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Food Distribution

About Processing USDA Foods

Last Published: 08/18/2016

USDA began the processing program in 1958 to permit State Distributing Agencies and eligible Recipient Agencies to maximize the use of donated USDA Foods. Most of the USDA Foods processed through these programs go to schools participating in the National School Lunch Program. 

Under this program, State and Recipient Agencies can contract with commercial food processors to convert raw bulk USDA Foods 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. 
  • State Agreement. Under a state agreement, the distributing agency negotiates 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.