“Someone’s profiting off this”: New public records reveal Covid-19 hunger relief contractors get handsome payouts for mediocre food boxes
In mid-May, the Department of Agriculture (USDA) raised eyebrows among hunger relief groups in Puerto Rico. The agency had contracted the island’s largest food distributor, Caribbean Produce Exchange, to deliver emergency food boxes to hungry families, and it was reimbursing the company up to $100 for each box.
To people who work in farming and hunger relief on the island, that number sounded suspiciously high. The boxes contained a combination of fruit, vegetables, dairy, and protein, and were meant to mitigate food insecurity during the coronavirus pandemic. But some felt that the company could do a lot more with $100 than assemble one package of food for a single family.
“For $100 a box, [Caribbean Produce Exchange] could make three boxes,” said Paul Dill Barea, a farmer and community organizer with Puerto Rico food co-op Apoyo Mutuo Campesino, which puts together boxes of produce grown on the island and sells them to the public for $25 apiece.
And despite the high cost to USDA, the food didn’t always reach recipients in decent condition, either—if it reached them in the first place.
In theory, the food-box program plugs the holes that Covid-19 blasted in the traditional food-aid infrastructure.
Complaints about the boxes surfaced on social media in June. Some recipients reported that their boxes arrived containing frozen, inedible bananas, and, in one case, no fresh produce at all. Half of the box’s contents were imported from the mainland, a local news outlet reported, which many saw as a missed opportunity to support Puerto Rican farmers. Worse, in mid-May, the company failed to appear at a scheduled box distribution event in the San Juan metropolitan area, leaving 600 families to wait in line for emergency food aid that would never come, said Denise Santos, chief executive of the Puerto Rico Food Bank, which partnered with the company to host the event.
Caribbean Produce Exchange is one of more than 200 private-sector companies contracted by USDA to furnish hunger relief organizations with pre-assembled boxes of produce, dairy, and pre-cooked meat. A cornerstone of the Trump administration’s hunger relief efforts during the Covid-19 crisis, the sprawling food box program has delivered more than 75 million boxes of food since mid-May.
The concept is straightforward: USDA has paid distributors, religious organizations, nonprofits, at least one caterer, an airport kiosk company, and a handful of farms more than $2.7 billion in total to assemble and distribute the emergency food boxes, erecting new supply chains virtually out of thin air as they by-pass overtaxed grocery stores. The program has issued two rounds of contracts—Caribbean Produce Exchange’s contract, already worth $107 million, was renewed for the second round in late June—and is currently accepting bids for round three, which will run through the end of October.
In theory, the food-box program plugs the holes that Covid-19 blasted in the traditional food-aid infrastructure as grocery store donations dried up, farmers were left without workers to harvest their crops, and pantries were forced to pivot to curbside distribution, pre-packaging groceries for a swelling client base made newly food-insecure by the economic toll of the pandemic. The prices USDA pays suppliers for these boxes are supposed to cover all related costs, including labor for assembly, materials for packaging, and “truck to trunk” distribution of the boxes themselves—an important bonus for food banks that have limited refrigeration and trucking capacity at their disposal to transfer boxes from one hub to the next.
In reality, though, some of the program’s core promises have gone unmet. That’s due at least in part to the fact that many of the companies awarded the lucrative contracts are ill-equipped to handle food in any real quantity. Food bank operators report having to pay the bill for delivery from their own budgets, receiving boxes that are leaking or falling apart, and that arrive full of commercial-grade bags of meat with no instructions for how to prepare it.
Despite these failures, new public records reviewed by The Counter indicate that the boxes have cost well above what USDA typically pays farmers and manufacturers for food it buys for food banks and schools—and, in some cases, well above what they’re actually worth. Multiple food-aid professionals we interviewed for this story said they could provide the same service for a fraction of the price by purchasing food through their existing networks, even after accounting for the costs of cardboard, transportation, and labor. Even so, the Trump administration has doubled down on support for the program. Just last week, it announced an additional $1 billion in funding.
“These boxes should cost $25 to $40, maximum.”
According to public records obtained by The Counter that disclose contractors’ invoice totals and the number of boxes they delivered, Caribbean Produce Exchange was paid an average of $86.27 per box during the period spanning from mid-May to the end of June. The company invoiced USDA $99 for each box intended for families, and less for smaller boxes meant for single-person households. Local producers and hunger relief professionals say they can—and do—stretch the same amount much further.
“These boxes should cost $25 to $40, maximum,” said Marisel Robles, an organizer for Comedores Sociales, a nonprofit that distributes food aid to families in Puerto Rico, referring to how much she thinks these boxes should really cost USDA, especially given that Caribbean Produce Exchange most likely buys food at distributor prices, which are significantly lower than the retail prices shoppers pay at supermarkets. “A contract that big means that someone is profiting a lot,” Robles said. “It doesn’t make sense.”
