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IMPROVING  THE  QUALITY  AND
EFFICIENCY  OF  COMMODITY
DISTRIBUTION  TO  FEDERAL
CHILD  NUTRITION  PROGRAMS

HEARING

BEFORE THE

COMMITTEE  ON  EDUCATION
AND  THE  WORKFORCE
U.S.  HOUSE  OF  REPRESENTATIVES
ONE  HUNDRED  EIGHTH  CONGRESS

FIRST  SESSION

October  7,  2003

Serial No. 108-36

Printed  for  the  use  of  the  Committee  on  Education  and  the  Workforce

(

Available  via  the  World  Wide  Web:  http://www.access.gpo.gov/congress/house
or
Committee  address:  http://edworkforce.house.gov

90-141 PDF

WASHINGTON  :

2004

U.S.  GOVERNMENT  PRINTING  OFFICE

For sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800
Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

VerDate 0ct 09 2002  09:18 May 18, 2004 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 H:\DOCS\90141.SF EDUWK PsN: NNIXON

COMMITTEE  ON  EDUCATION  AND  THE  WORKFORCE

JOHN  A.  BOEHNER,  Ohio,  Chairman

Thomas  E.  Petri,  Wisconsin,  Vice  Chairman
Cass  Ballenger,  North  Carolina
Peter  Hoekstra,  Michigan
Howard  P.  ‘‘Buck’’  McKeon,  California
Michael  N.  Castle,  Delaware
Sam  Johnson,  Texas
James  C.  Greenwood,  Pennsylvania
Charlie  Norwood,  Georgia
Fred  Upton,  Michigan
Vernon  J.  Ehlers,  Michigan
Jim  DeMint,  South  Carolina
Johnny  Isakson,  Georgia
Judy  Biggert,  Illinois
Todd  Russell  Platts,  Pennsylvania
Patrick  J.  Tiberi,  Ohio
Ric  Keller,  Florida
Tom  Osborne,  Nebraska
Joe  Wilson,  South  Carolina
Tom  Cole,  Oklahoma
Jon  C.  Porter,  Nevada
John  Kline,  Minnesota
John  R.  Carter,  Texas
Marilyn  N.  Musgrave,  Colorado
Marsha  Blackburn,  Tennessee
Phil  Gingrey,  Georgia
Max  Burns,  Georgia

George  Miller,  California
Dale  E.  Kildee,  Michigan
Major  R.  Owens,  New  York
Donald  M.  Payne,  New  Jersey
Robert  E.  Andrews,  New  Jersey
Lynn  C.  Woolsey,  California
Rube´n  Hinojosa,  Texas
Carolyn  McCarthy,  New  York
John  F.  Tierney,  Massachusetts
Ron  Kind,  Wisconsin
Dennis  J.  Kucinich,  Ohio
David  Wu,  Oregon
Rush  D.  Holt,  New  Jersey
Susan  A.  Davis,  California
Betty  McCollum,  Minnesota
Danny  K.  Davis,  Illinois
Ed  Case,  Hawaii
Rau´ l  M.  Grijalva,  Arizona
Denise  L.  Majette,  Georgia
Chris  Van  Hollen,  Maryland
Tim  Ryan,  Ohio
Timothy  H.  Bishop,  New  York

Paula  Nowakowski,  Staff  Director
John  Lawrence,  Minority  Staff  Director

(II)

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C O N T E N T S

Hearing held on October 7, 2003 ............................................................................

Statement of Members:

Boehner,  Hon.  John  A.,  a  Representative  in  Congress  from  the  State
of Ohio ............................................................................................................
Prepared statement of ...............................................................................
Hastings,  Hon.  Doc,  a  Representative  in  Congress  from  the  State  of
Washington, prepared statement of ............................................................
Kildee,  Hon.  Dale  E.,  a  Representative  in  Congress  from  the  State  of
Michigan ........................................................................................................
Miller,  Hon.  George,  a  Representative  in  Congress  from  the  State  of
California, prepared statement of ................................................................

Statement of Witnesses:

Bost,  Hon.  Eric  M.,  Under  Secretary  for  Food,  Nutrition,  and  Consumer
Services, U.S. Department of Agriculture ...................................................
Prepared statement of ...............................................................................
Response to questions submitted for the record .....................................
Cockwell,  Paula,  Manager  of  Nutrition  Services,  Adams  County  School
District  #14,  and  Food  Service  Director,  Mapleton  Public  School  Dis-
trict .................................................................................................................
Prepared statement of ...............................................................................
Heaney, Dr. Robert P., John A. Creighton University Professor, Professor
of Medicine, Creighton University ...............................................................
Prepared statement of ...............................................................................
Joslin, Robinson W., President, Ohio Soybean Association ..........................
Prepared statement of ...............................................................................
Slavin, Dr. Joanne L., Professor of Nutrition, University of Minnesota ......
Prepared statement of ...............................................................................
Stenzel,  Thomas  E.,  President  and  CEO,  United  Fresh  Fruit  and  Vege-
table Association ...........................................................................................
Prepared statement of ...............................................................................
Yates,  A.J.,  Administrator,  Agricultural  Marketing  Service,  U.S.  Depart-
ment of Agriculture .......................................................................................
Prepared statement of ...............................................................................

Additional materials supplied:

American  Commodity  Distribution  Association,  Statement  submitted  for
the record .......................................................................................................
Barnard,  Dr.  Neal  D.,  President,  Physicians  Committee  for  Responsible
Medicine, Statement submitted for the record ...........................................
Additional statement submitted for the record .......................................
Foster,  Nancy  E.,  President  and  CEO,  U.S.  Apple  Association,  Statement
submitted for the record ...............................................................................
The  Humane  Society  of  the  Unted  States,  Statement  submitted  for  the
record .............................................................................................................
Keith,  Dr.  Jeanette  Newton,  Assistant  Professor  of  Medicine,  Attending
Physician,  Nutrition  Support  Service,  The  University  of  Chicago  Hos-
pitals,  Section  Gastroenterology/Clinical  Nutrition,  Statement  sub-
mitted for the record .....................................................................................
Savaiano,  Dr.  Dennis  A.,  Professor  of  Foods  &  Nutrition,  Dean  of  Con-
sumer and Family Sciences, Purdue University ........................................
Wittrock, Donna, President, American School Food Service Association ....

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(III)

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IMPROVING  THE  QUALITY  AND  EFFICIENCY
TO

OF
FEDERAL  CHILD  NUTRITION  PROGRAMS

DISTRIBUTION

COMMODITY

Tuesday,  October  7,  2003
U.S.  House  of  Representatives
Committee  on  Education  and  the  Workforce
Washington,  DC

The  Committee  met,  pursuant  to  call,  at  2  p.m.,  in  room  2175,
Rayburn  House  Office  Building,  Hon.  John  A.  Boehner  (Chairman
of the Committee) presiding.

Present:  Representatives  Boehner,  Petri,  McKeon,  Norwood,
Biggert,  Tiberi,  Keller,  Osborne,  Wilson,  Kline,  Carter,  Kildee,
Payne, Holt, McCollum, Grijalva, and Majette.

Staff  Present:  Julian  Baer,  Legislative  Assistant;  Kevin  Frank,
Professional  Staff  Member;  Parker  Hamilton,  Communications  Co-
ordinator; Kate Houston, Professional Staff Member; Sally Lovejoy,
Director  of  Education  and  Human  Resources  Policy;  Stephanie
Milburn,  Professional  Staff  Member;  Deborah  L.  Samantar,  Com-
mittee Clerk/Intern Coordinator; Denise Forte, Minority Legislative
Associate/Education;  Alex  Nock,  Minority  Legislative  Associate/
Education;  Joe  Novotny,  Minority  Legislative  Assistant/Education;
and Lynda Theil, Minority Legislative Associate/Education.

Chairman  BOEHNER.  A  quorum  being  present,  the  Committee  on

Education and the Workforce will come to order.

We  are  meeting  today  to  hear  testimony  on  Improving  the  Qual-
ity  and  Efficiency  of  Commodity  Distribution  to  the  Federal  Child
Nutrition Programs.

Under  Committee  rules,  opening  statements  are  limited  to  the
Chairman and Ranking Minority Member of the Committee. There-
fore,  if  other  members  have  statements,  they  may  be  included  in
the hearing record. And with that, I ask unanimous consent for the
hearing record to remain open for 14 days to allow members’ state-
ments  and  other  extraneous  material  referenced  during  today’s
hearing  to  be  submitted  in  the  official  hearing  record.  Without  ob-
jection, so ordered.

