Processing USDA Foods can represent cost savings, but it is not always the best option. The true value of processing USDA Foods = Value of USDA donated food + state charges + processing costs + storage and handling fees. Several factors should be analyzed before proceeding with processing USDA Foods:
- Does the processed USDA Food have a commercial equivalent?
- A commercial equivalent will guarantee consistency on your menu.
- Can you afford the commercial equivalent if you run out of USDA Foods?
- What is the cost of processing the USDA Foods?
- What are the state charges, if any, for USDA Foods?
- What is the handling fee you pay your Distributor?
- What are your storage fees and how many months will your product be in storage?
The USDA Foods Cost Analysis Tool can assist school districts with analyzing the cost and value of processing and annual forecasting.
In the end, you need to determine the best use of your Planned Assistance Level (PAL):
- Direct delivery USDA Foods (brown box), and/or;
- USDA Foods diverted to a Further Processor of your choosing.
Like all other purchasing decisions, the use of your commodity entitlement must be in the best interest of your students and your program.
Terms you should know
What is NOI?
- Net off Invoice (NOI): A Value Pass-Through System. Processors sell finished product to Distributors at commercial price. Distributor sells end product to RA at price minus the value of the USDA Foods products used. Distributor submits documentation to Processor that product was sold and receives a credit from processor. Verification of sales from RAs is required.
What is Fee for Service?
- Fee-For-Service (FFS): A Value Pass-Through System which separates the value of donated USDA Foods from the other costs of production. The FFS price represents a Processor’s costs of ingredients (other than USDA Foods), labor, packaging, overhead, and other costs incurred in the conversion of the USDA Foods into the specified end product. Fee-for-service is an alternative to using a standard Value Pass-Through system. It has traditionally been used when processing meat and poultry products or other non-substitutable USDA Foods.
What is rebate?
- Rebate: A Value Pass-Through System where the RA pays the commercial price for processed items and then submits a request for rebate for the value of donated food used. A Value Pass-Through system by which a Recipient Agency purchases a Processor’s end products at the commercial price and receives from the processor, by means of a refund application, a payment equivalent to the value of the USDA Foods contained in the end products. See the definition of Refund Application and Indirect Refund Sale.
For questions concerning processing please email: [email protected]
Diversion Process Timeline
- An email will be sent to all schools alerting them to complete the Food Preference Survey by going through the OGS Recipient Agency Logon.
- If you do not remember your logon information please send an email to: [email protected]. Be sure to include your school code, which is a letter followed by 3 numbers (Example A001).
- Successful completion of the survey is important in that it determines the top 30 USDA Foods that will be available to order for the next school year. Completion of the survey is mandatory to be able to order USDA Foods. Keep in mind that completing the Food Preference Survey does not place your USDA Foods order.
- OGS Food Distribution will send out an email containing the Diversion Worksheet for schools to complete. This worksheet will help schools calculate the number of pounds needed to order bulk USDA Foods for processing.
The worksheet contains four (4) tabs:
- Diversion Worksheet: Lists all of the processors and their end products. Simply enter the total number of cases for each item you need for the upcoming school year. The sheet will calculate pounds and estimated entitlement value.
- Totals: This tab totals all of the pounds by material/processor so you have an easy view of what to order. Once you have completed your work, you will need to print a copy and use this data for entering your orders into WBSCM. You will need the Business Partner ID listed in this tab when selecting your “deliver to” destination in WBSCM.
- Contact Info: Contact information along with shipping requirements are available in this tab.
- Reminders: Some important points to remember when entering your data into WBSCM.
Important: The Diversion Worksheet is a tool to help simplify the calculation process. If you do not enter your orders directly into WBSCM then you will NOT receive the end product.
Please remember the following as you complete this part of the diversion process:
- The entitlement listed is an ESTIMATE based on actual meal counts from two years previous. Entitlement will be updated in August/September based on the actual reimbursable lunches served in the previous school year. You should have an idea at this point if your entitlement will be less or more and order accordingly.
- Schools need to adjust their diversion ordering at the beginning of next school year if the difference between actual and estimated entitlement is excessive.
- We reserve the right to modify or cancel your diversion if you have demonstrated that you have not used past diversion pounds.
- NYS OGS does not properly procure any further processed items. All further end products you receive using USDA materials must go through your normal procurement process.
- NYS OGS is tied to the dates that orders have to be submitted to USDA. If you fail to enter your orders in the timeframe outlined, we will be unable to accommodate your needs in the upcoming school year. Please make sure that if any vacation/school breaks fall within this timeframe, you take that into consideration for entering your information into WBSCM.
- WBSCM catalog will open for ordering of USDA Foods bulk pounds to processors. The catalog will be open for approximately three weeks. At the end of this timeframe, the WBSCM catalog will be closed. OGS Food Distribution will then analyze the orders placed and determine if a full truckload quantity of each item ordered has been met. Orders for products that do not meet the full truckload requirement will be declined.
- The WBSCM catalog will reopen for approximately one week. This timeframe is a second opportunity for schools to order USDA products that have already made the full truckload minimum requirement.
- Once all orders are placed, OGS Food Distribution will compile all the necessary data and send this information to processors. Processors will then know the amount of bulk product that will be sent to them for the following school year.
March through June
- Schools will need to reach out to their processors to receive a delivery schedule for all processed items for the upcoming school year.
- Any unused pounds will be swept from schools accounts in June.
- Schools that need to make a change to their diversion will need to complete a Direct Diversion Change Request Form during the month of August.
- Schools will need to check their usage of pounds with either K-12 or Processor Link websites. Be advised that usage amounts should be at approximately 10% per month.
- School Food Service Directors should be aware of Regional Industry Seminars conducted throughout New York State. Processors showcase their new and existing products during these events. It is a great time to sample items and consider your menuing needs for the upcoming school year.
- In December, an email will be sent to schools alerting them that they will need to be at 40% usage of processed pounds by the end of January unless they provide information that they will be able to use all pounds by June 30th. Any schools not showing the 40% usage will be brought to that percentage of usage at this time.
School Year 2016-17
- Gold Kist Farms Inventory Update 12/16/2016
- Asian Food Solutions Product Availability Update 12/16/2016
- Gold Kist/Pilgrims Pride Inventory Letter Dated October 7, 2016
School Year 2017-18
Track Diverted Foods
Recipient agencies should monitor the balances of their pounds at the processors at least once a month. You should be using about 10% per month. There are two websites to monitor and track balances with processors and recipient agencies should sign up for both: K12 Food Service and Processor Link. You will need to log in to the correct website to see your remaining balance or what you have used, based on the processor.
|If you use one of these processors...||Login on this website...||To see...|
||What you have used so far|
||Processor Link||How much you have remaining|
Change Your Diversion
Recipient Agencies may change their diversion under certain circumstances. You will need to fill out the 2019-2020 Direct Diversion Change Request Form.
For a comprehensive overview of the USDA Processing program, visit the USDA Processing Website.