Groups representing the franchises claimed credit in aiding their members to get in on the PPP loans early, after McDonald’s corporate refused to grant rent relief. “[W]e helped prepare our Owners to be first in line, perhaps knowing the government, less solvent than our global company, was at least attempting to provide the desperately needed liquidity,” wrote Blake Casper, chair of the National Owners Association, another group representing McDonald’s franchisees, in a letter sent to company executives, on April 7, 2020.

PPP loans were in many ways an ideal solution for store owners. The program offered up to $10 million per franchise to pay for immediate expenses. And if business owners spent the money as Congress intended — mostly on payroll — then the loans were eligible for forgiveness.

In response to a March inquiry from The Counter and The Intercept, McDonald’s global communications manager Joseph LaPaille said that the company “never asked for assistance from any government entity.” While McDonald’s may not have requested direct Covid-19 relief, the analysis of PPP data shows it did collect federal dollars — in the form of rent checks funded by the taxpayer-backed small business program.

All told, 2,389 McDonald’s franchises collected approximately $1.3 billion in PPP dollars, according to data released in January by the Small Business Administration, or SBA, the agency that administers the program. That makes McDonald’s stores the second largest franchise recipient by total dollar amount. Only General Motors businesses, whose car dealerships are franchises, took in more total PPP dollars.

Of the loans to McDonald’s franchisees, 421 include rent figures, which totaled more than $31 million. The Counter and The Intercept attempted to reach the owners of each of these franchises. Two owners, who applied on behalf of multiple restaurants, confirmed that they used the loans as indicated: to pay a total of over $450,000 in rent to McDonald’s. Another said he wound up using all of the money on payroll costs instead. The vast majority declined to comment or did not respond to phone calls, emails, or fax messages. Those who agreed to speak with The Counter and The Intercept asked for anonymity, citing fear of corporate retaliation.

No solid spending data

The $31 million in rent payments is a substantial figure, but the actual amount may be higher, said Sean Moulton, a senior policy analyst at the Project on Government Oversight, an independent watchdog. That’s because the dollar amount breakdowns released by the government reflect only what was listed in borrowers’ loan applications — nonbinding estimates of how the money would be used. Around three in four franchisee applications showed plans to spend 100 percent of the funding on payroll costs, a trend Moulton said is consistent with application data for the program as a whole.

“It strikes me as unusual that, even in the early days, almost everyone was claiming, ‘It’s all going toward payroll,’” said Moulton. “As far as the lenders and the SBA were concerned, it was a nonissue if you were getting those fields wrong.”

The nonbinding spending estimates point at a key caveat to SBA’s data: It only reveals how borrowers intended to spend their PPP money. Loan forgiveness data would provide a more accurate reflection of actual spending breakdowns. However, in response to a Freedom of Information Act request from The Counter and The Intercept, the SBA said it does not collect specific category breakdowns from forgiveness applications, which lenders process and keep the records on.

With borrowers declining to specify how they used the money, it’s unclear precisely how many taxpayer dollars were ultimately paid to McDonald’s Corporation or its real estate affiliates in the form of rent. According to the SBA, individual lenders were responsible for collecting detailed forgiveness information. The Counter and The Intercept contacted 88 lenders who processed loans on behalf of McDonald’s franchisees, but none provided additional detail.

The lack of concrete data also makes it impossible to understand the impact of a relaxation of the rules, passed by Congress in June 2020, that allowed businesses to direct a greater percentage of the money — 40 percent instead of 25 percent — to nonpayroll expenses, including rent. The change came after most of the McDonald’s franchisee loan applications were filed. Franchise associations representing both McDonald’s and its franchisees were involved in lobbying efforts to loosen the restrictions.

“The PPP loan program was designed as a lifeline for small businesses, but the program’s limitations imposed by regulators were sinking them,” said Matt Haller, a senior vice president at the International Franchise Association, in a press release the week before the flexibility legislation passed.

McDonald’s initially responded to a set of general inquiries from The Counter and The Intercept but did not respond to a subsequent list of detailed questions and a final request for comment. A company spokesperson issued the following statement: “As the Paycheck Protection Program intended, some independent small business owner franchisees independently applied for and used PPP loans to support payroll for the continued employment of the nearly 800,000 local restaurant employees who work in McDonald’s-brand restaurants throughout the U.S.” The SBA did not respond to a list of questions and requests for comment.

“This is practically a black hole,” said Moulton, referring to PPP loan forgiveness data. “We’ve gotten almost no information about what these companies are claiming, and it makes it impossible then for any kind of outside evaluation [of whether] the forgiveness makes sense.”

A real estate empire

In the 1950s, when the McDonald’s real estate empire was born, the business model that put the young chain’s growth into hyperdrive was not a small cut of the burger sales. Instead, the parent company buys or leases the land on which its restaurants sit, then charges its franchisees a base rent plus additional rent based on a percentage of sales. At the end of 2020, McDonald’s Corporation held $37.9 billion in real estate assets before depreciation.

