USDA Foods Processing Information

Programs > Food Distribution Program for NSLP > USDA Foods Processing Information

About Processing USDA Foods

USDA Foods NSLP Program Overview

The use of entitlement towards further processing must be in the best interest of the students and school district. The processing of USDA Foods provides industry the opportunity to market finished end products to complement commercial purchases and can supplement 15-20% of the annual food budget. Recipient Agencies have the opportunity to receive a wider variety of end products that meet the needs of the students.

Recipient Agencies must participate in the National School Lunch Program (NLSP) to be eligible for processing. The further processing program converts raw bulk USDA Foods into more convenient, ready-to-use end products. Benefits of using further processing include increasing food safety, reducing labor costs and stretching entitlement dollars.

Click on the + or - sign below to expand or collapse that section.

Participating in Processing

NEW APPLICANTS

RENEWING APPLICANTS

Recipient Agencies choosing to participate in USDA Foods for Further Processing must manage inventory in good effort to ensure entitlement is used in the program year received. This responsibility will include:

> Enter into written agreements with cooperatives, processors, and distributors
> Provide accurate forecasting quantities for ordering
> Training and access to Processor Link and K12 Foodservice for monitoring inventory balances
> Training and access to WBSCM for sales orders (mandatory)> Track and manage inventory balances for compliance
> Ensure USDA Foods rebates, discounts and credits are applied to account(s)
> Report any discrepancies to the state in a timely manner
> Attend Education Service Center Annual Trainings
> Train a staff member to serve as back-up

WBSCM Transition Project

Beginning January 2024, USDAs Web Based Supply Chain Management (WBSCM) system

replaces TXUNPS to manage USDA Foods for the National School Lunch Program and Summer Food Service Program (SFSP). Tasks for reports, order requesting, tracking status, and receipting (for Direct Ships) will be performed in WBSCM.

CLICK HERE FOR DETAILS

Acting as Good Stewards Of Valuable Resources

Food loss and waste is food that is not eaten. The causes of food waste or loss

are numerous and occur throughout the food system, during production, processing, distribution, retail and food service sales, and consumption. Overall, about one-third of the world's food is thrown away.

Options to Minimize Food Waste


Procurement of USDA Foods for Further Processing					BROCHURE

USDA determines which foods are available to states and is limited with oversight of the states. Procurement methods used can be formal or informal.

Procurement is only conducted with processors and material codes currently approved by the state. Approved Processors have a current State Participation Agreement with the Texas Department of Agriculture.

Cooperative Purchasing

Cooperative purchasing is a system aimed at using group purchasing in an effort to increase buying power, reduce costs, and improve the quality of products and services available to school districts. Many cooperative purchasing groups are formed to increase the school districts’ ability to purchase ready-to-use end products made from USDA Foods. Ready-to-use end products allow for the use of USDA Foods in the final production of many mainstay menu items. By utilizing the USDA Foods in the final product, there can be a cost savings to the school district.

Cooperative purchasing groups may or may not be beneficial towards ordering USDA donated foods. The benefits may produce considerable savings and improve the quality of products purchased. On the other hand, the possibility of fewer deliveries or elimination of some specific products may not be beneficial and may actually cause hardship to a school district

Most school districts are experienced in cooperative purchasing, such as: books, paper, and equipment. The decision should be based on the success of providing healthy, cost-effective meals to students and adhering to regulations for efficiently using donated foods in a timely manner.


Passing the Savings On				7 CFR 250.36

Policy Memo: FD-40
To ensure Recipient Agencies are receiving appropriate credit for the value of the donated foods contained in end products, one of the four value pass through system methods must be applied: refund or rebate; direct discount; indirect discount or fee-for-service.

Inventory Management

Requests vs Orders

The use of commodity entitlement towards processing must be in the best interest of students and the NSLP Program.

Entries into the WBSCM system by school districts are only placing REQUESTS.

Requests are not officially ORDERED until WBSCM assigns a sales order number and the shipment is in a PURCHASE status.

Order what you use and use what you order.

Texas Approved List of Materials (LoM)

USDA offers bulk and congregate feeding pack size foods to be sent to processors for creating end products that are ready-to-serve, popular among students and follows child nutrition labeling. TDA makes available these USDA offerings to Recipient Agencies and cooperatives. Click below link to view the material code(s) for each processor.

Texas Approved Processor List

Minimum Ordering Limits

Recipient Agencies (RAs) must order at least the minimum case load (pounds) from a processor for each material code. Not ordering the minimum case load will cause the order not to be placed. RAs receive the SEPDS file during initial bid awards. If the balance is less pounds than a minimum case load, balances are transferred to the state account or RAs may request additional pounds to equal the minimum case load.

Inventory Drawdown

Policy Memo: FD-064 (Revised)

USDA Foods should be forecasted and used within the current program year. Recipient Agencies have an agreement with the state to order, store and use donated foods in accordance with local, state and federal regulations.

Recommended usage by USDA is ten percent monthly of total allocations within a 10-month cycle (AUG - MAY).

