Carry-over Inventory at USDA Foods Processors

This Management Bulletin (MB) provides information and guidance regarding carry-over inventory at U.S. Department of Agriculture (USDA) Foods processors and is effective beginning July 1, 2012. In order to reduce excess inventory at California’s approved USDA Foods processors, the Food Distribution Program (FDP) is implementing the following new policy.

Food Distribution National Policy Memorandum FD-064 (revised) lists carry-over inventory as one factor contributing to excess inventory at processors. Recipient agencies and private cooperatives (co-ops) should use USDA Foods diverted to a processor in the school year they are diverted to minimize excess inventory.

If a recipient agency or co-op is unable to use all the pounds they divert to a processor in the school year it was diverted, they will have until October 31 the following school year to use the inventory they carry over.

USDA Foods processors must submit a list of recipient agencies and co-ops with their June ending balance in pounds that will be carried over into the following school year for each USDA Foods item. In addition, USDA Foods processors will provide the average monthly usage during the prior year for each recipient agency and co-op. This information is due to the processors’ FDP processing consultant with the June Monthly Performance Report.

The FDP will use the June ending balances, the current year allocations, and the October ending balance to determine how much carry-over inventory is remaining as of October 31. Unused carry-over inventory will transfer to a State Account. The FDP will review special circumstances, such as truck cancellations and average monthly usage, that may make use of carry-over necessary past October 31 before carry-over is transferred to the State account. If a recipient agency or co-op transfers pounds to the State account due to non-use, they will lose the USDA value and the administration fee for these pounds. Once the pounds move to the State account, the FDP will notify schools about available pounds.

For example: 123 School District (123SD) diverts 10,000 pounds of cheese to The Sandwich Maker for School Year (SY) 2011–12. 123SD uses 6,000 pounds in SY 2011–12. The June 2012 ending balance is 4,000 pounds and will carry over into SY 2012–13.  Between July 1, 2012, and October 31, 2012, 123SD uses 3,200 pounds. On November 1, 2012, the remaining 800 pounds of carry-over will be reviewed and possibly moved into a State account due to non-use.

Agencies may not transfer carry-over pounds to another agency or processor. All transfers of USDA Foods will come out of the current year’s allocated inventory.

If you have any questions regarding this MB, please contact the Food Distribution Program Office by phone at 916-323-0865 or by email at fooddistribution@cde.ca.gov.