USDA cancels $1 billion in funding for schools and food banks to buy food from local suppliers

The U.S. Department of Agriculture is cutting two federal programs that provided about $1 billion in funding to schools and food banks to buy food directly from local farms, ranchers and producers, part of what the agency said was a decision to “return to long-term, fiscally responsible initiatives.”

The move cancels about $660 million in funding this year for the Local Food for Schools program, which is active in 40 U.S. states, as well as about $420 million for a second program called the Local Food Purchase Assistance Cooperative Agreement, which helps food banks and other local groups provide food to their communities. 

The decision comes as the Trump administration and Elon Musk’s Department of Government Efficiency, or DOGE, say they are slashing federal spending to reduce government waste. The USDA programs were funded through the agency’s Commodity Credit Corporation, a Depression-era fund created to buy products directly from farmers.

“Unlike the Biden Administration, which funneled billions in [Commodity Credit Corporation] funds into short-term programs with no plan for longevity, USDA is prioritizing stable, proven solutions that deliver lasting impact,” a USDA spokesperson said in an email to CBS MoneyWatch. 

In recent days, schools were alerted that they were set to lose $660 million in federal funding for the current year, according to Diane Pratt-Heavner, director of media relations for the School Nutrition Association, which represents thousands of school meal employees. The withdrawal of funding will affect schools across the U.S. at a time when they’re already grappling with high food costs, she said. 

“It’s a pretty big hit”

One of those school districts said the USDA’s decision will wipe out $100,000 in funding that it had planned to spend on local beef and produce for students’ school meals. 

“It’s a pretty big hit, and that’s mostly fresh fruits and vegetables,” said Patti Bilbrey, director of nutrition services at the Scottsdale Unified School District in Arizona. “It wasn’t just about keeping food costs low — it meant supporting your community and your local farmers in your state.”

While the $100,000 represents about 2% of the school district’s roughly $6 million in annual spending on food, Bilbrey noted that it allowed the district to buy food ffrom small farmers and introduce produce like microgreens to their students. She added that the funding loss comes as her district, like many others, are struggling to keep school meals affordable amid rising food and labor costs. 

The Local Food for Schools program “was a godsend to us,” Bilbrey said. “It keeps our meal costs down, and we’re helping our community, which improves the perception of school meals.”