Company LOGO South Texas Coop Lori Atwood Ramos, MBA, RD Purchasing Coordinator & America Retana Purchasing Technician

Agenda The Basics of Entitlement (PAL) How Can I Use My Entitlement Processing Commodities

Effective Use of Entitlement What is Entitlement? –REAL money for your program Your “commodity bank account” –Used towards USDA Foods (commodities), purchased by USDA and donated to schools USDA fiscal year runs January-December –Supports U.S. agriculture markets and provides nutritious foods to be used towards feeding programs –Commodity Assistance Rate for SY13 $0.2238

Effective Use of Entitlement How Do I Calculate My Entitlement? –Total lunches served and claimed for reimbursement x the Commodity Assistance Rate of $ How Can I Use My Entitlement? –Allocate (debit) funds towards: Group A & B USDA Foods (commodities) Farm to School Program Fresh Fruit & Vegetable Program Processing of USDA Foods (commodities)

Effective Use of Entitlement Group A USDA Foods (commodities): Meats Fruits, canned and frozen Vegetables, canned and frozen Group B USDA Foods (commodities): –Considered “staples” Dairy products, including cheese Grains Oils Peanuts

Effective Use of Entitlement Bonus USDA Foods: –Available for Group A & B items –Does not use entitlement funds (still has $ value) Farm to School Program (DoD) –Produce delivered from DoD Prime Vendor to JBS ( State Warehouse ) then delivered to schools Fresh Fruit & Vegetable Program (DoD) –Purchase fresh produce from approved vendors Option to purchase produce off this contract even after all entitlement funds allocated are exhausted

Effective Use of Entitlement Processing of USDA Foods (commodities) –Can make efficient use of raw and/or bulk USDA Foods by processing them into more convenient, ready to use forms –Benefits: More menu options Can help to increase student participation –Also increases entitlement Can help to decrease labor costs –Minimizes manual labor Provides a high level of food safety Most products are CN Labeled

Processing Flow Processor Manufacturers that process commodities Sampling Food show or taste testing RFP Request pricing from manufacturers/distributors School Districts Enter Pre-Order in ProcessorLink Coops Request truckloads through TDA – TXUNPS TDA Orders truckloads through USDA USDA Purchases USDA Foods (commodities) USDA Foods Sent to processor from USDA Processor Makes finished end products End Products Delivered to district directly, through warehouse or distributor – depending on chosen value pass through method School Districts Manage, track, and verify receipt of end products

Effective Use of Entitlement Value Pass Through Methods: –Fee for Service (FFS) School district invoiced directly from processor –Case price excludes the USDA donated food value. –Once end product is delivered to school district or state contracted warehouse the invoice is payable to the processor Processor produces end product once truckload is purchased by USDA and received Number of deliveries from processor may be limited –Dependent on size of end product order, must meet the processors minimum delivery requirements as specified in RFP

Effective Use of Entitlement Value Pass Through Methods, cont…: –Fee for Service (FFS) through Distributor Also known as Modified Fee for Service (MFFS) Distributor acts as processor’s billing agent and invoices school district –Case price excludes the USDA donated food value –Case price includes distribution fees – Distributor bills school district at the total case cost under provision of FD-025 (March 29, 2004) –School district and distributor are required to retain proof of delivery (invoice) »School district is responsible for verifying receipt of commodity value and accurate price

Effective Use of Entitlement Value Pass Through Methods, cont…: –Indirect Discount Also known as Net Off Invoice (NOI) School district is invoiced by distributor –Net price + distribution fees »Delivery fee included in commercial bid price »Donated food value deducted on the invoice Can eliminate need for storage costs –Just in time deliveries Distributor must have a tracking mechanism School district must commit to the required sales verification –Confirm receipt and commodity value

Effective Use of PAL $ Value Pass Through Methods, cont…: –Rebates Can be simplify procurement method School districts must pay the capital layout for the commodity value upfront and wait to receive refund from processor Process: –District purchases products through distributor –Distributor sends velocity reports to processor, broker or school district –Rebate form is submitted to processor with velocity reports –Processor sends rebate checks to district

FFS vs. NOI Fee For Service (FFS)Net Off Invoice (NOI) Required end product selectionsNo required end product selections “bank” of pounds Products delivered to state Purchased as needed through warehouse or direct to district*distributor -Minimum delivery requirements -Distributor minimum -1 or 2 deliveries/month -Weekly deliveries -Delivery charges -No delivery charges -Potential storage charge -No storage charge -Requires vendor account -Best commercial price plus set-up with district DF value discounted -Multiple invoices and p.o.’s -One vendor/one invoice -Typically best bottom $ -Pay premium for JIT deliveries *MUST consider storage *Additional administrative work to and delivery costs! monitor and verify pounds!

Effective Use of Entitlement Menu Nutrition Cost Customers Storage USDA Foods (commodities)

Effective Use of Entitlement Determine Usage of USDA Foods –Base on menus and past purchases –Estimated number of servings needed to fulfill your menu requirements for the school year Review past production records Conduct a Cost Analysis –Resource: SNA’s Supply Chain Management Toolkit:

Step By Step What You Need: –Your District’s Menu –CNP-STC Processing Order Guide –CNP-STC Commercial Bid Order Guide –All Applicable Delivery Charges and/or Fees JBS (or other State Contracted Warehouse) Private Warehouse Consider District Warehouse & Storage Costs –Labor –Equipment (trucks) –Fuel –Insurance & Liability –Commodity Costs »Evaluate your options (sample)…sample »Determine best value for your program!

Effective Use of Entitlement Maximize Your Entitlement: –Allocate (debit) funds for USDA Foods (commodities) and processing based on menus and usage –Evaluate costs Make sure to include donate food value –Diversify entitlement allocations –Never “sit” on uncommitted entitlement –Request Bonus items

Effective Use of Entitlement Common Pitfalls: –Not taking time to evaluate your school districts menu and usage needs –Thinking of USDA Foods (commodities) as “free” –Not utilizing all the available options –Not actively assessing/adjusting commodity requests –Committing to process items you have not served/tested with your students –Processing items that are not menued throughout the school year and/or changing menu –Inadequately managing, tracking, and/or verifying receipt of further processed items

Effective Use of Entitlement How to manage, track and verify processed commodities –Use the following resources: K12 Foodservice – ProcessorLink – Labatt Foodservice – –Must set up an account –No charge –Use throughout the school year –School district’s responsibility

Checklist: Do you and/or any of your staff need to submit FND 101 Certificate of Authority? –Complete and submit to TDA ASAP February 1 st access TXUNPS FDP Module –STOP! Read/view instructions and training materials –Set up district info Remember to select Region One Coop or we will not have access to assist you –Allocate entitlement If processing commodities ensure to allocate enough funds to cover requests (round up!) –Enter Group A & B survey (requests)

Checklist, continued…: Do you plan on processing commodities for SY13? –Ensure you have a ProcessorLink account –Check current balances against anticipated SY13 needs –Enter pre-order in ProcessorLink Order Guide will be ed to all members Deadline February 21 th –Do not enter processing survey in TXUNPS – FDP Module

Effective Use of Entitlement