Funding cuts take local produce from schools and food banks, leaving farmers uncertain

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Arizona local food advocates have been riding a roller coaster for the past two months, in the face of federal miscommunication and funding cuts that would reduce the amount of Arizona-grown produce in school lunches and food banks.

Programs that strengthened Arizona’s local food systems after the pandemic are facing a $21 million loss after the U.S. Department of Agriculture announced last week it was terminating future agreements. As a result, schools and food banks foresee a shift back to conventionally grown produce from out of state. Small-scale Arizona farms face losing a wholesale market that allows them to scale up and reach school children and low-income families.

USDA resumed some of the payments the agency had held up for the last two months despite federal court orders blocking the funding freeze. That announcement brought relief to farms, nonprofits, food hubs, and state agencies whose work came to a standstill.

“It has been a complete silent disruption,” said Rebecca Serratos, coordinator of the Yavapai County Food System Network, who worked with some 22 growers to fill orders for food banks. 

Many of the organizations affected by the freeze and cuts have worked steadily to build infrastructure and networks that would pay local growers fairly and make pesticide-free, locally grown food available to more Arizonans, regardless of their purchasing power. Their work got a big bump with the creation of two key programs under USDA’s Agricultural Marketing Service, which extended those benefits to more people.

Since 2021, the Local Food Purchasing Assistance program paid to buy local produce and animal protein from 297 small farms and distribute it to 170 food banks and organizations across Arizona.

Since 2023, Local Food for Schools reimbursed Arizona schools when they sourced fresh, local food to serve children at the cafeteria. Both supported small-scale Arizona growers, who didn’t have access to wholesale markets before the program and who made nutritious products available to underserved communities.

Many growers scaled up production because there were year-long contracts guaranteeing a purchase, said Serratos. Then payments stopped.

For almost two months, USDA did not provide Arizona state agencies clarity on the state of ongoing agreements and allocated funds. There was no indication of when or if payments would resume. The agency went silent, and on-the-ground organizations scrambled to keep operations going without a guarantee of reimbursement or fully stopped grant-based programs.

USDA’s marketing service announced that funding for the schools' program, managed by the Arizona Department of Education, will expire in August of this year or when funds are depleted. The Arizona Department of Economic Security will have until March 2026 to spend money for current local food assistance agreements, but new funding to extend the program to 2028 was canceled. The Arizona Food Bank Network will be able to sustain a fraction of those local purchases until June 2026 with state funding.

In an email to the Arizona Department of Education, the agency wrote the future agreement “no longer effectuates agency priorities.” The agency did not send any emails to the state Department of Economic Security regarding frozen or cut funds but announced the cancellation of future funding in a multi-state call last week.

Local food system advocates are disheartened. 

“We've been working for years, all of us, to make a difference,” said Gentry, with the Sun Produce Co-op, which has been operating for eight years and serves as the main aggregator and distributor for 37 central and northern Arizona small-scale farms.

Community-based groups and organizations on the ground are making a difference with those federal dollars, something USDA cannot do on its own, she said: “Who do they think they're taking money from?”

"It's not a conspiracy to feed people and grow food."

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In total, USDA awarded $15.6 million to the Arizona Department of Economic Security and made $4.3 million in reimbursements to the Arizona Department of Education to send thousands of pounds of Arizona-grown foods to K-12 schools, food banks, and community organizations across the state. The Navajo Nation and Pascua Yaqui tribe were awarded $5.5 million and $1 million under the local food purchase agreement program.

“They've been a response to things that we've needed in our food system for decades,” said Jessie Gruner, director of community innovations at Pinnacle Prevention, about the programs. The nonprofit and the Arizona Food Bank Network contracted with the state to use local food purchasing program funds.

“They've been an incredible resource for farmers to create different retail outlets for the things that they grow. So to shut that off abruptly, the ripple effects are quite drastic.”

After Inauguration Day, Arizona producers delivered veggies, fruit, meat, dairy and eggs that had been ordered under active contracts. Distributors paid them but were then left holding the bill because USDA’s agriculture marketing service would not process any claims taking place after Jan. 19.

Some of the effects of the federal funding freeze were felt immediately by local food hubs and distributors. Before payments resumed, Sun Produce Co-operative was missing a $45,000 payment. If the freeze lasted much longer, that would have turned into a personal liability, said Gentry.

With the loss of future agreements, food banks will remove Arizona-grown foods from their services and pivot back to donations only.

“I was really excited when we became part of this program,” said Kelly Saxon, farm head at Agritopia Farm in Gilbert. Local food purchasing agreements gave the food banks produce that was fresh, more nutritious and with a longer shelf life, instead of produce that had lost its peak nutritional value after traveling thousands of miles. It was also a win for local growers as it broadened their reach. 

“As a taxpayer, I'm OK with my money going to do that,” said Saxon. “The worst is to get food that's on its way out, which is often what they'll get in donations.”

With the end of the local food for schools program, schools will likely reduce their local purchases. Tucson-area schools and southern Arizona growers who were ready to sign contracts will have to renegotiate or cancel purchase agreements. 

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How small farms are affected

Snow is mostly gone at the Aguiars' farm in Paulden. Garlic shoots pop out of the ground at ankle height and some root vegetables still await harvest buried under the ground. 