STATEMENT OF HON. JOHN BOEHNER, CHAIRMAN,
COMMITTEE ON EDUCATION AND THE WORKFORCE
Good  afternoon.  Let  me  thank  all  of  you  for  coming  today,  espe-
cially  those  of  you  who  will  serve  on  your  panels  today.  This  is  an
important  hearing  on  Improving  the  Quality  and  Efficiency  of  the
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Commodity  Distribution  Program  to  the  Federal  Child  Nutrition
Programs.  These  programs  are  central  to  providing  the  Nation’s
needy  children  with  access  to  safe,  affordable,  and  nutritious  food.
This  marks  the  first  Full  Committee  hearing  to  help  prepare
members of this Committee for the upcoming reauthorization of the
Child  Nutrition  Act  and  the  Richard  B.  Russell  National  School
Lunch  Act.  There  is  general  agreement  on  the  importance  of  good
nutrition  for  everyone,  especially  growing  children.  And  while  par-
ents  obviously  bear  the  first  responsibility  for  ensuring  their  chil-
dren  eat  well  and  exercise  regularly,  programs  authorized  under
the  Child  Nutrition  Act  and  the  National  School  Lunch  Act  play  a
positive  role  as  well,  helping  to  provide  disadvantaged  children
with access to nutritious meals and snacks.

Programs such as the National  School Lunch and  Breakfast  Pro-
grams, WIC, the Summer Food Service Program, and the Child and
Adult  Care  Food  Program  are  helping  many  of  these  children
achieve  full  physical  development  and  success  in  school.  The  Fed-
eral  child  nutrition  programs  were  conceived  to  offer  wholesome
meals  and  snacks  to  children  in  need  and  to  support  the  health  of
lower-income  pregnant  women,  breastfeeding  mothers,  and  their
young children.

These  programs  represent  a  huge  national  investment  totaling
more  than  $12  billion  per  year.  And  while  these  programs  have
been  generally  heralded  as  successful,  this  Committee  is  seeking
new  ways  to  improve  access  to  safe,  healthy,  and  affordable  meals
and to better serve all program participants.

Today’s hearing will focus on a critical component of many Feder-
ally  funded  child  nutrition  programs:  commodity  distribution.  The
U.S. Department of Agriculture provides commodity support for the
School  Lunch  Program,  the  Child  and  Adult  Care  Food  Program,
and the Summer Food Service Program as well.

Last year, the United States Department of Agriculture provided
commodities  to  these  programs  valued  at  more  than  $700  million.
The Department of Agriculture has two major objectives in its mis-
sion  to  provide  food  products  to  schools.  One  objective  is  to  pur-
chase  products  as  part  of  the  Department’s  price  support  and  sur-
plus  removal  program.  The  second  is  to  provide  schools  with  high-
quality  nutritious  foods  so  that  children  have  access  to  meals  that
are both healthful and appealing.

Now,  these  objectives  are  frequently  at  odds,  which  poses  an  on-
going  challenge  for  the  Department.  And  because  the  Department
is charged with stabilizing agricultural markets and children’s pref-
erences,  food  quality  and  nutrition  must  frequently  compete  with
economic  factors  when  the  Department  decides  which  commodities
to purchase and supply.

In  1999  the  USDA  undertook  a  broad  evaluation  of  its  com-
modity  procurement  and  distribution  systems  to  improve  food  dis-
tribution  to  schools  and  other  beneficiaries.  The  Department’s  ulti-
mate goal was to better serve producers and consumers by improv-
ing  both  the  efficiency  of  the  distribution  process  and  the  quality
of the foods delivered.

USDA  convened  a  blue  ribbon  panel,  Food  Distribution  2000,
which  included  representatives  from  industry,  schools,  and  State
commodity  distribution  agencies  as  well.  The  result  was  a  report

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that  made  many  valuable  recommendations  for  improving  USDA’s
food distribution systems.  Since  that  time the  Department has cre-
ated  a  number  of  pilot  programs  and  other  initiatives  to  improve
upon  the  current  system.  However,  additional  efforts  are  needed
and several recommendations have yet to be implemented.

Last  month  I  sent  a  letter  to  Agriculture  Secretary  Ann
Veneman  requesting  information  about  the  Department’s  efforts  to
implement  the  recommendations  of  the  Food  Distribution  2000
panel.  I  look  forward  to  working  with  the  Secretary,  Under  Sec-
retary  for  Food  and  Nutrition,  Eric  Bost,  Ag  Marketing  Services
Administrator,  A.  J.  Yates,  and  our  partners  in  the  food  industry
and  school  food  service  providers  to  continue  the  good  work  that
has  been  started  to  make  meaningful  reforms  in  the  commodity
distribution system.

Today  we  will  hear  from  experts  who  will  help  us  shed  light  on
the commodity distribution to child nutrition programs, what works
well,  what  needs  improvement.  Several  of  today’s  witnesses  will
tell us about progress made by the Department to act upon the rec-
ommendations  of  the  Food  Distribution  2000  report  and  how  Con-
gress can help.

I  am  certain  all  of  our  witnesses  today  will  offer  unique  perspec-
tives on child nutrition and program operations that will be helpful
to  the  Members  of  this  Committee  as  we  work  to  improve  these
programs, and we look forward to all of your comments.

Now, I would yield to our Ranking Member today, my good friend

from the State of Michigan, Mr. Kildee.

[The prepared statement of Chairman Boehner follows:]

Statement of the Honorable John A. Boehner, Chairman, Committee on
Education and the Workforce

Good Afternoon. Thank you for joining us today for this important hearing on im-
proving  the  quality  and  efficiency  of  commodity  distribution  to  federal  child  nutri-
tion  programs.  These  programs  are  central  to  providing  the  nation’s  needy  children
with  access  to  safe,  affordable,  and  nutritious  food.  This  marks  the  first  Full  Com-
mittee  hearing  to  help  prepare  Members  of  this  Committee  for  the  upcoming  reau-
thorization  of  the  Child  Nutrition  Act  and  the  Richard  B.  Russell  National  School
Lunch Act.

There  is  general  agreement  on  the  importance  of  good  nutrition  for  everyone,  es-
pecially  growing  children.  While  parents  obviously  bear  first  responsibility  for  en-
suring their children eat well and exercise regularly, programs authorized under the
Child  Nutrition  Act  and  National  School  Lunch  Act  play  a  positive  role  as  well,
helping  to  provide  disadvantaged  children  access  to  nutritious  meals  and  snacks.
Programs  such  as  the  National  School  Lunch  and  Breakfast  Programs,  WIC,  the
Summer  Food  Service  Program,  and  the  Child  and  Adult  Care  Food  Program  are
helping  many  of  these  children  achieve  full  physical  development  and  success  in
school.

The federal child nutrition programs were conceived to offer wholesome meals and
snacks  to  children  in  need,  and  to  support  the  health  of  lower-income  pregnant
women, breastfeeding mothers, and their young children. These programs represent
a huge national investment totaling more than $15 billion per year. While these pro-
grams  have  been  generally  heralded  as  successful,  this  Committee  is  seeking  new
ways  to  improve  access  to  safe,  healthy,  and  affordable  meals  and  to  better  serve
all program participants.

Today’s  hearing  will  focus  on  a  critical  component  of  many  federally-funded  child
nutrition  programs—commodity  distribution.  The  U.S.  Department  of  Agriculture
provides  commodity  support  for  the  National  School  Lunch,  the  Child  and  Adult
Care Food, and the Summer Food Service program. Last year, the United States De-
partment  of  Agriculture  provided  commodities  to  these  programs  valued  at  more
than $700 million.

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The  Department  of  Agriculture  has  two  major  objectives  in  its  mission  to  provide
food products to schools. One objective is to purchase products as part of the Depart-
ment’s  price-support  and  surplus-removal  programs.  The  second  is  to  provide
schools with high quality, nutritious foods so that children have access to meals that
are  both  healthful  and  appealing.  These  objectives  are  frequently  at  odds,  which
poses an ongoing challenge for the Department. Because the Department is charged
with  stabilizing  agriculture  markets,  children’s  preferences,  food  quality  and  nutri-
tion  must  frequently  compete  with  economic  factors  when  the  Department  decides
which commodities to purchase and supply.

