up turkeys cheap and stuff our freezers and use them for our protein
source all year long. And the cost of all our food related supplies
have gone up too, deliveries have added fuel charges and pass on the
increased costs. We are now pulling money from other programs to pay
for the extra food costs.''
A provider commenting on the cost to children and families
said, ``The kids miss the meat most of all. The variety of fruits and
vegetables is limited because we have to buy at Costco and they have a
very limited variety in the #10 cans. We now have to ask parents to
supplement our food service and bring food to provide the additional
snack we are not reimbursed for.''
A director of Head Start and Pre-K programs serving 640
children in the school year said, ``Our fiscal people say that we will
subsidize CACFP reimbursements to fill a short fall of $100,000.''
For some child care providers and centers the balance has shifted,
the cost of the gap between the reimbursement level and the cost of
meeting the CACFP meal pattern and paperwork is finally pushing them
off the program. In many cases, providers do not the resources to make
up a significant shortfall because child care is a low-income
profession. Participation in the family child care portion of the
program continues to decline and for the first time child care center
participation has decreased. Only about 41 percent of the children in a
licensed family child care are in a home providing CACFP meals and
snacks. I am concerned about the nutritional value of the meals and
snacks available for the 59 percent of children in homes without CACFP.
The family child care providers tell us ``It is just not worth
it.'' It is easier to serve cheap less nutritious meals and to operate
without the CACFP oversight and the paperwork burden. It is also common
for providers and centers to forgo a meal service altogether and simply
let children rely on food sent from home.
A CACFP sponsor explaining the barriers to participation
for providers said: ``We also consistently heard from the child care
providers about the difficulty completing the paperwork, the amount of
time it took from them which meant less time for quality interactions
with children. Many providers for whom English is a second language had
a difficult time with the paperwork, the amount of time it took for
them which meant less time for quality interactions with children.''
The negative impact of rising food costs has intensified existing
barriers to participation in the programs including the means test in
the family child care portion of CACFP. Before the implementation of
the means test the family child care portion of CACFP was one of the
fastest growing federal food programs. Since the implementation of the
means test, the number of family child care homes, children and meals
and snacks served in family child care homes through CACFP has been
declining steadily. Since the implementation of the means test, there
has been a 27% drop in the number of family child care homes
participating in CACFP. (Thirteen states have had a drop of 42% or
more.) It is time to STOP THE DROP!
2. access is threatened as rising food prices push cacfp support system
to the tipping point
Rising food and fuel costs also threaten access by exacerbating
long standing pressures on the already fragile CACFP support system.
The network of CACFP sponsors, the non-profit community-based
organizations supporting the CACFP participation of family child care
homes, is breaking down as sponsor after sponsor leaves the program.
This is particularly problematic in California where half of the
sponsors have dropped out in the last twelve years. Nationally, 27
percent of the sponsors have left the program.
In the 2006 USDA report, Administrative Costs in the Child an Adult
Care Food Program: Results of an Exploratory Study of the Reimbursement
System for Sponsors of Family Child Care Homes, researchers reported
that ``Costs reported by sponsors on average were about 5 percent
higher than allowable reimbursement amounts.'' The current increases in
food and fuel prices are pushing an already underfunded system further
into the red.
CACFP sponsors struggle with increasing costs:
``we have added homes from other counties as the sponsors
in those areas decided to stop sponsoring the program. In the interest
of providing the services of the programs, 4Cs decided to expand our
service area * * * It costs more, of course, to monitor in the extended
areas: both the mileage costs to monitor and the additional staff time.
For example to monitor a home in Corte Madera, 42 miles away, it takes
at least a 3 hours travel time.'' said the director as she described
the need to supplement CACFP with other funding. She then went on to
address another contributing factor tipping the cost neutral balance, a
loss of economies of scale for CACFP sponsorships as providers food
costs go up and they drop out of the program. ``We are struggling to
maintain the current number of active providers * * * From a provider's
point of view the program requirements are too strict, especially when
they get reimbursed such a small amount for breakfasts and snacks.''
In describing the pressures that led them to recently drop
their sponsorship of CACFP the vice president of the Child Care
Resource Center said, ``CCRC gave up the federal nutrition program
because of the low administrative reimbursement combined with draconian
reporting requirements for the monitoring staff. It was with great
sadness that we gave this program up--we believe strongly in the value
of providing nutritious meals to low-income children, and providing
nutrition education to the family child care providers. ``she said,
``Should the administrative reimbursement increase and reporting
requirements become more reasonable we would be very willing to become
a food program provider[sponsor again].''
Child care plays a central role in shaping the nutritional habits
of young children. Through in-home visits, group classes, and ongoing
assistance and support CACFP sponsoring organizations teach child care
providers not just the importance of good nutrition but practical
advice and guidance on serving good and nutritious food. Unfortunately,
as the paperwork and cost of administering the program increase
exponentially, quality nutrition education is being squeezed out and
sponsors are dropping out of the program. This is particularly
problematic given the negative impact of rising food costs including
the growing rates of food insecurity in families with young children
and the continuing need to address the increasing rates of overweight
and obesity in preschool children.
II. Potential solutions: Options for protecting access and quality in a
time of increasing need
We would like to offer our recommendations for the stimulus or
other bills focused on ameliorating the negative impact of the rising
food costs on low-income families. We know there is a conversation
about reimbursements which we will address in detail in our
recommendations. Rising food costs are ultimately about children and
families struggling to make ends meet. We need to open the door to
CACFP and solve access problems. Today we will focus on opportunities
within this committee's jurisdiction, not discuss the need to include
additional funding for food stamps in the next stimulus bill, but
instead focus on recommendations for the short term (the stimulus) and
long-term, next years' Child Nutrition Reauthorization.
A. Stimulus bill
We recommend the inflation adjustment for the child nutrition
programs be improved by inserting a trigger requiring a mid-year
adjustment if the relevant Consumer Price Indexes rise above a specific
level. In years with rapidly rising food inflation a mid-year
adjustment would help to more quickly bring some much-needed relief to
CACFP child care providers and centers struggling to serve nutritious
foods on a limited budget.
The rapidly rising food costs during this past adjustment year
(July 1, 2007 to June 30, 2008) provide an example of the need for a
mid-year adjustment:
For the average CACFP family child care provider serving
low-income children a breakfast, lunch and a snack, a mid-year
adjustment would have resulted in an additional $55 for the second half
of the year.
Providers serving children from a mix of incomes (half and
half) would have received about $43 more in CACFP reimbursements the
last six months.
Family child care providers serving children with incomes
over 185 percent of poverty a CACFP breakfast, lunch and snack would
have received $31 more for the second half of the year. (On average
CACFP providers serve 6 children.)
The average CACFP child care center, serving 45 children a
breakfast, lunch and snack, would have received approximately $380 more
in CACFP reimbursements in the last six months. (Participation
assumptions based on national averages: 63% Free, 8% Reduced Price, and
29% Paid Category.)
A provision of this type would need to amend not only the school
meals adjustment but also the adjustment section for the CACFP family
child homes in 42 U.S.C. 1766(f)(3)(A)(ii)(IV). CACFP family child care
home rates are adjusted based on the Consumer Price index for ``Food at
Home.'' Adjustments to the CACFP child care center rates are the same
as the school meals adjustment (CPI for ``Food Away From Home'') and
are determined in the school meals adjustment section.
B. Child Nutrition reauthorization
The 2009 Child Nutrition Programs Reauthorization will be an
important opportunity to improve the program. There are millions of
children in child care who could benefit from CACFP but are currently
unserved. The following recommendations would help to improve program
access and protect the quality of CACFP services for children in child
care.
Streamline Access for Eligible Low-Income Children:
Reduce paperwork by extending CACFP categorical
eligibility to other beneficiaries of means-tested federally funded
programs supporting working families, including Medicaid/SCHIP
programs.
Reduce the area eligibility threshold in family child care
from 50 percent to 40 percent.
Establish area eligibility for child care centers.
Enhance Meal Reimbursements:
Dramatically revise or eliminate the burdensome CACFP
means test for children in family child care homes and thereby open up
access.
Allow CACFP to offer the option of a third meal, most
likely a supper, for children in child care centers over eight hours.
Increase CACFP reimbursements to reflect the increased
costs of meeting the Dietary Guidelines.
Improve CACFP's ability to reach low-income families by
streamlining program and paperwork requirements:
Streamline program operations, increase flexibility, and
maximize technology and innovation to allow sponsoring organizations
and providers to operate most effectively.
Direct the Secretary to revise the Block Claiming criteria
to be consistent with the reality of serving low-income families in
child care.
Allow carryover funds and CACFP sponsoring organizations
to plan multi-year administrative budgets.
Restore the right to advance funds for sponsors and child
care centers to cover program costs up front.
Allow CACFP family child care providers to facilitate the
return of participating children's family income form.
Continue USDA Paperwork Reduction Initiative.
Improve the Nutritional Value of the Meals and Snacks Served:
Direct the Secretary of Agriculture to issue proposed
regulations updating the CACFP meal pattern, including recommendations
for the reimbursements necessary to cover the costs of the new meal
pattern, within 18 months of the publication of the IOM CACFP Meal
Pattern report. (We are hoping to get the IOM study funded through the
appropriations process this year.)
Strengthen the Support System:
Increase the sponsors' administrative reimbursement rate
with nutrition education funding.
Enhance sponsoring organization reimbursement rates for
serving family child care homes in rural areas to cover transportation
costs.
Enhance sponsoring organization reimbursement rates for
serving family child care homes in low-income areas to cover the costs
of additional visits, and time spent in helping providers overcome
literacy and language issues.
Fully fund USDA FNS child nutrition functions to restore
adequate staffing levels for the child nutrition programs at the
federal and regional level.
III. Conclusion
Thank you for this opportunity to share what we know about the
impact of rising food costs on CACFP. Clearly it is in the best
interests of the millions of young children in child care to act to
protect CACFP access and quality in this time of increasing need. I
would like to close with a quote from a CACFP child center director who
said ``We worked really hard to make really good changes to our menus
to provide nutritious meals to our kids. We can't go back on them.''
______
[Additional submissions from Ms. James follow:]
------
Chairman Miller. Thank you.
Thank you, again, to all of you.
Mr. Matustik, you talked about this joint powers
interagency agreement that you have. Is that unique in
California? Do other districts do this?
Mr. Matustik. Mr. Chairman, as far as we know, we are the
only school food service JP or intergovernmental agency in
California for sure and maybe in the nation. There are other
JPAs for other reasons, but not for the food.
Chairman Miller. Right.
Dr. Wilson, would that be right?
Ms. Wilson. Yes, he really has been kind of on the leading
edge of putting this together, and has put a number of
districts together. And we don't know of any other one that
operates under the same conditions with this intergovernmental
agency.
Chairman Miller. Is that a model worth exploring?
Ms. Wilson. I am sorry?
Chairman Miller. Is that a model worth exploring?
Ms. Wilson. It absolutely would be. I think that there are
challenges to that, as well. They are lucky to have a director
that is knowledgeable and trained in that program, but I think
when you look at all the little, tiny districts throughout this
country, it is difficult for them to even come together and
bring that together. And then, too, you know, it takes dollars
to even put something like that together.
A number of school districts across the country have formed
co-ops with other districts, but then you have to pay somebody
to run that. You also have to have the warehouses to put all
the food in if you are buying in bulk or buying in larger
quantities.
But it is definitely something worth exploring.
Chairman Miller. Mr. Matustik, do you want to comment on
that?
Mr. Matustik. The biggest hurdle we found--because we have
districts who come to us and ask for expertise and advice, but
then suddenly you have egos starting to work in, because you
put five districts together, you are losing, minimum, four
directors, maybe five. People like to own. You know, the
business managers, the superintendents like to own their food
services. They just need to start looking at it completely
different, and I think that if they go into it, you see the
rewards.
Chairman Miller. Thank you. That is worth considering.
Ms. James, thank you for your testimony. We have obviously
started to recognize at the national level, and certainly
people all across the country have, the question of childhood
obesity. And you suggested in your testimony that we are
getting to a point where what we know we should do and what we
are starting to do, because of prices, is starting to get
compromised.
Do you want to elaborate a little bit?
Ms. James. Well, first of all, I would like to say, and I
didn't have a chance to say in my testimony, that the Child and
Adult Care Food Program is a program that we should be growing,
as opposed to seeing it decline. Because, certainly, what we
know about the prevention of childhood obesity is really
becoming more focused on very young children, specifically
children under the age of 5.
I think it certainly speaks to the fact, when we look at
the American Academy of Pediatrics, it has recently recommended
perhaps giving cholesterol medication to children at the age of
8, and certainly we know that children really need to have a
very healthy start and be exposed to a lot of variety and
healthful foods in child care and certainly before the age of
5.
Chairman Miller. You mentioned the kinds of foods that are
starting to creep into the program as people downgrade the
quality.
Ms. James. You know, certainly at a time when we are really
struggling to try to increase fresh fruits and vegetables and
whole grains, not only in schools but certainly in the child-
care setting, I find myself in an uncomfortable position,
trying to educate child-care providers to increase that
consumption or increase the servings of fresh fruits and
vegetables and to buy the whole grains, because the cost is
prohibitive.
