Nutrition standards for school lunches have turned into one of the most contentious issues in this year’s appropriations debate.

The lunch standards helped prompt House leaders to abruptly pull the Agriculture spending bill from the House floor last month, and they are shaping up as a potentially big vote in the Senate too.

Republicans in the House and Senate want to use the fiscal 2015 Agriculture spending bill to delay — or allow waivers from — rules aimed at putting more fruits, vegetables and whole grains on school menus and reducing sodium, sugar and fat.

Upping the ante, first lady Michelle Obama has thrown herself into the congressional battle over nutrition standards, as lawmakers grapple with child obesity issues and the food industry worries that new rules could eat into profits.

“We’re now seeing efforts in Congress to roll back these new standards and the hard work that all of you, all of us, have done on behalf of our kids,” the first lady told a school meal nutrition roundtable at the White House late last month. “This is unacceptable.”

Easily overlooked in the debate over whether the nutrition rules are necessary for public health, or are unwarranted government intrusions in local matters, is that school meals are also very much about money.

The K-12 food service industry generates $18 billion to $20 billion a year in business, with federal meal reimbursements accounting for about 60 percent of the money, according to a June report by the trade publication Food Management. That’s an educated guess, because the food service umbrella covers colleges and universities, restaurants and institutions. Even publicly traded companies provide few details.

Companies ranging from distribution giant Sysco Corp., to the leading chicken and pork processor Tyson Foods, to cereal- and food-maker General Mills Inc. have a stake in this niche food service industry. Regional and smaller companies are also players in the field.

With the stakes so high for the industry and the White House, particularly with the first lady’s personal involvement, the fight is only intensifying. The Obama administration issued a veto threat against the House bill just before floor debate started on June 11. Republican leaders took the measure off the floor the next day, before Democrats got a vote on an amendment to remove the bill’s one-year grace period from upcoming nutrition standards for school cafeteria directors who can show a six-month operating loss. The bill might come up again later this summer.

On the Senate side, Republican John Hoeven of North Dakota filed an amendment last month to a planned “minibus” spending bill — which included the Agriculture title — that would have given schools waivers from the whole-grain foods rules if the rules would cause hardship. Unlike the House bill, his amendment would not have required proof of operating losses. The bill, however, was pulled from the floor amid disagreements over amendment votes.

Thin Margins

For parts of the food industry, a delay — or broad waivers — would make a huge difference to their bottom lines.

Patty Johnson, a global food and beverage analyst for Mintel Group in Chicago, says tougher nutrition rules at both the state and federal levels would mean fewer snack sales for a la carte lines and greater reliance on food for federally subsidized meals.

“As these changes come through with the requirements for fat and sodium and those types of things, that requires reformulation and that requires investment. Not always, but typically, selling into the schools is not the highest margin sale for the manufacturers,” Johnson says. “The more reformulations and changes and changes, the more costs.”

Big companies with sales to grocery stores, convenience stores and other retail markers can better absorb the added costs, but there are limits.

“I’m selling a quarter of this product to the schools and I’m already putting it into special packaging and now I have to go back to the bench and redesign the product,” she says. “Now I got a pizza that is not performing and it doesn’t taste good. You’re a couple of years down the road before you can execute the product.”

Johnson says that, ultimately, a company with a school food service business is “interested in maintaining sales at the highest margin that they can so they can remain profitable in their business ventures.”

Several large food companies include the nutrition rules as an area of concern on lobbying reports, although they list several others issues as well, such as taxes, labeling of genetically modified foods and ingredients, or the 2010 health care law.

For school cafeteria managers, though, the issue seems to top the list of concerns. They run their operations on thin margins where the smallest drop in student participation means cutting back or operating in the red.

The School Nutrition Association, which represents cafeteria operators and their suppliers, says the additional 6 cents per meal in federal subsidies for meeting the new rules is not enough. Becky Domokos-Bays — a top officer with the School Nutrition Association and school meal director for Alexandria, Va. — says her organization has requested 35 cents per meal in additional reimbursement in the past. But this year, Domokos-Bays says congressional contacts suggested that the association not bother seeking additional money.

Instead, the association has embraced the waiver provision that House Agriculture Appropriations Subcommittee Chairman Robert B. Aderholt, an Alabama Republican, put in his committee’s bill.

Sara Gasiorowski, food service director for the Metropolitan School District of Wayne Township, Ind., says high school students rejected a 100 percent whole-grain enriched biscuit as a breakfast food, and that some students no longer buy school lunches. Gasiorowski praises the waivers because “we need flexibility and a level of reasonableness” in meeting requirements.

Some Dissent

The issue has divided the School Nutrition Association. Nineteen former presidents of the group have voiced concerns about the organization’s efforts to slow implementation of the next phase of the Agriculture Department nutrition rules that took effect July 1.

The first lady, Agriculture Secretary Tom Vilsack, public health advocates and retired military leaders consider the waivers as avoiding nutrition standards that they see as essential tools for combating child obesity.

Supporters of the school meal rules say corporations are behind the push for delaying nutrition standards for snack foods sold in school vending machines or in a la carte lines. But they have not been able to cite specific examples of corporate influence, beyond suggesting that the Minnesota-based Schwan Food Company had urged the SNA to push back against the meal standards.

Chuck Blomberg, a Schwan spokesman, denied via email that his company prodded the SNA to pursue the waiver proposal. “Contrary to what’s been implied in some reports, our company has not taken a position on the proposed waiver,” Blomberg wrote. “We also have not advocated for a waiver with any lawmakers or other organizations.”

The company, whose brands include Red Baron and Big Daddy’s pizza, LiveSmart, Mrs. Smith’s desserts and Minh Asian products, is reformulating products to meet school meal requirements, he said.

Either way, it shouldn’t be surprising that a money crunch is helping drive the debate over school meal rules, given the history of the 2010 health care law that set the mandates in motion. The law renewed school lunch and breakfast programs, as well as the Women, Infants and Children program and several smaller food programs.

Groups dissatisfied with portions of the House and Senate bills thought they could make changes once the legislation went to negotiations between the two chambers. Although the House Education and Labor Committee reported the bill out, it never went to the floor. The Senate Agriculture Committee got its version through the Senate and that was the version that became law.

In June, the School Nutrition Association had requested a meeting with the first lady and Vilsack to detail their major concerns and to lay out suggested remedies. Instead, the organization and its ally, the National School Boards Association, got a roundtable discussion on July 10 with Vilsack, Let’s Move Executive Director Sam Kass and several organizations that generally support the nutrition standards.