11/17/2017. USDA Commodity Foods Basics. What commodities mean to your district

Transcription

1 USDA Commodity Foods Basics What do commodities mean to you? Importance of Districts staying on track Concept of Coop driven delivery method District Level Diversion Single Bank What commodities mean to your district Schools per meal served Do not lose track of this Fact: Your District earned this amount by serving meals. This is not Free Money It has nothing to do with Free and Reduced It is not just given to the school Schools can make a difference based on performance Schools need to earn and utilize these funds to have a successful program. 1

2 The Value of USDA Foods Average commercial cost of a meal: $1.50 Average price of a meal: $2.25 Food cost with no commodity: ($1.50/$2.25) 66% Food cost with commodity: ($1.50-$0.33)/$2.25) 52% You must effectively utilize your USDA Foods to realize this 14% in lower food costs. If your boss is complaining about high food costs, look to commodity utilization How would we get started? 1 st and Most Important! Go to the State for acceptance and guidance Assemble a group of schools that would be interested (a good rule of thumb is 60K ADP) Does not have to be just your coop Have to form an entity to be recognized as the RA in the eyes on USDA and State Determine how you will execute (Self manage? Commodity Administrator?) RFP if necessary How would we get started? Agree on and solicit RFP s for Processors Coop typically owns this Follow all Federal Guidelines including without limitation 2 CFR Part 200, and 7 CFR Parts 210, 215, 220, 225 and 226 (which I am sure you all know about ) The awarded processors are sent to Commodity Administrator and they aggregate demand and order trucks through WBSCM, the state gives final approval and sends orders 2

3 Benefits of Coop Commodity Program Control and Focus on Processors and Non-Processed Items Your group can evaluate and make good decisions You order what the group needs Coordination with awarded distributor reference stocking All commodities come on the same truck as your commercial distributor/weekly deliveries Soft cost savings (Less invoices, Deliveries, orders etc.) Volume Discounts Types of USDA Foods Available Non Processed Items: Direct Delivery Minimally Processed Direct Delivery Value Added Direct Diversion to Approved Processors for Further Processing Value Pass Through (VPT) Systems FEE-FOR-SERVICE THROUGH A DISTRIBUTOR (MFFS) NET OFF INVOICE (NOI) DoD Fresh Fruit and Vegetable Program Insist on Tools to Help your Districts Manufacturer Volume Discounts. Based on the aggregate volume Above the SEPDS Distributor Reports. USDA Foods Commodity Administrator reports. Are there additional tools you use today? 3

4 Two/Three types of Delivery Methods District Level Diversion Method Single Bank Combination of the two District Level Diversion Method District decides how many pounds to go to the processors (and Non Processed go to Distributor) of their choice. This decision is made in January/February timeframe of the prior school year Coops demand gets aggregated and trucks ordered Cannot spend any more or less than pounds allocated District Level Diversion Method Key is to Plan! Then survey for your district only Processed Items Plan for those pounds on your menu data is key Non-Processed Items Overall cost should be lower than commercial price DoD Produce Understand the limited availability of product at times Manufacturer Volume Discounts Suggest diversion to manufacturers offering additional rebates 4

5 Pro s of District Level Diversion Control Ownership of pounds/cases Plan is clearly defined Con s of District Level Diversion Having to make decisions so early Lower flexibility in the menu offering Allocating pounds to processor and unable to utilize in the current school year Not allocating enough pounds and unable to receive commodity draw down. Historically, lower commodity utilization Historically, higher carryover balances Historically, higher level of frustration Single Bank Delivery Method Paradigm shift from thinking about pounds to thinking about Entitlement Dollars All processor pounds are put into a Single Bank for all members to pull from. 5

6 Single Bank Process Michigan piloted SY HPS and GLC implemented SY Ohio and California implemented SY HPS and SWEPC implemented SY HPS has been successfully managing this system since the school year Great results High member satisfaction State Dept. pleased with results The program has grown to include Brown Box Why make this change? The system is becoming inefficient Members do not have sufficient data to make the decisions they need to make Converting Commercial Sales to Commodity Sales. (Gift Card analogy) USDA Utilization Directives Use it or Lose it. 6 month balance What does that mean? Single Bank System What would it mean for you? Timeline Processed Items Brown Box DoD Produce Volume Discounts 6

7 Single Bank System Time saved on Survey Process No need to calculate pounds Ability to change processors when menu dictates Allows Districts to focus on what they do best: Feed Kids!! Single Bank System Do I need to do a survey for Brown Box and DoD if my district does not want those items? No. If you feel it is best for your district to use all of your entitlement on Processed, do not complete the survey and all of your entitlement will go into the Single Bank System What if I forget to order Brown Box and DoD during the survey period? Carryover Processed Pounds will be swept into the Single Bank You will be given Dollars that represent your fair share of Coop s entitlement Reallocated Balance The entire Coop will have access to those pounds They do not go back to Processor, get donated, or vanish Non Processed Will Carryover and you will given the value of that carryover because you have already landed it 7

8 How does it all work? How much Entitlement can I spend in the Single Bank System? What Processors will be available to order from? Can I spend too much at a Processor? What about Fair Share? Single Bank Entitlement Complete survey: divert dollars to Non-Processed and DoD Produce. All remaining entitlement will be available in the Single Bank System. Example: District has $50,000 in entitlement Divert $5,000 to Non-Processed Divert $5,000 to DoD District would be able to spend $40,000 on in the Single Bank System on Processed vendors Total Entitlement Non-Processed Allocated DoD Allocated = Single Bank ($50,000) ($10,000) ($5,000) ($35,000) Which Processors will I be available to order from? You can order from ANY approved Processor the Coop has a processing agreement with. How will I know what items to order? Distributor should have indicators, E.g.: GFS has the Green Badge Icon. Approved Product List. 8

9 What about Fair Share? You (or a commodity administrator) has to have a system in place because per USDA a Fair Share must be ensured Each member has a threshold of pounds at each Processor Thresholds are determined from purchasing history Once the threshold is reached, you will not be able to order from that Processor If that happens you will call HPS to see if the overall Councils balance at that Processor would allow you to be loaded with additional pounds How do these Thresholds work? You (or a commodity administrator) will review your purchasing history and then: Determine a minimum # of pounds that all members will have Establish a buffer This establishes your target Place order with USDA This will ensure Fair Share for all Members What if I do not use a Processor? Every member will start with a Minimum Threshold from every processor You (or a commodity administrator) will reduce the balances by 10% of pounds from those members that had zero usage in any given month Then You (or a commodity administrator) will redistribute those pounds to members who are utilizing that processor 9

10 What Happens if I surpass my Target? A notification will be sent to the distributor and you. You will no longer get the Commodity discount for those vendor s products. At this point you can You (or a commodity administrator) to determine if there are enough pounds available to be loaded with some more target pounds. If that is not available you can continue to purchase NOI items from your distributor at the Commercial price. Are Brown Box and DoD part of Single Bank? That depends: These products can be ordered exactly as they are today Complete the Survey (Sometime in February) Products are assigned to your district Place order through your distributor Storage Fees for Brown Box may apply How can I manage this program? You could require or have a webpage that can monitor progress. You could require or have a system to sent a notification when your Single Bank is 95% depleted Real Time PAL Report 10

11 Will I still utilize Commodity Data Companies? Yes, these companies are still very important in your managing of the USDA Foods program. They are still your primary source for sales verification and have many resources that can help you utilize the program better. Resources ACDA (Handbook) Other Coops Distributor HPS SNA/ANC QUESTIONS? Kevin Crampton VP Contracting and Commodity Administration kcrampton@hpsgpo.com 11