When SFAs choose to process USDA foods, they become responsible for tracking the value of their products. SFAs must make sure that they are aware of their inventory level, which was discussed on the previous page. In addition, it is the Child Nutrition Director's responsibility to make sure that they are receiving the full value of their USDA food products. Product value may be given back to the SFA through a variety of value pass-through systems. Each system will be tracked on the product invoice in a different way. The system chosen will also change the timing of inventory draw-down in inventory management systems. This page will introduce each of the value pass-through systems.

Value Pass Through Systems

There are three value pass-through systems: fee-for-service, net-off-invoice (NOI), and rebates. As of 2016 the state of Utah is no longer allowing rebates as an acceptable value pass-through system with our USDA food processors. Each SFA should be aware of both fee-for-service, and NOI and choose the method that best meets their needs.

USDA Foods Value Pass Through Webinar

This webinar explains the definition of various value pass-through systems, as well as the pros and cons of each system. Watch Now

The information below is a summary of some of the content covered in the USDA Foods Value Pass Through Webinar.

Fee-For-Service

Traditional: This is used when products are purchased by the SFA directly from the processor. The SFA purchases the products and pays the processor a fee for service and delivery. Service and delivery are charged as two separate line items. The USDA food inventory is reduced when the processor invoices the SFA.

Through a Distributor: This is used when products are purchased by the SFA from a distributor. The distributor (Nicholas, Sysco, US Foods, ect.) purchases the product from the processor in acticipation of the SFAs' needs. The end products are shipped to the distributor at fee-for-service rates. The SFA receives a single invoice with a service charge and a delivery charge. The USDA food inventory will not be reduced in inventory management systems until the distributor has reported sales to the processor.

Net-Off-Invoice

This is used when the products are purchased by the SFA from a distributor. The SFA purchases the product from the distributor at the commercial price minus the value of the USDA food contained in the end products. Then the distributor prepares a sales report that is sent to the processor. When the processor receives the sales report the distributor is refunded the price of the USDA food. The USDA food inventory will not be reduced in inventory management systems until the processor receives and verifies the proof of sales from the distributor.