It's Not Pork, It's Milk That's Costing Taxpayers

| 3/9/2009 10:34:00 AM

johnnyeatingschoollunchThe debate rages on in school cafeterias about what to feed our kids—whether we want over-processed, pre-fab concoctions replaced with organic piles of healthy, or agribusiness monopolizing the National School Lunch Program. This year Congress will review the Child Nutrition and WIC Act, and considering the ever-increasing obesity rates of American children coupled with the rising price of food, lawmakers have a lot on their plates. 

An In These Times article addresses a whole different controversy in the school lunch program, and it is costing taxpayers millions. Sodexo, the second-ranking food-service worldwide, with revenues of around 20 billion last year, is accused of taking rebates, or kick-backs, from their suppliers. Take a New England dairy farm, where they charge the milk producer a few extra cents per half-pint of milk and in return, expect a rebate back. This method of give and take has been common in the food industry since the 1950s says an industry consultant, when kickbacks meant cash in an envelope slipped to the chef. This means taxpayers are paying for Sodexo to charge more for their milk, and it adds up, as this company provides food-service to cafeterias, and other facilities for schools, hospitals, universities, government agencies, the military and private companies across the country.

In These Times explains the scheme:

“The rebate system, endemic to the industry, works like this: A food management company like Sodexo signs contracts to run a client’s cafeteria. The company buys supplies from vendors such as Coke, Kellogg’s or Tyson. Then, chosen vendors send the management company rebates based on a percentage of sales. 

“There are generally no cost caps, so rebates—which are not deducted from what the food-service company charges clients—mean higher meal prices. They also limit food choice and quality: food-service companies buy products from vendors that pay bigger rebates rather than those that offer cheaper, locally grown, or higher quality food.”

A produce supplier says, “They try to intimidate you. They have such a grasp on the market. They force you to work on low margin, 20 percent. If you give them a 10 percent kickback, you’re pretty much working for nothing. We lost about $30-to-$40,000 a year, which is a lot for a small businessman.”

Stephanie Sakes_1
3/10/2009 3:10:11 PM

Interesting article, I knew lunches in schools were not up to par... but now knowing it's because of $$ is very disappointing.

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