United States Department of Agriculture

Food and Nutrition Service

Southeast Region

 

Policy Memorandum 250.13-06:  Value of Commodities Used by Food Service Management Companies (FSMCs)

 

This memorandum is a restatement of policy previously issued as Food Distribution Policy Memorandum 82-21 on June 22, 1982.  Any changes made to the original text are in bold.

 

From time to time, a food service operation may enter into a contract with a FSMC which calls for that FSMC to utilize commodities earned by the food service operation in the production of the meals to be served.  Such contracts usually call for the price of the meal to be reduced by the value of any commodities used in the meal since they have been provided by the food service operation.  The major problem which arises most frequently in situations such as this is the determination of the value to be assigned to each commodity item in order to reduce the cost of the meal to the food service operation.

 

Any commodities made available to and used by FSMCs are to be assigned one value per product, based on the current commodity file for the date that the contract is signed.  The commodity file is updated and provided to State agencies on a regular basis.  Any food service operation entering into a contract with a FSMC must ensure that the appropriate commodity value is assigned based on the estimated cost-per-pound rate established by the current commodity file at the time that the contract is signed.

 

There may be instances during the period covered by the contract in which the FSMC is able to acquire the same food item(s) for a price lower than the value assigned by the commodity file.  Such items may be substituted for those which were actually donated by the food service operation, but the reduction in the total price of the meal must still reflect the full value assigned by the commodity file.

 

State Directors should ensure that food service managers are aware of the requirement to assign values to commodity items when they plan to enter into a contract with a FSMC; State agencies should make the necessary current commodity file information available to those food service operations planning to initiate such contracts.