Business & Economics

July 14, 2009

School Lunch Brings Home the Bacon

An experiment in subsidizing school lunches to use locally raised commodities pays off both in the cafeteria and in the regional economy, one study finds.

By David Richardson

School lunches provide some of the “best nutrition kids get all day,” says Michelle Ratcliff. But, she says, typically, “If you order chicken, you get a stamped product — nuggets.” And it’s not even certain that students know if what they’re eating is a meat product.

Ratcliff, director of Farm to School for Ecotrust, a West Coast not-for-profit dedicated to building sustainable communities, believes children deserve something better.

In Portland, Ore., where Ecotrust is headquartered, 43 percent of students are eligible for federally subsidized school meals. In 2005, Ecotrust partnered with Portland’s Abernethy Elementary for a semester-long experiment testing whether school kids, accustomed to mass-produced institutional fare, would tolerate a switch to a more wholesome lunch menu. The district renovated the school’s kitchen and hired a chef to cook meals from scratch on-site using farm-fresh local ingredients, an effort that even drew the attention of NPR.

Deborah Kane, Ecotrust’s vice president of Food and Farms, performed an assessment of the project. There were a few hiccups: “We brought in parsnips and roasted them. Some kids thought they were potatoes; loved them. We told them, ‘No, they’re parsnips.’ Then they weren’t so sure.” There were surprises, too, at a campus billed as “the little school under the elms.” “Prior to the project, it was amazing how many kids had never had fresh strawberries.”

Incentives
The idea of “farm to school” is not a new one in the United States. The U.S. Department of Agriculture started promoting healthier school lunches in 1995 (and it continues to be a major proponent of the idea). The next year saw programs sprout in school districts in Santa Monica and Berkeley, Calif., and in the state of Florida, and a “handful” of programs were active in the late 1990s, according to the National Farm to School Network. Currently, it estimates there are more than 2,000 programs in 40 states.

In 2005, the organization estimated there were more than a thousand programs, and the Abernethy effort was among them. Kane recalled that the initiative demonstrated “tremendous possibility,” but “we couldn’t make it pencil out.” Beyond food costs, “it was the labor cost that was killing us.”

The challenge was to find a way to extend the farm-fresh approach beyond one model school. So Kane said Portland’s Farm to School advocates lent their support to a series of buy-local initiatives. Nonetheless, “We realized we were still dancing around the edges of this issue. We were changing out an apple here and there — making one lunch a month local, but we realized we were not going to make wholesale change to the school food menu without policy changes.”

For most of Oregon’s school districts, Kane said, cost is the major consideration driving school food purchasing. As a consequence, local farmers have been essentially frozen out of the state’s $70 million school food market, unable to compete with commodity-priced institutional food.

In 2007, Oregon’s state legislators considered offering a 15 cent subsidy per school meal that used Oregon products to “incentivize” local purchasing, but that bill died without a full vote when the session ended.

Farm to School activists decided to take an analytical approach to the problem. Ecotrust secured a $150,000 grant from Kaiser Permanente Community Fund for a first-of-its-kind districtwide study of a local purchasing incentive.

The Kaiser grant provided a 7-cents-per-serving subsidy for school meals. The funds were to be used to narrow the price gap between locally sourced menu items and those available at commodity prices through national distributors. The study involved the entire Portland and Gervais school districts comprising nearly 100 individual schools, both urban and rural.

How About Them Apples?
Prior to the grant, Kane says schools “were buying apples out of state at maybe 10 cents a serving, but because they had extra resources, they could afford to buy the in-state apples for 12 cents a serving, bringing that 10 cents back into the state of Oregon.”

Kane said the goal of the project was not just switching suppliers but to bring change to “the center of the plate.”

She said she was pleasantly surprised by the “ingenuity of the school food service directors.” Rather than just focusing on fruits and vegetables for the salad bar, “they felt that 7 cents reimbursement — that little extra cushion — gave them the room to explore lots of new supply relationships that went beyond the obvious apples.”

And according to Ratcliff, it worked. During the first 14 weeks of the study, she said Portland schools began buying finished products, such as breads made from wheat grown on area farms, as well as ready-to-serve meals, such as chili dinners, processed and packaged by local food service firms.

Bruce Sorte, then a community economist with the Oregon State University Extension, analyzed the local food purchases for the two districts, breaking them down into their component parts, parsing expenditures for ingredients, labor and transport, among others, from overall product costs and tracing the money as it flowed through the state’s economy.

Sorte said that each school food dollar directed toward in-state purchases generated an additional 84 cents in waves of economic activity within the state, in the form of wages, upgrades or investments in food production facilities and consumer purchasing. That economic multiplier of 1.84 is “a pretty good number,” he said, considering that typically a dollar spent on a product or service in today’s economy triggers about 50 to 60 cents worth of additional economic activity.

Kane said these robust figures were a welcome surprise, but more intriguing was an additional finding that bringing school lunch money home boosted economic activity not just in agriculture and food processing but throughout “401 of 409 of the state’s economic sectors.”

Though trade substitution was the most obvious result of the new incentive program, Kane said the full scope of the change could not be captured through traditional economic analysis. According to Kane, some of the new selections that struck a chord with kids at lunchtime, such as Truitt Bros. fresh salsa, have had crossover appeal, bursting from the cafeteria to become popular items on local supermarket shelves.

Sorte said bringing business home through local connections could also provide substantial efficiencies in the long run, helping to smooth out line-item price differentials. “Over time, it’s cheaper to work with a supplier you know well,” he said.

Kane noted that one Gervais farmer began supplying food to a neighboring school for the first time as a result of the study. She termed it, “a hit yourself on the forehead moment — ‘Why haven’t we been doing this all along?’”

With grant funding set to expire, Kane says it’s the children’s health and happiness that matters most. She told state legislators that students gave positive reviews when surveyed about the local food on the menu. When asked, one student said that the grilled cheese sandwich was “off the hook” — which means he loved it.

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