july 15 –2:15 pm - school nutritiondocs.schoolnutrition.org/meetingsandevents/anc2013... ·...

Series New Directors ‐USDA Foods History, Processing and Distribution

July 15 – 2:15 PM

USDA Foods Program BackgroundMary Beth Flowers, SNSTraining CoordinatorFDD, FNS, USDA

USDA Foods Processing ProgramPeggy CantfilSpecial Nutrition Operations Branch ChiefFDD, FNS, USDA

USDA Foods DistributionMatthew EssnerMissouri DOE

Intro to USDA Foods

• USDA Foods Video

• Why you should know about USDA foods

• USDA Foods Realities and Misconceptions

• What foods USDA offers

• USDA food ordering & procurement

• USDA food processing concepts & the flow

What are USDA Foods?

USDA Foods Video

Why do you need to know aboutUSDA Foods?

•Schools receive USDA Foods (101,000)•You are interested in the their business•You need to understand:

‐ What drives their business decisions?‐ What role USDA Foods play in decisions?‐ How are USDA Foods going to impact your business?

Why do you need to know about USDA Foods?

What drives school business?

MENU

PROCUREMENT

LABOR

PARTICIPATION TRAINING

BUDGET

REVENUE

Percentages are approximate and will vary by district

Food Distribution Programs• Schools and Institutions

• National School Lunch Program ‐ NSLP• Child and Adult Care Food Program ‐ CACFP• Summer Food Service Program – SFSP

• Household Feeding• The Emergency Food Assistance Program ‐ TEFAP• Commodity Supplemental Food Program ‐ CSFP• Food Distribution Program on Indian Reservations – FDPIR

• Other• Disaster Feeding – DF

The Misperceptions

• School lunch and commodities cause obesity

• USDA “surplus” commodities are the culprit

• Commodities are low quality

Need replacing with…

The Realities of USDA Foods

Healthy Choices 100% American GrownFood safety standards are set highAccount for 15‐20% of school food purchasesSchool districts are never required to accept items they do not want

Play an important role in providing nutritious foods in school meals by offering:

Less sodium

Less sugar

Less fat

More fruits and vegetables

More whole grains

The Realities of USDA Foods

What kinds of food does USDA OFFER to

schools ?• What am I competing against?

• How can I market my products to compliment them?

How a food becomes a USDA Food

• Support "Dietary Guidelines for Americans“

• Support new Meal Pattern Requirements

• Food Distribution Nutrition Initiatives: • More fruits & vegetables• More whole grains• Less salt, sugar and fat

• Meet level of demand

• Successful commercial market history

• 100% U.S. supports ag market!

Foods Available Listhttp://www.fns.usda.gov/FDD/foods/SY13‐schfoods.pdf

USDA Foods Nutrition Initiatives

• Review product offerings continuously to ensure each supports “Dietary Guidelines for Americans”

• Enhance the foods available list to support the nutritional needs of recipients

• Make ongoing changes to reduce or eliminate sodium, fat, and sugar

• Seek healthy and “kid‐friendly” products

USDA Foods ImprovementsReducing Sodium Low sodium in ALL canned vegetables

140 mg per serving (up to 77% sodium reduction)

Sodium‐free frozen and fresh vegetables Low‐sodium tomato products ‐ 140 mg/svg

eg. spaghetti sauce, salsa, whole, diced, paste

Reduced‐sodium turkey ham ‐ 460 mg/2 oz (‐19%)

Reduced‐sodium chicken fajita ‐ 220 mg/2 oz (‐28%)

Reduced upper salt limit on mozzarella spec’sReduced sodium in processed cheese: +/‐ 45%Researching more low‐sodium foods: Pork

Reducing Sugar Unsweetened applesauceNO heavy syrup in canned fruitONLY light syrup, juice, or water packed fruit

Packing Medium OptionsUnsweetened 100% juices

USDA Foods Improvements

Reducing Fat Purchasing 96‐97% lean ham Purchasing 95% lean turkey ham Purchasing 95% lean beef patties Eliminated trans fats in frozen potatoes Added a fat free potato wedge Eliminated shortening Substituted white meat for chicken skin in

processed poultry products Low fat bakery mix 1% low fat UHT milk Researching lower fat meat & cheese products


Increasing whole grainsWhole grain tortillasWhole grain pancakesWhole grain macaroniWhole grain spaghettiWhole grain rotini Rolled oats Brown rice, direct & bulk Parboiled brown rice Dry kernel corn for processing