“McDonald’s is a real estate company,” said Marcia Chatelain, author of “Franchise: The Golden Arches in Black America.” “It’s able to use the profits of McDonald’s, the hamburger company, to maintain an incredible portfolio of wealth in real estate.” Owning property, Chatelain said, has provided the company extra stability in times of crisis.

Yet in the spring of 2020, when the National Franchisee Leadership Alliance asked for the two-week rent forgiveness, McDonald’s refused.

“Owners were furious,” wrote one former McDonald’s executive familiar with the negotiations in an email. “They couldn’t believe the world’s largest restaurant company couldn’t give them some support … when you read about all the other smaller restaurant chains doing it every week.”

The company ultimately deferred — but did not forgive — the collection of $490 million in rental income, plus nearly half a billion dollars in royalty payments. The company’s business filings later revealed it recouped more than 80 percent of deferrals by the end of 2020 and was on track to collect the rest in 2021. Despite pandemic-related instability, McDonald’s collected $6.8 billion in rent payments in 2020.

McDonald’s is likely not the only corporation that collected taxpayer dollars in the form of PPP rent payments. Other fast-food chains like Wendy’s and Restaurant Brands International — parent company to Burger King and Tim Hortons — own franchise real estate, though their rental revenues are a fraction of McDonald’s.

If the arrangement of having megacorporations collect federal aid money bears further scrutiny, it’s not likely to come from the Small Business Administration.

To run the massive $789 billion program, the SBA offloaded the administrative task of processing PPP paperwork to lenders, like private banks and credit unions. As a result, the agency said it doesn’t have forgiveness records related to any particular PPP loan.

The lack of transparency surrounding PPP forgiveness data raises key questions about whether or not the program actually achieved its core aim: keeping workers on payroll. Left unanswered, it’s possible, based on existing SBA data, that a significant portion of the taxpayer funds were simply used to support landlords and utility companies.

“The stated purpose of this program from the beginning was to try and preserve jobs,” Moulton said. “It’s the name of the program. The more you dilute that with the authorization to use it on rent or mortgage payments or utilities, it really dilutes its impact.”

“Did we save jobs?” he said. “We spent a lot of money, and it’s very hard to answer that very simple question.”

Questions about how McDonald’s was able to bounce back from the early days of the pandemic are easier to answer. In January, the company’s chief executive called 2021 a “banner year” for the company, despite the public health crisis. The McDonald’s corporation reported $23.2 billion in revenue worldwide — its highest total since 2016.

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The program provided a maximum benefit of $15,600 per worker, equivalent to six months of traditional pandemic unemployment benefits. The report’s authors found that the money helped families afford basic necessities.

“We did hear from people who said, ‘At one point, I didn’t really have anything in the refrigerator,’ or ‘Somebody loaned me money and I bought a bag of rice,’” said Elaine Waxman, senior fellow at Urban Institute and one of the report’s authors. “It really brings home how stark the food insecurity was at the early part of the pandemic.”

The report noted that without traditional pandemic relief, many undocumented workers took on loans in order to cover such expenses, as well as others like rent and utilities. Those who received support from the Excluded Workers Fund said the money helped pay those debts off.

“One of the biggest things that came out of this and that we heard from the workers is the sheer amount of debt and loans these workers had taken out just to get by throughout the pandemic,” said Poonam Gupta, a research analyst at Urban Institute and another of the report’s co-authors. “To me that is one of the most topline findings. They really used this fund to dig themselves out of hole that otherwise would have taken potentially years to dig out of without any relief.”

The report was based on surveys with 15 eligible workers, many of whom described the program as a lifeline for their families. One farm worker who received $15,600 told the authors that she was able to pay off money she’d borrowed from friends during the pandemic, and cover family grocery costs during months when she didn’t have income.

“It was the lifesaver of my little household,” another worker told the report’s authors. “It helped us get out of the hole we were in.”

However, the Excluded Workers Fund itself ultimately left a significant number of its targeted constituents shut out. The money was depleted within three months of its launch, and according to the New York State Department of Labor, approximately 95,000 applications are still pending.

Angeles Solis, director of worker organizing at Make the Road NY, a grassroots immigrants’ rights group, said that in addition to the queue of pending applications, there are likely tens of thousands more who couldn’t apply before the program was officially closed, due to difficulties securing paperwork or lack of outreach.

In recent weeks, Solis, workers, and other advocates have taken actions to draw attention to the depleted fund and call for a replenishment. Last week, hundreds of delivery workers, street vendors, taxi drivers, construction workers rallied on the Brooklyn and Manhattan Bridges demanding that state lawmakers refill the Excluded Workers Fund so it can meet the needs of all residents eligible. They’re also calling for the creation of a permanent unemployment insurance program for workers excluded from traditional unemployment benefits.

“We need to move away from relief and relief every year and move toward full inclusion of these workers in the social safety net,” Solis said.

Whether or not there’s enough political will to meet either of those demands remains to be seen. As one lawmaker who sponsored the legislation told The City, Excluded Worker Fund proposals face more resistance right now, compared with last spring—a time when vaccines were not yet widely available and many Covid-19 restrictions were still in place.