In  1999,  USDA  undertook  a  broad  evaluation  of  its  commodity  procurement  and
distribution  systems  to  improve  food  distribution  to  schools  and  other  beneficiaries.
The Department’s ultimate goal was to better serve producers and consumers by im-
proving both the efficiency of the distribution process and the quality of foods deliv-
ered.  USDA  convened  a  blue  ribbon  panel,  Food  Distribution  2000,  which  included
representatives  from  industry,  schools,  and  State  commodity  distribution  agencies.
The  result  was  a  report  that  made  many  valuable  recommendations  for  improving
USDA’s food distribution system.

Since  that  time,  the  Department  has  created  a  number  of  pilot  programs  and
other initiatives to improve upon the current system. However, additional efforts are
needed  and  several  recommendations  have  yet  to  be  implemented.  Last  month,  I
sent  a  letter  to  Agriculture  Secretary  Ann  Veneman  requesting  information  about
the  Department’s  efforts  to  implement  the  recommendations  of  the  Food  Distribu-
tion  2000  panel.  I  look  forward  to  working  with  Secretary  Veneman,  Under  Sec-
retary  for  Food  and  Nutrition,  Eric  Bost,  Agriculture  Marketing  Service  Adminis-
trator,  A.J.  Yates,  our  partners  in  the  food  industry,  and  school  food  service  pro-
viders  to  continue  the  good  work  that  has  been  started  in  making  meaningful  re-
forms to the commodity distribution system.

Today, we will hear from experts who will help shed light on commodity distribu-
tion  to  child  nutrition  programs—what  works  well  and  what  needs  improvement.
Several  of  today’s  witnesses  will  tell  us  about  progress  made  by  the  Department  to
act  upon  the  recommendations  of  the  Food  Distribution  2000  report  and  how  Con-
gress  can  help.  I  am  certain  all  of  today’s  witnesses  will  offer  unique  perspectives
on  child  nutrition  and  program  operations  that  will  be  tremendously  helpful  to  the
Members of this Committee as we work to improve these programs. We look forward
to their comments.

With that, I would like to recognize the Committee’s distinguished Ranking Mem-

ber, Mr. Miller.

STATEMENT OF HON. DALE KILDEE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr.  KILDEE.  Thank  you,  Mr.  Chairman.  Thank  you  very  much
for  having  this  very  important  hearing.  I  have  been  involved  with
child  nutrition  since  about  1954,  when  I  became  a  teacher.  I  see
people are there in the background that I have known since I have
been  here  in  Congress,  27  years.  It  is  certainly  a  very,  very  impor-
tant program.

Some  people  forget  that  the  program  really  began  after  World
War II when it was discovered that many people entering the mili-
tary  in  the  draft  at  that  time  were  physically  unable  to  enter  the
military  because  of  poor  nutrition.  Of  course,  many  of  them  had
grown  up  during  the  1930’s,  when  we  had  the  Great  Depression.
So  it  really  became  apparent  to  the  Federal  Government,  Franklin
Roosevelt, and before him, Harry Truman, that nutrition was very,
very important for the long-term health of young people and for the
long-term health of this Nation.

I  have  been  through  every  permutation  that  this  program  has
gone  under,  cash  in  lieu  of  commodities,  everything,  every  per-
mutation  of  that.  But  generally  speaking,  the  Federal  Government
has kept its commitment. There are times when we had some prob-
lems  with  trying  to  call  ketchup  a  vegetable  and  things  like  that,
which  we  do  muse  about  from  time  to  time.  But  generally,  all  of

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the Administrations have been aware of the fact that this is a very,
very important program.

One  of  the  programs  I  visited  recently  in  my  district—Congress
established  a  vegetable  pilot  program  in  four  different  States  and
one Indian reservation. That was very important. One of the States
happened  to  be  Ohio,  the  other  was  Michigan.  I  am  not  sure  how
we got in there. But I visited the program in Linden, Michigan and
was very, very much impressed.

I  know  we  always  have  to  go  through  changes  and  new  ideas.
But  this  program  is  really  one  of  the  great  programs,  and  I  would
hope  that  that  pilot  program  would  be  expanded  and  that  the  De-
partment  look  at  that.  When  Secretary  Veneman  announced  the
award  of  that  $6  million,  and  that  Michigan  was  one  of  those,  I
was  determined  to  go  out  and  visit  the  programs.  You  have  done
a  very,  very  good  job  in  that  program  and  I  commend  you  for  it.
When  I  taught  school,  we  had  no  such  thing  as  a  formal  break-
fast  program  for  students.  As  a  matter  of  fact,  there  was  a  great
deal  of  controversy  when  the  breakfast  programs  started,  the  idea
that that might weaken the family. But the breakfast program has
been very, very important.

Having taught school, I could recognize the students who arrived
at  school  not  having  had  breakfast  and  how  that  did  affect  their
learning. I started the first breakfast program for one student, at—
you  have  heard  me  tell  that  story  many  times—at  Flint  Central
High  School.  I  had  noted  that  every  day  in  my  homeroom,  some-
one’s  lunch  was  being  stolen.  Very  often  students  packed  their
lunch  and  brought  it  to  school.  It  was  being  stolen.  And  I  was
raised in a family where stealing was a very, very—.

Chairman  BOEHNER.  Mr.  Kildee,  nobody  attempted  to  ever  steal

my lunch.

eye on it.

Mr.  KILDEE.  Very  good.  Well,  you  probably  kept  a  very  watchful

Chairman BOEHNER. I would have gladly given it to them.
Mr. KILDEE. It was the quality then, right?
But  I  finally  caught  the  young  man  who  was  stealing  the  lunch.
And  stealing  was  not  only  considered  a  very  serious  crime  in  my
family, but a sin. So I was going to turn him into the principal who
would  have  suspended  him  for  several  weeks.  But  I  found  out  that
his  mother  was  in  no  position  to  get  him  a  breakfast  in  the  morn-
ing. And whenever he got to school, his first task was to find some-
thing to eat.

But  then  he  said  to  me,  he  said,  Mr.  Kildee,  I  never  steal  the
same lunch from the same person in the same week. And I figured,
this  kid  has  ethics.  So  I  took  him  down  to  the  cafeteria  where  we
had  no  breakfast  program,  and  said  to  Mrs.  Pelkey,  who  was  in
charge  of  the  cafeteria,  ‘‘Mrs.  Pelkey,  Robert  will  be  coming  down
here  every  morning  for  breakfast,  and  you  get  him  something  for
breakfast  and  then  send  me  a  bill.’’  Well,  he  got  breakfast  for  3
years, and I never got a bill. But since then, of course, we have es-
tablished breakfast programs in many schools.

So  I  look  forward  to  your  hearing  today.  You  are  involved  in
something so important. Nutrition is so important. And the Federal
Government  has  a  great  responsibility  in  this  area.  I  look  forward
to your testimony. Thank you, Mr. Chairman.

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Chairman BOEHNER. Thank you, Mr. Kildee.
I  want  to  introduce  our  first  panel  of  witnesses  today.  Our  first
witness will be the Honorable Eric M. Bost, who is the Department
of Agriculture’s Under Secretary for Food, Nutrition, and Consumer
Services.  As  Under  Secretary,  he  is  responsible  for  the  administra-
tion  of  the  Department’s  15  nutrition  assistance  programs,  includ-
ing  the  Food  Stamp  Program,  the  National  School  Lunch  Program,
the  School  Breakfast  Programs,  and  WIC.  Before  his  appointment,
Mr.  Bost  served  as  Commissioner  and  Chief  Executive  Officer  of
the Texas Department of Human Services.

Our  next  witness  will  be  Mr.  A.  J.  Yates,  who  is  the  current  ad-
ministrator  of  USDA’s  Agriculture  Marketing  Service.  Mr.  Yates
oversees  more  than  50  programs  designed  to  maintain  a  stable
marketing environment for the benefit of America’s farmers, ranch-
ers and consumers. Prior to his appointment, he served as both the
Deputy  Secretary  and  the  Under  Secretary  for  the  California  De-
partment  of  Food  and  Agriculture.  He  has  been  actively  involved
in providing leadership to a variety of organizations supporting ag-
riculture and education.