Increasing fruits and vegetables Sliced Apple & Baby CarrotAlternate Fresh F & V PilotsBulk Apples for processingFrozen Broccoli Florets

Increasing Whole Grain ProductsExploring new productsExploring more improvements Communication Tools


Increased Ordering OptionsFruits VegetablesHamBeefPoultry Cheese


Meal Contribution of USDA Foods

• USDA Foods make up 15‐20% of market value of the food served

• Improved USDA Foods Nutritional Profile

• Processed USDA Foods

USDA Ordering Systems

PushDown

System

Demand Driven System

PARADIGM SHIFT

BPR 2000

PCIMSProcessed Commodities Inventory Management

System

By State Agencies:•Ordering history• Product demand• Questionnaires & surveys• Nutrition advisory groups• Informal input from Schools

By Schools:• Their menus• Storage capacity • Distribution methods• Fees• District size• Buying group/co‐op

How are ordering decisions made?

WBSCM supports the domestic agricultural economy, nutrition assistance programs, food security programs and International food assistance programs of USDA and USAID.

• Domestic Programs: AMS, FSA, FNS• Export Programs: FAS, USAID

• Demand Driven Product Ordering • Integrated food purchasing• Order tracking & receipting• SAP Software

How are orders submitted to USDA?

Web Based Supply Chain Management

• USDA• State Agencies• Receiving Organization

Who is required to used WBSCM?


USDA offers products to SDA

SDA offers products to Schools

Schools place USDA Foods

OrdersUSDA Buys Food

USDA submits orders to other

USDA Agencies to purchase food

SDA Submits School orders to

USDA

Vendors notify SDA of shipments

SDA notifies Schools when products arrive

Schools request delivery of USDA

Foods


VARIOUS

VARIOUS

VARIOUS

VARIOUS

FNS Food and Nutrition ServiceFood Distribution DivisionAssist in order planning for USDA FoodsOrder Fulfillment, Customer service

Agricultural Marketing ServiceAssist in order planning for USDA FoodsProcurement of Poultry, Livestock, F & V,Accounts Payable

Farm Service AgencyAssist in order planning for USDA FoodsProcurement Dairy, Grains

AMS

FSA

USDA Purchasing Partners

USDA Purchases

Two Kinds of Purchases

USDA PurchasesDirect Deliveredfka/Brown Box

USDA PurchasesBulk for Processing

USDA Foods Processing

Topics:•Program Background•What is Processing?•Flow of Processing•Processing Resources

• What is processing?• Bulk USDA Foods ‐> Processor• Finished End Products

• Should my company consider it?• Foot in the door• Lock in commercial/processed items• Meet menuing needs

Processing USDA Foods

Child Nutrition Programs

62%TEFAP27%

CSFP8%

FDPIR3% Disasters<1%

50% = Bulk for Processing

USDA Foods FY 2012

Program USDA Foods $CNP $1,256,545,003 TEFAP $543,901,223 CSFP $157,547,443 FDPIR $56,209,016 Disasters $920,057 TOTAL $2,015,122,742

EstimatedFY12 Total Purchases

Why do schools process?

• Menu continuity• Product familiarity • Reduced training and labor• Solves production challenges• Increases Food Safety• Maximize entitlement

How Schools decideWhat/If to Process

Analyze purchasing needs• Calculate annual usage

• Production Records• Distributor Velocity/Usage Reports

• Cost analysis• Compare Bid Prices with USDA Food Value• Add in processing, distribution &

administrative costs.

What is Processing?

What is Processing?

State Distributing Agency

USDA Processor

The Flow of Processing

The Flow of Processing1. Entitlement allocation & decision to process2. Agreements & end product approval3. Inventory protection options4. Procurement by school districts or State5. State orders Bulk USDA Foods6. USDA purchases USDA Food & delivers 7. Processing Methods8. Substitution & Commingling9. Sales, delivery, VPT10. Monthly Performance Reports11. Monitoring & Audit

The Flow of Processing1. Entitlement allocation & decision to process

Entitlement ESTIMATE !