But as the authors of Thursday’s report pointed out—even if the state is moving on from the pandemic, many workers are still reeling from it. All but one of the workers interviewed said they are working reduced hours, or as little as two days per week, due to slow economic recovery.

“It’s a lot of money, don’t get me wrong,” said one worker quoted in the report who had received assistance. “But it goes fast.”

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Workers this week also organized a first-of-its-kind protest outside of Starbucks’s Seattle headquarters, calling on the company to end what they described as a pattern of union-busting practices.

“What’s disgusting? Union-busting,” a crowd of around 70 workers and supporters chanted in front of the company’s head office. The rally included speeches from two former workers from a store in Memphis, Tennessee, whom Starbucks had recently fired after they had tried to form a union. The company told local news outlets that the layoffs were due to safety concerns, but workers suspected they were retaliatory. Beto Sanchez, one of the fired workers, described his former work environment as one that was unsafe for both staff and customers. (The Counter reached out to Starbucks for comment, and will update this post if the company responds.)

“We’ve had partners that were positive and exposed to Covid that were not sent home and were instead told to stay and work with us,” Sanchez told the crowd. “We had people that were throwing up in the back-of-house, and our managers said, ‘Oh, just stay in the back, you’re fine.”

Workers who had voted in the Mesa store election said at Wednesday’s press conference that they were not deterred, and that they expected to celebrate a victory once the votes are ultimately counted. 

“Initially, today, we had this set up and we were planning to go celebrate after, but now we are kind of free,” said Michelle Hejduk, a shift supervisor. “So I say we go out and start organizing some more stores in this time, right?”

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That’s what Monday’s study suggests may have happened: “The previously underestimated emissions from U.S. land conversion attributable to the policy are enough to fully negate or even reverse any [greenhouse gas] advantages of the fuel relative to gasoline,” the authors wrote.

In the study, researchers used economic modeling to calculate the impact RFS had on corn prices, finding that the program raised them by nearly 30 percent. Next, they calculated the relationship between the higher prices and observed land use changes, which include both the expansion of cropland, the replacement of other crops with corn, and declining participation in land conservation programs.

In total, increased emissions from land use changes equalled more than 438 million tons over eight years, equivalent to adding 86 million passenger vehicles to the road for a year. In addition to land use changes, Lark’s team also considered emissions associated with increased fertilizer use, another practice that releases greenhouse gases. Amortized across 30 years (for consistency with how carbon intensity is typically calculated), the team found that corn ethanol’s carbon intensity may actually be 24 percent higher than gasoline.

“No one anticipated such a large response and expansion of crop land,” said Tyler Lark, lead author of the paper and scientist at the University of Wisconsin-Madison Center for Sustainability and the Global Environment. “It’s enough to turn the balance from corn ethanol having net benefits relative to gasoline to being a net emitter relative to gasoline. In other words, it changes it from helping combat climate change to being another cause and contributing factor, likely exacerbating emissions from transportation.”

Climate researchers and environmental advocates have long warned that this might happen. In 2008, a team led by Timothy Searchinger, a scholar at Princeton University’s Center for Policy Research on Energy and the Environment, published a widely read analysis predicting that global land use changes from corn ethanol production could double greenhouse gas emissions.

But in 2010, the Environment Protection Agency (EPA), which administers RFS, determined otherwise. By its own math, after considering emissions from land use change, the agency projected that corn ethanol had a carbon footprint 21 percent lower than gasoline. This number is important—under federal law, renewable fuels are RFS-eligible only if they can achieve a 20 percent greenhouse gas emissions reduction relative to gasoline. 

In other words, EPA’s calculations produced a score for corn ethanol right on the knife’s edge of what was required by law in order for the product to qualify for the program. (If we want to really get into the weeds: What EPA actually found in 2010 was that by 2022, over a decade into the future, assuming advancements in technology and productivity that hadn’t yet been realized, corn ethanol could eventually achieve a carbon intensity 21 percent lower than gasoline. In other words, a moonshot view of things. Apparently, this passed muster, and corn ethanol has been booming in the Midwest since.) In an email, an EPA spokesperson said that the agency was reviewing Monday’s study.

For the corn industry, EPA’s 21 percent calculation was not only a huge win, but also a promise fulfilled by then-President Obama, a vocal advocate for ethanol during the 2008 election. The White House is “sending a very positive, very specific, very direct message that the Obama-Biden administration is highly supportive of the biofuels industry,” then-Secretary of Agriculture Tom Vilsack said at the time, according to an InsideClimateNews report. (Vilsack reprised his role for the Biden Administration.) The EPA under Obama denied that industry influence had affected its assessment.

Why are EPA’s numbers so different from those of the study’s? At the core of the issue is that modeling the impacts of any climate policy is inherently uncertain. What one model projects about the future can be vastly divergent from what ultimately plays out in reality.

