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School Breakfast and Lunch Costs: Are There Economies of Scale?

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  • Ollinger, Michael
  • Ralston, Katherine L.
  • Guthrie, Joanne F.

Abstract

On a given school day, over 31 million lunches and 10.1 million breakfasts are served to children in participating American schools through the USDA National School Lunch and School Breakfast Programs. The United States Department of Agriculture reimburses schools for some or all of their costs. Reimbursement rates are based on an average meal cost, adjusted each year based on the national CPI for food away from home. There is no adjustment for school characteristics such as size, although there can be as much as a seven-fold difference in the number of meals served, from the smallest to largest schools. Yet, economists have shown that economies of scale exist in a variety of commercial and industrial settings. Thus, we use a multiproduct translog cost function to estimate the costs of school breakfasts and lunches. Results indicate substantial and persistent economies of scale across 21 locations for school breakfasts but few unexploited scale economies in school lunches.

Suggested Citation

  • Ollinger, Michael & Ralston, Katherine L. & Guthrie, Joanne F., 2011. "School Breakfast and Lunch Costs: Are There Economies of Scale?," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103191, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103191
    DOI: 10.22004/ag.econ.103191
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    References listed on IDEAS

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    1. Ollinger, Michael & MacDonald, James M. & Madison, Milton E., 2000. "Structural Change In U.S. Chicken And Turkey Slaughter," Agricultural Economic Reports 34049, United States Department of Agriculture, Economic Research Service.
    2. Ollinger, Michael & Ralston, Katherine L. & Guthrie, Joanne F., 2010. "School Food Service Costs: Does Location Matter?," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60690, Agricultural and Applied Economics Association.
    3. Edward W. Gallagher & Cameron S. Thraen & Gary D. Schnitkey, 1993. "Milk Assembly Costs in the Greater Ohio Area: A Multiproduct Analysis," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(1), pages 75-88.
    4. Adams, Robert M & Bauer, Paul W & Sickles, Robin C, 2004. "Scale Economies, Scope Economies, and Technical Change in Federal Reserve Payment Processing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(5), pages 943-958, October.
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    6. Daniel Bilodeau & Pierre-Yves Crémieux & Pierre Ouellette, 2000. "Hospital Cost Function In A Non-Market Health Care System," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 489-498, August.
    7. MacDonald, James M. & Ollinger, Michael & Nelson, Kenneth E. & Handy, Charles R., 2000. "Consolidation In U.S. Meatpacking," Agricultural Economic Reports 34021, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Guthrie, Joanne & Newman, Constance & Ralston, Katherine & Prell, Mark & Ollinger, Michael, 2013. "Nutrition Standards for Competitive Foods in Schools: Implications for Foodservice Revenues," Economic Information Bulletin 262125, United States Department of Agriculture, Economic Research Service.

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    Keywords

    Food Consumption/Nutrition/Food Safety; Food Security and Poverty;

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