JULY RATEX

PRIOR YEAR MEALS+/‐

PRIOR YEAR BALANCE+

12% FUNDING =

TOTAL ENTITLEMENT $$

Beef 22%

Pork 5%

Chicken 13%

Eggs 1%Turkey 9%

Fruits & Vegetables

25%

Grains, Peanuts, Oils 3%

Cheese 22%

National Ordering Averages

SY11 Processing DiversionsUSDA Food Pounds Dollars

Beef (coarse & boneless) 14% 95.8 M $194.5 M 28%Chicken (large, small & leg) 28% 194.4 M $138.3 M 20%Turkey (bulk & thigh) 5% 32.4 M $29 M 4%Cheese (bulk mozz & barrel) 12% 80.5 M $134.8 M 20%Potatoes (bulk, dehy, sweet) 28% 189 M $15.9 M 2%Other USDA Foods 13% 90.8 M $63.4 M 9%

Total diversions 49% 682.9 M $575.9 M 48%Total purchases 1.388 B $1.2 B

49%Pounds

48%Dollars


2. Agreements & end product approval

Processing Agreements

NATIONAL Multi‐State Processors1) National Processing Agreement (NPA)2) State Participation Agreement (SPA)

In‐State Processors2) State Master Agreements3) State Agreements4) Recipient Agency Agreement

Processing Information

•112 National Processor Agreements•80 USDA food materials •5,000+ end products approved•$400‐$600 Million inventory

End Product Data Schedulei.e product formulation data

Pounds needed to produce a case

Under the NPA • AMS – Poultry & Livestock approvals• FNS – Everything else!

Under State or RA Agreements• AMS ‐ Poultry & Livestock approvals• State – Everything else

Summary (a list)End Product Data Schedule

1) SEPDS A – fixed draw down• 100% Yield• Standard Yield• Guaranteed Return

2) SEPDS B – Guaranteed Minimum Return

3) SEPDS C – hybrid of A &B

National Processing Agreement

DOES NOTEliminate bidding/procurement by SDA/RASpecify delivery and billing termsSpecify value‐pass‐thru methodCoordinate truck loading or orderingMonitor State inventory draw‐downs

Verify minimum yield/return metMonitor acceptability or field complaints

How to get started with State

• State Participation Agreement (SPA)

• Approved SEPDS goes to each State• Destination Data form for plant

• Complete & submit WBSCM‐Ship‐[email protected]• FNS creates new destination in WBSCM• State requests new destination to be mapped to their organization



3. Inventory protection options

Inventory Protection

• Bond• Letter of Credit• Escrow Account

• Year 1 = 100%• Subsequent years = % of maximum

• Due May 31

USDA Foods Value

• November 15 USDA Food Price• Used to determine:

• Value of surety bond, escrow or LOC• Refunds or discounts• Costs of replacement for production or USDA

Foods losses• Failure to meet GMR• Transfer Value




4. Procurement by school districts or State





5. State orders Bulk USDA Foods


USDA offers products to SDA

SDA offers products to Schools

Schools place USDA Foods

OrdersUSDA Buys Food

USDA submits orders to other

USDA Agencies to purchase food

SDA Submits School orders to

USDA

Vendors notify SDA of shipments

SDA notifies Schools when products arrive

Schools request delivery of USDA

Foods






6. USDA purchases USDA Food & delivers

Agricultural Marketing ServiceAssist in order planning for USDA FoodsProcurement of Poultry, Livestock, F & V,Accounts Payable

AMS Commodity Procurement Website

FSA Commodity Procurement Website

Farm Service AgencyAssist in order planning for USDA FoodsProcurement Dairy, Grains

AMS

FSA

USDA Purchasing Partners







7. Processing Methods

Processing Methods•100% Yield•Guaranteed Minimum Return (GMR)• Standard Yield •Guaranteed Return (GR)








8. Substitution & Commingling

• Full Substitution• Limited Substitution• Substitution & Negative Inventory•Non‐Substitution•Commingling

Substitution & Commingling

The Flow of Processing1. Entitlement allocation

2. Decision to process

3. Agreements

4. Procurement





9. Sales, delivery, VPT

Sales & Value Pass Through Methods

DirectSales made directly from the processor to the State or school

IndirectSales are made from the processor to a commercial distributor

Type of Sales

Sales & Value Pass Through Methods

RefundsSchool pays gross price and requests reimbursement from processor for commodity value contained in purchased products

DiscountsNet price paid by school

Method for Passing the Value









9. Sales, delivery, VPT

10. Monthly Performance Reports

Monthly Performance ReportsNuisances encountered in the day‐to‐day operations of a USDA Foods processing program that are reflected on the MPR:

• “Front loading” inventory•What information do you need to draw down the inventory?• Transfers: physical vs. paper• Condemned product and damaged food

Monthly Performance ReportsNuisances encountered in the day‐to‐day operations of a USDA Foods processing program that are reflected on the MPR:

• Effect of commingling (GRO)or substitution (GMR commodity for commodity) inventory on the paperwork• Effect of substitution on grading certificates• What happens when you’ve made product a school indicated they would purchase, then receive a transfer request.