“There are a number of assumptions you have to make,” said Richard Plevin, consultant and retired UC Berkeley researcher specializing in biofuel modeling, who reviewed the study. “How fast is technology going to improve so that we get more ethanol out of a quantity of corn? How much is the yield of corn going to improve over time? Can it actually backslide because of climate change and extreme weather events? We don’t know—and that’s the essence of the uncertainty. Any precise number coming out of the model represents just one set of assumptions. None of these models produce ‘truth.’”

The numbers drawn from Monday’s study, too, are based on models, meaning that they, too, are based on assumptions, and shouldn’t be taken as a final say on the carbon footprint of corn ethanol. But what distinguishes Lark’s methodology from EPA’s 2010 analysis is the benefit of hindsight. While EPA’s 2010 projects were based on what it expected to happen in the future, Lark’s analysis is based on land use changes that actually occurred between 2008 and 2016.

In fact, the study notes that it likely undercounts total land use change impacts, pointing out that it doesn’t look at impacts outside of the United States, nor does it include additional emissions resulting from increased fertilizer production. Still, the findings are likely to bolster concerns that the carbon footprint of corn ethanol is underestimated, and that its production may worsen the very issue it was supposed to mitigate. The study also poses a timely question for policymakers going forward: Given the uncertainty around corn ethanol’s climate impact, should it continue to get propped up?

It’s a question that EPA will have to answer in this year, when it’s expected to issue new blending requirements for 2023 and beyond.

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While it’s unclear whether Vegan Fridays was a direct result of the Good Food Purchasing report, the initiative dovetails pretty neatly with its broader goals. (The mayor’s office didn’t respond to an emailed list of questions about the development of Vegan Fridays.)

New York City is the nation’s largest school district to implement vegan meals on a broad scale for its students, but it’s certainly not the first. In 2017, the Los Angeles Unified School District (LAUSD) launched a first-of-its-kind pilot program offering vegan options to students on a daily basis. The program was initially a response to a student campaign at the Pacific Palisades High School, located in one of the country’s most affluent neighborhoods. It was eventually extended to more than 40 schools. The pilot was warmly received by students and staff, but struggled with low participation rates more broadly, found a 2018 report on the program. A California bill introduced in 2019 to incentivize schools to serve more plant-based meals received initial support, but later died. Portland Public Schools in Maine resumed daily vegan offerings at its elementary schools last fall, following two years of pause during the pandemic.

Recent efforts to introduce vegan meals to school cafeterias are driven by a number of factors, including student pressure and concerns over high greenhouse gas emissions linked to livestock production.

“We’re seeing increased demand from the K through 12 student population for more plant-based, environmentally conscious meals,” said Kari Hamerschlag, deputy director of the food and agriculture program at Friends of the Earth, an environmental group that has advocated for changes to the federal school meals program that would make it easier for school nutrition departments to serve vegetarian and vegan meals. “There’s definitely growing demand, but there’s a lot of challenges for the school district space to meet that demand.”

For example, Hamerschlag pointed out, the Department of Agriculture’s (USDA) school nutrition program rules dictate that in order to receive federal reimbursement, each meal has to include a few distinct components. To qualify, vegan products must be visually “recognizable.” That means tofu blended into a soup or pasta made of lentils won’t count. USDA also requires schools to offer milk with every meal, a mandate that means New York City’s school meals could never be fully vegan on Fridays, even if all meat and dairy products were taken off the menu. (Children who are lactose-intolerant need to provide medical documentation in order to receive milk substitutes.)

In other words, the city’s Vegan Fridays program was never meant to be completely vegan. Rather, it takes after the mayor’s own dietary pattern: Vegan in name, but not necessarily in strict adherence to the dietary rules of abstinence.

In any case, we’ll see everyone on Friday for another round of rage-tweeting about school meals. It looks like we’re having Mediterranean chickpeas this week.

The post New York City’s “Vegan Fridays” school-food program is as vegan as its mayor—that is, not entirely appeared first on The Counter.

Today’s standards fall somewhere in-between—setting a higher bar for school meals than those proposed under the Trump administration in November of 2020, without going so far as to fully re-establish Obama-era rules.

“USDA recognizes that schools may not be prepared to immediately implement the 2012 meal standards for milk, whole grains, and sodium,” the agency wrote, citing flexibilities that had been extended for school nutrition providers during the Covid-19 pandemic. “With this rule, USDA intends to provide a transitional approach in these areas while also acknowledging that a return to stronger nutrition standards is imperative.”

The School Nutrition Association, which represents school food administrators, welcomed the continued flexibility.

“School nutrition professionals are frantic just trying to get enough food on the tray for our students amid relentless supply chain disruptions and labor shortages,” said the organization’s president Beth Wallace in an emailed press release. “We greatly appreciate USDA addressing regulatory requirements.”

Public health advocates were slightly more critical, and urged the Biden administration to prioritize restoring 2012 nutrition standards as soon as practical in its next round of rulemaking.