I mean, I think as Judy Wagner from Concord Child Care
Center said, it is really difficult for us to be looking at
serving fresh fruits and vegetables when the kinds of crackers
and other foods like that that we can serve children that
really meet the federal guidelines for this program are so much
cheaper.
So I think we are sort of between a rock and a hard spot in
this situation. We know what people should be serving, and we
know what we should be providing, but the reality is what the
cost is, is making it prohibitive. And for people in the child-
care business, they are also very low-income to begin with.
There is not a lot of room for margin in that.
Chairman Miller. Thank you.
Mr. Faber, it appears that we have sort of walked into a
perfect storm here on a number of issues. Clearly, some
recognition that there may be a worldwide food shortage as
nations become richer, certainly countries like India and
China, and then the droughts in Australia putting pressure on
grains, the droughts through Africa putting pressure on grains.
Countries now, as you point out, putting export controls
because they are fighting about whether or not they will be
able to sustain, in some cases, subsistence levels for
individuals in those countries. The increased energy costs that
you point out, and then of course you can overlay that with
weather in good parts of the world and in the United States.
You said you thought that food prices would continue up at
9 percent a year? Is that what you are saying?
Mr. Faber. That is correct.
Chairman Miller. Mr. Leibtag, is that consistent with what
you think or what the department thinks?
Mr. Leibtag. Nine percent, no. What is the number? I don't
know what your estimate for yours is, but----
Mr. Faber. Bill Lapp, who is an independent economist,
estimates what average food price inflation would be between
2008 and 2012. And he looked at what commodity prices were
likely to be in light of increased production of food-to-fuel,
as well as the other factors you talked about, in particular
steadily growing global demand for protein and cereal grains,
in particular. And he estimated that food prices would increase
by a rate about 9 percent over the next 5 years.
Chairman Miller. Mr. Leibtag?
Mr. Leibtag. That is certainly way above our estimates, at
this point. As I mentioned, we are looking at about 5 to 5.5
percent this year. Certainly there will be some pressure on
meat and poultry products for the next 2 or 3 years.
But the overall--again, we have to remember here that there
is a difference between high prices and high inflation. I think
that the price levels we are at now are probably not going to
go down any time soon, but the rate of acceleration I don't see
as being that high going out beyond the next year, year and a
half.
But I will just add the one point. You know, the big
question mark is energy markets, because so much of what is
going on now is based on where we are at $130 more a barrel for
oil and there is a lot of uncertainty there. A lot of the
models people are looking at are assuming the energy market
that, you know, probably we are never going to get back to. So
there is some uncertainty.
Sorry, go ahead.
Mr. Faber. It might be worth noting that USDA has had a
hard time estimating these sorts of increases in food price
inflation and has fairly consistently underestimated the
increases in the last few years.
So I think the--to get back to what I think your main point
is, Mr. Chairman, is that, in light of all of these other
factors, are they likely to diminish or are they likely to
continue? And clearly, everything we know about global demand,
we expect to see very significant increases, especially as
people in China and India enjoy first-world lifestyles and
consume more protein in their diets.
And in light of that factor, when you just step aside and
look at what are global commodity stocks, how low are they, how
fast is demand increasing, and what is happening with global
agricultural productivity, when you look at that picture, it is
a troubling picture.
Because, in the 1970-to-1990 range, global agricultural
productivity was increasing about 2 percent annually. That has
fallen to 1.3 percent and is expected to fall to 1.2 percent
annually over the next decade. So, essentially, we have kind of
a classic supply-demand problem, not so much a problem of a
perfect storm.
Chairman Miller. When you talk about--just quickly here--
when you talk about food-to-fuel, the Department of Energy and
USDA said that is about 4 percent of the increase. So 4 percent
of the 5 percent is food-to-fuel. But there are other,
obviously, energy costs in there beyond that. And I am standing
by your testimony, the play-out in terms of the utilization of
the resources and that, but--and direct impact on food.
Mr. Faber. Well, there are a range of estimates. The UNFAO,
the World Bank, the IMF have all attributed significant
increases in the price of commodities and, ultimately, the
price of food to the recent sudden increase in the production
of biofuels. I don't think there is any doubt that it is the
dominant factor in the increase in price of especially corn in
the last few years. There are different estimates because
different models are being used.
I think the right question to be asking is, how much more
of our corn crop and our soybean crop do we want to dedicate to
fuel production in light of these other factors and in light of
the fact that the E.U., other nations, are also enacting
similar mandates?
No one has really looked at how these mandates are going to
interact to drive up the price of these basic commodities in
the next few years and, ultimately, drive up the price of food
and the cost of administering these important programs.
Chairman Miller. Thank you.
Mr. McKeon?
Mr. McKeon. Thank you, Mr. Chairman.
Mr. Leibtag, your testimony makes clear that corn plays a
major role in our food prices and costs. And unfortunately you
state that, ``Due to the continued expansion of biofuel
production, corn prices will likely be maintained at these
historically high levels, which will in turn affect beef and
poultry prices also.''
Can you provide any recommendations for how to combat these
rising costs?
Mr. Leibtag. On the producers' side, I mean, the question
is always efficiencies, whether we are talking about a school
lunch program, food services, livestock/poultry production. As
you mentioned, I don't think, given the current situation, we
are going to see any drop in corn prices in the near future.
Again, it is tied to the energy markets quite a bit.
The way to save is to find other places to be more
efficient. Whether that can happen, again, depends on the
particular practitioner. But, you know, at this point, corn is
a major ingredient in our animal feed, and it is becoming a
bigger and bigger ingredient in our energy equation.
So I think that efficiencies are what you have to find, and
that is what markets do. I mean, as an economist, I have to
believe in markets on some level, and I do. And so that is
where things are going to head in terms of producers and the
choice of who is using the resources that are available in the
world.
Mr. McKeon. What about, like, in other places where they
are using sugar beets or other commodities other than corn? Do
we have the possibility of using other commodities, or is that
a matter of acreage and it is going to be one or the other?
Mr. Leibtag. Ultimately we need to find additional
alternative sources for energy. Corn turned into ethanol is not
the solution on its own. You know, what Brazil has done with
sugar, again, is another part of the solution, but I think even
together, combined--it is not just going to be ethanol.
Mr. Faber. If I could just add one note on that, is that
this year we will import about 650 million gallons of sugar
ethanol from Brazil, but we could potentially import anywhere
from 10 billion to 15 billion gallons of sugar ethanol from
Brazil if we eliminated the 54-cent tariff on the imports of
that ethanol.
Fortunately, Brazil won't increase its production to serve
our market if they don't think they will have access to our
market. And right now they don't. And there are certainly
opportunities in some of the legislation that might still be
enacted this year to address that issue.
Mr. McKeon. If we could vote on those, yes.
Mr. Matustik, in your testimony you talked about the joint
powers agreement, and the chairman asked you some questions
about that. I am, of course, very familiar with it, having
worked with those school districts.
What it is, in the Santa Clarita Valley, we have one high
school district that services the whole valley and then four
elementary districts that feed into the high school district.
You know, we could do the same kind of thing out in the
Antelope Valley. We have a high school district out there, and
we have all the elementary districts. But you have pointed out
some of the problems with trying to get the people to get the
other--have they talked to you? Have the people in the Antelope
Valley come down and talked to you about this?
Mr. Matustik. No, they didn't. They were doing--I don't
know how their fiscal situation is right now, but they were
doing okay.
However, you may be aware of, let's say, Whittier area,
where we have quite a few small districts. There seems quite an
interest from superintendents to put something similar
together.
Mr. McKeon. Actually, they are not that much different now.
Antelope Valley is a little bit larger, but not that much. If
you take Palmdale, Palmdale would be smaller than Santa
Clarita. Lancaster would be smaller. Together they are a little
bit larger. But I am going to talk to them, see if we can get
them to talk to you to see if we can try to work something.
Mr. Matustik. You have some really small districts around
Palmdale and Lancaster that need help. They certainly need--one
of those districts asked if we can help them, but we are too
far. For us, it would be, like, 70 miles, 80 miles roundtrip--
--
Mr. McKeon. Transportation costs would wipe that out.
By doing the co-op, though, you save a million dollars a
year?
Mr. Matustik. Well, minimum, yes. Because, as I said, this
is for the 2007-2008 school year, we gave the member districts,
those five member districts, we gave them $700,000. When I
started there 15 years ago, they were about $250,000, $300,000
in the hole every year, which had to come from the general
fund. So now we have reversed the situation and we are giving
back money to the general fund.
Mr. McKeon. So you are doing a better job of providing the
food, plus saving money.
You talked about one more thing, if I could, seeing as how
we are both from California, the $1 that the state charges for
every case that they handle.
Mr. Matustik. That is my complaint, Mr. McKeon, for the
last 15 years, but it is getting worse and worse, in my
opinion.
I can see the historical reason for it before the computer,
that they needed people who were counting cases.
Here, this time, when USDA is so flexible and absolutely
wonderful with the national processing agreement, my district,
literally, I can order half a truck of fruits and vegetables
coming to my warehouse. California doesn't see it, doesn't
touch it. We do everything on ECOS, which, again, is a USDA
program. But California still charges me a dollar for that
case----
Mr. McKeon. How do they find out how many cases you are
getting?
Mr. Matustik. Because officially it still has to go through
the state. There is a state DA----
Mr. McKeon. So they have a way to find out.
Mr. Matustik [continuing]. And they know exactly how many
cases I am getting.
And if I order a sack of potatoes, they want $2 for that
sack of potatoes, because they say that really would be several
cases because the sack of potatoes is, I don't know, 100 pounds
or something like that.
I think it is completely ridiculous. I am fighting this for
15 years. If they are getting $1.3 million--and that is the
official figure from USDA--for their administrative fund----
Mr. McKeon. Just for your co-op?
Mr. Matustik. No, for the whole California, for
distribution----
Mr. McKeon. $1.2 million----
Mr. Matustik. But that is for administrative work----
Mr. McKeon. What do they do with that?
Mr. Matustik [continuing]. Half the price. [Laughter.]
Chairman Miller. That and other questions will be answered
by the committee in the future. It is sort of like having Tony
Soprano as your partner.
Thank you.
Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman.
Mr. McKeon said if we could vote on something--we did vote
on the agricultural bill. And the agricultural bill permits the
sale of excess sugar for the production of ethanol.
Mr. Faber, what effect to you think that will have upon
food prices?
Right now, also let me ask, where did you get your data?
Because both the USDA and Department of Energy say that, in
2007, 3.4 percent of the extra cost was because of the ethanol
production and, in 2008, 4.5 percent.
Mr. Faber. Right. Let me take the last question first, and
I will let USDA explain the discrepancy in numbers that have
been used.
But the CEA, Council of Economic Advisors, did an initial
estimate that attributed 2 to 3 percent of the increase in food
price inflation to biofuels. And Secretary Schafer said as much
when he went to the Rome summit on our global food crisis.
And then, subsequently, the current chief economist at
USDA, Joe Glauber, put out a significantly higher number. He
estimated that close to 10 percent of the increase in food
price inflation could be attributed to biofuels production.
And separately and apart from that, the recently retired
chief economist of the USDA, Keith Collins, was hired by a
third party. And he estimated that food prices would be rising
23 to 35 percent faster than historically because of our
biofuels production.
So I will leave it to you to sort out who is right and who
is wrong. But, clearly, I think anybody who looks especially at
the chart on page 3 of my testimony, I think it is fairly
obvious that diverting 33 or more percent of our corn crop this
year and 40 percent or more in the next few years is going to
have a significant effect on the price of corn and, ultimately,
the price of things made from corn, especially meat products--
milk, meat and eggs.
The sugar issue, the diversion of sugar from--in the sugar-
to-ethanol provisions of the farm bill will have virtually no
impact on prices, on the price of fuel. I think much more
promising opportunities are importing Brazilian ethanol, which
can be landed in the Port of Oakland, for example, at about $2
a gallon right now, if we could eliminate the tariff that is in
place.
Mr. Kildee. Well, with the production from sugar, which can
start now under the new farm bill--that is a new provision in
this year's farm bill--that would put less pressure on corn,
would it not?
Mr. Faber. What ethanol refiners tell us and have told you
is that they don't expect to use much of that sugar in the
production of corn ethanol or conventional ethanol in the short
term, but they might use more of it in the coming years.
Mr. Kildee. And Brazil has been doing this for years, has
it not, using sugar?
Mr. Faber. Correct.
Mr. Kildee. Mr. Leibtag, did you want to comment on that in
the new farm bill?
Mr. Leibtag. Well, I agree with the marginal effect at this
point, in terms of the use of sugar. I think, as I mentioned
earlier, you know, down the road there need to be more
solutions. Corn from ethanol is not the only one. But, you
know, I think everything will help. We just need a number of
factors to deal with the energy problem.
