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43–312 PDF 2008

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: 

http://www.gpoaccess.gov/congress/house/education/index.html 

(II)

COMMITTEE ON EDUCATION AND LABOR 

GEORGE MILLER, California, Chairman

Dale E. Kildee, Michigan, Vice Chairman 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Danny K. Davis, Illinois 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

Linda T. Sa ́nchez, California 

John P. Sarbanes, Maryland 

Joe Sestak, Pennsylvania 

David Loebsack, Iowa 

Mazie Hirono, Hawaii 

Jason Altmire, Pennsylvania 

John A. Yarmuth, Kentucky 

Phil Hare, Illinois 

Yvette D. Clarke, New York 

Joe Courtney, Connecticut 

Carol Shea-Porter, New Hampshire 

Howard P. ‘‘Buck’’ McKeon, California, 

Senior Republican Member 

Thomas E. Petri, Wisconsin 

Peter Hoekstra, Michigan 

Michael N. Castle, Delaware 

Mark E. Souder, Indiana 

Vernon J. Ehlers, Michigan 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Ric Keller, Florida 

Joe Wilson, South Carolina 

John Kline, Minnesota 

Cathy McMorris Rodgers, Washington 

Kenny Marchant, Texas 

Tom Price, Georgia 

Luis G. Fortun ̃ o, Puerto Rico 

Charles W. Boustany, Jr., Louisiana 

Virginia Foxx, North Carolina 

John R. ‘‘Randy’’ Kuhl, Jr., New York 

Rob Bishop, Utah 

David Davis, Tennessee 

Timothy Walberg, Michigan 

[Vacancy]

Mark Zuckerman, Staff Director 

Sally Stroup, Republican Staff Director 

(III)

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

Page

IV

Statement of Witnesses—Continued

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

(1)

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. 

2

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 


egg.eps
3

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. 

4

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 nutriVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
5

tion 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 Americanmade 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 energyrelated 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 

6

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. 

7

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. 

8

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 exVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
9

pertise 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 

10

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 

11

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-awayfrom-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-fromhome 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. 

12

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-fromhome 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. 

13

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 

14

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:]

15

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 

16

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. 

17

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 onethird 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 draVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
18

matically 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. 

19

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 Oxfam10 and by former USDA Chief 

Economist Keith Collins11 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 


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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 years20—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

21

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 foodto-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 biofuels. 


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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). 24Food 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. 25FAPRI Report, at 60. 

23

26FAPRI 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. 34FAPRI-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-factorsincreasing-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? 

24

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. 

25

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. 

26

• 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 Dis- trict $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 IndeVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6621 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
27

pendent 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. 

28

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 coop 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 

29

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) 

30

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 

31

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 

32

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 lowincome 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 proVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
33

gram 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. 

34

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 

35

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 applicaVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6621 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
36

tions, 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, startup 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. 

37

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. 

38

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 TodayGallup 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. 

39

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-inVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
40

come 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 lowincome 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 

41

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 

42

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, 

43

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. 

44

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:]

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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? 


james5.eps
54

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 coops 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, 

55

I find myself in an uncomfortable position, trying to educate childcare 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. 

56

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 firstworld 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, 

57

‘‘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? 

58

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? 

59

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 

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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? 

61

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 

62

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? 

63

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 goodquality 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. 

64

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. 

65

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. 

66

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 reducedprice 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. 

67

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. 

68

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 pushme, 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. 

69

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. 

70

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. 

71

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 

72

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 

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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-, mediumsized 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 comVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00077 Fmt 6633 Sfmt 6602 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
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mittee 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:]

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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 


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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. 2Dietary Guidelines for Americans, 2005 (6th ed.). U.S. Department of Health and Human 

Services, U.S. Department of Agriculture. www.healthierus.gov/dietaryguidelines. 

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. 

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.

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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.

Categories of Articles 

CPI Cumulative

Percentage 

Change 

Average Monthly 

Percent Change December 2007 May 2008

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


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Categories of Articles 

CPI Cumulative

Percentage 

Change 

Average Monthly 

Percent Change December 2007 May 2008

Fresh Whole Milk ............................................................ 115.505 124.507 7.79 1.56

Canned pigeon peas, chick peas and other grains ...... 101.858 114.123 12.04 2.41

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 

85

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 manVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6621 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
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ufacturers 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. 

87

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, lowcost 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 

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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. 

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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.’’

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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 biofuels 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 

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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 enVerDate 0ct 09 2002 14:34 Nov 09, 2008 Jkt 000000 PO 00000 Frm 00095 Fmt 6633 Sfmt 6621 G:\DOCS\110TH\FC\110-100\43312.TXT HBUD1 PsN: DICK
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gaged 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. 

93

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. 

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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 

95

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.]

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