“By clarifying the standards for sodium, whole grains and milk for the next two school years, this rule brings the meal standards closer to the strong, evidence-based standards that were adopted in 2012; however, closer will not ultimately be enough,” said Donald M. Lloyd-Jones, president of the American Heart Association in a press release. “These standards must be temporary and serve as a bridge to stronger nutrition standards based on the latest nutrition science.”

The agency said it’s moving toward permanent changes.

“This fall, we anticipate the Biden administration will come out with a rule that will update the nutrition standards with the 2020 Dietary Guidelines as required by law,” said Colin Schwartz, deputy director of legislative affairs at the Center for Science in the Public Interest, in a phone interview. CSPI previously sued the Trump administration over a 2018 attempt to rollback the 2012 nutrition standards.” That invariably will mean that sodium and whole grain standards will have to be put back on track and a new standard for added sugars would be included for the first time [….] We’re cautiously optimistic.”

The transitional rules, which will be open to public comment on Monday, can be found here.

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In the case of Feeding Our Future, investigators alleged that the organization enrolled fraudulent food service providers and forged documentation to claim reimbursement for meals that didn’t exist, in an effort to boost its own bottom line.

Kenneth Udoibok, attorney for Aimee Bock, the founder and executive director of Feeding Our Future denied any accusation of wrongdoing against Bock and Feeding Our Future. In a phone interview, he provided the following comment: “Ms. Bock has not been charged with any offense. I believe that at the conclusion of the investigation, the government will realize that all Ms. Bock did was feed children.”

Investigators said that according to a review of bank records, those involved in the alleged arrangement laundered federal nutrition funds through multiple pass-through companies and used the money to purchase property, cars, and travel.

“The companies and their owners received tens of millions of dollars in federal funds for use in providing nutrition meals to underprivileged children and adults,” wrote the agent who filed the search warrant application. After its approval, FBI raided Feeding Our Future’s offices last Thursday. “Almost none of this was used to feed children.”

Feeding Our Future first raised eyebrows in the fall of 2020, when the Minnesota Department of Education, which administers federal nutrition programs at the state level, terminated a handful of its sites, and put a pause on new applications over concerns about its auditing and bookkeeping processes. In response, Feeding Our Future sued the agency, and accused it of denying “thousands of qualified children in low-income and minority communities” much-needed food. The education agency resumed processing applications after a judge’s order, but not before reaching out to federal investigators about its suspicions of potential fraud.

Among the red flags, according to court documents, was an exponential increase in the amount of money involved with Feeding Our Future’s programs over the course of the pandemic. In 2019, the organization handled $3.4 million in federal nutrition funds; in 2020, that value was $42 million; in 2021, it reached $200 million.

In a screenshot of Feeding Our Future’s reimbursement claim for one feeding site last November, the organization claimed that it fed an average of 1,900 kids per day across 31 days, for a total of nearly 60,000 children. (There are only 30 days in November.) But according to investigators, a camera they had placed to monitor the site in November and December recorded little activity, such as food deliveries or meal pickups.

This isn’t the first time that a food contractor has been subjected to scrutiny over potential self-dealing during the pandemic. Late last year, a congressional report found that a supplier participating in USDA’s Covid-19 food box program appeared to have received millions of dollars in reimbursements for deliveries that were not verified. It’s also not the first time federal investigators have accused CACFP sponsors of defrauding the program: Last September, agents accused a Texas organization of similarly collecting reimbursements for meals that didn’t exist.

In response to last week’s raid, state legislators have called for increased auditing of Covid-19 relief programs administered in Minnesota. The federal investigation is still ongoing.

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During the previous school year, Brewer’s family had been automatically eligible for a Covid-19 hunger aid initiative called Pandemic-EBT (P-EBT), which was first authorized in March 2020 through the Families First Coronavirus Response Act. The program was supposed to be a simple solution to a big challenge: When the pandemic shut down schools, students across the country lost a crucial weekday source of food. P-EBT provided pre-loaded debit cards to families whose kids would have otherwise received free or reduced-price school meals as a way to reimburse them for the costs of those missed breakfasts and lunches.

“It meant everything,” Brewer said of P-EBT. She even received the payments on her regular Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) card, making them a straightforward boost to her monthly grocery budget. “The kids are home 24 hours a day. They’re eating their breakfast, their lunch and snacks, and everything at home. When we did get P-EBT, it was a godsend.” 

But Brewer got a rude awakening this month, when the North Carolina Department of Health and Human Services started issuing P-EBT payments for meals missed between September and December of the 2021-2022 school year: She discovered that her kids no longer qualified for the funds.

As it turns out, enrolling in fully virtual instruction comes with some unexpected—and to Brewer’s mind, downright counterintuitive—fine print. According to the Department of Agriculture (USDA), the agency tasked with administering P-EBT, when a child who normally attends a brick-and-mortar school has to switch to virtual learning because of a shutdown, or because they’re in quarantine, that child becomes eligible for P-EBT payments to cover missed school meals. The total value of those payments is based on the number of days a given student is absent from school for Covid-related reasons multiplied by $7.10 per day. For example, if a student spent 10 days learning virtually out of a month, their family would receive slightly over $70 in the form of a P-EBT payment.

