On Monday, March 22, the USDA held a 12-hour listening session to hear feedback from the public about the Farmers to Families Food Box Program. The program was created almost a year ago at the peak of the pandemic lockdown. It was designed to quickly move surplus commodities from farmers to consumers in need and hopefully support some idled workers and distribution systems in the process. The goals were broad, and the rules were loose.

There were many criticisms that the rules were too loose and the cost was too high, and about four months in, the USDA put more structure into place around the program. At that point, the program seemed to shift the balance more toward providing food for people in need rather than supporting farmers or the supply chain. The USDA was providing direct payments to farmers and the media had stopped reporting on crops being plowed under and milk being dumped. Yet, there was plenty of footage of cars lined up for miles to receive the food boxes. That shift to helping consumers, and the earlier criticisms, led the USDA to focus more on cost per box in the later rounds of the program.

Current concerns and challenges

I didn’t hear all 12 hours of the listening session, but from the five hours I heard, the following items came up repeatedly:

  • The USDA should have less focus on cost and more focus on providing local commodities through local organizations. Many people commented that their state was being serviced by out-of-state companies shipping in food that was sourced and processed outside their borders.

  • The lead time between being awarded a contract and the first deliveries should be extended, as five to 10 days was not enough time to properly ramp up preparations. The contract length should also be extended to more than four to six weeks. A few contractors mentioned hiring 40 to 80 people to pack boxes and participate in this program, and it is hard to make that investment if you aren’t sure whether you’ll get another contract next month.

  • The USDA has shifted to all combination boxes (a mix of fruits, vegetables, precooked meats, and dairy) during 2021, and that is causing problems on a number of levels. The boxes sometimes contain a mix of shelf stable, refrigerated, and frozen items, but they are all supposed to be delivered in a single box. That creates challenges through the distribution chain.

  • It also makes the boxes heavy, with contents sometimes falling out the bottom of the box, so heavier duty boxes and/or more tape are needed. For consumers without a car, toting a 30-plus-pound box home is difficult or impossible. Consumers with dietary restrictions (such as sodium, vegan/vegetarian, Muslim, or Jewish) didn’t appreciate some of the meat (and dairy) items mixed into the box.

  • Some also wanted the USDA to do more audits of what was in the box to make sure it lines up with what companies said they were putting in the boxes.

The USDA has spent over $4 billion on the Food Box Program so far. They were allocated another $3.6 billion by the American Rescue Plan Act for commodity purchases and grants to support the supply chain, and they likely have about $500 million left for the same purposes from the stimulus package that passed back in December.

This was originally created as a temporary program. It was created under duress, to address the specific challenges farmers, the supply chain, and consumers were facing at the time. With the amount of funding the USDA is sitting on, I think the USDA is right to take a step back, assess the situation, and see how the program needs to evolve to deal with the current challenges in the system.

Looking ahead

So, what are the current challenges in the food production/distribution/consumer system, and how could they be fixed with $4.1 billion dollars? That question wasn’t well addressed in the listening session. Most speakers were previous or current contractors or nonprofits that were distributing the food, and they made comments about how to make tweaks to the program. But some speakers called for radical changes like providing consumers with vouchers that they could use at local stores and farmer’s markets. That sounds a lot like the SNAP program, which is already getting increased funding from a different pool of money.

Some speakers mentioned the Food Box Program should operate more like The Emergency Food Assistance Program (TEFAP), where the USDA makes commodities available to states with the allocation based on the number of unemployed people in each state and the number of people below the poverty line. The states also receive administrative funds to help cover the cost of storing and distributing the commodities. The states then distribute the food to pantry shelves and soup kitchens. It is a well-established system and does much of what the Food Box Program does, but it is less flexible and doesn’t focus on local supply chains. I think it is theoretically possible the USDA could direct some of their funding toward TEFAP.

From a dairy perspective, domestic demand hasn’t recovered to pre-pandemic levels yet. So, the current challenge is just keeping government purchases elevated to move the surplus of products and hopefully moving the right mix of dairy products so that the Class III and Class IV milk price spread doesn’t explode. It would be nice if there was some way to phase out the government purchases when it is clear that domestic demand has rebounded; otherwise, the next problem might be an overheated market.

One thing that was clear from the comments I heard was that distributors and consumers don’t want combination boxes. By my calculations, combination boxes were good for dairy demand. Every box had to have dairy products in it. If the USDA moves back to separate commodity boxes, a smaller share of the dollars will be spent on dairy.

The USDA has to figure out what the Food Box Program is. Is it a temporary program meant to benefit farmers? Should it focus on supporting local supply chains? Should it focus on encouraging healthy eating? Is it an emergency feeding program for people in need? How much should they invest in creating rules and structure if this is just a temporary program that will run out of funding in the next six months . . . or should this become a permanent program?

My guess is the program is going to shift away from the combination boxes and focus more on local supply chains, but that will come at a higher administrative expense and higher cost per food box. The program will run until funding or “need” runs out. As long as they are giving away free food, people will probably show up to collect the free food, so it will be hard to show the “need” is going away. That means it will probably operate until funding runs out, and you can’t rule out more money being allocated to the program in future stimulus packages or maybe even the next farm bill.

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(c) Hoard's Dairyman Intel 2021
March 29, 2021
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