Should You Consider Commodity Processing for Your Frozen Potatoes?
By Toni Baca-Eike
If your district isn't taking advantage of the USDA's commodity processing program, you're not alone. Only about 25% of K12 sales are made through this program. Why? Many districts simply aren't aware of the savings and logistical advantages of commodity processing for popular items like French fries.
In my job as K-12 Business Program Manager at Simplot, I have guided dozens of foodservice directors through the ins and outs of commodity processing. I can tell you it's well worth your while to understand what it is, how it works and when to use your entitlement towards it.
What is commodity processing?
Bulk for Processing (also known as commodity processing) is another program offered by the USDA to connect America's farmers and ranchers with school nutrition programs. The USDA mandates commodity processing from more than 200 items (meat, cheese, etc.), including frozen potatoes.
Here's how it works:
- Let's say your district knows it wants to purchase 3,000 cases of crinkle cut fries for the upcoming school year. You review the USDA's Summary End Product Data Schedule (SEPDS) and select a specification for a fry based on the approved products listed there.
- The USDA then procures the raw potatoes that the manufacturer will need to produce your fries. (FYI: it takes about 55 lbs. of raw potatoes to produce a 30 lb. case of fries).
- Your district awards the processing contract to a manufacturer based on the bid specifications.
- The manufacturer then processes the raw potatoes into the specified finished product and ships through commercial distributors, state warehouses or directly to your district's warehouses.
- Your district gets an allowance for the equal value of the raw potatoes (procured by the USDA) called value pass-through (VPT).
Bottom line? You pay only for the processing and delivery, not the potatoes, so your cost is lower.
What's the quality like?
In a word, great. At Simplot, the products we commodity process are the SAME branded products we sell to restaurants and other commercial customers. In the case of your crinkle cut, you could have spec'd our popular Infinity® 3/8" fry from the SEPDS and you'd receive the same quality product that thousands of commercial chefs serve every day.
In fact, you may already be buying Infinity 3/8" fries in the traditional way through a distributor. Commodity processing simply allows you to purchase that fry at a "discount" using your entitlement dollars.
Advantages beyond dollars off
Besides the financial benefits, commodity processing offers other advantages that distinguish it from other USDA programs.
- Flexible delivery: Schools can receive deliveries as needed from their distributor (or in some cases directly from the manufacturer) and combine with menu items rather than having to store items for long periods. Commodity and commercial items can be delivered at the same time.
- More diverse offerings and flexibility: As noted above, commodity processed items are in fact the same branded products we supply to commercial foodservice customers. This allows for more diversity of items offered, as well as the flexibility of being able to get your unique potato items with your primary distributor deliveries.
- Greater selection: There are a wide range of products approved for commodity processing. At Simplot, a variety of our branded white potato, sweet potato and dehydrated products may be purchased in this manner.
How do you receive your value pass-through (VPT)?
Districts can receive the value pass-through (the value of the potatoes that the USDA procured for them) in one of three ways:
- Net Off Invoice (NOI): Here, the distributor reduces the cost of the goods on your district's invoice. The distributor reports the transaction in a website application called ProcessorLink. You're able to monitor your commodity transactions and balances through this website, a service offered at no charge to you or the distributor.
- Fee for Service (FFS): Your district receives the value pass-through off invoice from the manufacturer. The manufacturer will arrange full truckload deliveries to your designated warehouse or designated distributor warehouse. The manufacturer reports the transactions in ProcessorLink.
- Rebate: Your district pays the commercial price for the processed item and submits a request for rebate to the manufacturer. The manufacturer then issues a payment directly to your district for VPT.
Potatoes are a natural for commodity processing
Given the popularity of potatoes in schools, it only makes sense to direct a portion of your entitlement funds to commodity processing for them.
Research shows that serving high quality potatoes can increase participation and satisfaction in school nutrition programs:
- "Students like the product and staff knows it will be a busy day when they are serving Sidewinders" Loudon County Schools, VA | 2017 Cool School Caf Annual Report
- Noticed an increase in ADP on days Simplot is served - Savannah Chatham County School, GA | 2017 Cool School Caf Annual Report
- Montgomery County School System, AL, prefers to utilize Simplot due to quality and student acceptance | 2017 Cool School Caf Annual Report
Let us help you evaluate commodity processing
At Simplot, we're here to assist you in any way we can, with free consulting and tools like online calculators to build your buying confidence. The details of commodity processing can seem intimidating at first. But with a little education, the choice becomes an easy one. The combination of commodity processing and potatoes is simply too valuable to pass up!
The purpose of this article is to bring attention to the benefits of commodity processing offered through the USDA and Simplot. This article is meant to be a general idea of how to process using entitlement dollars, but reach out to your individual state agency to see if this is an option for you.