However, a child enrolled in a fully virtual school is not eligible for P-EBT at all. This is because unlike brick-and-mortar schools, virtual schools would not have offered meals to enrolled students under non-pandemic circumstances, so they aren’t offering them during this chaotic time either. After all, they don’t have cafeterias, nutrition staff, or cooks, and the students are learning from home, so there’s nothing—by that logic—to reimburse families for anyway.

This reasoning threw Brewer for a loop. If there weren’t a pandemic, she wouldn’t have had to enroll her kids in a virtual school in the first place. (A representative of the Charlotte-Mecklenburg Schools district confirmed that it does not provide meals for students enrolled in virtual learning.)

“I almost feel like we’re being punished,” she said.

Brewer has multiple sclerosis, which has made working an impossibility. Her husband is in construction, meaning that his income can fluctuate widely based on weather and what gigs are available at any given time. Between his earnings, food stamps, and disability payments, Brewer has found herself running out of grocery money often a week or more before each month’s end. Still, she tries to make a hearty and filling dinner for the family every night. Breakfast is usually cereal, and lunch either gets skipped—or it consists of whatever snacks the kids can find in the cupboards.

The dilemma facing Brewer’s family is one example of how Covid-19 relief rules can be at odds with the pandemic reality for struggling families, leading to vastly unequal levels of food access.

In the spring of 2020, almost all brick-and-mortar schools pivoted to a virtual learning model to limit the spread of Covid-19. Then, over the course of the following academic year, many schools attempted to re-open in some capacity by offering hybrid in-person and remote learning models. 

In the summer of 2021, however, a new trend emerged: As states and school districts geared up for a full return to in-person learning, many launched dedicated virtual “academies,” which were intended to be a fully online alternative for families who were hesitant about sending their kids back to physical classrooms. Most fully virtual schools are operated by the same public school districts as their brick-and-mortar counterparts. For the purposes of federal nutrition policy, however, they are considered distinct entities that do not participate in the National School Lunch Program (NSLP), the country’s primary school meal distribution program. Because of this technicality, students enrolled in fully virtual learning settings aren’t missing any school meals for which they’d need to be reimbursed, at least by USDA’s accounting.

“P-EBT’s authorizing statute, the Families First Coronavirus Response Act, makes P-EBT benefits available to children who would have received free or reduced-price meals at their schools through the National School Lunch Program (NSLP), if not for their schools’ closure or reduced attendance or hours in response to the Covid emergency,” a USDA spokesperson wrote in response to an emailed list of questions from The Counter. “Children who attend fully virtual academies are ineligible for P-EBT benefits, just like children who attend other non-NSLP-participating schools, because they would not receive free or reduced price NSLP meals at those institutions in the absence of the Covid emergency.”

Effectively, this P-EBT policy has created a two-tier pandemic aid system among kids who would typically qualify for free breakfast and lunch: Those learning from home due to a Covid-19 shutdown of their brick-and-mortar school are eligible for relief money. Those whose families, out of an abundance of caution, have their children learning from home in a new, fully virtual program are not.

“The bottom line is that the pandemic continues to evolve in ways that we didn’t anticipate and P-EBT is always playing catch up,” said Elaine Waxman, a senior fellow at the Urban Institute, an economic and social policy think tank. “In the beginning, all the schools were closed, so everybody had the same issue. Now increasingly, we have people in all of these different situations. We just haven’t designed [P-EBT] with the maximum flexibility. Frankly, people thought the pandemic would come and it would go, and that would be the end of it, and obviously that’s not happening.”

Joel Barron, a mother of two now living in Minnetonka, Minnesota, found herself in a situation similar to Brewer’s last week.

In August, before the vaccine was approved for kids aged 5 and up, Barron decided to enroll her kids into the new virtual learning academy offered by White Bear Lake Area Schools, their local public school district, rather than have them return to in-person instruction in the fall. Her daughter has asthma, and before the pandemic, she had suffered from a collapsed lung. Barron also noticed that both of her kids were getting better grades while learning remotely, and that she could spend more time helping them with school work when they learned from home.

The downside now is that money is tighter than ever: Her 10- and 12-year-olds eat a lot.

“They’re growing by the day, basically,” she said. “Those extra P-EBT funds really helped replace the meals that they would have been eating at school.”

“Despite the broad exposure to drought risk and growing frequency of drought in response to climate change,” the report authors wrote, “only one-fifth of irrigation organizations have formal drought plans.”

Drought plans outline what exactly an irrigation organization intends to do during periods of scarcity. For instance, an irrigation district might pay farmers to not farm, or it may invest in groundwater pumping, or it could buy water from neighboring regions or a private supplier. It might ration water to farmers based on their acreage, or it might cut off some producers to prioritize others, based on seniority.

The proportion of irrigation entities with a formal drought plan was higher among larger groups—which the authors defined as serving 10,000 acres of farmland or more—clocking in at 41 percent. Still, that means the majority of those entities responsible for delivering water to the biggest agricultural regions don’t yet have official guidelines on how they may curtail and divvy limited resources during periods of scarcity.

