USDA axes food box contracts with San Antonio event company and other controversial distributors

The first round of the hunger relief program neglected families in many regions, including Maine, Alaska, and Virginia. Now the agency appears to be playing catch-up.

After some delay, the Department of Agriculture (USDA) has announced the contractors for the second round of its Farm to Families Food Box distributions, which run from July 1 until the end of August. Most of the distributors remained the same, though some of the companies that attracted negative media scrutiny and criticism from food banks did not see their contracts renewed. 

The Counter identified 11 distributors whose contracts did not get extended out of a list of nearly 200. Their initial contracts totaled nearly $110 million over the six-week period. We reached out to all of them to ask whether the agency had terminated the relationship or whether they had opted out of distributing boxes. We’ll update this post if they respond.

Notably, San Antonio-based event firm CRE8AD8, which initially received a $39 million contract, did not win a renewal. The firm was the subject of multiple investigative San Antonio Express News stories, and the paper revealed that the company had misrepresented its client list and failed to deliver many of the 750,000 boxes it promised. For its part, CRE8AD8 blamed food bank partners for its lackluster performance.

Eleven distributors had contracts that did not get extended out of a list of nearly 200. Their initial contracts totaled nearly $110 million over the six-week period.

Yegg Inc., a company which identified itself as a financial services provider prior to the start of the food box program, also did not see its $16 million contract renewed. Reporting by The Counter in June revealed that Yegg had farmed out much of its distribution to Alta Dena, a subsidiary of bankrupt dairy processor Dean Foods. Pacific Produce Corporation, a company with a $3.7 million contract that is apparently based in Guam but slated to serve the Midwest, did not receive a renewal, either.

Cargill, which received $3.5 million to distribute pre-cooked meat, will no longer serve the program. A representative from Cargill said the company did not bid on the second period, citing “market uncertainty.” She said that the company has thus far distributed “over half” of the boxes from its contract, and that distribution logistics were made more difficult by the impacts of Covid-19. 

Other contractors that drew initial scrutiny, like Travel Well Holdings, an airport kiosk operator based in California, have apparently performed to USDA’s satisfaction. The agency did not publish the dollar amounts for contracts that had been extended. The largest new contract, worth $90 million, was awarded to Gold Star Foods in Ontario, California.

Notably, San Antonio-based event firm CRE8AD8, which initially received a $39 million contract, did not win a renewal.

The agency also announced a slate of new contractors for the next phase, seeming to have taken some earlier criticism to heart. Previously, the state of Maine pointed out that it had been all but completely shut out of the program. No distributors in the state were tapped to distribute boxes to food pantries, which relied on a few deliveries from other states to feed hungry families in May and June. This time around, USDA awarded a $1.3 million contract to wholesale distributor Native Maine Produce and $2.1 million to Maine Farmers Exchange, a potato processor. 

In June, Democratic Senators Mark Warner and Tim Kaine of Virginia wrote to agriculture secretary Sonny Perdue, arguing that the state had received a disproportionately small share of food boxes. They pointed out just one distributor had been tapped to service the entire state and that food banks in southwest Virginia were struggling to serve food insecure clients. For round two, USDA awarded a $21.6 million contract to Military Produce Group, a Virginia distributor that primarily supplies food to supermarkets on military bases.

Alaska, too, was largely excluded from the program in round one. No Alaskan distributors were awarded contracts, and the Food Bank of Alaska managed to source produce deliveries only through a maneuver where a local company signed on to be a subcontractor, ProPublica reported. But even then, the food bank was only able to get produce, but no meat, for Alaska families. This time, USDA has awarded over $650,000 to local distributor Charlie’s Produce and $3.9 million to Alaska Commercial Company, a subsidiary of a Canadian grocery store chain. According to the specifications of those two contracts, however, Alaskans will still not be able to receive any meat.

The Farm to Families Food Box program is slated to distribute up to $3 billion in fresh food boxes over the two contract periods. USDA has not yet released details about how much of the funding has been spent to date, though the program had delivered 29.3 million food boxes by July 2. The program was originally projected to deliver 40 million boxes by the end of June.

H. Claire Brown is a senior staff writer for The Counter.

Jessica Fu is a staff writer for The Counter.