For  those  of  you  that  may  not  be  aware,  in  addition  to  chairing
this  Committee,  I  am  also  the  Vice  Chairman  of  the  House  Com-
mittee  on  Agriculture.  So  I  am  glad  to  have  both  of  these  gentle-
men here.

Mr. Bost, with that you may begin your testimony.

STATEMENT OF ERIC M. BOST, UNDER SECRETARY, FOOD, NU-
TRITION,  AND  CONSUMER  SERVICES,  U.S.  DEPARTMENT  OF
AGRICULTURE
Mr.  BOST.  Good  afternoon,  and  thank  you  so  very  much,  Mr.
Chairman  and  members  of  the  Committee.  I  am  Eric  Bost,  the
Under Secretary for Food, Nutrition, and Consumer Services at the
United  States  Department  of  Agriculture.  I  appreciate  this  oppor-
tunity to review the Department’s Commodity Nutrition Assistance
Program  and  consider  how  this  vital  program  can  be  enhanced  as
it relates to the National School Lunch Program.

As  you  know,  the  Child  Nutrition  reauthorization  process  gives
the  Administration  and  Congress  the  opportunity  to  support  local
schools,  parents,  and  communities  to  move  toward  an  environment
that values and fosters the health of our children. The commodities
are  used  in  school  meals  in  over  98,000  schools  nationwide.  Over
28  million  lunches  are  served  each  day  in  the  National  School
Lunch  Program.  In  fiscal  year  2003,  USDA  provided  schools  with
over  705  million  in  entitlement  commodities  and  $75  million  in
bonus commodities for their school meal programs.

Of  course,  the  commodity  programs  are  equally  important  to
American  farms  and  ranchers  because  they  provide  the  Depart-
ment with a means to stabilize agricultural markets.

There  has  been  considerable  attention  paid  to  the  fat,  sodium,
and sugar content of school meals. I would like to ensure the Com-
mittee of our continuing and abiding concern in this area and share
a few of the things that we have done to address this.

The  Department  has,  one,  reviewed  and  modified  recipes,  com-
modity  specifications,  and  other  materials  that  support  compliance
with  the  dietary  guidelines.  We  have  also  worked  with  schools  to

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more closely align the meals they serve with the dietary guidelines.
We  are  working  hard  to  improve  the  quality,  variety,  and  nutri-
tional  content  of  commodities  we  provide  the  schools,  including  of-
fering reduced-fat meat and cheese products, reducing the salt con-
tent  of  canned  vegetables,  and  reducing  the  sugar  added  to  canned
fruit.

We  have  also  strongly  encouraged  schools  to  offer  more  nutri-
tious choices to students and provide food service workers with the
training  and  technical  assistance  to  help  them  prepare  more  nutri-
tious  and  appealing  meals.  Today,  over  80  percent  of  these  Na-
tional  School  Lunch  Program  schools,  we  believe,  offer  meals  that
are consistent with good health.

We have also asked our partners in industry and State and local
agencies  for  their  suggestions  in  order  to  identify  how  we  can  im-
prove  the  delivery  of  the  commodity  programs  to  States  and
schools. Earlier the Chairman made reference to the Food Distribu-
tion 2000 report that we use as a blueprint for change.

There  are  a  couple  of  things  I  would  like  to  say  about  what  we
have done to address many of the recommendations, we believe, all
of  the  recommendations  that  were  noted  in  that  report.  We  have
implemented  an  Internet-based,  commodity-based  ordering  system
called  the  electronic  commodity  ordering  system.  This  new  system
provides  greater  access  and  speed  in  food  distribution  processes  at
the  Federal,  State  and  recipient  agency  levels.  States  can  now
place,  cancel,  or  modify  food  orders  online  that  previously  were
handled through paper transactions. We plan to roll the system out
in schools, at the State’s option, beginning next year.

We have also done some things to align the commodity programs
with  commercial  practices.  To  bring  our  commodity  programs  more
in  line  with  commercial  practices,  we  have  now  allowed  vendors  to
use  commercial  labels  on  USDA  commodities  in  lieu  of  USDA  la-
bels;  permitted  recipient  agencies  to  maintain  single  inventory
records,  instead  of  requiring  separate  accounting  for  USDA  com-
modities  and  commercial  products;  and  reviewed  all  USDA  com-
modity  specifications  and  improving  or  modifying  them  when  fea-
sible, to better align them with commercial specifications.

In  addition  to  that,  we  have  also  revised  regulations  that  allow
for  full  substitution  of  all  commodities  with  the  exception  of  beef
and pork, and with limited substitution for poultry products, which
allows processors more flexibility in scheduling their production.

In  addition  to  that,  we  have  also  initiated  a  long-term  contract
for certain commodities, including cheese, some fruits, frozen chick-
en  and  turkey  products,  bringing  consistency  and  predictability  to
the commodity program.

‘‘Best  value’’  as  opposed  to  ‘‘lowest  cost’’  contracts  are  also  being
tested to focus on overall product quality and service. There is also
a  concern  to  ensure  that  the  food  that  we  serve  as  a  part  of  this
program  is  also  safe.  So  we  have  worked  very  closely  with  the  De-
partment’s  Food  Safety  and  Inspection  Service  to  ensure  that  that
occurs.  We  have  established  and  implemented  written  procedures
and timeframes to address commodity holds and/or recalls resulting
from  safety  concerns.  This  initiative  reduces  the  hold  time  on  com-
modities,  removes  products  quickly  from  schools  and  other  outlets,
and expedites product replacement and/or reimbursements.

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As with other Distribution 2000 initiatives, this was a joint effort
by  us,  the  Food  and  Nutrition  Service,  the  Agricultural  Marketing
Service,  the  Farm  Service  Agency,  and  the  Food  Safety  Inspection
Service.  In  keeping  with  the  dietary  guidelines,  we  have  estab-
lished  helpful  standards  for  canned  fruit  and  vegetables  offered  in
our nutrition programs. We have also worked to ensure that we in-
crease and encourage the purchase and consumption of fresh fruits
and vegetables for our School Lunch Program.

We  have  successfully  teamed  with  the  Department  of  Defense
Supply Center of Philadelphia to deliver high-quality fresh produce
to  school  children  and  Indian  tribes.  Under  this  program,  partici-
pating  schools  nationwide  order  fresh  produce  directly  from  DOD
prime  vendors.  In  fiscal  year  2003,  USDA  purchased  $50  million
worth of fresh fruit produce for schools, and the program has prov-
en to be very popular and is currently in about 41 States.

With  Food  Distribution  2000,  we  have  worked  cooperatively,  as
I  noted,  with  all  four  of  the  agencies,  and  I  am  very  pleased  to  an-
nounce  that  today,  later  on  this  afternoon,  we  will  go  live  with  a
USDA  commodity  food  network  Web  site,  which  allows  customers
to  go  to  a  single  portal  for  all  USDA  commodity  program  needs.  It
is  an  E-government  resource  designed  to  provide  a  wealth  of  infor-
mation  about  the  purchase  and  distribution  of  USDA’s  commod-
ities.  This  portal  combines  the  resources  and  information  from  all
four agencies and other partners in the commodity distribution net-
work  into  a  one-stop  shopping  for  our  customers.  It  is  no  longer
necessary  to  understand  the  roles  of  each  of  the  agencies  individ-
ually,  but  you  are  able  to  go  to  one  place  and  receive  information
about how the commodity program works.

In  conclusion,  Mr.  Chairman,  USDA  would  be  pleased  to  work
with  you  and  this  Committee  as  we  embark  on  reauthorizing  the
child nutrition programs to ensure the continued improvement and
success of our nutrition programs for the Nation’s children and the
continued success of our commodity programs.

Mr.  Chairman,  this  concludes  my  testimony.  Of  course,  I  am
happy  to  answer  any  questions  that  you  or  the  Committee  Mem-
bers may have.

Chairman BOEHNER. Mr. Bost, thank you for your testimony.
[The prepared statement of Mr. Bost follows:]

Statement  of  Eric  M.  Bost,  Under  Secretary  of  Food,  Nutrition,  and  Con-
sumer Services, U.S. Department of Agriculture, Food and Nutrition Serv-
ice

Good  afternoon,  Mr.  Chairman  and  Members  of  the  Committee.  I  am  Eric  M.
Bost,  Under  Secretary  for  Food,  Nutrition  and  Consumer  Services  (FNCS)  at  the
U.S.  Department  of  Agriculture  (USDA).  I  appreciate  this  opportunity  to  join  you
once again as you review the Department’s commodity nutrition assistance program
and  consider  how  this  vital  program  can  be  enhanced  as  it  relates  to  the  National
School  Lunch  Program  (NSLP).  As  you  know,  the  Child  Nutrition  reauthorization
process  gives  the  Administration  and  Congress  the  opportunity  to  support  local
schools, parents, and communities to move toward a nutrition environment that val-
ues and fosters the health of our children.