There are some important caveats to note here. For one, these numbers may have ticked upwards since 2019, particularly in response to record dry conditions in the period since. Additionally, just because an irrigation organization doesn’t have an official policy on paper doesn’t necessarily mean they’d be clueless in the face of a water shortage, said lead author Steve Wallander. 

“Even if organizations don’t have a formal, written plan, they still have some idea about how they are likely to respond to drought,” he wrote in an email.

Still, drought resilience for producers will depend, at least in part, on their ability to foresee and prepare for disruptions like insufficient water supplies. In 2021, severe droughts across the Southwest and the West pummeled producers, some of whom saw significantly reduced yields due to water shortages, and others who decided to simply stop farming altogether and sell their high-demand water instead. In some regions, a lack of surface water led farmers to pump groundwater at such high volumes that it left many of their residential neighbors without a drinking water source. As recently as November, 28 percent of the contiguous United States was affected by severe to extreme drought, according to the National Oceanic and Atmospheric Administration.

Knowing what to expect during dry years, especially as they become more frequent, is crucial information for farms, said Sharon Megdal, director of the Water Resources Research Center at the University of Arizona, who was not involved in the study. 

“It’s just being able to plan for the future and for a region in a holistic way when there’s so much uncertainty,” she said. “Individual farmers are the ones making the decisions: Do they leave land fallow? Do they continue to farm? Do they farm the same crops? Do they use the same irrigation methods? [….] It’s really a complex picture.”

Patterson Irrigation District, a public utility that delivers water from the San Joaquin River to more than 12,000 acres of farmland in California’s Central Valley, is one irrigation organization with a formal plan. Adopted in 2014, it outlines exactly how water would be rationed to landowners were supply to ever fall short of demand. That’s only happened twice so far, said general manager Vince Lucchesi: once in 2015, and then again in 2021. In both instances, Lucchesi said that the district was able to buy water from a neighboring district and avoid a rationing scenario, thereby meeting the water demand of local farmers “by the skin of our teeth.”

But Lucchesi also knows that option might not always be the case. “With the climate changing, it’s so hard,” he said, referring to the district’s ability to project and plan for contingencies. “Things you used to be able to depend on are not showing up.”

Even with a drought response plan in place, there’s still a lot of uncertainty to contend with, he said.

“I see the drought plan being a tool in your toolbox,” Lucchesi said. “You need to have a plan in place to address shortages for your agency. But you can’t just have a drought policy and then [maintain] the status quo. You need to be able to assess your water supply and be able to look and try to plan appropriately and make adjustments as needed.”

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Today, the so-called “Big Four” beef processing companies—which include Tyson Foods, JBS, Cargill, and Marfrig—control around 85 percent of feedlot cattle in the U.S. (Beef has seen the fastest rate of consolidation compared to poultry and pork). In recent years, producers have accused these companies of engaging in anti-competitive business practices, like depressing live cattle prices through restrictive contracts or artificially restricted supply, while simultaneously reaping record profits. 

The coronavirus pandemic has highlighted how this dynamic can play out under extreme circumstances: Outbreak-related shutdowns in the early spring of 2020 caused backlogs of live animals with nowhere to go for slaughter, tanking the prices big packers pay to ranchers for their animals. Meanwhile, on the other end of the supply chain, the resulting inventory shortages at grocery stores drove up the cost of meat for consumers. These concurrent trends meant that the “meat margin”—that is, the difference between what processors pay for livestock and what they charge for meat—widened significantly, leading to soaring profits.

In other words, the Big Four are beautifully positioned to take advantage of supply chain chaos: disruptions led to historically low cattle prices, but spooked consumers have proven willing to pay more to stockpile their freezers with meat.  

How did we get the “Big Four?”

Economists measure consolidation using what is called the “four-firm concentration ratio,” which refers to the market share controlled by the four biggest companies in any given industry. In 1977, the four biggest beef packers controlled just 25 percent of the market, according to the U.S. Census Bureau. Within 15 years, that number had jumped to 71 percent—a nearly threefold increase. Today, that number hovers around 85 percent.

James MacDonald, a University of Maryland agricultural economics professor who has conducted research on meat industry concentration, said that two important factors drove what he described as a “dramatic” rate of consolidation in the industry in the 1970s and 1980s: economies of scale and lower wages.

“In beef packing, an important driver was that large firms realized they could reduce processing costs by building much bigger plants,” he said. Another key factor was a series of labor fights that resulted in lower wages for the meatpacking workers employed by those companies that were rapidly expanding, further accelerating their dominance within a consolidating industry.

“Through the early 1980s, there was a series of labor battles, strikes, lockouts, plant closures,” MacDonald said. “In a very short period of time, the average production worker wage in meatpacking fell very sharply, [particularly] in the larger plants, because that’s really where they broke the unions.” Average hourly wages in the largest meatpacking plants fell by almost 15 percent in the decade between 1982 and 1992.

