About Commodity Processing

USDA began the Processing Program in 1958 to permit State Distributing agencies and eligible recipient agencies to maximize the use of donated commodities. Most of the commodities processed through these programs go to schools participating in the National School Lunch Program. 

Under this program, States and recipient agencies can contract with commercial food processors to convert raw bulk USDA commodities into more convenient, ready-to-use end products. There are four basic types of processing agreements.

• National Processing Agreement.  In an effort to reduce costs and paperwork, FNS has taken on the roll of holding the agreement with the processor and approving all of the end products that will be manufactured under the agreement.  By SY 2007 all multi-State processors must have a national agreement in place. For additional information on NPA, click HERE. 
   

• State Agreement. Under a State agreement, the distributing agency negotiate bids/ and/or prices, selects the processor and the end products which will be produced, and enters into an agreement with the processor.
   

• Recipient Agency Agreement. Under a recipient agency agreement, the recipient agency or school enters into an agreement with the processor. This kind of arrangement requires the approval of the distributing agency. Once approved, the recipient agency may purchase end products from that processor.  A recipient agency agreement should be used after the agency has completed its procurement process.
   

• State Master Agreement. Under a State master agreement, the distributing agency enters into an agreement with the processor and only designated eligible recipient agencies may purchase end products from the processor

Last Modified: 02/28/2008