New USDA Guidelines Could Require $250 Million Of New Equipment

The nation’s 32 million schoolchildren will be eating healthier under just-released U.S. Department of Agriculture guidelines for government-subsidized school meals. The new guidelines are a boon—estimated by the USDA at $250 million in the next two years—for the foodservice equipment industry outfitting school kitchens and cafeterias to ensure those rules are met.

The guidelines, part of the Healthy Hunger-Free Kids Act, double the amount of fruits and vegetables served in schools, set limits on trans fats and salt, boost the amount of whole grains served, make low-fat milk the norm, and establish daily caloric intake ranges. The moves will cost less than half the agency’s original proposal—much of it by abandoning requirements that schools serve meat and meat alternatives at breakfast.

Many schools will need to replace or purchase foodservice equipment to comply with the proposed standards. Some might need to replace fryers with ovens or steamers; many will likely need to install salad bars to meet the fruit and vegetable requirements and upgrade heating and holding equipment to ensure cooking, not just reheating, capability.

The agency says it received wide ranging cost-and-need estimates for new kitchen equipment to prepare more foods on site, which it says precluded it from estimating the dollar value of that need with any certainty. As a result, the USDA’s cost estimate in its revised final guideline assumes half of all schools will need to invest $5,000 in new kitchen equipment in the next two years. Half of this overall $250 million cost is assumed as an upfront expense in 2012; the other $125 million will be incurred in `13, the first full year of implementation. No equipment costs have been estimated past that time frame. Costs to replace equipment nearing the end of its useful life is already covered by USDA meal reimbursements and other sources of foodservice revenue.

The agency’s estimate appears to be based on the strong response to its 2009-10 grant programs funded by the American Recovery and Reinvestment Act. Those grants totaled $125 million.