USDA Food Box Program Provides Cautionary Tale About Contracts to Lowest Bidders

A program to aid the food insecure became a boon to big agribusiness.

Earlier this month, the United States Department of Agriculture (USDA) announced it will spend $5 billion to strengthen food supply chains and address food insecurity. This includes $1 billion for grants and direct food procurement for hunger relief organizations, with a commitment to spend up to $400 million buying from local and “socially disadvantaged” farmers.

The emergency food assistance replaces the controversial Farmers to Families Food Box program, which USDA launched in May 2020 in response to the pandemic. Over the course of five rounds of funding, the program delivered over 173 million boxes of food to needy Americans and aimed to support regional food systems, with mixed results.

The successes and failures of the food box program provide a cautionary lesson for USDA’s new initiative. Specifically, it shows that while small, local farms and community-based organizations are well positioned to produce and deliver emergency food and support local economies, they can wind up being frozen out in favor of big agribusinesses if USDA continues to award contracts primarily to the lowest bidders.

During the first and second rounds of the program, USDA awarded contracts to many small producers and regional, cooperatively owned, and mission-driven organizations. These groups rose to the occasion, navigating the program’s pitfalls and matching farmers looking for markets with families in need. Their efforts boosted local economies and supplied quality, culturally appropriate foods.

For regional food distributors like the Common Market, a Philadelphia-based nonprofit, direct relationships were the key to success. “We already had strong relationships with farmers, community organizations and schools,” co-founder Tatiana Garcia-Granados recounted of her organization’s experience. “Some of the larger projects were not able to connect [people with food] as quickly.”

From May to September 2020, the Common Market sourced from small and midsized farms to deliver nearly 1 million produce and dairy boxes to residents of Baltimore, New York, and Atlanta.

While the USDA program maintained a formal goal of supporting local farms, the third round of funding changed how applicants were evaluated to prioritize the lowest-cost bids, making it more challenging for small organizations to qualify. Not only did this shut out many regional organizations, but larger, lower-cost contractors delivered fewer boxes per dollar.

In the first two rounds, the USDA spent $2.981 billion on 198 contracts and delivered 101.7 million boxes of food in four months. By the fourth round, the program contracted with fewer than 54 organizations. Compared to the first two rounds, funding decreased by 17% in the fourth and fifth rounds to $2.463 billion, while the number of boxes decreased by almost half—delivering only 53.1 million boxes in six months.

Many communities watched out-of-state companies replace local distributors in later rounds of the program. In Vermont, the first two rounds of funding went to the Abbey Group, a state-based food service organization. A strong local network, including the Vermont Foodbank, allowed the Abbey Group to successfully connect families in need with local farmers that lost foodservice markets. The collaboration provided 80 pickup sites for families and sourced from 19 Vermont farms. When an out-of-state bidder, Global Trading Enterprises, took over the program, the number of pickup sites decreased to seven. Global Trading was unable to source from Vermont farms: The low price of its food boxes could not accommodate local farmers with higher overhead costs. Boxes from the large distributor also contained less variety and were often inappropriately sized—leading to food waste. The low-bid priority ignored social capital and existing regional networks, and the Vermont program lost its bite.

Similar scenes played out across the country as the USDA program entered its third and fourth rounds. The Federation of Southern Cooperatives, a nonprofit association of Black farmers, landowners, and cooperatives, had great success early on in the program. The Federation connected local farmers to 20 nonprofits, churches and community groups across Mississippi, Georgia and Alabama, and sourced 82 percent of produce from Black-owned small farms. Despite its success, the Federation’s contract was denied in the third round. A&H Farm, a small vegetable and livestock operation in Kansas, planted crops in anticipation of third-round funding after exceeding expectations in the first and second rounds. It, too, was blindsided: In the third round, its contract was denied.

On February 12, 2021, the Vermont congressional delegation requested a formal investigation of Global Trading Enterprises. This dovetailed a request on the national level. In October 2020, 50 members of Congress asked Agriculture Secretary Sonny Perdue to investigate the changes to the third round of funding that left so many farmers out to dry.

Kate Fitzgerald, a food systems consultant based in Washington, D.C., says the low-bid priority undercuts the quality of food for recipient families and squeezes farmers and workers along the supply chain. Low price contracts exclude farms and food businesses that take on higher overhead costs to create economic benefits like livable wages or responsible production methods.

Several groups put forth recommendations for improving the food box program and future USDA procurement efforts. In a report earlier this year, the Harvard Food Law and Policy Clinic (FLPC) and National Sustainable Agriculture Coalition (NSAC) recommended establishing, maintaining, and tracking a more concrete goal of supporting small- and midsized, and minority- and women-owned farms and distributors. FLPC and NSAC further warned against evaluating bids solely based on cost. According to their report, bid prices should instead take into account differences in historical and reasonable costs to “ensure that small and specialty farms are adequately compensated.”

The Biden USDA has a tremendous opportunity to respond to crisis by building a fair, equitable, and sustainable food system. This ambition requires the USDA to understand the harm of prioritizing the lowest bidder over larger societal goals. “Ultimately,” says Fitzgerald, “if low price is the basis from which the food system operates, you undercut the economy’s resilience.”

This piece originally appeared in Food & Power.

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Alexandra Spring

Alexandra Spring is an Agriculture Policy Intern at the Open Markets Institute.