Mr. Faber. The other thing that is worth noting is that,
while a corn ethanol has a net energy benefit of about 1.3 to
1, sugar ethanol has a net energy benefit of 8 to 1 and poses
significantly fewer environmental challenges than corn ethanol
or biodiesel. So it helps address some of those challenges as
well.
Mr. Kildee. So that provision of the farm bill could be
helpful both for our energy problem and our food problem.
Mr. Faber. Well, it will certainly increase the price of
sugar and, ultimately, the price of food.
I don't expect it will do much to reduce the price of fuel
or the demand for corn ethanol, and here is why: Because of the
way the energy bill was structured, gasoline refiners are
required to blend a certain amount of corn ethanol into our
gasoline supply every year. And that amount is going to
increase in the next few years to 15 billion gallons. We will
make about 9 billion to 10 billion gallons in 2008.
Mr. Kildee. Is it corn ethanol or just ethanol?
Mr. Faber. It is corn ethanol.
Mr. Kildee. Corn ethanol.
Mr. Faber. There is a separate mandate for advanced
biofuels like sugar and sorghum.
Mr. Kildee. Well, Congress should probably address that in
Energy Committee, in light of the fact that the agriculture
bill now calls for production of ethanol from sugar.
Thank you very much.
Thank you, Mr. Chairman.
Chairman Miller. Mr. Castle?
Mr. Castle. Thank you, Mr. Chairman.
Dr. Wilson, let me ask you a question that bothers me.
Maybe I should know the answer to this, but I don't think I do.
I am from Delaware. And when I go to our schools, and I am
thinking particularly of high schools--I have got a couple of
mine where I saw this--I see the lunches, school lunches in
this case, which are being served.
And I don't doubt for a minute that they have nutritious
things being served, but a lot of the kids are eating pizza and
other things. We have a problem with weight with our children
today and nutrition, obviously.
How does this happen? Is that a local decision which is
made in terms of what they are going to offer at a particular
site in terms of a lunch or a breakfast?
And if we are adopting nutrition programs--I have been
involved with this legislation before--how does it sometimes
get into something perhaps less nutritious by the time it is
actually served?
If you could help me straighten out my puzzle.
Ms. Wilson. Well, as far as the reimbursable meal is
concerned, we all have the same reimbursable meal pattern that
we need to follow. But what those components are we can choose,
whether it is pizza or a hamburger or chicken casserole,
whatever that is for the main entree.
I think some of the misinformation, though, that is out
there is that, number one, we are numbers-based. We need our
customer to come through the line to keep our programs alive.
And so we try to meet the needs of that customer. And so what
has happened, even at the food manufacturers, is that we have a
number of products that we serve in schools that truly are a
healthy product.
And you mentioned pizza, for instance. Many times, that is
a whole grain crust, maybe even a whole wheat crust. It might
be low-fat pepperoni, low-fat cheese. So there are products out
there that we have an idea in our mind that that is not such a
healthy product but, in essence, it really is, when we look at
the different ways we purchase in schools and the products we
are getting through the school system.
The other thing we look at is that, if that child likes to
eat a piece of pizza, number one, we are portion-controlled. So
that piece of pizza is not half a pizza. It is a single piece
of pizza. It also comes with milk, vegetables and fruit. And so
there is a whole, complete meal there.
And really what we are trying to do is teach children to
eat----
Mr. Castle. Pardon me. Do you think they take and eat the
milk, vegetables and fruit?
Ms. Wilson. You know, we really try to encourage them. Do
they eat it? Not always. But, for instance, in our district
where at our high school we serve pizza, but we have a full
fresh fruit and vegetable bar that is included with the meal.
So that child can go through, get a piece of pizza, and then
they can go through and take all different choices of fruits,
vegetables, and then of course their milk. So, you know, what
we try to do is definitely encourage the children to do those
things.
One of the things, though, that, now that you brought it
up, one of the things that we know that is still lacking is
nutrition education. I have talked to students all across this
country that say, ``Look, you are putting all these standards
on us, but you are not telling us why. You are not explaining
to us how to put that meal together. You are not giving us the
opportunity to be educated in nutrition.''
And when you look at it, even though wellness policies were
required to look at nutrition education, there was no type of--
there is nothing strong there that says to schools, ``You must
have nutrition education K through 12,'' or, ``You must have
something that is science-based that teaches kids about
nutrition,'' not whatever anybody thinks about the latest diet
fad, but real nutrition education. It is definitely lacking in
the school system.
Mr. Castle. Well, sometimes I think it is just a matter of
will. I think, Mr. Chairman, we ought to have a committee
hearing in which we set up a lunch here and bring in about 10
of these high school kids and let them choose what they are
going to eat. I think we might be surprised at the lack of
nutrition that we see there, to a degree there, in terms of
choices.
I don't know if we can address that. I mean, there are
local decisions on that. But it is concerning.
At the risk, Mr. Faber, perhaps of a local advertisement
here, I would like to ask you questions about the cellulosic
research which goes on. The reason I say ``local'' is because I
am from Delaware and the DuPont company is doing a lot of this.
Looking at other growth areas, if you will, they are
looking at the husks of corn and the stover of corn, the
cornstalks, as well as switchgrass and other things that are
being looked at.
Do you have any sense of the state of that research in the
country today? I mean, I don't know how much all of this is
influencing the cost of corn and soybeans, but it clearly is.
The bottom line is that there may be easier and less expensive
ways of doing this.
Mr. Faber. Absolutely. Clearly, the most promising solution
to the impact of our food-to-fuel policies on food prices is
getting these second-generation fuels, cellulosic biofuels and
advanced biofuels, to commercial scale as quickly as possible.
And it is important to remember that it took corn ethanol
30 years and an extraordinary level of government support to
get to its first 2 billion gallons. And when I talk to my
colleagues who are in the business of developing these second-
generation fuels, they expect to produce their first 2 billion
gallons sometime between now and 2014.
So there is extraordinary promise there. I think that it is
sort of a race, in some sense, to identify the most cost-
effective, most easily commercialized fuel that can take
advantage of existing infrastructure. One of the challenges
with corn ethanol, as you know, is you have to rail it or put
it in a barn.
So there are great opportunities there. There are things
that Congress can do to really accelerate the development of
those second-generation fuels, in particular: looking at ways
to accelerate the mandates that are in place for cellulosic;
changing the tax credits that go to the refiners of gasoline to
make it more attractive for oil and gas refiners to blend
cellulosic and advanced biofuels into their fuel supplies; and,
again, reducing the tariff.
You know, the real opportunities to produce a lot of these
cellulosic biofuels are not necessarily in Delaware or in
California. They are in equatorial regions of the globe where
you can get multiple harvests in a single year and then ship it
to take advantage of our market and E.U. market and so on.
So we really need to be looking globally as we think about
how to get these second-generation fuels online to take
pressure off the conventional biofuels that are driving up food
prices.
Chairman Miller. Thank you.
Mrs. McCarthy?
Mrs. McCarthy. Thank you, Mr. Chairman.
Mr. Harnett, in your testimony you mentioned that Nassau
County--and I am sure this is happening in counties all over
the country--that they are subsidizing your particular program,
summer program, by 21 percent?
What concerns me is--we have a very diverse community in
Nassau County. We have some of the wealthiest people probably
in the country, and then we have some of, unfortunately, the
poorest people. And I knew our food banks. Every church had a
food bank. We have our own food banks. And yet those shelves
now are being empty.
So the children that you are getting--and I am sure this
probably works with some of the other areas around the country.
What concerns me is that the food banks aren't getting out food
to the families as they pick them up for the weekend or the
evening meals. It comes back to whether our schools or whether
programs like yours are the only areas where the children are
actually getting fed.
And, Dr. Wilson, I guess one of the others things, too,
that I am concerned about, in my underserved schools they don't
have too many kids paying for their lunches. And unfortunately
they probably serve the worst lunches. Now I am going into all
my regular schools, and less and less of them are going to be
buying lunches, so they are not going to be able to subsidize
the children that need the free lunches.
So with that, the problems that we are facing, to me, seems
that it is something that this committee really needs to work
on and certainly Congress needs to work on. Because if we don't
have healthy children, we are not going to have a healthy
future.
When the pediatricians start talking about putting children
on cholesterol medication at age 8, that is a sign of the
times. And we are seeing more and more children with diabetes
in our society. So, again, it comes down to the basics. And
that is programs like yours.
What are you going to do if Nassau County or any other
county that is supplying or helping our programs to feed our
children--they are going to go through tough times too. It is
down the road.
Mr. Harnett. Well, there is no question that everyone is
going to be challenged in a similar way. I mean, we all
participate. Thirty-nine different programs in the county
participate in the county program, so that we can get whatever
economies of scale we can and the best possible prices. There
is no question, as other speakers have mentioned, that
nutrition is the key. And it is nutritional education.
Kids are kids. They like food that tastes good. And they
are surrounded by food that tastes good that is not good for
them. And, on the other hand, we know that if the children are
given good-quality food and they learn the benefits, they will
do better. There is no question about that. But it is a major
effort.
We also have to remember that the families that are trying
to raise these children are struggling. Both parents are
working. They are away from home large parts of the day. They
are counting on these programs to give the children their basic
nutritional meal of the day. Families are working longer and
longer hours.
So, without these programs, the children's nutrition will
suffer. We will all struggle to try and come up with ways to
try not to diminish the nutritional quality of the meals but to
add more money there at the price of the other kinds of things
we do with these programs.
The point of these programs--the nutritional part of them
is only one component of the program. We are trying to get
children involved in more creative learning activities so they
are not on their own after school, they are not involved with
other kinds of activities that are high-risk behaviors and
ultimately will be much more detrimental.
We all know, the bigger the investment we put in the
children at their earliest years, the better the payback.
Mrs. McCarthy. And I agree with you on that, because I
think that the coalition of our underserved schools, you know,
where we certainly want to bring the best education to them,
are usually the children that do not have the best nutrition.
And as you said earlier in your testimony, if you don't have
the fuel to do the energy, you are not going to be able to do
well in school.
So, we have a long way to go in this country. Thank you.
Mr. Harnett. I couldn't agree more.
Chairman Miller. Thank you.
Mr. Keller?
Mr. Keller. Thank you, Mr. Chairman.
I want to thank all our witnesses for being here.
I listened carefully to all your testimony and read your
written remarks, and it seems like there is a consensus, from
most of your testimony anyway. And it seems like the bottom
line is that high gas prices, along with ethanol mandates and
tariffs, are killing us, in terms of higher food costs.
The solutions are pretty simple, although they are not
politically easy. And the simple solutions, in the interest of
straight talk, are these: We have got to drill for oil
domestically. We have to axe the tariffs on biofuels. And we
have to quit wasting $40 billion a year in agricultural
subsidies and price supports.
That is the truth. And it takes a lot of political will to
do that. And I certainly would support everything I just said.
But that is the truth.
I want to focus my remarks a little bit on childhood
obesity, and it certainly is a serious problem. Two out of
three adults in this country are overweight; one out of three
children are overweight. Childhood obesity rates have tripled
since 1980.
And we know the solutions, according to the experts who
have testified before this committee--pretty simple and
straightforward. Every child should have a healthy breakfast.
Every child should exercise, one day, outside activity. Every
child should have at least five servings of fruits and
vegetables, hopefully nine. Those are the three common-sense
things. And that tailors with the USDA guidelines.
One of the things that I have heard over and over today is
that the high cost of fruit and vegetables is a concern. And I
stipulate that to a point. I mean, it is obviously a lot more
expensive for poor folks to buy apples and bananas and lettuce
and fresh green beans than it is to buy a package of macaroni
and cheese or rice. And so we see obesity rates a lot higher
among poor folks.
But what I am interested in--and I will begin with Ms.
James--is whether some of the local school districts are making
the same type of choices that I do when faced with high food
prices.
I am someone who eats 10 servings of fruits and vegetables
every day. I am sold on that concept. But my favorite
vegetable, for example, is green beans. And back when times
were great, I would go to my local public grocery store and go
to the produce section and buy a package of fresh green beans,
which are $2.99, and I would put them in the microwave.
Now I go to the same store and I buy a can of green beans,
which are 99 cents and have the same volume and, according to
my nutritionist, roughly the same nutritional value. And so,
instead of paying $3, I pay $1. I would prefer to have the
fresh; they are a little crunchier, a little better. But
nutritionally, not a substantive difference.
Do school districts, Ms. James, make the same type of
choices and use, say, canned green beans versus fresh green
beans when the prices become exorbitant?
Ms. James. Well, first of all, I am not a school district,
so I am going to defer that question to some of the school
people. But I can speak for the child-care community. And one
of the things that I know is that, clearly, for child-care
centers, they are buying canned vegetables because they are
cheaper.
But what I also know is that they are typically buying in
places like Costco and Wal-Mart, where they can buy ``number
10'' cans, whatever--I think the school district could tell me
better what that is. But the varieties that they are able to
purchase, in terms of what the stores offer, is significantly
less and lower quality than that of what they could purchase if
they were buying fresh fruits and vegetables.
Mr. Keller. Thank you.
I will switch to, okay, Ms. Wilson. When times are hard,
would your district be more likely to buy the cans of green
beans versus the fresh green beans?