What do we do with MPRs?• State monitors inventory on MPR

• Processors should only draw down what was produced & delivered

• Six month inventory limit

• Request destination changes• “Paper transfer” between processors• Understand State policies

The Flow of Processing1. Entitlement allocation & decision to process2. Agreements & end product approval3. Inventory protection options4. Procurement by school districts or State5. State orders Bulk USDA Foods6. USDA purchases USDA Food & delivers 7. Processing Methods8. Substitution & Commingling9. Sales, delivery, VPT10. Monthly Performance Reports

11. Monitoring & CPA Audit

Processing Resources:ACDA Website:•www.commodityfoods.org

• RA Processing Handbook• EPDS/SEPDS Templates• Processor Guidance• Distributor Agreement

www.commodityfoods.orgClick on Processing tab

Processing Resources:Food Distribution Website:•Main Page:

• www.fns.usda.gov/fdd/processing/•Processing Policy Memos:

• www.fns.usda.gov/fdd/Policy/cp_policies.htm

[email protected]

www.schoolnutrition.orgwww.teamnutrition.usda.govwww.fns.usda.gov/USDAFoodswww.commodityfoods.usda.gov

NSLP Resources

USDA Foods Distribution

MO DESE – School Food Services Donated Foods Program

Mission Statement

•Provide tools and products•Operate with integrity•Offer outstanding customer service•Showing respect•We are held accountable for the decisions•Keep an open mind to new ideas•Operate efficient program.•We strive to have a positive effect on students

IT’S ALL ABOUT THE MONEY

Role of the State Distributing Agency

• SDA monitors State Entitlement and Inventory

• USDA views Entitlement by State, so MO monitors Entitlement as a State

•Each RA's Entitlement is a portion of the State's Entitlement (could vary from the RA's Total Lunches Served (TLS) x per meal rate)

• Entitlements are based on “projected” TLS

Role of the State Distributing Agency

• TLS figures used are from previous SY but effect 3 SY

• Don't know exact Entitlement until November AFTER all meals are served

• By November, most trucks for the current school year are already purchased/bid

Entitlement = Moving Target

• What does it mean to you?• Entitlements up or down for SY14?• Should I track my Entitlement

throughout the SY?• Difference between Entitlement

and Bonus? Who determines?• Value of Commodities vs.

Entitlement

Historical Figures13‐14 $0.272513‐14 $0.227512‐13 $0.227511‐12 $0.222510‐11 $0.260010‐11 $0.227510‐11 $0.202509‐10 $0.195008‐09 $0.207507‐08 $0.187506‐07 $0.170005‐06 $0.175004‐05 $0.172503‐04 $0.1575

12% Provision via NSLA

Expected

Entitlement = Moving Target

USDA Foods CalendarWhen do Schools order?

What it’s like in Missouri• One state contracted warehouse (69,709 sq miles)

• State pays for all storage, handling, delivery charges for public RAs• USDA Brown Box = FREE for Public RA• Non-Public pays delivery fee of $1.85

• About 60% Entitlement to USDA Brown Box

• 40% towards Processing• FFS, NOI, MFFS, and Rebates all offered

• Depends on the item

• USDA items – MO schools order by 15th of the month for delivery the following month• Processed items – plan diversions prior school year• Net-Off-Invoice (NOI) is ordered commercially


• Depends on the item

• State coordinated delivery depends on the State’s delivery options

• MO schools receive once a month delivery August – April

• But each state is different


• Not very convenient

• State of Missouri receives pricing in November for all of next school year

• RAs plan diversions by March prior to beginning bids for next School Year

USDA Foods CalendarBidding Cycle

• Does the cart go before the horse or the horse before the cart?

• What came first, the chicken or the egg?

USDA Foods CalendarHow to Menu

USDA Foods CalendarThe Great Paradox - How to Menu

Role of the SDA

Questions?

july 15 –2:15 pm - school nutritiondocs.schoolnutrition.org/meetingsandevents/anc2013... ·...

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