Dave TuckwillerAssociate Deputy Administrator, Commodity Procurement Program

Kathleen Staley

Chief, Program Integrity and Monitoring Branch

July 11, 2018

What’s New With USDA Foods

Christina Riley, MS, RD

Nutritionist, Nutrition Services and Access Branch

Business Management Improvement Initiative (BMI)

Business Management Improvement Initiative

• Key improvement opportunities:• Forecasting/Align Supply and Demand• Long-Term Contracts• Transportation Management• Warehouse Management• Supplier Management• Checkloading• Product Lifecycle Management• Electronic Communication• Processing Program

Business Management Improvement Initiative

• BMI Activity• Business Case completed March 2017• Teams formed for pilot development October

2017• Multiple pilots complete or in process• Additional research and documentation in

process

BMI – Current Status

• Forecasting/Demand Planning• Completed overview of software capabilities for

demand/supply forecasting April – June 2018 • Developing requirements through process mapping &

evaluation of historical data refined with supply considerations/demand inputs from FNS/States

• Long-Term Contracts• Pilot 1: First long-term contract awarded for oven

roasted chicken• Pilot 2: Researching bulk products and other direct

delivered poultry products

BMI – Current Status

• Transportation Management• Pilot 1 underway: F.O.B. Origin beef roast contracts

awarded for July-September 2018 delivery with USDA arranged transportation

• Pilot 2: Researching group of products for F.O.B. origin purchase and transportation arranged USDA (through services contract TBD)

• Warehouse Management • Third Party Logistic (3PL) Services contract awarded

this summer for household program; possible pilot for schools in 2019

BMI – Current Status

• Supplier Management • Identifying key performance indicators• Next: Analyzing available data on KPI

• Checkloading • Pilot 1: Complete. Canned fruit (peaches, pears,

mixed fruit) deliveries in school year 2017/2018• Expanded to include frozen and canned vegetables in

school year 2018/2019

BMI – Current Status

• Product Lifecycle Management• Determined products and market research; drafting

specifications for industry input; next step to define procurement schedule (Sept.)

• Electronic Communication/EDI• Dual pilots:

• Direct communication• VAN services to interchange purchase orders and

changes (Autumn 2018)

Purchase Update

Livestock, Poultry, and Fish

SY 2018/2019 Outlook• Beef prices down 8%• Pork and Chicken prices down 4%• Egg prices up 53%• Turkey prices up 34%• Fish prices up 11%

Market Challenges• Chicken Drumsticks

Fruits and Vegetables

SY 2018/2019 Outlook• Fruit prices up 19%• Vegetable prices similar to last year

Market Challenges• Raisins• Apricots

Dairy, Grains, and Oilseeds

SY 2018/2019 Outlook• Cheese prices up 2%• Flour prices up 4%• Oil prices up 11%• Peanut prices down 22%• Rice prices up 36%• Pasta prices up 2%• Yogurt prices similar to last year

USDA DoD Fresh Fruit and Vegetable Program

USDA DoD Fresh Continues to Grow

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

SY08 SY09 SY10 SY11 SY12 SY13 SY14 SY15 SY16 SY17 SY18

USDA DoD Fresh Complaint Process

Recipient Agency

State Agency

USDA Complaint Team

Produce Vendor

DLA Service Representatives

DoD Philadelphia

SFSP USDA DoD Fresh Pilot

• Summer 2017 – 11 States participated and spent over $186,000• (AK, AR, CO, DC, FL, HI, IA, NV, PR, SC, VT)

• Summer 2018 – increase to 20 States with $328,000 allocated• (AK, AR, CT, CO, DC, FL, HI, IL, IN, IA, ME, MA, NV,

OH, OR, PA, PR, SC, UT, VT)

Webinars

• USDA DoD Fresh Fruit and Vegetable Program: The

Basics for Schools (7/25/2017)http://www.fns.usda.gov/fdd/webinars-and-training

• USDA and DLA Partnering for a Healthy Futurehttps://youtu.be/FsV949uEJpo

USDA Foods Processing Rule

Processing Rule

• Transfer of title for USDA Foods

• Vended meals

• Processor agreement with distributors

• Backhauling

Transfer of Title

This section describes when title to USDA Foods transfers from USDA to distributing or recipient agencies

KEY UPDATE:• When a distributor is acting as a recipient agency's

authorized agent, title transfer from USDA to recipient agency occurs upon delivery to the distributor

Transfer of Title and Inventory Pooling

• In situations where recipient agencies contract with a

distributor to store or transport processed end products

containing USDA Foods and act as their authorized agent,

complications can arise that may impede the transfer of title

• The intent of this new requirement is to discourage the

pooling of processed end products at distributors

Transfer of Title and Inventory Pooling

• With this new requirement, end products must be assigned

to a specific recipient agency by the time they are accepted

at a distributor so that the title may be transferred to the

correct recipient agency

• FNS does not expect distributors to maintain separate

physical inventories for each recipient agency

Vended Meals

• Clarifies that the repackaging and use of USDA Foods in vended meals is considered processing - §250.30(a)