Ms. Wilson. At this point, no. And I have talked to a
number of different district directors around this country, and
what we are doing is really assessing our programs. We are
looking at paper products. We are looking at the way we do
dishes. We are looking at everything possible before we get to
the food issue. That may mean cutting labor, though, as well,
and cutting our labor force.
Mr. Keller. Well, the obvious question is, why not?
And I will certainly point you to the most famous
nutritionist in the country, Dr. Barbara Rolls at Penn State.
They say frozen vegetables and canned vegetables have equal
nutritional value to the fresh.
And if you are not using that, which would save you 67
percent on your food costs, why the hell not?
Ms. Wilson. Well, we use a combination of things. I mean,
we have fresh and canned out every day, because the children
like choices. There are some children that like canned fruits
and vegetables; that is just what they like to consume.
Mr. Keller. Right.
Ms. Wilson. And you are absolutely right. The nutritional
value is, you know, very, very close. With canned vegetables,
you have a sodium issue that you have to take a look at in
school districts. But otherwise, what we see are school
districts using a combination of both.
Mr. Keller. Okay.
Ms. Wilson. But to eliminate fresh for no reason--one of
the things we are trying to do is teach kids where food comes
from. So----
Mr. Keller. Well, you are right. And some of the canned
vegetables are low-sodium, as well.
Ms. Wilson. Right.
Mr. Keller. I can tell you from personal experience, having
had the can with no sodium, it is horrible. I don't know why.
[Laughter.]
But I would just rather have the salt for myself.
But my time has expired. And I will yield back, Mr.
Chairman.
Chairman Miller. Thank you.
Mr. Scott?
Mr. Scott. Thank you, Mr. Chairman.
Dr. Wilson, you represent organizations all over the
country. Are they experiencing the same increases in total
costs for food?
Ms. Wilson. Yes, sir, they are. If you go on to our school
nutrition Web site, almost daily we have 10, 20 different
districts reporting in that the same issue is impacting
everybody across the country.
Mr. Scott. And are the total costs the same, or is there a
variation of costs around the country for the cost of a
nutritious meal?
Ms. Wilson. Well, I think they have done an average, but of
course it is somewhat different depending upon the region. You
know, even as far as what the season is, in northern Wisconsin
or northern Minnesota, it is going to cost you a lot more than
southern California to obtain fresh produce. But the average is
$2.88 to $3 nationwide.
Mr. Scott. Are some much above average and some much below
average?
Ms. Wilson. I don't know of any that are really below
average. I mean, I think--grossly below. I mean, you know, a
lot of them are grossly below average. I mean, I think people
are pretty clustered into that. You might have a fluctuation of
about 40 cents back and forth.
Mr. Scott. Ms. Houston, the free lunch is still free, is
that right?
Ms. Houston. That is correct.
Mr. Scott. And the reduced cost, the increase in cost in
the food does not affect what those on reduced lunch will pay?
Ms. Houston. By law, schools are not allowed to charge more
than 40 cents per meal to a family that qualifies for a
reduced-price meal.
Mr. Scott. And if the costs go up, what does the full-pay
student pay?
Ms. Houston. That will vary depending on the school
district. The school district is in a position and has the
discretion to set the price that they charge for children who
do not qualify for a free or reduced-price meal.
Mr. Scott. Now----
Ms. Houston. Our most recent data that we have available
shows that, for the 2005-2006 school year, on average, school
districts charged about $1.60 for a paid meal.
Mr. Scott. Do most of them pay the actual full cost, or do
they just pay a reasonable amount?
Ms. Houston. USDA subsidizes the cost of all meals,
regardless of whether they are free, reduced or paid.
Mr. Scott. And has the higher cost resulted in many
students electing not to get lunch?
Ms. Houston. Well, in fact, our data suggests that the
reimbursement that USDA provides for the paid meals is actually
helping to offset the charges that schools are passing along to
families of children who are not eligible for the free and
reduced-price meals.
Mr. Scott. So you are not experiencing fewer children
getting lunch as a result of the higher prices?
Ms. Houston. Our projected estimate for the 2009 school
year is that participation rates will increase about 1.5
percent.
Mr. Scott. And that is the increase in student population?
Ms. Houston. That would account for increase in student
population, as well as what we anticipate the increased use of
the program would be.
Mr. Scott. Now, is there any evidence that the LEAs are
affecting their menus as a result of the higher prices?
Ms. Houston. That will vary around the country, depending
on the LEA of which you speak.
We have certainly tried to provide technical assistance to
help school districts identify ways in which they can economize
to manage their very tight resources. A tip sheet that we
recently put out helped schools to think about ways that they
can improve their meal service without compromising nutritional
quality.
So there certainly are some strategies that can be
employed, both on the ways in which they procure food as well
as looking at ways in which they can increase program
participation, and also examining opportunities to increase the
revenue streams coming into the school food service.
Mr. Scott. Now, have the summer programs, the Head Start
and the daycares, have they been affected by the higher prices?
And how are they affected?
Ms. Houston. I think it is fair to say that, generally
speaking, across the board, families at home as well as in
institutional settings--schools and child care and the like--
everyone is working to try to identify ways in which they can
make the most effective use of the resources that they have
available, recognizing that food costs have increased.
Mr. Scott. And students benefit from food banks. How have
commodities going to food banks been affected? Have you
increased or decreased the number of commodities going to food
banks?
Ms. Houston. We have a very strong partnership with our
food banks. The TEFAP program provides some support to food
bank operations. We have an ongoing commitment through
appropriations to provide a level of funding that has recently
been increased in the farm bill up to $190 million a year.
We also, when we have available, provided what we call
bonus commodities to food banks. Because the agricultural
markets have been strong, we have had less bonus commodities
available to donate. But when we do have them, we do make them
available.
Mr. Scott. Am I hearing that the local food banks are
getting less from the federal government than they have been
getting in the past?
Ms. Houston. That is correct. In the past year, we have had
a decreasing amount of commodities available.
We are working to employ some strategies to try to offset
that reduction in commodity donations, however. One of the
strategies we have put in place is the program we are calling
``Stocks for Food.'' The federal government is taking what we
have had warehouses of, raw commodities, and bartering them in
the marketplace for value-added products that we are then
donating to food banks. And that is helping to ease some of the
challenges that food banks have had.
It is also important to recognize that, in addition to our
child nutrition programs and the important work that the food
banks have, we also strongly encourage and working very hard to
make families aware that they may qualify for the Food Stamp
Program.
The Food Stamp Program provides ongoing benefits to about
27 million individuals every month. And depending on your
income requirements, we provide a cash-value benefit that
families can then use to purchase food in the grocery store.
Mr. Scott. Thank you.
Chairman Miller. Thank you.
Ms. Woolsey?
Ms. Woolsey. Thank you, Mr. Chairman.
First of all, I apologize for not being here for the entire
hearing. We have a hearing on Iran going on across the hall. So
it is a push-me, pull-you day. But, you know, I felt sure I
agreed with the need for more food for all of our children. So
I didn't feel like I needed to come here and be convinced of
that.
Mr. Harnett, in my district, and all over the country I am
sure it is true, because of rising food costs and the expanded
demand for food for populations in our communities, the
Community Action Partnership of Sonoma County, which is located
in Santa Rosa in my district, had more children show up on the
first day of the summer meals program than they had meals to
feed them. Actually, 40 children were unable to get meals that
day. So they watched others eat while they didn't have
anything.
So my question to you--Ms. Houston responded, but I am
going to ask you to respond about summer food programs that are
already struggling, with decline in participation and high
administrative costs. How have the rising food prices impacted
your participation in summer programs this year?
Mr. Harnett. Well, I think I am happy to say, at least as
of yesterday, every child that showed up in our county did
receive a meal and is participating in a program. But I realize
that not every county is in that position. So there are always
going to be these tradeoffs that people are going to make.
Programs that are smaller, faith-based organizations, they
are going to drop out of these programs. And the problem is the
children will not only get the meal, but they won't get the
activities that these programs provide, so it is a double
whammy. The children then are unsupervised. They don't have the
activities that they should.
I agree with the congressman's point that the children need
to be more physical. We are competing with PlayStation and
other games that they will play endlessly. They have got to be
out there exercising. And that is what these programs do. They
are structured, they are creative, they challenge the children
both in mind and body. And that is what we need.
So it is a terrible thing if we are not pushing these
children and involving the families to the extent we can so
that they do learn better activities and better nutritional
values. It is not just the food, as important as that is.
Ms. Woolsey. Well, okay, that is right. It is not just the
food and it is not just having food. It is nutrition that goes
along with that.
So, Ms. Houston, we have to make sure that every child is
given access to food that meets sound nutritional standards. I
was sitting here thinking, having just come across the hall
from International Affairs, we have had hearings where we have
heard that children in Africa eat dirt just to have something
in their stomachs. I mean, we aren't doing that in the United
States of America, but it does us no good to fill them up with
food that is not nutritious, and we know that, even though some
of it could be less expensive.
So I have introduced, along with Senator Harkin, H.R. 1363,
the Child Nutrition Promotion and School Lunch Protection Act,
which seeks to ensure that all foods sold in schools during the
entire school year, including summers, is based upon current
nutritional science.
And so I am concerned that the rising food prices may
reduce, actually, or loosen nutritional standards. What is your
experience in that regard?
Ms. Houston. Let me just start by saying that we strongly
support efforts to try to increase participation in the summer
feeding program. We serve, on average, about 31 million school
lunches a day but only about 3 million meals during the summer
months. So we believe that there is a strong need to try to
identify ways in which we can not only increase child
participation in the programs but also increase the number of
sponsors that are willing to operate sites where children can
get access to healthful meals during the summer.
We also have some interesting research that suggests that
childhood obesity rates can actually go up during the summer
because children don't have the same kind of structure they
have during the school year.
In terms of the nutritional quality, the meal pattern
requirements that are required for the school meals during the
school year also pertain to the meals that are served in other
non-school-based programs. So we work very hard to try to
encourage the summer programs, for example, to serve fruits and
vegetables, whole grains, et cetera.
It is a challenge and cost to affect their ability to do
that. But I think, as we have been talking about cost, food is
just one aspect of the cost of operating these important
programs. And there are strategies that we can put in place to
try to help maximize the use of the resources available and see
how we can make the most effective use of what is available to
serve the most healthful meals we can for children.
Ms. Woolsey. Thank you.
Thank you, Mr. Chairman.
Chairman Miller. Thank you.
Mrs. Davis?
Mrs. Davis. Thank you, Mr. Chairman.
And I am sorry that I missed your testimony, but perhaps if
this kind of question was asked you can let me know, but I am
really looking a little bit more specifically.
San Diego is my home district, and it is a very high-cost
area, as you probably know. And so the recent rise in food
prices has really hit our community hard. I know that
Congresswoman Woolsey mentioned the lunch programs during the
summer, and they have seen an overflow crowd at those centers.
And so we are certainly experiencing those same issues.
Does the calculation for the federal reimbursement rate for
the school nutrition program take into consideration cost-of-
living differences between different parts of the country? And,
if not, do you think it should? Would you support factoring in
those cost-of-living differences?
Ms. Houston. Our current reimbursement rates provide an
additional subsidy for Hawaii and Alaska, but within the
contiguous United States there are not differences in the
reimbursements rates.
We have certainly looked at this issue in the past, and we
will continue to look at it, but there are so many factors that
affect the cost of different types of foods in different
geographic locations that it would be quite a challenge to
identify how best we would go about making adjustments to those
reimbursement rates.
Mrs. Davis. You might look at the services, because they
try to do that for families. And that might be a way of
assessing, to the extent to which that is an issue.
I know that in the area, cost of producing a meal now is up
20 percent, from $2.47 to $2.97. And an increase in the cost to
produce a meal will increase program costs by an additional
$35,000 per day, or $6.3 million over the 180 days in the next
school year.
So those are sizable numbers, and people are looking for
some relief in that area by region. And so I would hope that
they might take a look at this. I think there is a way to
assess that. And I know it is always a push-pull, in terms of
who gets included and who doesn't. But, in fact, if we are
treating children differently by virtue of the fact that they
are not able to produce those meals as well in some
communities, I think that is a factor to look at.
Anybody else want to comment on whether you think that is
an exercise that is worth doing, that we should look at, at
least to know those differences?
Ms. Wilson. I would just like to make a comment that
especially in labor costs, it is very different around the
country as to what the cost of labor is in our school systems.
And so that is another thing that would be very beneficial to
be factored into that.
Mrs. Davis. Yes.
Ms. Houston. I think it is also worth mentioning that the
food costs also are impacted by the types of strategies and
effective use of procurement practices from one school district
to the next, and also the amount of participation.
So certainly the ability, such as what is happening in Mr.
Matustik's district, he is able to receive a lower price for
foods because of the sophisticated way in which he has been
able to set up his volume purchasing.
So there are some practical ways in which we can provide
training and technical assistance to school food service
operators that might help them lower the prices even in areas
where geographically they may be paying more for certain types
of foods.
Mrs. Davis. Are you all doing that now?