Spring planting will look very different from the past two years. After growing pounds of onions, potatoes, garlic, peppers, carrots, zucchini and other veggies for food banks, the family may go back to sunflowers, zinnias, tulips, irises, snapdragons, marigolds and some eye-catching produce for farmers markets.

“We’re faced with transitioning back to that again,” said Juan Aguiar, co-owner of Blooming Reed.  

The two-acre farm he started with his wife in 2018 grew to four acres when market opportunities through the federal local food purchasing program came up. After selling at farmers markets in Flagstaff and Prescott, they switched to wholesale for schools and food banks, something Aguiar desired and tried before but that hadn’t come to fruition because of barriers in schools’ food procurement.

“We knew how much we were growing and how much we were making at the end of the year,” said Aguiar of the years they participated in the program. “This year, not knowing that, it's going to be hard.”

Last April, the farm won a federal grant to buy a refrigerated truck to move produce. Now, they don’t know if that money is ever going to come. Like them, 17 other applicants are waiting for USDA’s release of $2.8 million under the Resilient Food Systems Infrastructure grant program.

The Arizona Department of Agriculture, in charge of administering the grant, said this funding was first of a kind and the agency has been informed the funds are under review.

"There were a lot more steps that had to be taken for the USDA to move our grant applicants forward. We have been waiting along with them through this process and are still hopeful that these necessary projects will be funded," the state agency said in a statement to The Arizona Republic.

“Farmers don't just plan for tomorrow, they have to plan seasons ahead,” said Summer Grandy, a client advocacy manager with Flagstaff Family Food Center who has worked closely with Yavapai County growers. 

“If you are planning on getting this (grant) and you are a good business person, then you've started the motion, the wheels have started moving, and now they're just put in this precarious situation when they are having to really put on the brakes.” 

Aguiar might plant only half of his land this year because of lost contracts. Agritopia Farm is bracing to lose a third of its current revenue and actively looking for new markets for the crops they have already planted.

Growers said the lack of communication was frustrating, especially because they have active-year contracts of anywhere from $30,000 to nearly $200,000. Many planted seeds this spring without clarity on payment because otherwise they would miss the prime season and wouldn’t have product when it’s needed.

Saxon, with Agritopia Farm, sends $3,000 worth of food boxes every week to the food bank. Their contract runs through June. Now that USDA axed the next round of funding for the local food purchasing program, she knows they need to find new markets.

"That's the nature of a business: things change,” Saxon said. “It would have been nice to know that we have a contract that is going to be honored and if it's not going to be renewed then they'll let us know and give us a little bit of warning.”

Her six-member crew is still harvesting yellow beets, cabbage, red and orange carrots, celery, spinach, dill, kale, chard and cilantro on the farms’ 11 acres for the reduced food bank orders, in-house food boxes and the weekend farmers markets.

“It makes it difficult for people to pivot and make some moves if they need to,” she said.

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Food programs lose quality food; families fear SNAP cuts

On a windy Wednesday afternoon, a retired city bus made its way to the next to last stop of the day in the Valley, loaded with shelves of fresh produce, instead of seats and passengers. Neighbors were already waiting for it at Maryvale Parkway Terrace.

Diana Hadlock said she’s been shopping at the Farm Express mobile market for almost two years. She can see the bus arrive from her apartment and, since she doesn’t have a car, it saves her from a long walk or an Uber ride to Walmart.

"I save up on some things and it is more convenient," she said.

Her neighbor Marie Ashdown is also a regular. When it comes to Arizona-grown, dates are her go-to.

"I would think we'd be more inclined to buy from our own state,” she said. It’s also reassuring to know some of those foods are grown pesticide-free. 

The mobile market, a program of the nonprofit Activate Food Arizona, sells conventional and organic produce at cost to communities in Phoenix and Tempe, where they have 37 stops. The store also takes DoubleUp food bucks, a two-for-one incentive on fresh food for SNAP users.  

The areas Farm Express serves don’t fall under the USDA definition of a “food desert,” said nonprofit executive director Elyse Guidas.

“But we know in the Valley that if you're half a mile away and you don't have access to a vehicle or you experience mobility challenges or it's 120 degrees outside, that those transportation barriers can be just as significant, even if there's a grocery store nearby," Guidas said.

The nonprofit received local produce under the local food purchasing program and will have to find new funding or cancel some purchases. A program with the San Carlos Apache community might disappear unless they find alternative funding.

Funding cuts have also distressed low-income families under SNAP, who fear the food assistance program will also be cut short under the Trump administration. Farm Express buyers told Guidas they were rationing their benefits worrying they wouldn’t be extended.

“Maybe short term it will give them a couple more dollars in their pockets, but maybe they are going hungry and not taking home the food that they need," Guidas said.

The Flagstaff Family Food Center heard the same fears from people receiving food boxes or dinners at their facility, said Summer Grandy.

The food center received local produce through one of the federally funded programs that were axed last week. After current agreements end they will stop adding locally grown, nutrient-dense foods to their free hot meal program.

“Cutting these funds is the opposite of contributing to having healthy communities,” Grandy said.

Clara Migoya covers agriculture and water issues for The Arizona Republic and azcentral. Send tips or questions to clara.migoya@arizonarepublic.com.