U.S. school lunch reform may open opportunity menu

LOS ANGELES Wed Aug 26, 2009 1:38pm EDT

Kirsten Saenz Tobey, founder of Revolution Foods, poses in the company's kitchen in Los Angeles August 19, 2009. REUTERS/Mario Anzuoni

Kirsten Saenz Tobey, founder of Revolution Foods, poses in the company's kitchen in Los Angeles August 19, 2009.

Credit: Reuters/Mario Anzuoni

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LOS ANGELES (Reuters) - School lunch is back on the U.S. policy menu for the first time in decades, thanks to President Barack Obama's drive to make school food more nutritious and healthy.

Like any reform effort in Washington these days, the school lunch overhaul is vulnerable to a growing government deficit. But some companies and investors are getting in the game early with small projects that could some day grow into big business catering to millions of school children.

The U.S. government pays much of the bill for school food. Efforts to replace the processed and nutrition-poor foods still on many student lunch trays come with a higher price tag that many schools cannot afford. Businesses can help close the gap.

U.S. natural foods grocer Whole Foods Market Inc WFMI.O has teamed with Chef Ann Cooper -- best known for her high-profile partnership with Chef Alice Waters at Berkeley Unified School District -- to launch the Lunch Box project (thelunchbox.org/), an expanding online guidebook to help school "lunch ladies" serve healthier food.

Other efforts focus on outsourcing.

Privately held Revolution Foods, which delivers health-focused, made-from-scratch lunches, breakfasts and snacks to schools around California, got $6.5 million to expand into Colorado and Washington, D.C., bringing its total venture funding thus far to $17 million.

President Obama and First Lady Michelle Obama -- who planted a vegetable garden on White House grounds, hired a chef focused on healthy fare and have two school-aged daughters -- are expected to buoy reform efforts.

President "Obama actually said the words 'school lunch' and 'health' in the same paragraph," said Cooper. "The last time a President talked about school lunch, it was Reagan talking about making ketchup a vegetable."

While concern over rising obesity rates -- which put kids at risk of having shorter lives than their parents -- has fueled some policy changes, the lunchroom battle rages on.

U.S. schools are banning junk food and sugary beverages. Many want to serve more fresh fruits and vegetables and hormone- and antibiotic-free meat and dairy. Those cost more than processed food and government-supplied commodities.

The federal government has raised its reimbursement for free school lunches to $2.68 from $2.57 last school year, but after labor and other expenses, most schools are left with $1 or less per lunch to spend on food.

That's why Cooper and Whole Foods' Lunch Box project has put a priority on tips to help schools stretch every penny.

The pressure is on Cooper to deliver because the higher-quality food used in lunches at the Berkeley Schools sent per-meal ingredient costs to around $1.40, an expense that was offset with money from Waters' Chez Panisse Foundation.

This year, Cooper has taken up residence in Boulder, Colorado, where she expects food costs to be around $1.20 per lunch.

PAY NOW OR PAY LATER

The federal government will spend just over $9 billion on lunch reimbursements in the year ended September. President Obama proposed spending $9.8 billion in the year ahead, with the increase funding improvements in food safety and nutrition.

"We pay now, or we pay later," says Cooper, referring to the estimated $147 billion the United States spends each year treating obesity-related illness.

Meanwhile, fund-raisers and grants from the W.K. Kellogg Foundation and others are helping to cover the additional cost of healthy lunch programs.

Adam Drewnowski, a noted obesity researcher at the University of Washington, applauds Obama's school lunch reform effort but is concerned that it is a "palace revolution" that may not take hold in a hard-luck town like Flint, Michigan.

"We are trying to reach out to some of the neediest communities," Revolution Foods co-founder Kirsten Tobey said when asked about Drewnowski's view, which is shared by many workers in the nation's school lunchrooms.

Revolution Foods, which this year will deliver 14,000 lunches daily, focuses low-income areas like Oakland, Compton, South Central Los Angeles and the District of Columbia.

It prices on a sliding scale and lunches range from just under $3 to up to $4 each.

Many schools that work with the company have part-time cafeteria workers or low overhead, so they can commit more money to food costs.

Still, she said her company's main selling point is its "kid-friendly" food, which ranges from chicken hot dogs to chicken nuggets made with just a few, simple and healthy ingredients.

"It's not crunchy, cardboard-tasting granola," Tobey said.

(Reporting by Lisa Baertlein; Additional reporting by Chuck Abbott in Washington, D.C.; Editing by Richard Chang)

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