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Agriculture Department to invest $1.5B in school meals as supply chain issues persist

States will receive a majority of the aid as cash payments to purchase domestic, minimally processed foods, said Stacy Dean, USDA's deputy undersecretary.
Image: Students eat lunch separated by plastic dividers at Wyandotte County High School in Kansas City, Kan., on March 31, 2021.
Students eat lunch separated by plastic dividers at Wyandotte County High School in Kansas City, Kan., on March 31, 2021.Charlie Riedel / AP file

WASHINGTON — The Agriculture Department announced Friday it plans to invest up to $1.5 billion in the school meals program as ongoing supply chain issues ripple across the U.S. economy.

The funds will be made available through USDA’s Commodity Credit Corporation, which was previously used to assist farmers with trade mitigation payments. The funds will be broken into three parts: $1 billion for schools to purchase food for their meal programs; another $300 million for states to purchase foods to be distributed to schools; and an additional $200 million will be used for cooperative agreements to purchase local foods for schools.

The majority of the aid will be the $1 billion to states for cash payments to purchase "domestic, unprocessed, or minimally processed foods like fresh fruits, milk, cheese, canned tomatoes, frozen vegetables, rice and more," said Stacy Dean, deputy undersecretary at the USDA.

"A big part of what we need to try to do is offer as much stability and predictability as possible in an incredibly uncertain time," Dean told reporters on a call Friday.

Each state will allocate the funds to schools based on student enrollment, with a minimum amount per district to ensure that small schools aren’t left behind. In total, the Supply Chain Assistance Funds are expected to provide a boost in resources for up to 100,000 schools across all 50 states, D.C., Puerto Rico, Guam, and the U.S. Virgin Islands.

The additional federal assistance to school meal programs comes as program operators continue to face unprecedented challenges stemming from supply chain disruptions and labor shortages.

In October President Joe Biden announced that Walmart, FedEx and UPS, three of the largest U.S. goods carriers, would up their efforts to address supply chain issues after retailers had started warning that some products may not make it to the shelves before the holidays.

The remaining aid will provide states funding for domestic local school food purchases and USDA Foods, which are qualified foods products from small to large vendors.

Schools served almost 500 million lunches on average per month from September 2018 to May 2019. The number dropped during the pandemic-scarred 2020-21 school year to about 330 million lunches per month, according to the USDA.

Separately, the agency announced meal service waivers, known as the "Seamless Summer Option," have been extended through June 2022. The waivers allow for schools to offer meals free of charge to students. Republicans in Congress have been critical of the proposal made by Democrats to make universal free meals permanent because of the potential high price tag.

Besides allowing higher reimbursement rates, the USDA is also giving schools more leeway when it comes to meeting meal guidelines and extending the nationwide waiver through the 2021-22 school year to make all meals free of charge.