Federally Donated Meat and Poultry

Each year, the Agriculture Department purchases and donates hundreds of millions of dollars' worth of agricultural commodities to various domestic food assistance programs, including the National School Lunch Program. Schools receive donated meat and poultry in a finished form, such as hamburger patties or chicken nuggets, and either use the product immediately for school lunches or store it for future use. Schools sometimes send fine-ground beef to a commercial processor, who might turn it into products such as barbecue-flavored hamburgers or meatballs. To gain greater production efficiency, some large processors may combine federally donated meat or poultry received from multiple sources, a process known as "batching." However, the contracts of some local school food authorities and state agencies restrict commercial processors from batching their products under certain conditions. This report discusses the (1) reasons for and extent of batching restrictions among schools and state agencies; (2) impact that batching restrictions have on commercial processors, schools, and the federal government; and (3) mechanisms that schools and state agencies use to ensure compliance with batching restrictions.

GAO found that: (1) states and schools impose batching restrictions to prevent deteriorated taste from meat and poultry that have been stored too long or improperly; (2) 46 of 54 state agencies that distribute federally donated meat and poultry have contracts with commercial processors that receive products from several states; (3) 28 of these agencies have batching restrictions in their contracts, but processors can request waivers from batching restrictions under certain circumstances; (4) most multistate processors say that batching restrictions do not significantly increase their costs or decrease yields because batching is not the standard processing procedure for some processors; (5) batching is not an issue for poultry products, since poultry is usually processed to a finished form by its producer before shipment; (6) a few multistate processors believe that failure to obtain waivers from batching restrictions limits their ability to operate at full capacity and increases costs; (7) processors usually absorb the higher operating costs that result from batching restrictions and do not pass them directly on to the schools; (8) batching restrictions have no effect on the federal government, since they occur after transfer of ownership; and (9) state agencies and schools rely on on-site Agricultural Marketing Service graders, periodic independent audits, and Department of Agriculture Inspector General reviews to ensure compliance with their batching restrictions.