Lobbying and Regulatory Capture: How Congress Came to Believe that Pizza is a Vegetable

   In 2010, the Obama administration pledged its support for the Healthy, Hunger Free Kids Act. This ambitious bill suggested reforms to combat the rising rate of childhood obesity by imposing strict guidelines for all foods sold in public schools. One of its most signification requirements was that school lunches would have to offer twice as many fruits and vegetables. Although the legislation seemed to have admirable intentions, the Schwan Food Company repealed its support for the bill because it would also require tomato paste to be considered just that—tomato paste. Under previous legislation, there existed an important loophole, which recognized two tablespoons of tomato paste as equivalent to eight tablespoons of tomatoes or a full serving of vegetables. Because Schwan manufactures 70% of all pizza sold in school cafeterias, the new legislation directly threatened the company's monopoly-like influence in the school lunch market. Schwan, along with dozens of processed food manufacturers, spent millions in lobbying efforts to reverse the new food standards. Ultimately, their lobbying efforts succeeded, and the budget for the bill passed in November of 2011 with the pizza-as-vegetable rider.

   The Schwan Food Company’s lobbying success supports Stigler’s supposition that regulation is acquired by industry and is designed primarily for its benefit. The pizza-as-vegetable designation allowed Schwan to maintain its level of pizza sales without changing its product. The stipulation acted as a barrier to entry for smaller fresh-vegetable producers who genuinely complied with the new demands of the Healthy, Hunger Free Kids Act, albeit at a higher price. This turn of events also calls into question the “protection of the public” theory of regulation. If regulation were employed for the benefit of the consumers, the government would have remained firm in its original declaration that pizza is not a vegetable to protect the health of public school students. The pizza lobby, thus, demonstrates the power of corporate interests. And perhaps, Jon Stewart got it right when he said, “It’s not democracy, its DiGiorno”.