Insiders shared insights into a niche for the fresh produce industry that promises tremendous growth potential during a Web seminar presented by the United Fresh Produce Association: School meal programs.

United Fresh vice president for nutrition and health, Lorelei DiSogra, moderated the online event and whetted the sales appetites of more than 80 online attendees with statistics about government funding for produce in school meals.

DiSogra said the $158 million available from the U.S. Department of Agriculture for the 2011-12 school year’s Fresh Fruit and Vegetable Program will be more than triple the $49 million that was available for the 2008-09 school year. And that is only one of the USDA-funded school meal programs that the produce industry can cash in on – literally.

The Cincinnati school district foodservice director joined the head of a major foodservice supplier and the marketing director from a top fresh-cut processor to describe the expanding market for fresh produce in schools. They all said that the USDA’s proposed changes to school meal requirements that require more fresh fruits and vegetables are a boon for the U.S. produce industry.

In Cincinnati’s 53 public schools students are already receiving increased servings of fresh produce, said foodservice director Jessica Shelly. Shelly handles all of the buying for the district’s meal and snack programs.

She said a key factor in her buying decisions is whether fresh produce has value-added elements.

For the 2010-11 school year Shelly spent $525,000 on fresh produce for Cincinnati’s schools. For the 2011-12 school year she will spend a projected $1.5 million on fresh produce.

“We keep labor costs low with triple-washed produce that is ready to eat,” Shelly said, adding that she works with distributors to keep costs down by buying fresh produce that is in season.

Shelly also said her district has a market price flexibility clause in its contracts to help keep costs down.

Knowing those kinds of policies and procedures are crucial for produce businesses that want to tap into the government revenue stream that pays for fresh produce in schools, according to Phil Muir, president of Muir Copper Canyon Farms in Salt Lake City.

Muir said schools are 10% of Copper Canyon’s business, with the remaining 90% made up of other foodservice operations including hospitals and restaurants. The company does business in a 300 mile radius around Salt Lake City and has a Department of Defense contract for foodservice in Utah.

Muir said his company will serve 23 school districts this fall. Some of them have district-wide delivery requirements and others have individual school delivery needs.

“You must understand the funding source and the purchasing practices of each district you work with,” Muir said. “If you don’t know how they do business, how can you do business with them? Schools are the most aggressive growth area I know of for our fresh fruits and vegetables.”

Tony Freytag, marketing director for Crunch Pak, Cashmere, Wash., agreed that school meal programs offer a huge opportunity for the fresh produce industry, especially the fresh-cut sector. He said Crunch Pak has tripled its school lunch category in the past three years.

That growth not only means an immediate effect on Crunch Pak’s bottom line, but it provides other lasting benefits.

“This supports our brand and there is a ripple effect because the kids go home and tell their parents they want to eat fresh fruits and vegetables,” Freytag said.

Freytag also said suppliers such as Crunch Pak can’t tap into the school meal bonanza by themselves.

“Suppliers like us need to develop relationships with foodservice distributors because they have the contacts at the school districts. As suppliers we just can’t do that because there are so many. The foodservice distributors are the boots on the ground for suppliers.”