USDA Foods perpetual balances can be viewed in commercial tracking systems. Accounts are to be monitored at least monthly, if not bi-monthly. Both systems are robust and present information using charts and graphs, as well as provide report options in dollars or pounds that can be uploaded.

Need access or technical assistance with tracking systems? Contact your Education Service Center.

ProcessorLink

K12 Foodservice

State Inventory Management Exercises

As part of the state's responsibility of keeping inventory levels to six-months on hand or less, several inventory exercises are implemented. The Usage Analysis Exercise conducted in December reviews all accounts for usage. Accounts with no usage and no plans to order have the balance redistributed to the state account for further redistribution at the end of December. The Transfer Exercise begins in January and ends in April. This is an effort to offer existing inventory to those that can drawdown pounds to place additional orders and further reduce processor inventories state-wide. The Annual Redistribution Exercise is conducted on July 1 of each program year when remaining account balances are transferred to the respective state accounts. These pounds are applied towards future truck ordering.

Click here to submit transfer request (Coming soon)

Usage Analysis Flyer

Transfer Exercise Flyer

Annual Redistribution Flyer

Delivery and Receipt

7 CFR 250.11

It is important to understand that Title of USDA donated foods can only be owned by a government entity (USDA, State Agency, or RA). Title of USDA Foods donated foods transfers and shifts responsibilities upon the following transactions:

Key Points to Consider for Best Value

Evaluate popularity and usage of processing items currently available
Were Entitlement dollars spent down?
User experience level of facilitating a National School Lunch Program (NSLP)
Do selected processing items have a commercial equivalent to guarantee consistency on your menu?
Can your budget afford the cost and service fees for processing USDA Foods?
What are your current storage capabilities, storage fees and length of storage needs?

True Value of Processing USDA Foods

The USDA Value of donated foods is obtained by using entitlement dollars. There are additional charges that occur when using donated foods that are out-of-pocket expenses and should be considered when placing orders. These additional charges should be factored in when replacing or comparing donated foods with commercial products.

A product containing USDA Foods does not always represent a savings. Commercial options may provide lower prices compared to the additional charges associated with USDA donated foods. Processors offer commodity calculators to assist with determining the number of pounds needed to place an order.

Inventory Formulas and Calculations

Average Monthly Usage (AMU)

AMU calculates how many pounds the account uses per month to assist in requesting transfers and forecasting. Months of Usage is determined by the month of the program year (currently in) using a 10-month cycle.

REVIEW 10-month Usage Cycle Chart

RETRIEVE tracking system balances for:
*YTD Usage (Shipped)
Processor Link - 2 usage columns totaled
K12 Foodservice - usage may appear negative
Total both tracking systems usage
CALCULATE average monthly usage during program year

Account Usage Rate %

Account Usage Rate is a key performance indicator of Recipient Agencies following menu plans. When inventory levels are high, this is generally a sign of inaccurate forecasting by the schools, long lead times by the processors, and inadequate distributor performance.

REVIEW Recommended Monthly Usage Rate Chart

RETRIEVE tracking system balances for:
* YTD Usage (Shipped)
   Processor Link - 2 usage columns totaled
   K12 Foodservice - usage may appear negative
*Available Balance
   Total of allocations and transfers posted

CALCULATE average monthly usage during program year

Months on Hand (MOH)

Months on Hand (MOH) calculates how many months of inventory an account has available if the same usage rate continues to occur.

REVIEW Average Monthly Usage Rate CALCULATION

RETRIEVE tracking system balances for:
*YTD End Balance
CALCULATE months on hand during program year

Not seeing all allocated inventory? The processor may not frontload inventory into the tracking system until the truck is received. Check the Approved Processor list for status.

What is Frontloading?

7 CFR 250.34(a)

The majority of Texas Processors practice frontloading allocations in the tracking system(s). A processor will "substitute" for the donated food in advance of USDA purchase, and provide commercial food products to RAs with value pass-through for the donated food. Although not specifically prohibited by USDA, such substitution in advance of purchase is not recommended, as USDA cannot guarantee the purchase and provision of donated foods for processing. In such case, the processor makes a business decision, and assumes the risk and attendant financial liability if USDA is unable to make the purchase.

Helpful Links

Online Resources

USDA Menu Planner for Schools
Nutrition Analysis Protocols
USDA Foods for NSLP Training Resources
Product Information Sheets
USDA Foods e-Letters
TDA Monthly Newsletters
ICN Training Resources

Inventory Management Online Tools

TDA Inventory Control Exercises

Online Training and Webinars

List of USDA Foods Materials for Further Processing

USDA Foods Weighted Average Adjustment

Transfer of Further Processed USDA Foods Pounds

Participation Options

Passing the Savings On

Assistance available in English and Spanish. Please call 877-TEX-MEAL (877-839-6325) for help. Additional translations services available as well.

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1. Mail:

U.S. Department of Agriculture
Office of the Assistant Secretary for Civil Rights
1400 Independence Avenue, SW
Washington, D.C. 20250-9410; or

2. Fax: (833) 256-1665 or (202) 690-7442; or

3. Email: program.intake@usda.gov.

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