The ketchup as a fruit controversy refers to proposed United States Department of Agriculture (USDA) Food and Nutrition Service (FNS) regulations, early in the presidency of Ronald Reagan, that intended to provide more flexibility in meal planning to local school lunch administrators coping with National School Lunch Plan subsidy cuts enacted by the Omnibus Regulation Acts of 1980 and 1981. The regulations allowed administrators the opportunity to credit items not explicitly listed that met nutritional requirements. While ketchup was not mentioned in the original regulations, pickle relish was used as an example of an item that could count as a vegetable. A similar controversy arose in 2011, when Congress passed a bill prohibiting the USDA from increasing the amount of tomato paste required to constitute a vegetable; the bill allowed pizza with two tablespoons of tomato paste to qualify as a vegetable.
The Omnibus Reconciliation Act of 1980, signed into law by President Jimmy Carter, reduced the Federal School Lunch and Child Nutrition Programs budget by approximately eight percent. Building upon these reductions, the Omnibus Reconciliation Act of 1981 (passed as the Gramm-Latta Budget) made further spending cuts to the Federal School Lunch Program decreasing its fiscal year 1982 budget by 25 percent. To administer the requirements made by both Omnibus Reconciliation Acts of 1980 and 1981, the USDA's Food and Nutrition Service (FNS) was tasked with proposing ways to implement the regulations while maintaining nutritional requirements for school lunches despite the lower funding. Among the recommendations made by the Food and Nutrition Service's September 3, 1981 Regulations was a proposal to give local school lunch administrators flexibility in accrediting substitute food items that met FNS nutritional requirements and regulations. The report stated an item could not be counted as a bread that was not enriched or whole-grain, "but could credit a condiment such as pickle relish as a vegetable."
While ketchup was not specifically mentioned as a potential substitute, critics demonstrated outrage in Congress and in the media against the Ronald Reagan administration for cutting school lunch budgets and allowing ketchup and other condiments to count as vegetables. According to New York Times reporter Benjamin Weinraub, "the opposition had a Dickensian field day of outrage and mockery that contrasted school children's shrinking meal subsidies with the Pentagon generals' groaning board of budget increases."