Welcome to the Georgia School Nutrition program food processing training.
The objectives of this training are one to provide information on how the food
distribution unit or FDU of the School Nutrition Program administers USDA food
processing program in Georgia, two also details on your roles and
responsibilities as a recipient agency or RA as well as other stakeholders will
be discussed and third to review the importance of inventory management.
The USDA food processing program is one of three ways along with direct delivery
foods and the Department of Defense our DoD fresh fruits and vegetable program
in which USDA allows RAs such as schools to use their planned assistant
level our PAL funds. Well for those of you that are not familiar with the
program a basic explanation is the RAs can elect to divert specific USDA bulk
foods such as coarse ground beef to a manufacturer for further processing into
usable end product such as a fully cooked hamburger patty.
Here's a simple example of how food processing diversion works. The RA places a request for ten
thousand pounds of the 100154 beef coarse ground in WBSCM the online
ordering system to be diverted to Where's the Beef Company where as the
beef company receives the beef coarse ground and process it into precooked
frozen hamburger patties and in turn delivers them to ABC warehouse on the
RAs designated delivery location and finally the RA requests 10 cases of
hamburger patties from ABC warehouse to be delivered to their school kitchen
All partners in the food processing program such as USDA State's, RAs,
processors, and distributors have responsibilities. This training focuses
on USDA, State, and RA responsibilities as you will see one common responsibility
among the three is inventory management. First let's look at USDA.
Each school year USDA provides an allocation of entitlement dollars to States based on
the total number of lunches claimed from their previous school year multiplied by
an established per meal rating. In turn the state allocates entitlement dollars
to RAs based on their total lunch meal counts which is called their plan
assistant level or PAL. Also an additional funding provisions
provides a minimum of 12% to the per meal rate you see a provides the
annual food available list and purchase schedule for all products that they
intend to purchase. They manage and finalize state orders they approve
various processor and end products under the National Processing Agreement they
set the processor bond levels and monitor their inventories.
In Georgia FDU administers the food processing program under the School Nutrition division of
the Georgia Department of Education. FDU responsibilities include the
following: 1 establish state participation agreements with food
processors that must be approved under the USDA National Processing Agreement
and provide proof of marketability in Georgia such as commercial sales to RAs
and are RA bid awards; two approve processor summary end product data
schedules which provide a description of end products such as the quantity of
USDA food in the product and the USDA food value which is needed for
record-keeping; 3 release food catalogs for RAs to place their food request.
In turn FDU reviews the request to build trucks and place orders; 4 monitor
processor RA inventories to help ensure that it is no
more than six months usage on hand. Our carryover inventory policy will be
discussed later in the presentation five post food processing information
on the School Nutrition website such as the Georgia Food Processing Program
handbook the ACDA RA processing handbook the Georgia approved processor
list and summary in current data schedules are posted on the department portal
Factors for RAs to consider before participating in food processing
include but are not limited to the following your menu is the heart of the
program. Following an established menu will result in a cost-effective
processing program. Consult other RAs and already participate as well as other
states and processors to get best practice ideas and cost-effective
options before deciding to participate.
Analyze cost and value do not assume
that just because a product contains USDA foods it represents a savings.
Determine how much PAL you want to allocate toward processing, know your
district of federal spending threshold. Does the process product have a
commercial equivalent? Commercial equivalent will provide consistency on
your menu. Can you afford the commercial equivalent if you run out of the USDA food?
What is the cost of processing USDA food such as your state contracted
warehouse delivery costs, your commercial warehouse costs, your school storage costs
and how long product will be in storage. The truth value of a processed
product manufacturer is the value of USDA food plus state charges plus
processing costs plus storage and handling fees and remember time.
It's important to be aware of the time restraints in which you must complete
your procurement and order foods for the next year. An ongoing concern under this
program is ensuring the timely use of your USDA foods. In an earlier slide you
saw that each partner in the program has a responsibility for
managing inventory. Monitor your processor and your internal usage
reports to ensure a steady drawdown of inventory and to prevent carryover and
the transfer of your pounds to the State account.
The value passed through system
our VPT is the process of selected method to return the full value of USDA
foods contained in the finished product to the RA. The method is established in
the state participation agreement or SPA. So, there are four ways in which the
value can be passed through back to the RA. The processor may choose from the
four options participating in one or combination. Let's review them. One refund
to the RA. The RA submits a refund application to the processor for the
value of USDA food in an item and the processor issues a check or an e-rebate
in which an automatic rebate is issued when a distributor delivers the
product and reports that delivery to the processor. Two fee for service bill by
the processor. The processor charges the RA a fee for service that includes cost
of additional agreements minus the USDA food value. Three fee for service bill by the
distributor. This VPT involves a pooled physical inventory of process and
products at the distributor. The distributor charges the RA both the
processor and distributor costs on the same invoice charges can be combined
into a single price. And four net price through distributor or net off invoice
or NOI for short. Processors sell commercial products to a
distributor when the product is sold to an RA with USDA food allocation the
distributor bills the commercial cost minus the value of USDA foods. On proof
of sale the processor rebates the USDA value to the distributor.
Morgan Produce is the holding location RAs used to place their request and deduct their
entitlement until they're processing bid is awarded
Morgan Produce request will remain and ready for approval status which means it
is waiting to be ordered. When the bid is awarded the RA a must email Gladys
Glover and Frank Mullins to provide the awarded processor the USDA food material
number, name, and quantity. In turn FDU will review the request and change
the destination. The order is placed if the food catalog is open and there are
sufficient request for a truckload. For partial request FDU would work
with the processor, other states, and USDA to share a load. The later the RA waits
to identify the selected processor for a partial request the more challenging it
becomes to find a partner to fill the load.
In SY 14 FDU created a carryover
inventory policy to help eliminate the carryover of RAs processing
inventory with minimal to no usage. Also to prevent USDA denial of new sales
orders until excessive inventory is reduced to the allowable 6-month level.
In the following slide I will discuss the importance of the June 30th and
February 15th dates.
At the end of the school year RAs are allowed to
carry over June 30th inventory at the processor to the following school year.
If carryover inventory remains after December 31st which the processor
reports to the state by January 31st FDU will instruct the processor to move
the pounds to the State account by February 15th with FDU approval the
processor can transfer a state pounds to RAs with the signed purchase plan to
use the pounds by the end of the school year. Also these PALS are not available
for transfer to another processor.
The processor state account includes bonus
pounds which are unused inventory carry over from the previous school year
pounds are available to RAs with the processor bid award. The pounds
however are not available for transfer to another processor.
The processor state
account can also include unallocated entitlement pounds under a current
school year sales order when building trucks entitlement PALs may be assigned
to the state to complete an order. In turn as RAs complete their bids or need
additional pounds FDU will redistribute them to the RA and WSCBM
and the RA entitlement is deducted as well. The PALS however are not available
for transfer to another processor.
This concludes the Georgia School Nutrition
Program training. Now let's test your knowledge on the
information presented.