USDA cancels $1 billion in funding for schools and food banks to buy food from local suppliers (2025)

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.

"USDA can confirm it has provided notice to States, Territories and Tribes that the FY 2025 funding previously announced for the pandemic-era Local Food for Schools and Child Care Cooperative Agreement and pandemic-era Local Food Purchase Assistance Cooperative Agreement program is no longer available and those agreements will be terminated following 60-day notification," a spokesperson with theagency said in an email to CBS News.

The decision comes as the Trump administration and Elon Musk'sDepartment 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."

One farmer in Massachusetts told CBS News Boston that she was concerned the funding cut could hurt her business. Katie Carlson, president of Carlson Orchards in Harvard, Massachusetts, said the Worcester Regional Food Hub, which connects school districts with food from local farmers through the USDA program, had been a reliable customer.

"We know that this time of year we can count on the Worcester Food Hub," Carlson said. "They may not be huge orders every week, but we know that they're coming to take something every week, so if that were to all of a sudden drop off [...] It's just not, not good."

In:
• Education
• United States Department of Agriculture