School produce fee stirs critics

Private vendor charges to deliver

RALEIGH -- State agriculture officials and two powerful North Carolina congressmen are calling for lower price markups on North Carolina-grown fruit and vegetables purchased under a popular federal farm-to-school program that provides fresh produce for student lunches.

Officials say they'll ask for a price break from U.S. Department of Defense purchasing agents and the private produce company that was awarded a $37.6 million contract to distribute fruits and vegetables to North Carolina military bases and schools participating in the lunch program.

At issue is a $4.30-a-case delivery fee charged by the defense agency's private contractor, Foster-Caviness Foodservices of Colfax. State agriculture officials say the fee significantly increases the cost of homegrown produce to school districts across the state, including Wake County, that participate in the farm-to-school program and have their purchases delivered by state trucks.

That fee is in addition to a 5.9 percent charge tacked on to each case by defense agency purchasing agents that will be reduced to 4.6 percent in October.

"I'm still not satisfied with the decision made by the Defense Department," said U.S. Rep. Walter Jones, a Farmville Republican. "I feel that this program is too valuable. To increase this delivery cost -- would that have happened if DoD had not decided to hire a private vendor?"

The decade-old farm-to-school program relies on the Defense Department because of its immense purchasing power.

Jones, along with U.S. Rep. Bob Etheridge, a farmer and Lillington Democrat who is a member of the House Agriculture Committee, have been sharply critical of the impact of the produce purchases on the decade-old farm-to-school program. Agriculture officials say the program sells North Carolina produce to about 60 school districts in the state.

Agriculture Commissioner Steve Troxler said defense agency officials failed to take into account his agency's delivery of farm-to-school produce when they awarded the contract to Foster-Caviness in May.

Troxler said defense officials and Foster-Caviness need to "restructure" the price charged for farm-to-school produce before his agency will resume free deliveries of North Carolina fruits and vegetables. He suspended deliveries after a final run late last week.

"They set one price for all the schools, and that made the farm-to-school prices not as competitive as they were before," said Troxler, who met Tuesday with defense purchasing agents, congressional staff members, school nutritionists and Foster-Caviness officials. "If we get the right kind of restructuring, we could wind up with the best of both worlds. ... Foster-Caviness is a good company with a good reputation and has pledged to use all the North Carolina produce they can for the school program."

The low-cost bidder

Paul Lieb, president and owner of Foster-Caviness, said his company has been unfairly targeted for criticism of the defense agency's decision. He also said his company's delivery fee is lower than those charged to school districts that don't get produce delivered by state agriculture trucks -- particularly small, rural districts far from major distribution centers.

"You do realize I didn't structure this deal," said Lieb, who blamed much of the criticism on confusion about how the new program would work. "I'm simply the low-cost bidder, so somewhere out there are companies that had higher bids."

In the long run, Lieb said his 105-year-old Guilford County company, hired to save money for the defense agency, will deliver top-notch produce to schools at a competitive price. He also pledged to work with defense agency officials to adjust the price of farm-to-school produce delivered by state trucks, but did not say whether he'd slash his delivery fee.

"As part of the restructuring, the objective would be to have a reduced catalog price for products delivered by [state agriculture trucks]," Lieb said.

The farm-to-school program represents a small slice of Lieb's contract to deliver produce to North Carolina military bases and school districts, a pact worth an estimated $6 million in purchases a year. Of that amount, about $4.5 million is projected produce purchases by North Carolina schools -- from growers within and outside the state. Last year, the farm-to-school program purchased about $475,000 in fresh produce from North Carolina farmers, state agriculture officials said.

"We've been very committed to buying North Carolina-grown products," Lieb said.