Ms. Houston. We are. In fact, this summer we are about to
release a series of Web-based modules for school food service
that will help them in improving their ability to make
procurement decisions. We have a number of modules. One of the
modules will discuss the co-op system and other ways in which
we can make those practices----
Mrs. Davis. I would agree, that kind of information-sharing
is important. But, on the other hand, there are some other
issues that perhaps the greatest efficiencies in the world will
not answer if we don't get a handle on that.
Just really quickly, have you recommended linking the
inflation adjustment in the school nutrition program to the PPI
instead of the CPI, Producer Price Index instead of the CPI? Is
that an issue that you all have looked at? And what merit do
you think that would have?
Ms. Houston. I am going to turn this over to my colleague,
Dr. Leibtag, in a second. But we are required by law to use the
Consumer Price Index food-away-from-home series. So that is not
a discretion that the department has at this time, in terms of
making a change to what index we are using.
Dr. Leibtag, you may want to comment on why that particular
index has been used in the past and whether or not it is the
appropriate index.
Mr. Leibtag. Given that we are trying to cover the final
cost of the lunch on the tray, that is why the CPI is the most
appropriate. It is a measure of retail prices for food items.
Producer Price Index is looking at earlier stages of
production. It measures what I would call wholesale prices,
which are definitely relevant to the food service sector but do
not approximate the changes in the final retail cost.
Just as an example, one of the big distinctions is between
a wholesale commodity-level price and a final retail price, and
that includes labor and services. And that is kind of the
biggest distinction between wholesale and retail.
Mrs. Davis. All right. Thank you.
Thank you, Mr. Chairman. My time is up.
Chairman Miller. Thank you.
Mr. Hinojosa?
Mr. Hinojosa. I want to thank the panelists for coming to
brief us and explain to us the situation.
I am going to start my questions with Kate Houston.
And I have seen here, in the last few months, where there
was a big recall of ground meat. And it was in the millions and
millions of pounds. And they had been sent out to further
processing companies, where they would take a load of 40,000
pounds of ground beef and make it into charbroiled beef
patties. And they had already been received. They were in
storage ready to be further processed, and they had the recall,
and so that put a stop on that.
And Houston Independent School District and Dallas and
those schools were expecting to get the charbroiled patties but
they couldn't receive them. And that added to their, I guess,
frustration, that they didn't have meat coming in when it was
scheduled.
And what do you do to reimburse those school districts?
Because they had to get it at a much higher price from some
distributor like SYSCO or some of those that are available to
them? How do you reimburse that school district for the
additional cost?
And the next question is, since gasoline has gone up, which
adds to the transportation cost--I saw the IRS upped the
allowance for using your automobile to do official work from 50
to 58.5 cents. I am sure that school districts get contracts
that have a paragraph that says that, should distribution costs
go up, they are allowed to increase the product cost before
they deliver it.
What are we doing in the federal government to help those
school districts?
Ms. Houston. I will start with the Hallmark-Westland recall
issue.
We have committed publicly that we will reimburse schools
for all reasonable expenses related to the hold and recall of
the beef. We are in the process of working with the state
agencies to whom we provide the reimbursement. And, to date, we
have provided about $12 million back. As soon as those bills
come in from state agencies, we are turning them around and
getting that money back out as quickly as possible so they can
distribute it appropriately to schools.
We worked very hard after the recall to give schools the
option of either getting them replacement product as quickly as
possible or providing them a credit toward their commodity
account that could then be used for the next coming school
year, recognizing the timing of the school year in which the
recall happened, and that some schools preferred to then re-
menu at a later time.
On the gas prices, you know, I can't speak to the
individual types of contractual arrangements that school
districts have made for the purchase of food that they have
used, their cash portion of their reimbursement.
However, I can say that we are providing technical
assistance to both state agencies and schools to try to help
them identify procurement practices that will make the most
sense for maximizing the use of the reimbursement dollars that
they have available and to get the lowest unit price for the
product.
Ultimately, those are local decisions, in terms of what
contracts are entered into, so long as they are made in
accordance with government procurement practices.
Mr. Hinojosa. My time is running out. Now that you have
explained that part to protect the state and the school
district, let's talk about the processor, the manufacturer that
does processing for a fee.
They are having double problems. One is they receive the
product, they have got expenses and the warehouses, and now
they are having to send it back. And then the other problem is
that the gas and electricity costs have suddenly skyrocketed.
And I had this processor in Harlingen, Texas, say that the
bill that they had on the gas that is used to fuel the
charbroiled cooking had gone up substantially. I don't remember
the exact figures, but it was way out of line. And they are
saying that it is because the crude oil has gone up so much and
then all these people who have gotten into the market to invest
for their pensions and other factors that have gone into
possibly explaining why crude oil has gone to $140.
What are we doing in Congress to help them out? And they
are talking about possibly going out of business because they
just cannot process what they said they were going to process
back 4, 6 months ago when the bids were out. So these are
small-, medium-sized businesses. Are we doing anything to help
them out?
Ms. Houston. Again, I think as we have heard from a number
of the witnesses today, there are a variety of factors,
including gas prices, that are contributing to the overall
bottom line and challenges that both schools and the processors
that serve the schools face.
We are working to identify ways in which we can try to help
schools manage their underlying costs in a manner that can try
to offset some of the challenges that they are having because
of the increased cost of food.
In terms of the processors, again, those are arrangements
that are, generally speaking, entered into between the school
food service and the processor. And in some cases, those
processors are working with our commodity entitlement program.
Mr. Hinojosa. Would you agree with me that we have lost a
lot of small-and medium-sized processors in the last 7 years?
Ms. Houston. I don't have any data on that today. But we
would be happy to look into it, and I can provide it to you.
Mr. Hinojosa. Thank you, Mr. Chairman.
Chairman Miller. Thank you.
If I might ask one question, Ms. James, you mentioned
Antioch and Pittsburgh and Concord. Those three communities--
maybe to a lesser extent Concord--appear to be pretty heavily
impacted by mortgage foreclosures. Do you see this reflected in
participation by students in the program? Does that play out in
any way, when you are talking to your different constituents?
Ms. James. It certainly, from the child-care perspective
and family child care, certainly we have seen a number of
family child-care businesses that lost their business because,
in fact, their homes were foreclosed. So from the business
perspective.
But then in terms of the children, certainly it has
impacted, you know, their, sort of, quality of life, their
stability in life and where they have been forced to move to.
So it is really, sort of, a different answer to your
question, but clearly we have seen a dramatic change in, sort
of, the income eligibility levels for individual families
participating in the child-care food program.
Chairman Miller. Thank you.
Thank you all very much for your participation this
morning. Obviously, this isn't an issue that is going to be
settled in this committee room this morning. And it also plays
out in the reauthorization next year.
But I hope that we might be able to continue this
conversation, because I think that most of the economic
forecast suggests that it is going to be fairly rough sledding
for the American economy. We had both the secretary of treasury
and the chairman of the Fed yesterday suggest to us that this
was going to go deep into next year.
And I think some of the recommendations you made here this
morning for immediate consideration, some that you made for
consideration in the future, we will start to pore over.
But we would like to keep our hand here, because obviously
we want to do whatever we can to make sure that the children
can participate and that they are participating in a quality
program. But we appreciate all of your inputs here.
Let me just say, Mr. Matustik, you looked like you had
something you wanted to say here as all these people were
commenting about the cost of the program. I don't know if you
just want to----
Mr. Matustik. Yes, I did. I mentioned it in my
presentation, my summary. I think it is not right if we don't
charge pay kids the same, if we don't bring that fee on the
same level of what the reimbursement rate is. I call it the
reverse Robin Hood. We cannot feed the kids from better-to-do
families on the backs of kids who really don't have any
resources.
And that is why I always have a hard time with people
coming and asking for more resources until in schools we bring
it to at least a similar level. You know, there is no excuse if
the district is charging $1.20 for lunch or a $1.60 when I am
getting from the USDA, from the federal government, $2.54. I
mean, who is going to cover the difference? It is the quality
of food or the amount of food we serve.
So I think that is a very important fact we should look
into.
Chairman Miller. Well, thank you.
Thank you again.
And, with the adjournment of this hearing, this is the
100th hearing that this committee has had since I have had the
honor to become chairman. I didn't realize we had had that many
hearings, but we are working on it here.
And, without objection, all members will have 14 days to
submit additional materials and questions for the hearing
record.
And, without objection, this hearing is adjourned.
And, again, thank you to the witnesses for your time and
your experience, and to the members for their participation.
The committee stands adjourned.
[Additional submissions from Mr. Miller follow:]
------
Prepared Statement of Connie Tipton President and CEO, International
Dairy Foods Association
Chairman Miller and Ranking Member McKeon: Thank you for holding
this important hearing on the impact of current milk and food prices on
the Child Nutrition Programs of the Department of Agriculture (USDA).
Our organization represents companies who process, manufacture and
distribute 85% of the milk, cheese, and ice cream products consumed in
the U.S. The role of milk and dairy products in USDA nutrition programs
is critical to establishing healthy eating habits that comply with
dietary guidelines. As the price of milk has increased to record levels
over the past year, we are concerned about the impact this will have on
school food districts and the children they serve.
Milk has played a prominent role in schools for over 65 years, when
our government first started subsidizing milk in schools under the
Special Milk Program (SMP). The SMP expanded nationally in 1955 and was
available to all schools and child care institutions until 1981. Today,
milk is a required component of the National School Lunch program. The
SMP is also still available in schools and institutions that do not
participate in USDA meal programs.
A combination of fuel, feed, and increased global demand have
driven milk prices to all time highs. Increased energy costs play a
critical role--as milk must be transported to processing plants daily,
where it is pasteurized, packaged, and transported to schools, stores,
and outlets across the country.
An outdated government milk pricing system also contributes to the
cost of milk. USDA recently increased the cost of beverage milk in 14
states throughout the Southeast and is currently considering another
proposal to raise these prices nationally.
While many factors impact milk consumption--one of the major
problems in schools is the proliferation of alternative, less healthy
beverages. We are concerned that with current high milk prices, some
school districts are expanding their offerings of these less
nutritious, non-milk beverages.
Only one nutrition program at USDA has a reimbursement rate that
has kept up with milk prices. Every year USDA adjusts the reimbursement
rate under the Special Milk Program to reflect the Bureau of Labor
Statistics' index of producer prices for fluid milk. This adjustment
allows the SMP to achieve its goal of subsidizing the price of milk for
students so they do not have to pay full cost for a la carte milk.
Expanding the Special Milk Program reimbursement to all schools would
greatly alleviate the pressure of increased milk prices and should be
considered during the reauthorization of the Child Nutrition Act.
We have seen announcements from school districts across the country
that many will raise the price of a la carte milk during the 2008/2009
school year. We are concerned that if milk prices continue to rise,
this trend may continue and could negatively impact milk demand that is
sold in schools. Currently, only about half of eligible school age
children in the United States have access to milk under a USDA
sponsored nutrition program. This is a challenge your Committee can
address during reauthorization of the Child Nutrition Act.
Government health statistics indicate that almost 90% of girls
don't meet their recommended intake of calcium, while about 70% of boys
fall short of the calcium recommendation.\1\ Milk and most dairy
products provide nine essential nutrients, including three of the five
nutrients identified as ``nutrients of concern'' for children in the
2005 Dietary Guidelines for Americans--calcium, magnesium and
potassium.\2\ Comparing cost to other foods, milk and dairy products
such as yogurt and cheese are nutrient-dense, providing a wide variety
of nutrients for the investment. The nutritional value of milk and
dairy products in schools, not cost constraints, should be the primary
consideration in USDA's nutrition programs.
---------------------------------------------------------------------------
\1\ Centers for Disease Control and Prevention (CDC). National
Center for Health Statistics (NCHS). National Health and Nutrition
Examination Survey Data. Hyattsville, MD: U.S. Department of Health and
Human Services, Centers for Disease Control and Prevention, 1999-2002.
\2\ Dietary Guidelines for Americans, 2005 (6th ed.). U.S.
Department of Health and Human Services, U.S. Department of
Agriculture. www.healthierus.gov/dietaryguidelines.
---------------------------------------------------------------------------
We look forward to working with you and all members of the
Committee as you consider improvements to USDA's Child Nutrition
Programs. Please call on me, or members of the for any additional input
we can provide to help you during this process.
______
Hon. George Miller, Chairman,
House Education and Labor Committee, Rayburn Building, Washington, DC.
Dear Mr. Chairman: I would like to congratulate you for conducting
the 100th hearing as Chair of the House Education and Labor Committee.
This particular hearing on the school nutrition program comes at a
critical time as there is critical information relative to food
inflation in Puerto Rico which Governor Acevedo Vila felt it was
important for you and the Committee to have for the record.
The Commonwealth administers the Puerto Rico public school system
for over 600,000 students in 1,500 schools spread across the island.
Our school lunch and breakfast strives to exceed the nutritional
standards of the USDA and historically Puerto Rico has financed over 50
percent of the school lunch and breakfast program from our own
resources. We have worked to increase reliance on local produce and we
have been able to reduce staffing levels by over 1000 positions in an
effort to hold down nutrition program costs.