Processor Agreement with Distributors

• Processors must have agreements with distributors -§250.30(i)

• Agreements must include the financial liability for the replacement value of USDA Foods, monthly end product sales reporting frequency, requirements under 250.11, and the applicable value pass through system

• Distributing agencies may set additional requirements for these agreements

• Verification of these agreements will be required as a part of the audits that processors must obtain

§250.31 Procurement Requirements

This section covers the procurement requirements for the processing of USDA Foods, i.e. requirements for contracts and solicitations

KEY UPDATES:• Requirements for procurement documents - §250.31(b)

1. Price of the end product or service2. Value pass through method to be used and assurance

that crediting will be performed in accordance with §250.36

3. Value of the USDA Food in the end products4. Location for the delivery of the end products

Backhauling

This section describes when commercially purchased foods

can be substituted for USDA Foods

KEY UPDATES:

• Substitution or commingling of all backhauled USDA Foods is prohibited - §250.34(b)

Value Pass Through

This section describes the methods of end product sales and crediting for the value of USDA Foods

Including:• Describing the allowable value pass through systems

• Refund or rebate (250.36(b))• Direct discount (250.36(c)) • Indirect discount, also known as net off invoice

(250.36(d))• Fee for service (250.36(e))• Approved alternative method (250.36(f))

Webinar Recording Available!

• USDA staff highlighted information from the Processing Rule

and answered questions from stakeholders on June 28

• View the recording:

https://www.youtube.com/watch?v=5PTIt2EtJ5w

New Foods Available

OVERVIEW

New Products for SY18 – 19

• Mixed Berry Cups, Frozen, 96/4 oz• Mixed Vegetables, 4-Way Blend, Frozen, 30 lb• Chicken Fillet, Cooked, 2.0 MMA, Frozen, 30 lb• Egg Patty, Cooked, 1.0 MMA, Frozen, 25 lb case• 100% White Whole Wheat Flour, 8/5 lb, 25 lb, 50 lb

SY18 – 19 Product Changes

• Mushrooms, Diced, IQF, 12/2.5 lb• Turkey Deli Breast, Smoked, Sliced 8/5 lb• Turkey Deli Ham, Smoked, Sliced 8/5 lb

USDA Foods Tasting Opportunities

• October 2017- Maryland USDA Foods Processing Show• Featured: Butternut Squash, Pepper/Onion Blend

• October 2017- New York State SNA• Featured: Dried Fruit Mix

• March 2018- Ohio Child Nutrition Training and Vendor Show• Featured: Individual Portion Dried Cranberries and Peanut Butter

• May 2018- Tri-State Meeting (ME, VT, NH)• Featured: Sweet Potato Fries, Mixed Berry Cups, Individual Portion Peanut

Butter, Individual Portion Dried Cranberries

• June 2018- Iowa SNA Conference• Featured: Mixed Berry Cups

USDA Foods Product Information

Accessing USDA Foods Product Information

• Information Sources • USDA Foods Specifications• USDA Foods Approved Vendor Lists• USDA Foods Product Preview Sheets• USDA Foods Product Information Sheets• Vendor Label• USDA Foods State of Origin Information

USDA Foods Specifications

All USDA Foods products have a specification defining the parameters for the product to be supplied, which may include:

• Nutrient Limits (e.g. fat, sodium, sugar)• Allergen Exclusions (e.g. no gluten, no soy, no peanuts)• Packaging (e.g. type of material and sizes)

USDA Foods SpecificationsAMS Website: www.ams.usda.gov/selling-food/product-specs

USDA Foods Approved VendorsAMS Website: https://www.ams.usda.gov/selling-food/becoming-approved

New Product Preview Sheets

https://fns-prod.azureedge.net/sites/default/files/fdd/product-preview-sheets19.pdf

USDA Product Information Sheets

• Provide a summary of product information from the specifications and from potential USDA Foods vendors

• Only available for direct delivery products

USDA Foods Vendor Label

FDA/FSIS defines minimum label information on primarypackaging:

• Company name• Company/Plant location• Food item name• Ingredient list• Allergen declaration

USDA Foods Purchased by State – FY16

USDA Foods Purchased by State – FY16

USDA Foods from Farm to Plate E-Letter

• Keep up-to-date with what is going on at FNS!

• Different program focus for each month

• Sign up for only the topics that interest you!

https://service.govdelivery.com/accounts/USFNS/subscriber/new

USDA Foods: We’re Listening!

• Do you have problems, concerns, ideas, or suggestions?• Do you have a success story to share?• Let us know: USDAFoods@fns.usda.gov

Photo submitted by: Prince Williams County Public Schools in Virginia

Want to Learn More About USDA Foods?

Join us in these other sessions:- USDA Hot Topic: Regulations, Research and Resources

(Monday, 1:00-2:00)- USDA Foods: Recall Know How (Tuesday, 2:15-3:15)- Using USDA Resources to Source American-Grown

Products (Wednesday 8:45-9:45)

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QUESTIONS?