The  Department  of  Agriculture  is  very  proud  of  its  commodity  programs  and  the
role  they  play  in  supplementing  and  supporting  our  other  nutrition  assistance  pro-
grams.  USDA  commodities  are  used  in  school  meals  in  over  98,000  schools  nation-
wide. In Fiscal Year 2003, USDA provided schools with over $705 million in entitle-
ment commodities and $79 million in bonus commodities for their school meals pro-
grams.  Nationwide,  over  28  million  lunches  are  served  each  day  in  the  National
School  Lunch  Program.  Of  course,  the  commodity  programs  are  equally  important

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to American farms and ranches because they provide the Department with a means
to stabilize agricultural markets.

I  would  like  to  begin  today  by  saying  a  few  words  about  the  nutritional  aspects
of  our  school  meal  programs.  There  has  been  considerable  attention  paid  to  the  fat,
sodium,  and  sugar  content  of  these  meals.  I  would  like  to  assure  the  Committee  of
our continuing and abiding concern in this area. The Department has reviewed and
modified  the  recipes,  commodity  specifications  and  other  materials  that  support
compliance with the Dietary Guidelines for Americans.

USDA  has  worked  with  schools  to  more  closely  align  the  meals  they  serve  with
the Dietary Guidelines. Today, over 80 percent of NSLP schools offer meals that are
consistent  with  good  health.  We  have  worked  hard  to  improve  the  quality,  variety,
and  nutritional  content  of  the  commodities  we  provide  to  schools  and  will  continue
to make improvements in the future. At the same time, we are strongly encouraging
schools  to  offer  more  nutritious  choices  to  students  and  we  are  providing  food  serv-
ice  workers  with  the  training  and  technical  assistance  to  help  them  prepare  more
nutritious and appealing meals.

As  many  of  you  recall,  back  in  the  1990’s,  the  Department  became  aware  of  a
growing  gap  between  the  way  we  were  delivering  our  commodity  support  to  schools
and  the  way  States,  schools  and  industry  could  most  efficiently  and  safely  produce,
deliver,  store  and  serve  a  quality  product.  We  asked  our  partners  in  industry,  the
State, and local agencies for their suggestions in order to identify how we could close
this  gap,  and  we  incorporated  these  recommendations,  along  with  our  own,  into  a
report entitled, ‘‘Food Distribution 2000,’’ and used it as a blueprint for change.
Recognizing and Responding to a Challenge

The  Food  Distribution  2000  Report  identified  numerous  ways  in  which  USDA’s
commodity program for schools was overly cumbersome and burdened with red tape.
Commodity  ordering  was  handled  by  seven  different  regional  offices,  rather  than
centrally  at  USDA’s  Food  and  Nutrition  Service  headquarters.  Orders  were  sub-
mitted on paper, not electronically.

The  Department’s  program  was  significantly  out  of  step  with  commercial  prac-
tices.  Vendors  were  required  to  use  USDA  labels  on  commodities,  which  entailed
running  separate  production  lines  and  no  interchangeable  products.  The  Depart-
ment  required  States  and  recipient  agencies  to  maintain  separate  inventories  for
USDA products and account for them aside from commercial products. Specifications
for  USDA  commodities  often  deviated  from  the  specifications  commonly  used  for
commercial  products.  The  vendor  contracting  process—short-term  lowest  cost  con-
tract awards—made USDA the customer of last resort and created inconsistent and
unpredictable product quality and service.

Other  key  issues  the  report  addressed  were  how  USDA  agencies  could  better  co-
ordinate  their  efforts,  improve  food  safety  protocols,  and  promote  fresh  fruits  and
vegetables.

I  am  pleased  to  report  that  USDA  has  addressed  each  of  the  issues  raised  by  the
Food  Distribution  2000  Report,  took  action,  and  has  now  implemented  most  of  the
Report’s  recommendations,  some  of  which  I  would  like  to  share  with  you  this  after-
noon.
Making Commodity Programs More Responsive to Customer Needs

To  make  our  commodity  programs  more  responsive  to  our  customers,  USDA  has
implemented  an  Internet-based  commodity  ordering  system  called  the  Electronic
Commodity  Ordering  System  (ECOS).  This  new  system  provides  greater  access,
speed  and  transparency  to  the  food  distribution  process  at  the  Federal,  State,  and
recipient  agency  levels.  States  can  now  place,  cancel,  or  modify  food  orders  online
that  previously  were  handled  by  paper  transactions.  We  plan  to  roll  the  system  out
to schools, at the State’s option, beginning next year.
Aligning Commodity Programs with Commercial Practices

To  bring  our  commodity  programs  more  in  line  with  commercial  practices,  USDA

now:

labels;

• Allows vendors to use commercial labels on USDA commodities in lieu of USDA

• Permits  recipient  agencies  to  maintain  single  inventory  records,  instead  of  re-
quiring  separate  accounting  for  USDA  commodities  and  commercial  products;
and

• Reviews  all  USDA  commodity  specifications,  and  improves/modifies  them  when

feasible, to better align them with commercial specifications.

We have revised regulations to allow for full substitution of all commodities, with
the  exception  of  beef  and  pork,  and  with  limited  substitution  for  poultry  products.
Substitution  allows  processors  more  flexibility  in  scheduling  production.  Through

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the  use  of  the  Standard  Yield  Program,  schools  can  now  obtain  seamless  distribu-
tion of commodities and commercial purchases.

We  have  also  initiated  long-term  contracts  for  certain  commodities,  including
cheese,  some  fruits,  frozen  chicken  and  turkey  products.  This  procurement  method
brings consistency and predictability to the commodity program. ‘‘Best value’’, as op-
posed  to  ‘‘lowest  cost’’  contracts  are  also  being  tested  to  focus  on  overall  product
quality and service.

Improving Food Safety Protocols

To  ensure  that  the  commodities  we  offer  to  schools  are  safe  as  well  as  nutritious,
all  meat  and  poultry  product  specifications  are  reviewed  and/or  amended  in  con-
sultation with the Department’s Food Safety Inspection Service (FSIS).

Ground  beef  suppliers  must  operate  under  new  process  control  protocols  similar

to those required by large volume commercial buyers of ground beef.

USDA  has  also  established  and  implemented  written  procedures  and  time  frames
to  address  commodity  holds  and/or  recalls  resulting  from  safety  concerns.  This  ini-
tiative  reduces  the  hold  time  on  commodities,  removes  product  quickly  from  schools
and other outlets, and expedites product replacement/reimbursement. As with other
Food  Distribution  2000  initiatives,  this  was  a  joint  effort  by  FNS,  the  Agricultural
Marketing Service (AMS), the Farm Service Agency (FSA), and FSIS.

Promoting Fresh Fruit and Vegetables

As  many  of  us  here  today  recall  from  our  own  school  days,  the  National  School
Lunch  Program  of  the  1950’s  and  60’s  served  canned  fruits  and  vegetables  almost
exclusively,  and  in  keeping  with  the  tastes  and  nutrition  knowledge  of  the  times,
they  were  often  flavored  with  plenty  of  salt  and  heavy  syrup.  Since  those  days,  and
in  keeping  with  our  Dietary  Guidelines,  we  have  established  much  more  healthful
standards  for  canned  fruits  and  vegetables  offered  in  our  nutrition  programs.  The
sodium  specifications  for  the  vegetables  we  offer  to  schools  are  the  minimum
amount  possible  that  still  assures  palatability  of  the  products.  Canned  fruit  is
packed only in natural juice or light syrup.

Recently, the Department has embarked on a major effort to increase and encour-
age  the  purchase  and  consumption  of  fresh  fruits  and  vegetables  for  the  school
lunch program.