Caribbean Produce Exchange confirmed its box prices, but said that they were fair. The company also confirmed that it couldn’t meet some of its early delivery commitments, but said that any affected families later received food via other distribution channels.
Caribbean Produce Exchange isn’t the only distributor getting handsome payouts for lackluster food boxes. In Texas, San Antonio Food Bank CEO Eric Cooper said he was initially hopeful that the Farmers to Families Food Box program would provide a much-needed influx of food to his organization, which was seeing 120,000 people a week at the start of the pandemic, up from 60,000 in a typical week.
USDA awarded a $39 million contract to CRE8AD8, a local catering company Cooper wasn’t familiar with, to supply him with emergency boxes for his clients that contained produce, dairy, and pre-cooked meat. Cooper told us that the first truckload of protein boxes to arrive held 25-pound boxes of frozen, pre-cooked pepper chicken, packaged in five-pound bags. “We were thinking, if it’s a mixed protein box that a family would receive, it would be a variety, packaged for retail, with instructions on how to prepare, cook, re-heat,” Cooper said. “What we got from CRE8AD8 and [sub-contractor] Gourmet Foods was an institutional pack, what we would call a case of chicken.” It wasn’t something a family could easily break down into portions small enough to cook at home.
Cooper said he asked CRE8AD8 for re-heating instructions, and the company told him the chicken could be microwaved. He called the manufacturer, which he said told him the same thing. Cooper asked the company to put that in writing so that he could include printed directions in the boxes. Eventually, he heard from the manufacturer again: The bags weren’t microwave-safe after all. The chicken had to be boiled in the bag. “After complaining, we stopped getting that food,” Cooper said. “Protein is something we needed the most, but any feedback was received with kind of harsh rejection.”
“For someone in this world of food banking, that’s all I think about, is how to stretch a dollar, how to be the most efficient. So that was painful: knowing what $3 billion could have done to help nourish the line of families that we’re feeding.”
According to invoices reviewed by The Counter and confirmed by the company, CRE8AD8 was reimbursed by USDA at a rate of $103.15 per box for 233,874 boxes of “precooked meat.” Cooper estimated he could purchase the same product for half or a third of what the agency paid. “For someone in this world of food banking, that’s all I think about, is how to stretch a dollar, how to be the most efficient,” he said. “So that was painful: knowing what $3 billion could have done to help nourish the line of families that we’re feeding.”
CRE8AD8 wrote in an email to The Counter that “Boxes (produce, protein or dairy) contained 4-10 various high end, high quality and hand selected items depending on the origin and destination point for safety and freshness.” The CRE8AD8 food box contract with USDA was not renewed for the second round of funding, and the contract is included in a broader Congressional investigation of the program. A representative from Gourmet Foods declined to talk specifics about the CRE8AD8 contract, but said that the company did not make any money off the food-box program and that he felt CRE8AD8 was being treated unfairly by the press. Other sub-contractors hired by CRE8AD8 did not respond to requests for comment.
Pricing issues persisted with dairy boxes, too. Sherrie Tussler, executive director of Wisconsin’s Hunger Task Force, shared photos of a recent dairy box she received from a distributor she works with. It contained six blocks of unlabeled cheese, two five-pound tubs of plain yogurt, and a gallon of milk. According to USDA’s invoice records, dairy boxes from this distributor cost the agency $66 to $71 per box in the first round of purchases.
Tussler struggled to square the cost of the box with the items inside: She’d recently won a food-purchasing grant from the state of Wisconsin that authorized her to pay her suppliers $2.50 for a gallon of milk and $3 to $4 for a pound of cheese. At those prices, the milk and the cheese in the box would add up to less than $27. Add the bulk yogurt and the costs of labor and cardboard, and the total cost still wouldn’t have reached $66 a box. “The box costs $1.50, then you’ve got to have a space where you’re going to aggregate all these boxes, then a bunch of low-wage workers. All this stuff costs money,” Tussler said. ”Does it inflate the value of a box to a level like that? I seriously doubt it.”
The box prices also represent a significant departure from costs in other food-purchasing programs run by USDA. The agency buys huge quantities of fruit, meat, dairy, and grains from farmers and manufacturers each year and re-distributes those items to schools, food banks, senior centers, and others through a wide variety of existing public and non-profit programs. Last year, for example, the agency bought 18.5 million gallons of milk and sent it to food banks free of cost.
According to a report updated earlier this month, so far in 2020, the agency has paid an average of about $0.22 a pound for fresh vegetables and $0.56 a pound for fruit, prices that would easily fill a 25-pound produce box for less than $15 in total. That’s well below the $23.50 average rate the agency paid private companies for Farmers to Families produce boxes, and far below the $90 per box paid to outliers like Caribbean Produce Exchange. According to public records reviewed by The Counter for the first round of boxes, dairy boxes averaged $35.32, and boxes of pre-cooked meat averaged $54.71. (Box weights vary, and the agency declined to disclose precise measurements in response to our records request.)