In examining the inflationary trends of key elements of our school
nutrition program, the history of the past 6 months suggests that our
school lunch program is going to be facing significant challenges in
the next school year. While we appreciate and understand the 4.3
percent increase in reimbursements by USDA, your hearing clearly
highlighted the fact that challenges to schools in Puerto Rico and
across the country are going to exceed that modest increase.
Below is a chart depicting food inflation in Puerto Rico between
December 2007 and May 2008 which includes some basic food elements that
are critical to the school nutrition program in Puerto Rico. You can
see the dramatic uptick in food inflation.
----------------------------------------------------------------------------------------------------------------
CPI Cumulative
Categories of Articles ---------------------------------- Percentage Average Monthly
December 2007 May 2008 Change Percent Change
----------------------------------------------------------------------------------------------------------------
Rice........................................ 108.139 133.602 23.55 4.71
Sandwich Bread, except whole wheat.......... 108.942 126.452 16.07 3.21
Chicken Thighs (fresh and frozen)........... 118.089 129.233 9.44 1.89
Oats........................................ 108.890 119.746 9.97 1.99
Fresh Whole Milk............................ 115.505 124.507 7.79 1.56
Canned pigeon peas, chick peas and other 101.858 114.123 12.04 2.41
grains.....................................
----------------------------------------------------------------------------------------------------------------
Source: Bureau of Labor Statistics, Department of Labor and Human Resources, Commonwealth of Puerto Rico Base
period: December 2006.
Each of these food stuffs: rice, bread, chicken, oats, fresh whole
milk and canned peas and grains, is a fundamental element of diets in
Puerto Rico and elements of our school nutrition program. As you see,
the worldwide shortages of rice are having an impact in Puerto Rico.
The increase in costs for the listed items from December 2007 to May
2008 ranging from 7.8 percent for fresh milk to 23.4 percent for rice
are going to create challenges for our schools, particularly since rice
is on the school menu an average of 18 days a month.
It is clear that if food inflation continues unabated the
Commonwealth is going to confront serious challenges in regard to
school nutrition. The Governor is certainly interested and supportive
of Committee initiatives which will strengthen our program and give our
children adequate nutritious school breakfasts and lunches particularly
during these challenging economic times
Again, Mr. Chairman, I would like to extend my appreciation for
your leadership on issues critical to the Commonwealth and your
longstanding interest in Puerto Rico.
Sincerely,
Flavio Cumpiano, Executive Director,
Federal Affairs Administration, Commonwealth of Puerto Rico.
______
Prepared Statement of Paule T. Pachter, A.C.S.W., L.M.S.W., Executive
Director, Long Island Cares, Inc., the Harry Chapin Food Bank
Thank you for the opportunity to provide this written statement to
the members of the House Education and Labor Committee as you gather in
Washington, D.C. on Wednesday, July 9, 2008 to hear statements as part
of your hearing on: ``The Rising Cost of Food and Its Impact on Federal
Child Nutrition Programs.'' I am extremely pleased to know that my
colleague from Long Island, James Harnett, President and CEO of Family
and Children's Association has been selected to serve on this Committee
to gather testimony during this hearing.
As the Executive Director of Long Island's only food bank and a
lead organization in addressing the issue of hunger on Long Island, I'm
am keenly aware of the needs of children, who are in jeopardy of
becoming undernourished and those that are among the more than 260,000
Long Islanders that are hungry and rely upon the services of our
network of more than 560 community based organizations including food
pantries, soup kitchens, day care centers, pre-school programs and
other charitable organizations for food. Long Island Cares is a
participating organization and receives support from The Emergency Food
Assistance Program, as well as the Department of homeland Security
Emergency Food and Shelter Program which in turn is delivered to
community based programs serving more than 93,000 children.
The poor national economy, which according to most experts is
clearly in a recession, has been impacting the quality of life for many
families and children on Long Island. While our network of community
based agencies have historically provided support to individuals and
families living at or below the national poverty level, there are a
growing number of families whose incomes exceed the poverty level by
20-50 thousand dollars who are turning to pantries and soup kitchens on
Long Island for assistance in obtaining nutritious foods including
meats, poultry and such staples as milk and eggs. Many Long Islanders
are struggling as a result of the continued increase in the cost of
fuel to heat their homes, gas to power their cars, the failures within
the mortgage lending industry, which has resulted in more than 40,000
homes on Long Island being in foreclosure, and as result of the rising
cost of food, which has increased by more than 17 percent nationwide.
Long Islanders are making difficult choices in reaction to the poor
economy, and many of these families who may earn between $45 and
$70,000 annually are turning to our network of food pantries, and other
charitable organizations for assistance. Some can't afford meat or
poultry, others can't afford fruits and vegetables, and we all can't
afford to move forward without greater collaboration and support
between food banks, anti-hunger organizations and our congressional
leaders. Feeding hungry children on Long Island takes creativity,
determination, resources and the type of passion and commitment that
was displayed 27 years ago by singer, songwriter and activist, Harry
Chapin, when he founded the organization that now bears his name.
Long Island Cares and our network of food banks across New York
State are committed to working together and to reaching out to create
greater alliances with local food manufacturers, farmers, and food
distributors to ensure that the needs of the more than 260,000 hungry
children and families on Long Island are met with nutritional meals,
access to entitlement programs, and passion. But we cannot accomplish
this task alone, especially when it is estimated that 15% of the
nation's population is relying on the services of hunger relief
organizations such as Long Island Cares.
More nutritional food is greatly needed to address the needs of
children on Long Island. Such critical food items as cereals, shelf-
stabilized milk, fruits and vegetables are in short supply as donations
from the public decline in response to our poor national economy. Long
Island Cares hears from our network of community agencies each day that
the numbers of individuals turning to food pantries and soup kitchens
is increasing between 25-30% as a result of the poor economy. Our
organization looks toward Congress to assist us as we move forward in
meeting the nutritional needs of children whose families are relying on
food pantries, day care centers and other important programs for food
especially during those times that school is not in session and
children are in need of our support and services even more.
______
[The statement of Mr. Altmire follows:]
Prepared Statement of Hon. Jason Altmire, a Representative in Congress
From the State of Pennsylvania
Thank you, Chairman Miller, for holding this important hearing on
the rising cost of food and its impact on federal nutrition programs.
As the Chairman explained in his opening remarks, rising food costs
have made it increasingly difficult for schools, child care programs,
and summer food service programs to continue to provide nutritional
meals for our nation's children. The federal reimbursement rate for
child nutrition programs has not kept up with inflation, and is well
below the amount necessary to supplement the increase in the price of
staples such as bread, milk, and cheese.
As I expect we will hear in the testimony of the witnesses today,
schools have had to make difficult decisions to cope with these rising
costs. Under the current system, federal nutrition programs in some
cases cannot afford fresh fruits and vegetables. Likewise, some schools
have been forced to increase the use of vending machines and a la carte
sales in order to recoup costs even though food sold in vending
machines had been shown to have less nutritional value than the school
lunch itself. As a result, schools may feel pressure to provide less
healthy options as well as resort to these easy sources of revenue at
the cost of meeting the USDA's nutritional requirements.
In addition, these less healthy offerings are significantly
worrisome for a larger reason. Today's struggling economy forces
families to make difficult decisions to budget their money. Some
parents may not be able to provide their children with adequate
nutrition at home because they are struggling with the increased cost
of gas and groceries. For some kids, the school lunch is their most
nutritious meal of the day, and, in some cases, it is their only meal
of the day.
I hope that the hearing today will not only raise our awareness and
understanding of the pressing need to address the impact of rising food
costs on federal nutrition programs, but uncover realistic and cost
efficient solutions to keep these programs not only operational, but
sufficient to meeting the nutritional needs of our nation's children.
Thank you again, Mr. Chairman, for holding this hearing. I yield
back the balance of my time.
______
[Additional submission from Mrs. Biggert follows:]
Prepared Statement of Beth Hillson, the American Celiac Disease
Alliance (ACDA)
Thank you Chairman Miller for calling this hearing on the impact of
rising food prices on child and adult care food programs. The American
Celiac Disease Alliance (ACDA), which represents patients, physicians,
medical research centers, food manufacturers and others, commends you
for highlighting this issue as schools and parents begin to prepare for
the 2008-2009 school year.
Under the National School Lunch Program students with special
dietary needs are accommodated when that need is medically documented.
Depending on the medical condition, special foods are substituted as
per the medical prescription. A student with phenylketonuria or PKU
will require low-protein items a child with celiac disease will need
the substitutions to be gluten-free. For students with a medically
prescribed diet, these accommodations are not a fad, or because they
don't like the choices, it is because their lives depend on it.
The inherited autoimmune disorder celiac disease affects an
estimated 1 in 133 Americans, and is now recognized as the world's most
common genetic disorder. Individuals with the condition are unable to
eat foods containing gluten, a protein found in wheat, rye, and barley.
For them, gluten sets off a reaction which causes damage to the small
intestine. It impedes the body's ability to absorb vital nutrients and
will trigger symptoms which can severely affect a child's classroom
performance. The only course of treatment is strict adherence to the
gluten-free diet.
Even before food costs began to rise, schools balked at providing
foods to meet the medically required diet of students with celiac
disease. Why? The cost of a loaf of gluten-free bread is about $6.00; a
box of 24 crackers $3.99; and a package of 12 chicken nuggets $5.50. As
food costs have gone up, families are facing an even greater challenge
to ensure their celiac children have access to a lunch at school, like
every other child.
In addition, a growing number of low-income families now have one
or more celiac children. At Connecticut Children's Medical Center, for
example, at least a dozen families fall into this category. The Center
has established a celiac scholarship program to assist with the food
purchases. These families once relied on school lunches as a major
source of the daily food intake for their children. Now they face the
added dilemma of making that food safe for a special diet.
The ACDA just completed a survey of parents with celiac students to
learn whether they were able to obtain gluten-free meals at school. Of
the 2200 responses, over 92% wanted the school to provide the medically
required gluten-free meals for their child. Hundreds of families have
requested their child's diet be accommodated and were turned down. Over
30% stated their child was unable to receive a balanced meal by simply
selecting items known to be gluten-free such as fruits and vegetables,
or yogurt when going through the lunch line.
Some schools are trying very hard to accommodate medically
prescribed diets and to find ways to offset the cost. Gilbert Unified
School District in Arizona is one of the few districts in the country
which regularly provides gluten-free options for celiac students.
Earlier this year, the District Food Manager contacted the ACDA
inquiring whether our organization had any grants to assist the school
in purchasing gluten-free food products. It was very difficult to
advise her that we do not.
It is clear that food costs are forcing schools to reevaluate how
to meet the requirements set out in federal nutrition programs. As the
Committee examines ways to address this issue, the ACDA urges you to
ensure that needs of students with medically prescribed diets are not
overlooked.
Thank you for the opportunity to present this testimony.
______
[The statement of Mr. Hare follows:]
Prepared Statement of Hon. Phil Hare, a Representative in Congress From
the State of Illinois
Mr. Chairman, for the record, I would like to respond to assertions
expressed in today's hearing that domestic ethanol production has
played a significant role in the rising cost of food.
Several factors have contributed to the recent rise in global food
prices, primarily high fuel costs, weather, and increased demand from
China and India.
There is a tendency to blame ethanol production for the current
high food prices. Yet, I would like to point out to the Committee that
according to the Council of Economic Advisors, corn ethanol only
accounts for 2-3 percent of the food cost increase.
Many experts agree that the underlying force driving commodity
prices is higher energy costs. Higher oil prices have increased the
cost of production, transportation, wages and packaging, which all
contribute to the main cost of retail food.
Contrary to testimony given by Mr. Faber, corn ethanol has resulted
in significant savings at the pump and has driven down the price of
foreign oil.
If we are to end our costly dependence on imported oil and improve
our nation's energy security, ethanol must be a part of the solution.
Mr. Chairman, thank you for giving me the opportunity to speak on
this issue.
______
[The statement of Mr. Kucinich follows:]
Prepared Statement of Hon. Dennis J. Kucinich, a Representative in
Congress From the State of Ohio
I wish to thank Chairman Miller for calling this important hearing
and our witnesses for joining us here today.
Rising food costs are negatively impacting our school lunch
programs. A dollar can only be stretched so far. Our states are
struggling to serve the freshest and healthiest foods to our nation's
children. Their struggle to stretch these precious food dollars farther
as prices continue to escalate is now jeopardizing their ability to
maintain nutritional priorities.
High quality and fresh food too often comes with a larger price
tag. Whole grains are more expensive than products made with white
flour. Fresh fruits and vegetables cost more than canned or frozen
products. Current reimbursement rates per meal fall short of the cost
of producing the meal. As such, our school nutrition programs are in a
precarious situation. Unfortunately food dollars can be stretched
farther if the freshest and healthiest foods are sacrificed for cheaper
options. When this happens the real sacrifice is the health of our
children.