USDA  has  successfully  teamed  up  with  the  Department  of  Defense  (DoD)  Supply
Center  of  Philadelphia  to  deliver  high  quality  fresh  produce  to  school  children  and
Indian  tribes.  Under  this  program,  participating  schools  nationwide  order  fresh
produce directly from DoD prime vendors. In fiscal year 2003, USDA purchased $50
million  worth  of  fresh  produce  for  schools  and  the  program  has  proven  to  be  very
popular in the 41 States that took part in it last year.

Improving USDA Inter–Agency Coordination

Food  Distribution  2000  has  been  a  collective  and  unprecedented  effort  of  four
USDA  agencies.  Together,  FNS,  AMS,  FSA,  and  FSIS  have  forged  a  partnership  to
eliminate  inter-agency  barriers  and  work  together  to  bring  about  major  structural
changes  to  the  commodity  programs  our  Department  administers.  The  success  of
these  commodity  improvement  initiatives  is  due  to  the  commitment,  support,  and
considerable effort put forth by each agency at every level.

I  am  proud  to  announce  today  that  one  of  our  inter-agency  partnering  goals  has
resulted  in  the  creation  of  a  one-stop  USDA  Commodity  Food  Network  (CFN)
website.  This  website—which  goes  ‘‘live’’  this  afternoon—allows  our  customers  to  go
to  a  single  portal  for  all  USDA  Commodity  Program  needs.  It  is  an  e-government
resource  designed  to  provide  a  wealth  of  information  about  the  purchase  and  dis-
tribution of USDA commodities. This portal combines the resources and information
from  all  four  agencies,  and  other  partners  in  the  commodity  distribution  network,
into  ‘‘one-stop  shopping’’  for  our  customers.  It  is  no  longer  necessary  to  understand
the  role  of  an  individual  USDA  agency  in  order  to  obtain  commodity  information.
The  website  enables  schools,  community  feeding  sites,  State  agencies,  Native
American  Tribal  Organizations  and  others  to  have  instant  access  to  information
about  USDA’s  commodities  and  distribution  programs.  CFN  also  provides  direct
links  to  other  commodity  distribution  partner  websites,  such  as  the  American  Com-
modity  Distribution  Association  and  the  American  School  Food  Service  Association.

Conclusion

Mr.  Chairman,  USDA  would  be  pleased  to  work  with  you  and  this  Committee  as
we  embark  on  reauthorizing  the  Child  Nutrition  programs  to  ensure  the  continued
improvement and success of our nutrition programs for the nation’s children and the
continued success of our commodity programs.

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11

Mr.  Chairman,  this  concludes  my  testimony.  I  would  be  happy  to  answer  any

questions.

Chairman BOEHNER. Mr. Yates, you may begin.

STATEMENT OF A. J. YATES, ADMINISTRATOR, AGRICULTURAL
MARKETING SERVICE, U.S. DEPARTMENT OF AGRICULTURE
Mr.  YATES.  Mr.  Chairman,  members  of  the  Committee,  thank
you for the invitation to appear before you today to discuss the role
of the Agricultural Marketing Service, AMS, in the National School
Lunch Program.

I  am  A.  J.  Yates,  Administrator  of  AMS,  and  I  am  pleased  to  be
here with Under Secretary Bost. While USDA’s Food and Nutrition
Service  administers  the  National  School  Lunch  Program,  AMS  is
responsible  for  purchasing  many  of  the  commodities  for  this  and
other  domestic  food  assistance  programs.  We  support  the  National
School  Lunch  Program,  providing  nutritious,  high-quality  food  to
school  children  through  our  purchases  of  red  meat,  fish,  poultry,
eggs,  fruit  and  vegetable  products.  USDA’s  Farm  Service  Agency
purchases  flours,  grains,  peanut  products,  dairy  products,  oils  and
shortening. All of these purchases help  to  stabilize the agricultural
market  by  balancing  supply  and  demand,  thus  helping  domestic
farmers and ranchers.

Let  me  briefly  describe  the  purchase  process  and  AMS’s  role  in
it.  The  process  begins  long  before  AMS  announces  that  it  plans  to
purchase  particular  food  items.  AMS  specialists  knowledgeable  in
food  processing  work  with  potential  vendors,  Food  Nutrition  Serv-
ice,  and  food  safety  officers  in  developing  specifications  for  each
item that will be purchased. Many of these items are similar to the
popular commercial items.

Other  items  are  developed  specifically  to  meet  the  special  nutri-
tional  needs  of  our  recipients.  The  specification  provides  details  on
product formulation, manufacturing, packaging, sampling and test-
ing requirements and quality assurance provisions. By coordinating
the  development  of  specifications  with  specialists  from  all  aspects
of  food  processing,  AMS  ensures  the  purchase  of  high-quality,
wholesome,  appealing  products  that  meet  recipients’  needs  and
Federal standards for nutrition.

Prior to conducting any purchase, AMS economists assess market
conditions and determine the availability for commodities the agen-
cy  is  considering  buying.  During  this  time,  AMS  also  works  closely
with Food Nutrition Service to determine recipient preferences. Or-
ders are taken by FNS and provided to AMS so that purchases can
be made.

Although  weekly  meal  patterns  must  meet  Federal  standards,
local  school  authorities  make  the  decisions  about  what  specific
foods  to  serve  and  how  they  are  prepared.  Moreover,  USDA’s  com-
modities  comprise  less  than  20  percent  of  the  food  products  put  on
school  childrens’  plates.  AMS  and  FSA  are  responsible  for  issuing
and accepting bids and awarding and administering contracts.

FNS  is  responsible  for  taking  commodity  orders  from  States,
monitoring  purchases  and  entitlements  throughout  the  year,  and
the overall administration of the commodity nutrition programs.

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Actual  purchasing  begins  with  AMS  and  Farm  Service  Agency
notifying  specific  industries,  through  press  releases  and  other
means,  of  their  intent  to  purchase  particular  food  products.  These
agencies  invite  bids  under  a  formal  advertised  competitive  bid  pro-
gram.  These  invitations  give  specific  details  on  when  bids  are  due
for  a  particular  purchase.  All  products  must  be  US-produced  and
of  domestic  origin.  Under  Federal  acquisition  regulations,  vendors
must  be  deemed  responsible  prior  to  participating  in  the  program.
For instance, they must have a satisfactory performance record and
adequate financial resources to demonstrate their ability to produce
and deliver the product within designated timeframes.

It  is  essential  that  USDA-purchased  food  products  arrive  on
time, as recipients depend on it. Bids are received from responsible
vendors,  analyzed,  and  contracts  are  awarded  by  AMS  or  Farm
Service Agency. Contracts are then administered by the agencies to
make sure that the terms and conditions are followed.

All  products  purchased  by  USDA  are  produced  in  compliance
with  applicable  food  safety—Federal  food  safety  laws  and  regula-
tions.  Red  meat,  poultry,  and  egg  products  must  be  processed
under USDA’s Food Safety and Inspection Service regulations. And
all  fruit,  vegetable  and  fish  products  are  subject  to  Food  and  Drug
Administration regulations.

FSIS  and  FDA  ensure  that  such  products  are  wholesome  and
that  processing  plants  operate  under  sanitary  conditions.  In  addi-
tion to FSIS inspection, AMS inspectors are present during produc-
tion and shipping of all red meat and poultry items to ensure com-
pliance  with  all  specification  requirements,  including  those  for  raw
material processing, packaging, and testing.

Plants  supplying  processed  fruit  and  vegetable  products  undergo
a  survey  by  AMS  inspectors  to  ensure  compliance  with  FDA  re-
quirements,  including  that  agency’s  good  manufacturing  practices.
Additionally,  fish  products  are  produced  in  facilities  operating
under  the  National  Marine  Fisheries  Service  voluntary  seafood  in-
spection  program.  For  certain  types  of  products,  such  as  ground
beef, egg products and fruit juices, additional product handling and
testing protocols are required.

AMS  also  works  with  FSIS  to  distribute  educational  materials
for  food  service  professionals  about  proper  handling  and  cooking
techniques.  These  materials  are  available  both  in  Spanish  and
English,  and  are  designed  to  assist  food  service  professionals  in
every  school  participating  in  the  National  School  Lunch  Program.
As you know, in 1998, USDA policy officials met with representa-
tives  of  the  American  School  Food  Service  Association  and  the
American  Commodity  Distribution  Association,  with  the  aim  of  im-
proving the commodity procurement  and  distribution process.  AMS
played  a  key  role  in  developing  and  implementing  the  initiatives
contained  in  the  ‘‘Food  Distribution  2000—USDA’s  Reinvention
Plan for Change’’ report.

