Practice Can be Part of a Recycling Program, But Many Restrictions Apply.
According to the FDA, kitchen waste may be fed to livestock, but there are regulations and restrictions that apply, and a food service establishment that wants to do this cannot simply just throw its waste food into a barrel and give it to a farmer.
In some parts of the United States, particularly near large metropolitan areas (or in areas where there are large resorts, theme parks, universities, with cafeteria operations), there are businesses that specialize in this type of recycling operation.
The intent of the regulations is to protect animal and public health. Historically, there are a number of zoonotic diseases that were spread through this type of feeding practice, but which have been controlled in large part by application of these regulations.
The Swine Health Protection Act prohibits the feeding of kitchen waste to swine unless it has been cooked. (This law is administered by the USDA, not the FDA). The FDA prohibits the feeding of kitchen waste to cattle unless it has been cooked.
For more information, go to http://www.fda.gov/AnimalVeterinary/GuidanceComplianceEnforcement/ComplianceEnforcement/BovineSpongiformEncephalopathy/default.htm