Approximately one-third or 25 million children in the U.S. are
overweight or on the brink of becoming overweight. Obesity in children
is known to create a host of heath problems including an increased risk
of type two diabetes and a shorter lifespan caused by heart disease and
stroke. The obesity and diabetes epidemics affect low income Americans
more often and with more severity. If we are serious about combating
this trend we must ensure that healthy food is served in schools, our
children are informed about how to make healthy dietary choices, and
junk food and junk food advertising is removed from schools.
Our school nutrition programs provide an invaluable service to our
communities by playing a vital role in keeping children healthy and
helping them learn. In some instances, if it were not for school
breakfast and lunch programs children would go hungry. During the 2006-
2007 school year in Ohio the average daily participation in the school
breakfast program was over 290,000 students. Over 200,000 of these
breakfasts were provided to children free of charge. Over 420,000
children received free lunches through the National School Lunch
Program. Hungry children have a more difficult time learning in school
and can suffer from behavior problems. Furthermore, schools present
knowledge to our children that help them to make healthy nutritional
choices and establish healthy lifestyles for the future.
Again, I thank the Chairman for calling this important hearing and
appreciate the valuable insight our witnesses are here to provide.
______
[The statement of Mrs. McCarthy follows:]
Prepared Statement of Hon. Carolyn McCarthy, a Representative in
Congress From the State of New York
I want to thank Chairman Miller for holding this hearing today and
I would like to welcome Mr. James Harnett from the Family and
Children's Association on Long Island. I am very happy to have him here
and I look forward to his testimony.
The rising cost of food is one facet in a complex problem facing
our country today. The Healthy Families and Communities Subcommittee,
which I chair, touched on the rising cost of food as we looked at the
rising cost of energy for Americans, including home heating fuel and
transportation costs. On Long Island, the heat or eat debate has
already happened. LIHEAP monies are almost, if not already, gone, and
we are not even a month into summer yet. How will families afford to
stay cool AND afford healthy food or just food in general?
The Federal child nutrition programs are also affected by the
rising cost of food and the fuel that it takes to bring the food to the
programs for our nation's vulnerable young people. The National School
Lunch Program provides nutritional, low-cost or free lunches to
children each day--in 2006 the program served more than 30 million
children! A similar program exists for breakfast as well. These are
year round programs, feeding kids both during the school year and the
summer months. Schools and programs receive commodities and financial
reimbursements for each meal served.
Yet, as food costs rise, school food authorities are seeing the
cost of breakfast and lunch rise faster than the standard increase in
inflation -of the reimbursement rates. Meal services must operate as
non-profit programs and with costs rising without reimbursement rising
similarly, therefore we are seeing tough choices being made:
Schools are raising the cost of lunches for those who can afford
it.
Schools are scrutinizing every aspect of their meal programs to cut
costs.
Schools could turn to selling less healthy competitive foods to
increase revenue. We all know that junk food sells.
Schools will seek to purchase foods lower in price, which could
mean a reduction in the amount of fresh fruits and vegetables. (In
fact, the USDA recommends using canned or frozen vegetables more often
to help maintain healthier meals at a lower cost).
I know that there are many other options that I have not listed,
and creative, innovative actions being taken to ensure that our
nation's vulnerable youth are being fed.
Communities are struggling with this issue: low-income families and
even some middle-income families are feeling the pinch of tight
economic times and the impact on what they feed their children.
Families are moving to cheaper staples, like peanut butter sandwiches
and pasta--but we know that to be healthy we need fruits and
vegetables, too, and more of them both in a day than carbohydrates and
fats. Nutritional standards will alter as families seek to have full
stomachs and stretch their dollars farther.
Schools in communities are struggling as well, as we will hear
today. I am looking forward to learning more of what the impact of
higher food prices is having on our child nutrition programs and then
moving on to see what role we can take in addressing this issue.
______
[The statement of Ms. Woolsey follows:]
Prepared Statement of Hon. Lynn C. Woolsey, a Representative in
Congress From the State of California
American families across the country are struggling. Food and
energy costs are rising and families are forced to make tough decisions
between feeding their families, heating their homes, and paying their
bills. These choices are no less severe for schools across the country.
Unfortunately, students have become increasingly dependent on schools
for the only nutritious meal they can get during their day. That's why
it's so important that our nation's schools and child support agencies
continue to have the resources they need to provide our children with
healthy, nutritious meals.
Central to this effort is ensuring that every child is given access
to foods that meet sound nutritional standards based upon the most
current research into child nutrition. Senator Tom Harkin (D-IA) and I
have introduced S. 771 and H.R. 1363, the Child Nutrition Promotion and
School Lunch Protection Act, which would make certain that all foods
sold in schools are based on the most current nutrition science.
Current U.S. Department of Agriculture regulations that limit the sale
of junk food in schools have not been updated in almost 30 years,
despite major changes in nutritional science as well as changes in food
consumption patterns and growth in childhood obesity. Steps to protect
the health of our children must keep pace with current nutrition
science.
Unfortunately, rising food costs may not only cause schools and
agencies to turn to cheaper, less nutritious options, but the increased
costs may affect their ability to provide food to every eligible child.
Because of rising food costs, it's becoming difficult for both free
meal programs and parents to provide nutritious meals to children.
This summer, more families have needed to turn to free lunch
programs to feed their children. Community Action Partnership of Sonoma
County, which is located in Santa Rosa, California, in my Congressional
District, runs two summer programs for children. One program combines
activities with a free lunch and the other program solely provides a
meal. On the first day, 90 children arrived for a meal, more than the
program had had show up before. There wasn't enough food for every
child and 40 children were unable to get meals that day. Unfortunately,
this trend continued through the rest of the summer. We have a
responsibility to our children to make sure they do not go hungry.
Whether it's increasing the reimbursement rate for meals or providing
more flexibility so that programs can respond to rising food costs and
continue to provide nutritious meals, we must find a way to help these
programs ensure that every child who needs a meal receives one.
Additionally, it's clear that the challenges of providing
nutritious meals to every child who needs one will continue to grow in
the future. Over the past five years, corn producers have shifted from
devoting only three percent of their crop to ethanol production to
dedicating more than 20 percent. As a result, the price of corn has
doubled, and the prices of foods dependent on corn have surged. As
transportation costs increase, schools must increasing rely on organic
and local producers to minimize their costs and support local
agriculture. This will not only strengthen our agriculture economy, but
will improve the ability of our schools to provide healthy, nutritious
foods to students.
Despite the increasing challenge to providing hungry children with
nutritious meals, we must continue to expand access to free and reduced
price meals. Our school lunch and breakfast programs provide meals for
many children who would otherwise go without or go with very little. We
need to make sure that every student, including high school students,
are given the option for a school breakfast and lunch if their families
cannot afford to feed them. In addition, we need to give schools and
agencies the option to provide dinners if the children are going to be
there through the dinner hour so that these children are guaranteed to
have a nutritious meal even when parents are working late. These more
long-term solutions will go a long way towards ensuring that no child
goes hungry. I look forward to working with my colleagues to accomplish
these goals.
______
[Questions submitted to witnesses and their responses
follow:]
U.S. Congress,
Washington, DC, July 16, 2008.
Scott Faber, Vice President for Federal Affairs,
Grocery Manufacturers Association, 1350 I St NW, Suite 300, Washington,
DC.
Dear Mr. Faber: Thank you for testifying at the July 9, 2008
hearing of the Committee on Education and Labor on ``The Rising Cost of
Food and Its Impact on Federal Child Nutrition Programs.''
Please respond in writing to the following questions:
1. Please elaborate on the relationship between the Grocery
Manufacturers Association (GMA) and the study done by Bill Lapp that
you reference in your testimony in regards to the 9% food inflation
rate forecast. Did GMA provide any funding and/or other support for Mr.
Lapp's study?
2. Please provide a detailed, step-by-step explanation and
justification of the methodology used by Mr. Lapp to derive the 9%
inflation rate number. Please clarify exactly what this 9% rate
represents.
3. Please list all of the economic studies for which GMA or its
members have provided funding in the past 5 years.
4. Please list any economists or analysts who have received funding
from GMA or its members in the past 3 years.
5. In your testimony, you indicated that you believe that the 54
cent tariff is preventing 15 billion gallons of ethanol from being
imported. Could you please provide any supporting evidence and analysis
for this assertion?
6. In your testimony, you advocate for a chance in biofuel policy.
If the 2008 RFS were lowered by 50% to 4.5 billion gallons, how much
ethanol reduction would you anticipate in 2008 and 2009? Please provide
any supporting evidence and analysis for your position.
Please send an electronic version of your written response to the
questions to the Committee staff by close of business on Monday, July
21, 2008--the date on which the hearing record will close. If you have
any questions, please do not hesitate to contact the Committee.
Sincerely,
George Miller,
Chairman.
______
July 21, 2008.
Hon. George Miller, Chairman,
House Committee on Education and Labor, Rayburn House Office Building,
Washington, DC.
Dear Chairman Miller: Pursuant to your letter of July 16, please
accept the following responses to the questions posed by Committee
members following the July 9th Education and Labor Committee hearing on
``The Rising Cost of Food and Its Impact on Federal Child Nutrition
Programs.''
1. Mr. Lapp's June 2008 study, ``Rising Commodity Prices and their
Impact upon US Food Inflation,'' is an updated version of a December
2007 study he authored. The December study was produced without any
outside financial support. GMA subsequently retained Mr. Lapp to update
his study to reflect increases in commodity prices that have occurred
in the time since the Energy Independence and Security Act of 2007 was
enacted.
2. Mr. Lapp estimates that U.S. consumers face an average annual
food inflation rate of 9 percent between 2008-2012.
Mr. Lapp's methodology involved examining historic precedent for
sharp rises in commodity prices, specifically during the 1970's. Based
on $5.25/bu corn (a low estimate), Lapp derived price forecasts for a
variety of products (livestock/dairy/eggs) and for other food input
prices (other grains/oilseeds). He estimated the share of major food
products represented by farm values, leaning on USDA estimates. Lapp
increased the farm value for most products 4 percent- as occurred
during the 1970's surge in prices- and used a higher percentage for
bakery and cereal items based on an unpublished survey of bread/bakery
producers. He then factored in other input costs (labor,
transportation, manufacturing)- which he projects will add 3.6 percent
to food costs per year from 2008-2012. Based on all input costs, he
projects a 9 percent annual increase in retail food prices.
3. GMA has funded three studies in the past year to ascertain the
impact of bio-fuels on commodity prices, consumer food prices, and
energy prices. The Advanced Economic Solutions study was released in
June, as indicated. GMA was also one of several organizations that
financed a study by Iowa State University's Center for Agricultural and
Rural Development in July 2007 entitled ``Emerging Biofuels: Outlook of
Effects on U.S. Grain, Oilseed, and Livestock Markets.'' GMA recently
hired Hart Energy Consulting for an analysis of the impact various
policy change scenarios will have on energy prices. GMA is aware of
only one member-funded study, written by former USDA Chief Economist
Keith Collins and financed by Kraft Foods. This study was released in
June 2008 and was entitled ``The Role of Biofuels and other Factors in
Increasing Farm and Food Prices.''
4. GMA retained Bill Lapp of Advanced Economic Solutions for
economic analysis related to food price inflation and has not retained
or contributed to any other economists during the past three years.
5. GMA has consulted with leading experts and estimates that Brazil
could increase the production of ethanol from sugar for the US market
to 2 billion gallons by 2009, 3 billion gallons by 2010, and by more
than 15 billion gallons by 2018. Ethanol refining capacity would also
be developed in other Latin America nations, including Mexico. However,
these new investments are largely dependent upon market signals for US
policymakers, including the elimination of the tariff of imported
ethanol. Eliminating the tariff, according to experts, would lower both
food and gasoline prices.
6. GMA has urged the Administration to reduce the RFS mandate for
2008 and 2009 to production levels for 2007. I have attached our
comments to EPA.
Thank you again for providing me the opportunity to share the
Grocery Manufacturers Association's views on this important issue.
Sincerely,
Scott Faber,
Vice President, Federal Affairs.
______
U.S. Congress,
Washington, DC, July 10, 2008.
James J. Harnett, President & CEO,
Family and Children's Association, 100 East Old Country Road, Mineola,
NY.
Dear Mr. Harnett: Thank you for testifying at the July 9, 2008
hearing of the Committee on Education and Labor on ``The Rising Cost of
Food and Its Impact on Federal Child Nutrition Programs.''
Representative Lynn Woolsey (D-CA), a member of the Early
Childhood, Elementary and Secondary Education Subcommittee, has asked
that you respond in writing to the following questions:
1. What are the benefits to allowing schools and agencies to serve
a third meal, such as dinner?
2. What are the benefits to expanding the Afterschool Supper
Program to children over the age of 13? What additional resources are
needed to accomplish this?
Please send an electronic version of your written response to the
questions to the Committee staff by close of business on Monday, July
21, 2008--the date on which the hearing record will close. If you have
any questions, please do not hesitate to contact the Committee.
Sincerely,
George Miller,
Chairman.
______
Mineola, NY, July 22, 2008.
Hon. George Miller, Chairman,
Committee on Education and Labor, U.S. House of Representatives,
Washington, DC.
