Fruit and vegetables given to children under a government scheme are largely imported, often of poor quality and have higher levels of pesticide residues than supermarket equivalents, a report has revealed.

Children’s health campaigners are urging the government to revamp the £40m school fruit and vegetable scheme, saying it is a waste of taxpayers’ money and is failing in its mission to encourage young people to eat more fresh produce.

Under the initiative, all children aged four to six attending a state school in England are eligible for a free piece of fruit or veg at school each day. But the report on children’s food in England published on Tuesday by the Soil Association reveals that the produce is largely imported rather than grown in the UK, and often of poor quality or inedible, leading to high levels of food waste.

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Despite the fact that fruit and vegetables are an important source of dietary fibre, vitamins and minerals, fewer than one in 10 children meet the five-a-day target, the report reveals. More than one-third of the vegetables that children eat are processed, with 17% of the veg in children’s diets coming from pizza and baked beans.

“The scheme is broken,” said Rob Percival, the head of policy at the Soil Association. “Children are being presented with produce so lacking in flavour and texture that it is teaching them to actively dislike – or at least distrust – fruit and veg.

“This government scheme is having an entirely counter-productive effect. This is a missed opportunity and a waste of taxpayers’ money.”

An estimated 2 million children attending 18,000 schools in England benefit from the scheme – funded by the Department of Health since 2004 – and the report acknowledges it is an “important investment” in child health. But teachers involved in the research were highly critical of the quality of the produce provided, describing it as lacking in freshness, far from tasty and frequently inedible.

In response to freedom of information requests submitted by the Soil Association, the government admitted that only 13% of apples and 5% of pears – popular items for the initiative – were sourced from the UK, even when in season. Overall, less than a third of produce came from the UK. Official government data also shows that the produce supplied through the scheme contains higher pesticide residues than equivalent supermarket produce.

“Pears are under-ripe and hard, carrots have been sweating in bags for days. Generally, the produce is not as fresh as we would hope, and this means the children don’t eat it,” one teacher told the organic food and farming organisation.

The association is urging the government to “re-specify” the scheme so that a higher proportion of the produce is British, local and organic, and therefore fresher, tastier, of known provenance and more enjoyable for children. The scheme is administered through an annual government contract currently with Foodbuy, part of the Compass catering group.

A Department of Health and Social Care spokesperson said: “This government is fully committed to making sure children have a healthy start to life and [this] scheme is providing children with a free portion of fruit and veg each school day.

“Fruit and vegetables supplied through the school fruit and vegetable scheme follow the same safety and quality legislation as all other fruit and vegetables supplied for consumption in the UK.”