In lunchrooms throughout the Visalia School District, kids are about to notice what administrators are doing to save money in the face of rising food prices.
The chicken taquitos the students like so much will be dropped. So will the popular pizza pockets. The items (49 cents for a taquito; 58 cents for a pizza) are too pricey to keep on the menu -- especially when it is costing the district $110,000 more this year to serve milk than it did last year.
"Prices started to escalate last year. This year it hit us especially hard, but I see next year as being more difficult," said Lynnelle Grumbles, director of nutritional services for the Central California district's 18,000 students. Her costs rose 7% this year, but her funding is fixed -- and her budget is in the red. "School meal programs are at a breaking point," she said.
Around the country, managers of large-scale food programs are doing the same anxious math, paring costs any way they can and worrying that the squeeze might get tighter.
Military planners are considering switching troops from milkshakes to less expensive soy shakes. Federal prisons are cutting back on dessert. Schools are trimming workers' hours and replacing lasagna with more economical spaghetti. Infant-feeding programs are running on emergency funds. And federal officials have begun bartering for basics such as peanut butter to shore up depleted food banks.
Institutional budgets are usually set once a year, but managers have to feed their clients -- 31 million schoolchildren, not to mention hospital patients, soldiers, inmates and more -- regardless of how high prices climb.
Food costs are rising for many reasons.
Poor global harvests and drought have cut crop outputs. The weak U.S. dollar makes American commodities more attractive to consumers overseas and investors at home. Increasing demand for corn-derived ethanol means less cropland for food corn or other grains, such as wheat. India and China are consuming more, further tightening supplies. And soaring energy prices raise processing, retail and transportation costs. The average U.S. food item travels 1,500 miles before it is eaten.
Food prices rose 4% in 2007 and are on track to climb 5.5% in 2008. Most federal programs are already struggling to meet the costs of basics like meat, eggs and bread. And agricultural economists say prices haven't hit their ceiling yet.
"It could take anywhere from 12 to 24 months, and will ultimately depend on where oil goes," said Michael Swanson of Wells Fargo & Co.
With that in mind, managers are whittling expenses.
The military has targeted the dairy shake. The Department of Defense orders about 17 million a year, said Gerald A. Darsch, the Pentagon's director of combat feeding. Each one provides 410 calories, 20 grams of protein, and half of the calcium and vitamin D that troops need daily. And unlike some items in their packages of MREs (meals ready to eat), troops actually consume the shakes.
One Pentagon contractor is considering a switch from dry milk to soy, or to a soy-dairy blend, to offset price increases.
But no substitution will be made if soldiers and Marines don't like the result.
"The key driver is the quality and the acceptability of the product," Darsch said.
Ameriqual Group, the largest maker of MREs, has seen dairy costs rise 30%. But under government rules, the company can request more money only if it suffers losses on its entire MRE contract.
"We are going to have to absorb those costs," said Rashid Hallaway, an Ameriqual vice president, adding that price increases also could be coming soon for other foods.
Budgets are tighter within the federal prison system, which serves half a million meals a day. The Federal Bureau of Prisons spends $2.65 per inmate per day for all three meals, which are set by a standardized national menu.
Rising food and transportation costs are necessitating cuts, said spokesman Michael Truman.
"We have focused on reducing or eliminating extras such as desserts, sodas, sugar or other empty calories and are focusing on basic nutrition," Truman said.
Food banks have struggled as well.
The U.S. Department of Agriculture finances food banks and distributes surplus products from farmers. But now the money is buying less, and market demand means farmers have less surplus.
So USDA officials established a system last year to barter commodities such as cotton for food like canned meat and vegetables to send to soup kitchens and food banks.
Concern for basic nutrition recently prompted the Agriculture secretary to dip into a contingency fund for $1.5 million to keep a program for pregnant women, new mothers and their infants running for the rest of the year. That program provides vouchers for items like eggs and milk.
With money tighter all around, and energy prices undercutting the ability of local school boards and states to help, the School Nutrition Assn. is lobbying for more federal support.
School nutrition directors worry that the strain on schools and families could lead to hungry children.
In Hardin County, Ky., the school board will stop paying for free school breakfasts next year.
The county nutritional director, Janey Thornton, is trying to make up the funding shortfall in a number of ways, such as switching from grape tomatoes to tomato slices and running the numbers on disposable utensils versus ones that need washing. She has also recommended that the school board raise prices for lunches to $2, up from $1.85.
"If you have three kids in school, for some people that's a lot of money every day. We know we'll see kids coming to school having eaten less. We know we'll see hungry kids," said Thornton, a 38-year veteran of the school system. "We've had tight times -- but never, ever anything like this."
Times staff writer Julian E. Barnes in Washington contributed to this report.