Dear Congressman Miller: Thank you so much for your letter
regarding my testimony on July 9, 2008 at the Education and Labor
Committee's hearing on ``The Rising Cost of Food and Its Impact on
Federal Child Nutrition Programs'' and for the follow-up questions from
Representative Lynn Woolsey (D-CA).
With regard to Representative Woolsey's first question, I believe
the benefits of allowing schools and agencies to serve a third meal
include:
1. Providing a third meal gives children and teens full access to
the nutritious meals that their bodies need. It eases the burden on
low-income families that are struggling to make ends meet. It decreases
the likelihood that families will run out of money for food at the end
of the month; that children will go without the nutrition their bodies
need; and that parents will give up the food they need so their
children do not have to go without.
It also is likely that providing a third meal will help counter the
current childhood obesity epidemic. Studies show that children who
participate in the school breakfast and lunch programs drink more milk,
eat more fruits and vegetables, and consume less fat. A recent study
found that girls who participate in school breakfast, school lunch or
food stamps programs were less likely to be overweight. Like the school
meals programs, the afterschool and summer nutrition programs have
nutrition requirements that ensure the nutritional value of the meals.
As I testified it is important to allow schools and organizations
to provide a third meal after school and during the summer. Currently,
the Summer Food Program provides only sufficient funding at most sites
(except migrant sites and camps) for a maximum of two meals.
2. The Afterschool Supper Program allows school-age children and
teens to receive a supper at afterschool or youth development programs.
A meal can also be provided at programs operating on the weekend or
during school holidays. As you know, the program is only available in
eight states: my state, New York, Delaware, Illinois, Michigan,
Missouri, Oregon, Pennsylvania and West Virginia. More states should be
included in this important nutrition program, so that afterschool
programs can better meet the needs of the families they serve.
The Afterschool Supper Program is easier to administer than the
Child and Adult Care Food Program (CACFP) option, which allows children
younger than 13 to receive suppers. Afterschool programs that are
located in a low-income area are eligible to participate in the
Afterschool Supper Program. To provide suppers under the CACFP option
for children younger than 13, afterschool programs have to individually
qualify each child for the program. This creates a tremendous amount of
administrative work.
This program is especially important for children whose parents
work non-traditional hours, which is common for many low-income
parents. Many afterschool programs operate long hours to provide
quality programming and child care to meet the needs of the families
they serve.
In addition to supporting low-income families, the Afterschool
Supper Program makes it more cost effective to feed children after
school even when the cost of food is skyrocketing. First, all of the
suppers are reimbursed at the highest rate of reimbursement (the free
rate). The program, allowing children younger than 13 to receive
supper, bases the reimbursement rate on the household income of each
child who attends the afterschool program.
Second, it is difficult to provide a healthy snack with the $0.71
allotted for snack reimbursement. In order for an afterschool program
to be reimbursed for a snack, it must serve two of the four components
(milk, a serving of fruits or vegetables, a serving of protein, and a
grain). The supper must include five components (milk, two servings of
fruits or vegetables, a protein, and a grain). The supper reimbursement
is $2.57 plus an additional $0.2075 in commodities or cash in lieu of
commodities, a total of $2.7775 per meal.
Afterschool programs need to serve three components in addition to
the two required for snacks. This additional funding allows afterschool
programs to provide healthier food, to serve enough food to keep
children and teens learning and engaged throughout the afternoon, and
to more fully cover administrative and transportation costs.
In expanding the supper program to additional states, I think it is
critical to further streamline the program. For example, it would be
much easier for schools to participate if they could do so through the
school nutrition programs instead of through the CACFP. Operating a
second child nutrition program simply creates more administrative work
for the school.
With regard to Representative Woolsey's second question, the first
part is easy: teenagers over 13 years old simply require more
nutritious food to feed their growing bodies. I look back in some shock
at how much food I could eat as a teenager without significant weight
gain and how little food I require now to produce weight increase.
The second part of the question is much more complicated and beyond
my current information. I was able to review some data for 7 of the 8
states in the After School Supper program, but for only one month
(October 2007) and the data was not broken down by age.
Since the Afterschool Supper Program is an entitlement program, the
additional resources required to expand the supper program, if my
understanding is correct, would be determined by the Congressional
Budget Office. I assume that the U.S. Department of Agriculture may
also have the data to answer Representative Woolsey's question.
I am confident that a simple calculation would show that the costs
of expanding the program would be reasonable compared to the positive
impact it will have on low-income children and their families.
Thank you again for the opportunity to testify. I am grateful for
the Committee's leadership in recommending the reauthorization and
improvement to these critically important nutrition programs for our
Country's economically disadvantaged children to the full House of
Representatives for its consideration.
Sincerely,
James J. Harnett,
President & CEO.
______
U.S. Congress,
Washington, DC, July 16, 2008.
Kate Houston, Deputy Under Secretary for Food, Nutrition and Consumer
Services,
U.S. Department of Agriculture, 400 Independence Ave., S.W.,
Washington, DC.
Dear Ms. Houston: Thank you for testifying at the July 9, 2008
hearing of the Committee on Education and Labor on ``The Rising Cost of
Food and Its Impact on Federal Child Nutrition Programs.''
Representative Danny K. Davis (D-IL), a member of the Early
Childhood, Elementary and Secondary Education Subcommittee and the
Higher Education, Lifelong Learning and Competitiveness Subcommittee,
has asked that you respond in writing to the following question:
1. Since it's important that we continue to offer our kids milk
with each school meal and since milk prices--like all food prices--have
been rising, doesn't that make it all the more important that Congress
look at additional resources to make reimbursement rates more
realistic?
Representative Lynn Woolsey (D-CA), a member of the Early
Childhood, Elementary and Secondary Education Subcommittee, has asked
that you respond in writing to the following questions:
1. As a Member of the Energy and Environment Subcommittee of the
Science Committee, I am interested to hear your views on how increased
production of corn ethanol has affected our ability to provide sound
nutritious meals to our children?
2. In your recommendations for how schools could increase revenue
you suggest that schools consider increasing prices for ala carte
items. It is our understanding that there are no nutrition standards
for ala carte items unlike the reimbursable meal. How does the
Department reconcile this policy with its effort to increase nutritious
foods in the program and efforts to reduce childhood obesity?
Please send an electronic version of your written response to the
questions to the Committee staff by close of business on Monday, July
21, 2008--the date on which the hearing record will close. If you have
any questions, please do not hesitate to contact the Committee.
Sincerely,
George Miller,
Chairman.
______
U.S. Congress,
Washington, DC, July 10, 2008.
Paula James, Director,
Child Health and Nutrition Program, Contra Costa Child Care Council,
1035 Detroit Ave., Concord, CA.
Dear Ms. James: Thank you for testifying at the July 9, 2008
hearing of the Committee on Education and Labor on ``The Rising Cost of
Food and Its Impact on Federal Child Nutrition Programs.''
Representative Lynn Woolsey (D-CA), a member of the Early
Childhood, Elementary and Secondary Education Subcommittee, has asked
that you respond in writing to the following question:
1. What are the benefits to allowing schools and agencies to serve
a third meal, such as dinner?
Please send an electronic version of your written response to the
questions to the Committee staff by close of business on Monday, July
21, 2008--the date on which the hearing record will close. If you have
any questions, please do not hesitate to contact the Committee.
Sincerely,
George Miller,
Chairman.
______
Responses to Questions for the Record From Ms. James
What are the benefits of allowing schools and agencies to serve a
third meal, such as dinner?
As I stated in my testimony, more and more children are coming to
child care hungry. As families struggle to keep food on the table, the
meals provided by the Child and Adult Care Food Program, as well as
those provided by the other federal nutrition programs in schools and
afterschool programs, provide a significant safety net. Young children
are often in child care settings for long hours--sometimes from 6 AM to
6 PM or even later if their parent(s) work non-traditional hours. As a
result, many of them have at best a compromised dinner. In Contra Costa
County, as in many other areas of the country, working parents have
long commutes; time constraints and a lack of money make fast food
dinners a growing reality. Child care providers tell us that often the
foods the children get in child care are the only food they get all
day. These stories are repeated in school based nutrition programs as
well.
Reimbursing for a third meal, dinner, would provide a significant
nutrient contribution to children in child care and after school
programs. There is no question that if a growing young child had access
to a nutritious federally reimbursed dinner while they are in care,
that they would consume more fruits, vegetables, and milk and fewer
foods like chips, fries and sodas. This latter group of unhealthy foods
are a reality for many families who struggle with little time and money
to put healthy, nutritious foods on the table that will benefit a
growing child. Thus, reimbursement for a third meal would also likely
contribute to the prevention of childhood obesity.
The Child and Adult Care Food Program currently provides
reimbursement for dinners in afterschool programs in seven states
(Delaware, Illinois, Michigan, Missouri, New York, Oregon, Pennsylvania
and West Virginia), for children in low-income neighborhoods
participating in educational and enrichment programs. CA has invested
$550 million dollars in quality afterschool programs for low-income
children. If children in these programs had access to a nutritious
dinner, this investment would be increased significantly and the
benefit to the kids could not be overstated.
However, before taking steps to expand child nutrition programs to
include a third meal, steps must be taken to improve access and
participation by simplifying the paperwork and administrative burdens
associated with operation of these programs. In CA and nationally, the
administrative cost and paperwork burdens have outstripped the ability
of these organizations to stay financially viable. The cost of
administering the programs far outweighs the administrative
reimbursement.
Reimbursement for a third meal such as dinner would be invaluable
to many young children, providing food security where there may be
none, alleviating hunger, helping in the prevention of childhood
obesity and supporting struggling families with the knowledge that
their children have access to a healthy dinner. In consideration of
this recommendation, Congress must ensure that the organizations needed
to administer the program have the administrative resources and program
simplification to do the job.
______
U.S. Congress,
Washington, DC, July 10, 2008.
Ephraim Leibtag, Ph.D., Economist,
U.S. Department of Agriculture, Room N2124, 1800 M Street, NW,
Washington, DC.
Dear Dr. Leibtag: Thank you for testifying at the July 9, 2008
hearing of the Committee on Education and Labor on ``The Rising Cost of
Food and Its Impact on Federal Child Nutrition Programs.''
Representative Lynn Woolsey (D-CA), a member of the Early
Childhood, Elementary and Secondary Education Subcommittee, has asked
that you respond in writing to the following question:
1. Several witnesses suggested that the Consumer Price Index should
be updated more than once a year to better reflect the changing costs
for providing meals to our children. Would this better help struggling
communities in times of rising food costs?
Please send an electronic version of your written response to the
questions to the Committee staff by close of business on Monday, July
21, 2008--the date on which the hearing record will close. If you have
any questions, please do not hesitate to contact the Committee.
Sincerely,
George Miller,
Chairman.
______
U.S. Congress,
Washington, DC, July 10, 2008.
Katie Wilson, Food Service Director,
Onalaska Schools, 705 8th Ave N, Onalaska, WI.
Dear Dr. Wilson: Thank you for testifying at the July 9, 2008
hearing of the Committee on Education and Labor on ``The Rising Cost of
Food and Its Impact on Federal Child Nutrition Programs.''
Representative Lynn Woolsey (D-CA), a member of the Early
Childhood, Elementary and Secondary Education Subcommittee, has asked
that you respond in writing to the following question:
1. How have increased food prices impacted the ability of schools
to offer universal school breakfast?
Please send an electronic version of your written response to the
questions to the Committee staff by close of business on Monday, July
21, 2008--the date on which the hearing record will close. If you have
any questions, please do not hesitate to contact the Committee.
Sincerely,
George Miller,
Chairman.
______
Responses to Questions for the Record From Dr. Wilson
How have increased food prices impacted the ability of schools to
offer universal school breakfast?
Universal breakfast programs are known to be powerful tools in
promoting healthy childhood weight, increasing academic success and
combating hunger. We also know that universal breakfast programs reduce
the stigma associated with free school breakfast and greatly increase
overall participation in school breakfast. Universal breakfast programs
function best when schools serve a high percentage of students who are
eligible for free and reduced meals. School districts are able to
offset the cost of providing free breakfasts to all children due to the
increase in participation in the breakfast program. The increase in
reimbursements from free and reduced meals offsets the revenue that
would have been generated from paid students who participate. Rising
food costs increase the break even point--the point at which meal
production costs equal reimbursement revenue. If a school is unable to
reimburse for enough meals to cover their costs, they will suffer a
loss and that money will need to be directed from somewhere else in the
school nutrition program.
In the past, school districts were willing to maintain a negative
revenue balance on their universal breakfast program in order to
provide students with such a valuable service. Unfortunately, rising
costs of food, labor and indirect expenses are leaving school districts
with no additional revenue to support the program. Although not yet
widespread, SNA has observed programs who historically have offered
universal breakfast discontinuing the program related to increased
costs. Preliminary data from SNA's Meal Cost Survey shows that 27% of
school districts are eliminating programs and services in order to
reduce expenses. As prices continue to increase we expect more
districts will need to discontinue important programs, such as this, to
maintain financial integrity.
______
[Whereupon, at 12:01 p.m., the committee was adjourned.]