Together, MacDonald said, those factors helped the biggest packers to become very large and cost-efficient, while making it harder for smaller packers to compete—setting the stage for the concentrated industry we see today.

What would the White House plan do to curb consolidation?

A lot—at least according to the White House. Its billion-dollar aid package will include $375 million in grants for independent processing plants (which it expects to pay out through the spring and summer of this year); $375 million in loan support; $100 million to fund worker safety and training programs; $50 million in research and development, and $100 million in subsidies to help small processing plants cover inspection costs.

But critics of the plan argue that the White House largely excluded from its announcement a concrete timeline by which it would enforce the robust competition laws that already exist.

In 1921, Congress passed the Packers and Stockyards Act, a set of laws aimed at protecting producers from anti-competitive practices on the part of meatpackers, like unequal treatment and price manipulation. In 2016, the Obama administration promulgated a set of rules under the act that would have given farmers and ranchers an avenue for legal recourse against those unfair practices, and outlawed delayed payment and economic retaliation, among other things. Those reforms were later rolled back under the Trump administration. In June of last year, USDA announced that it had begun working to reinstate them and to strengthen its enforcement actions under the Packers and Stockyards Act. That hasn’t yet happened, though—and now, six months later, supporters of these protections are scratching their heads, wondering when the agency will actually take action.

Monday’s announcement provided little clarity. Instead, USDA committed that it would, within 30 days, set up a tip line through which farmers and ranchers could file complaints about unfair practices. The agency would then refer them to the Department of Justice for investigation “as appropriate”—a far cry from the decisive steps that anti-monopoly advocates were hoping for.

“They’re going to essentially establish a hotline so cattle producers could continue complaining about potentially anti-competitive practices to a regulatory agency that hasn’t done anything about all of the previous complaints that have been filed,” said Bill Bullard, president and CEO of Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA). In 2019, R-CALF USA filed a lawsuit against the Big Four, alleging anti-competitive business practices. An amended version of the case is currently in discovery. 

Who’s getting excited?

Owners of independent meat processing plants, obviously, as well as many livestock producers. In July, USDA received more than 400 comments from industry stakeholders, including farmers, ranchers, and processing companies, many of them largely enthusiastic about federal funding to expand meat processing capacity, worker training, and infrastructure investments.

Monday’s announcement was also warmly received by multiple lawmakers and organizations, including those that have advocated for greater scrutiny of meatpacking giants.

“For too long, our meat and poultry supply chain has been over reliant on a handful of large-scale companies that dominate the market,” wrote Representative Chellie Pingree, the Democratic congresswoman from Maine, in a press release. (Pingree has previously sponsored legislation that would provide funding for small processors.) “The Biden-Harris Administration’s action plan […] will work to create a more competitive and resilient meat and poultry sector and is a win for local farmers and small businesses, the market, consumers, and hungry Americans.”

Bigger groups like the Farm Bureau also welcomed the announcement.

“American Farm Bureau Federation appreciates the Biden administration’s continued work to ensure a fair and competitive meat processing system,” read a statement from president Zippy Duvall. “We must get to the bottom of why farmers and ranchers continue to receive low payments while families across America endure rising meat prices.”

Who’s not having it?

Those who believe that an influx of funding can’t fix a system rigged against small- and mid-scale processors. From an economic standpoint, said Darren Hudson, a professor of agricultural economics at Texas Tech University, who has researched concentration in agriculture, a $1 billion investment is unlikely to effect any significant, long-term change in the meat supply chain.

“It’s a horrible idea,” he said. “Subsidizing small processors isn’t going to solve any real problems. In a short run it might prop up or encourage some small processors to engage in meat processing [….] But unless they’re operating at a cost that’s equivalent to or very near what the major processors are, they won’t be able to compete over the long run.”

What’s an alternative?

Hudson’s sentiment was echoed by Austin Frerick, deputy director of the antitrust-oriented Thurman Arnold Project at Yale University, who called the plan “naive.” Going a step further, Frerick said that focusing resources solely on supporting small processors, instead of scrutinizing the practices of packing giants, meant USDA was missing the forest for the trees.

“They understand the issue, they want to pretend to have a solution, but they don’t want to actually do anything meaningful here or they don’t want to actually grapple with this industry, grapple with this corporate power that’s run amok,” he said.

Like Bullard, Frerick said it would be far more effective to just enforce the Packers and Stockyards Act. Short of addressing the root causes of market concentration, any independent processors subsidized by federal dollars would still face the same economic challenges that pushed their predecessors out of business in the first place.

Since the 1980s, the meatpacking industry has undergone a series of mergers, in which larger packers edged out or bought up smaller competitors, usually those on the financial brink due to downward economic pressure that the bigger processors could exert. Frerick said he wouldn’t be surprised to see another wave of similar acquisitions between the Big Four and their smaller, subsidized competitors when the federal funding dries up.

“They’re throwing all this money at these plants,” Frerick said. “I just expect that in a few years they’ll go broke and then the big companies will buy them for pennies on the dollar.”

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