Some of the key initiatives contained in this report that AMS has
implemented  include  the  expanded  use  of  long-term  contracts  with
proven  suppliers;  expanded  use  of  best-value  contracting;  revised
product  specifications  to  align  them  with  commercially  available
products;  purchase  of  commercially  labeled  products;  use  of  com-
mercial  and  commodity  products  interchangeably  by  further  proc-

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essors in the manufacture of fruit and vegetables products, and, on
a  more  limited  basis,  poultry  products;  implemented  formal  com-
modity  product  hold  and  recall  procedures  for  use  by  State  and
local  authorities;  and  relaxed  truckload  delivery  requirements  al-
lowing multiple stops within a State or city.

Mr.  Chairman,  AMS  is  proud  of  the  role  it  plays  in  providing
food  products  to  this  Nation’s  school  children.  We  are  proud  of  the
relationship we have built with other Federal agencies, State agen-
cies,  and  the  school  food  community  to  carry  out  this  most  impor-
tant  responsibility.  We  look  forward  to  working  with  you  in  any
way that we can as the Child Nutrition Act and Richard B. Russell
National School Lunch Act reauthorization process continues.

This  concludes  my  statement,  Mr.  Chairman,  and  I  would  be

pleased to respond to any questions that you may have.

Chairman BOEHNER. Mr. Yates, thank you for your testimony.
[The prepared statement of Mr. Yates follows:]

Statement of A. J. Yates, Administrator, Agricultural Marketing Service,
U.S. Department of Agriculture

Mr. Chairman and Members of the Committee, thank you for the invitation to ap-
pear  before  you  today  to  discuss  the  role  of  the  Agricultural  Marketing  Service
(AMS)  in  the  National  School  Lunch  Program.  I  am  A.  J.  Yates,  Administrator  of
AMS, and I am pleased to be here with Under Secretary Bost.

In  1946,  Congress  passed  the  National  School  Lunch  Act,  providing  a  healthy
lunch  to  millions  of  schoolchildren.  Over  55  years  later,  the  program  continues  to
help improve the health of children, especially those at nutritional risk.

While  USDA’s  Food  and  Nutrition  Service  (FNS)  administers  the  National  School
Lunch  Program  (NSLP),  AMS  is  responsible  for  purchasing  many  of  the  commod-
ities  for  this  and  other  domestic  food  assistance  programs.  We  support  the  NSLP
by  providing  nutritious,  high  quality  food  to  schoolchildren  through  our  purchases
of red meat, fish, poultry, egg, fruit, and vegetable products. USDA’s Farm Services
Agency  (FSA)  purchases  flours,  grains,  peanut  products,  dairy  products,  oils,  and
shortenings.  All  of  these  purchases  help  to  stabilize  prices  in  agricultural  markets
by  balancing  supply  and  demand,  thus  helping  domestic  farmers  and  ranchers.  Let
me briefly describe the purchase process and AMS’ roll in it.

The  process  begins  long  before  AMS  announces  that  it  plans  to  purchase  par-
ticular  food  items.  AMS  specialists  knowledgeable  in  food  processing  work  with  po-
tential  venders,  FNS,  and  food  safety  officials  to  develop  a  specification  for  each
item that will be purchased. Many of these items are similar to popular commercial
items.  Other  items  are  developed  specifically  to  meet  the  special  nutritional  needs
of  our  recipients.  The  specification  provides  details  on  product  formulations;  manu-
facturing,  packaging,  sampling,  and  testing  requirements;  and  quality  assurance
provisions.  By  coordinating  the  development  of  specifications  with  specialists  from
all  aspects  of  food  processing,  AMS  ensures  the  purchase  of  high-quality,  whole-
some,  appealing  products  that  meet  recipients’  needs  and  Federal  standards  for  nu-
trition.

Prior  to  conducting  any  purchase,  AMS  economists  assess  market  conditions  and
determine the availability for commodities the Agency is considering buying. During
this  time  AMS  also  works  closely  with  FNS  to  determine  recipient  preferences.  Or-
ders  are  taken  by  FNS  and  provided  to  AMS  so  that  purchases  can  be  made.  Al-
though  weekly  meal  patterns  must  meet  Federal  standards,  local  school  authorities
make  the  decisions  about  what  specific  foods  to  serve  and  how  they  are  prepared.
Moreover, USDA commodities comprise less than 20 percent of the food products put
on schoolchildrens plates.

AMS  and  FSA  are  responsible  for  issuing  and  accepting  bids  and  awarding  and
administering  contracts.  FNS  is  responsible  for  taking  commodity  orders  from
States, monitoring purchases and entitlements throughout the year, and the overall
administration of the commodity nutrition programs.

Actual purchasing begins with AMS and FSA notifying specific industries through
press releases and other means of their intent to purchase particular food products.
The agencies invite bids under a formally advertised competitive bid program. These
‘‘invitations’’  give  specific  details  on  when  bids  are  due  for  a  particular  purchase.
All products must be U.S.-produced and of domestic origin.

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Under  Federal  Acquisition  Regulations,  vendors  must  be  deemed  ‘‘responsible’’
prior  to  participating  in  the  program.  For  instance,  they  must  have  a  satisfactory
performance  record  and  adequate  financial  resources  to  demonstrate  their  ability  to
produce  and  deliver  the  product  within  designated  timeframes.  It  is  essential  that
USDA purchased food products arrive on time as recipients depend on it.

Bids  are  received  from  responsible  vendors,  analyzed,  and  contracts  are  awarded
by  AMS  and  FSA.  Contracts  are  then  administered  by  the  agencies  to  make  sure
that terms and conditions are followed.

All products purchased by USDA are produced in compliance with applicable Fed-
eral  food  safety  laws  and  regulations.  Red  meat,  poultry,  and  egg  products  must  be
processed under USDAs Food Safety and Inspection Service (FSIS) regulations, and
all  fruit,  vegetable,  and  fish  products  are  subject  to  Food  and  Drug  Administration
(FDA) regulation. FSIS and FDA assure that such products are wholesome and that
processing plants operate under sanitary conditions.

In addition to FSIS inspection, AMS inspectors are present during production and
shipping  of  all  red  meat  and  poultry  items  to  ensure  compliance  with  all  specifica-
tion  requirements—including  those  for  raw  materials,  processing,  packaging,  and
testing.  Plants  supplying  processed  fruit  and  vegetable  products  undergo  a  survey
by  AMS  inspectors  to  assure  compliance  with  FDA  requirements,  including  that
Agency’s  Good  Manufacturing  Practices.  Additionally,  fish  products  are  produced  in
facilities  operating  under  the  National  Marine  Fisheries  Service  voluntary  seafood
inspection  program.  For  certain  types  of  products,  such  as  ground  beef,  egg  prod-
ucts, and fruit juices, additional product handling and testing protocols are required.
AMS  also  works  with  FSIS  to  distribute  educational  materials  for  food  service
professionals about proper handling and cooking techniques. These materials, avail-
able  in  both  Spanish  and  English,  are  designed  to  assist  food  service  professionals
in every school participating in the NSLP.

As  you  know,  in  1998,  USDA  policy  officials  met  with  representatives  of  the
American  School  Food  Service  Association  and  the  American  Commodity  Distribu-
tion  Association  with  the  aim  of  improving  the  commodity  procurement  and  dis-
tribution process. AMS played a key role in developing and implementing the initia-
tives  contained  in  the  ‘‘Food  Distribution  2000—USDA’s  Reinvention  Plan  for
Change’’  report.  Some  of  the  key  initiatives  contained  in  this  report  that  AMS  has
implemented include:

• Expanded use of long-term contracts with proven suppliers;
• Expanded use of best-value contracting;
• Revised  product  specifications  to  align  them  with  commercially  available  prod-

• Purchase of commercially labeled products;
• Use  of  commercial  and  commodity  products  interchangeably  by  further  proc-
essors  in  the  manufacture  of  fruit  and  vegetable  products  and,  on  a  more  lim-
ited basis, poultry products;

• Implemented  formal  commodity  product  hold  and  recall  procedures  for  use  by

State and local authorities; and

• Relaxed truckload delivery requirements allowing multiple stops within a State

ucts;

or city.

