A comparative cost analysis of commodity foods from the U.S. Department of Agriculture in the National School Lunch Program

Schools that participate in the National School Lunch Program receive a portion of their federal funding as commodity foods rather than cash payments. This research compared the product costs and estimated total procurement costs of commodity and commercial foods from the school district perspective using data from 579 Minnesota ordering sites in school year (SY) 2008-2009. Though comparison of product prices indicates that commercial foods were an average of 17 percent more expensive than equivalent commodity foods, once full estimated procurement costs were included, the commercial products became 9 percent less expensive per food case than commodity products. Base case results were sensitive to the cost of risk to hold inventory. When this input was tested at zero, the estimated cost to procure commercial foods was 2 percent higher per case than commodity foods, though total commercial procurement costs remained less than commodity costs by 3 percent. It is estimated that Minnesota schools collectively spent an additional $1.7 to $3.7 million to procure USDA commodity foods in SY 2008-2009. © 2009 by the Association for Public Policy Analysis and Management.