Talia A. Moore
“There goes $50K of our donor money.”
USDA initially promised that distributors approved for the food-box program would handle “truck to trunk” delivery, easing the logistical burden on food banks and justifying some of the costs associated with the program. In reality, though, Tussler and Cooper say they were left to pay for what is known as “last-mile” delivery—that is, the final leg of the journey from the food bank to the food pantry, church, or other distribution site. Because the prices the agency paid for the boxes were supposed to include this crucial, and expensive, aspect of the logistics, food bank operators’ unexpected last-mile expenses amounted to an unofficial subsidy for the program, using labor and money from their already thin budgets.
Cooper said that, in Texas, the contractors for the first two rounds of the program delivered boxes to San Antonio Food Bank’s warehouses rather than individual pick-up sites. That left Cooper scrambling to find the funding and manpower to get the boxes through the next leg of their journey to the people who needed them. “None of them have delivered to the distribution sites or helped food banks with the last-mile expenses,” he said. “We’ve had to work really hard to get local philanthropy to pay for the expenses of our logistics, and then rely on volunteers.”
Tussler said that in Wisconsin, one contractor—Gordon Food Service—refused to deliver outside its “footprint,” meaning that her clients from nearby tribal communities had no access to delivery. “Our team arranged the transportation and met the costs so that the indigenous [communities] were on equal footing,” she wrote in an email, adding that she requested reimbursement from the distributor without any luck. “There goes $50K of our donor money for the last mile.” A representative from Gordon Food Service was unsure why the company hadn’t been able to deliver to Tussler’s indigenous clients, but said that it had fulfilled its contract with USDA according to the agreed-upon terms.
Politics as usual
In response to widespread criticism of the food-box program, USDA has made some changes ahead of the next round of contracts. It is prioritizing combination boxes that include produce, dairy, and meat. It has asked would-be distributors to include details in their applications about how they will handle last-mile delivery, and to disclose any planned use of sub-contractors in advance. The agency will also prioritize distributors that promise to deliver boxes to “Opportunity Zones,” or economically stressed communities, as defined through the president’s 2017 Tax Cuts and Jobs Act.
Like so many Covid-19 relief programs, the food-box program has generated its fair share of partisan rancor. In early August, USDA began to include a letter in each box, boasting about the Trump administration’s pandemic response. “As part of our response to the coronavirus, I prioritized sending nutritious food from our farmers to families in need throughout America,” a copy of the Trump-signed letter read.
And at an event promoting the food boxes last week, Secretary of Agriculture Sonny Perdue urged Americans to vote for Donald Trump in the November election, The Independent reported. Democrats were furious about both, citing each incident as a possible violation of the Hatch Act, which prohibits federal employees from using their official authority to influence elections.
The extension of the program and subsequent announcements of additional funding have also rankled Democrats, who are pushing for additional funding for the Supplemental Nutrition Assistance Program—SNAP, formerly known as food stamps—as part of the next round of Covid-19 relief. Republicans have opposed spending more on SNAP thus far.
Indeed, the administration’s latest $1 billion investment in the food-box program may be an implicit maneuver to bolster support for President Trump.
“The administration, through its comments and actions, has made clear that they’re using this program for partisan politics right now,” said Donald Sherman, deputy Director of Citizens for Responsibility and Ethics in Washington, a non-profit government watchdog group that recently filed an ethics complaint over Perdue’s comments. “Imagine if you are a struggling farmer and you’ve come because you want to learn about this program that’s ostensibly aimed at all Americans. The secretary makes it seem like this is a program for supporters of the president, aimed to help the president politically, and [farmers] are forced to sit through a political rally when they just want to hear about this program.”
The initiative may very well have become yet another vehicle for Trump to cement his support among farmers, a major constituency, and one that has grown increasingly weary through the administration’s prolonged trade wars and now a pandemic. Conveniently, the food box program is also an easy way to send de facto campaign flyers—dressed up as letters from the president—to hungry Americans across the country.
“This letter is new for this last [round of food boxes] that goes out through October 31, which is four days before election day,” Sherman said. “It’s not subtle in any way, shape or form.”
Politics aside, it’s not clear whether the food-box program is delivering food that’s better, cheaper, or easier to access than what recipients might buy at the grocery store or what food banks might order directly from USDA, for free. One of the program’s hallmark promises—to alleviate the burden on food banks of driving truckloads of food from one pantry to the next—seems largely unmet.
The failures have left some cynical that the program is really about serving the thousands of families who have found themselves newly food-insecure in the midst of the pandemic. “What’s the point of the box?” Tussler asked. “Unless one of these people is related to somebody who makes cardboard.”
“They’re just doing it so they can get the farmer vote.”