Mr. Chairman, AMS is proud of the role it plays in providing food products to this
Nations  schoolchildren.  We  are  proud  of  the  relationships  we  have  built  with  other
Federal  agencies,  State  agencies,  and  the  school  food  community  to  carry  out  this
most important responsibility. We look forward to working with you any way we can
as  the  Child  Nutrition  Act  and  Richard  B.  Russell  National  School  Lunch  Act  reau-
thorization process continues.

This  concludes  my  statement,  Mr.  Chairman.  I  would  be  pleased  to  respond  to

questions from the Committee.

Chairman  BOEHNER.  USDA’s  commodity  distribution  program
really  has  two  objectives.  One  is  to  stabilize  the  agricultural  mar-
ketplace,  and,  second,  to  provide  high-quality  nutritious  foods  to
Federal  nutrition  programs.  And  I  am  trying  to—wearing  both  of
my  hats  of  interest—trying  to  understand  what  really  drives  this
process:  what  is  good  for  the  nutrition  programs  in  terms  of  what
the schools want; or is it the economics of the marketplace in terms
of the stabilization of certain commodity markets?

So  I  would  like  to  ask  both  of  you,  just  help  me  understand

which objective wins when it is all said and done.

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Mr.  BOST.  Mr.  Chairman,  let  me  take  a  stab  at  it.  I  don’t  know
if  it  is  a  question  of  which  objective  wins.  I  think  what  we  have
attempted to do in the Department is to ensure that there is a bal-
ance,  and  that  essentially  they  balance  one  or  the  other  out  in
terms  of  us  making  some  decisions  that  are  going  to  address  both
entities.

On  the  one  side,  of  course,  what  the  farmers  and  ranchers
produce  and  they  want  us  to  buy;  and  on  the  other  hand,  a  very
important consideration that we have to give—we are interested in
giving  to  ensure  that  we  provide  nutritious,  healthy  food  to  the  29
million children in our schools.

And  also  the  other  issue  of  dealing  with  the  bonus  buys  that  are
out  there.  So  we  try  to  bring  all  of  those  to  the  table  and  balance
them out in terms of some decisions that we make.

Interestingly  enough,  that  is  why  there  are  essentially  two  com-
ponents  of  the  program.  One,  of  course,  is  entitlements.  There  are
143—145  items  on  that  list  that  schools  are  actually  able  to  order
from.  The  other  is  bonus  buys.  The  bonus  buys  afford  the  Depart-
ment a great deal of flexibility in terms of when and what they buy
and how much.

And  so  that  tends  to  be  somewhat  of  a  lever,  because  it  affords
us  an  opportunity  to  attempt  to  balance  all  of  those  things  out,  a
challenge.  It  is  a  major  challenge  for  us.  Because  there  is  a  great
deal  of  pressure  coming,  of  course,  from  one  side  on  occasion,  say-
ing  ‘‘Well,  I  want  you  to  buy  X.’’  It  could  be  peaches,  it  could  be
tree nuts. It could be, ‘‘Well, I want you to buy more beef.’’ .

On  the  other  hand,  it  could  be,  we  are  interested  in  ensuring
that the foods that we do buy, one, that we can afford to buy them;
and,  two,  that  they  are  going  to  meet  the  nutritional  needs  of
school  children.  And,  most  importantly,  that  even  when  we  do  buy
them, that the children are going to eat them. We have people who
come  to  see  us  who  are  interested  in,  say,  two  of  my  favorites,  as-
paragus  and  brussel  sprouts.  You  know,  there  are  not  too  many
second  graders  that  that  is  at  the  top  of  their  list,  you  know,  in
terms of interest and taste.

So we try to ensure that we balance all of those things out.
Chairman BOEHNER. Mr. Yates.
Mr.  YATES.  Mr.  Chairman,  it  is  a  balancing  act.  And  we  at  AMS
work very closely with FNS. We will have a number of different ag-
ricultural  commodity  groups  come  before  us  in  a  period  of  time
with  a  statement  that  our  commodity  is  in  surplus,  we  are  having
a  difficult  time.  And  the  first  thing  that  we  always  do,  is  we  go  to
FNS  and  we  say,  here  is  what  the  industry  has  out  there  in  sur-
plus.  Can  you  use  it  in  any  of  the  school  lunch  programs?  Are  the
recipients interested in this type of product?

It  is  a  very  close  relationship  that  we  have  with  FNS  in  this  re-
gard.  And  as  the  Under  Secretary  said,  some  of  these  commodities
are  wanted  much  more  than  others.  And  we  look  for  ways  of  put-
ting  nutritious  items  together,  even  if  it  is  a  dried  fruit  mix,  that
would  allow  us  to  use  certain  commodities  that  by  themselves
might  not  be  so  appealing  to  an  individual,  a  young  student,  but
by  combining  these  nutritious  dried  fruits  together,  it  provides
something  that  was  very  popular  last  year  in  the  purchases  that
we made and the deliveries to the schools.

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Chairman  BOEHNER.  In  Food  Distribution  2000,  the  panel  rec-
ommended  that  specifications  be  written  to  resemble,  as  close  as
possible, the specifications used in commercial food system procure-
ment. I know the Department has reviewed some of these. But how
are  we  coming  in  terms  of  the  implementation  of  all  of  those  rec-
ommendations?

Mr.  YATES.  Well,  I  think  we  have  been  very  successful  in  imple-
menting  most  of  those.  One  of  the  issues  that  the  Under  Secretary
and  I  both  stated  in  our  testimony  is  the  substitution  issue  in  re-
gards  to  fruit  and  vegetables.  It  is  fairly  broad  in  substitution
there.  And  it  is  limited  when  it  comes  to  poultry  and  to  beef  and
pork products.

For  the  poultry  products,  if  our  inspectors  are  in  the  facility
where  we  have  continuous  inspection,  the  company  can  be  making
either commercial or school product, and actually we allow them to
use  their  own  label  on  the  product.  And  so  if  it  has  passed  under
AMS inspection, those products can be interchanged.

With  beef,  with  the  new  beef  specifications  that  we  put  in  place
last spring dealing with microbial testing, we allow no substitution
because  the  health  of  one  of  the  most  at-risk  groups  of  people  we
have  in  the  country,  the  young  people  in  school,  we  are  going  to
assure  to  the  best  of  our  ability  that  we  deliver  a  product  that  is
safe and healthful.

And  so  there—our  testing  begins  at  the  carcass.  And  it  goes
through  the  boneless  beef,  on  to  after-processing.  What  we  are
looking  at  now  in  addressing  the  issue  I  think  that  you  had  raised
is  that  we  would  entertain  delivering  on  time  to  a  processor,
chilled,  boneless  beef  for  further  processing  that  has  gone  through
our  inspection  process  and  microbial  testing.  And  I  believe  that
that  would  provide  a  product  that  is  more  economical,  and  also  a
fresher product for school children.

Chairman  BOEHNER.  I  can  see  my  time  has  expired.  We  will
come  back  to  that  after  all  of  the  members  have  had  a  chance  to
ask their questions. Mr. Kildee.

Mr.  KILDEE.  Thank  you,  Mr.  Chairman.  We  understand  that  the
Department  has  conducted  studies  to  determine  how  to  reduce
overcertification  of  eligibles.  Do  you  believe  that  these—that  there
are  program  safeguards  built  into  your  proposal  to  reduce  overcer-
tification  that  protect  children,  and  to  make  sure  that  we  aren’t
dropping  those  that  should  still  be  in?  And  what  are  these  safe-
guards?

I  have  in  mind,  for  example,  that  I  have  taught  at  an  inner-city
school.  We  had  homeless  kids.  We  had  illegal  immigrants.  We  had
migrant  workers.  We  had  children  in  barely  functional  families,  if
not dysfunctional families. We had really a cross-section. How have
you  built  safeguards  in  to  make  sure  that  in  your  zeal  to  reduce
overcertification  that  you  weren’t  really  dropping  those  who  legiti-
mately need program?

Mr.  BOST.  I  think  it  is  real  important  to  note  that,  first  of  all,
it  is  not  necessarily  just  overcertification.  We  are  interested  in  en-
suring  that  every  eligible  child  is  able  to  participate  in  the  pro-
gram,  because  we  have  a  significant  number  of  eligible  children,
that  for  whatever  reason,  are  not  participating.  So  it  is  just  not
overcertification, but it is ensuring that those children that are eli-

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