USDA Foods Processing Information

About Processing USDA Foods

USDA Foods NSLP Program Overview
The use of entitlement towards further processing must be in the best interest of the students and school district. The processing of USDA Foods provides industry the opportunity to market finished end products to complement commercial purchases and can supplement 15-20% of the annual food budget. Recipient Agencies have the opportunity to receive a wider variety of end products that meet the needs of the students. 

Recipient Agencies must participate in the National School Lunch Program (NLSP) to be eligible for processing. The further processing program converts raw bulk USDA Foods into more convenient, ready-to-use end products. Benefits of using further processing include increasing food safety, reducing labor costs and stretching entitlement dollars. 


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Participating in Processing


Inventory Management


Inventory Formulas and Calculations

Average Monthly Usage (AMU)  

AMU calculates how many pounds the account uses per month to assist in requesting transfers and forecasting. Months of Usage is determined by the month of the program year (currently in) using a 10-month cycle.

REVIEW 10-month Usage Cycle Chart    
RETRIEVE tracking system balances for:    
 *YTD Usage (Shipped)
Processor Link - 2 usage columns totaled
K12 Foodservice - usage may appear negative
Total both tracking systems usage    
CALCULATE average monthly usage during program year

Account Usage Rate %        

Account Usage Rate is a key performance indicator of Recipient Agencies following menu plans. When inventory levels are high, this is generally a sign of inaccurate forecasting by the schools, long lead times by the processors, and inadequate distributor performance.

REVIEW Recommended Monthly Usage Rate Chart
RETRIEVE tracking system balances for:    
* YTD Usage (Shipped)        
    Processor Link - 2 usage columns totaled
    K12 Foodservice - usage may appear negative
*Available Balance        
    Total of allocations and transfers posted

CALCULATE average monthly usage during program year

Months on Hand (MOH)  

Months on Hand (MOH) calculates how many months of inventory an account has available if the same usage rate continues to occur. 

REVIEW Average Monthly Usage Rate CALCULATION
RETRIEVE tracking system balances for:
       *YTD End Balance
CALCULATE months on hand during program year

Not seeing all allocated inventory? The processor may not frontload inventory into the tracking system until the truck is received. Check the Approved Processor list for status.
What is Frontloading?                7 CFR 250.34(a)

The majority of Texas Processors practice frontloading allocations in the tracking system(s). A processor will "substitute" for the donated food in advance of USDA purchase, and provide commercial food products to RAs with value pass-through for the donated food. Although not specifically prohibited by USDA, such substitution in advance of purchase is not recommended, as USDA cannot guarantee the purchase and provision of donated foods for processing. In such case, the processor makes a business decision, and assumes the risk and attendant financial liability if USDA is unable to make the purchase.

List of USDA Foods Materials for Further Processing  Maximize 

USDA Foods Weighted Average Adjustment  Maximize 

Transfer of Further Processed USDA Foods Pounds  Maximize 

Participation Options  Maximize 

Passing the Savings On  Maximize 

Assistance available in English and Spanish. Please call 877-TEX-MEAL (877-839-6325) for help. Additional translations services available as well.

In accordance with federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, this institution is prohibited from discriminating on the basis of race, color, national origin, sex (including gender identity and sexual orientation), disability, age, or reprisal or retaliation for prior civil rights activity.

Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (e.g., Braille, large print, audiotape, American Sign Language), should contact the responsible state or local agency that administers the program or USDA’s TARGET Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal Relay Service at (800) 877-8339.

To file a program discrimination complaint, a Complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form which can be obtained online at:, from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant’s name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to USDA by:

1. Mail:
U.S. Department of Agriculture
Office of the Assistant Secretary for Civil Rights
1400 Independence Avenue, SW
Washington, D.C. 20250-9410; or
2. Fax: (833) 256-1665 or (202) 690-7442; or
This institution is an equal opportunity provider. Logo

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