NET-OFF INVOICE PROGRAM
Approved Net Off Invoice Processor
Richland Hills Farms participates in the USDA Commodity Foods programs using the Net Off Invoice method. The orchard is listed as Sunset Orchard for all USDA programs. Sunset Orchard is a USDA approved commodity processor and meets all USDA standards required to participate in the program such as GAP certified, Buy American Compliant, USDA NSLP approved portion sizes. Sunset Orchard is inspected yearly because fruit and vegetable growers and processors must pass GHP and/or GAP audits conducted by the USDA. From field to plate, all produce items have been held to quality and food safety regulations set forth by the USDA to ensure the highest quality finished product.
USDA Foods Net Off Invoice or Direct Diversion is a commodity further processing program. NOI/Direct Diversion allows state distributing agencies (SDA) and school districts or recipient agencies (RA) to contract with commercial food processors to convert raw and/or bulk USDA Foods into a variety of convenient, ready-to-use end products like pre-packaged sliced apples. The purpose of USDA NOI further processing program is to provide ordering options that maximize the use of USDA Foods by allowing RA the ability to further process their USDA commodities into products that work well in their food service operation while allowing directors more options to purchase products that their students prefer.
The majority of the USDA Foods processed through the NOI program are purchased with entitlement money from schools participating in the National School Lunch and Child and Adult Care Food Program. SDAs, RAs, and food processing companies collaborate to ensure that further processed products can be delivered utilizing the RA commercial distributor. Or, they can be delivered directly to the RA warehouse. The processing of USDA Foods through diversion programs provides industry the opportunity to market finished products while recipient agencies have the opportunity to select a wider variety of end products that meet individual district needs and local flavor preferences.
Participation in the NOI program allows RA’s to allocate entitlement by requesting the state agency to order a specific raw commodity and send it to a manufacturer for further processing. The state agency then pools all the entitlement per the RA allocation into truckloads. The state agency then orders from the USDA truckloads of apples to be sent to Sunset Orchard on the RA behalf to be further processed into products that include individually wrapped 2 oz and 2.4 oz bags or packaged in bulk bags offered in 1 pound, 2 pound and 10 pound bags. The USDA Material number to allocate entitlement to is 110149 – apples for further processing.
Customers who divert pounds of commodity apples, USDA Material Number 110149, to Sunset Orchard are able to utilize their allocated pounds towards the purchase of Richland Hills Farms sliced apples. Sunset Orchard (also known as Richland Hills Farms) fresh sliced apples are delivered to the RA through their broadline distributor along with their commercial purchases on a weekly basis. The NOI process allows a seamless transition from commodity to commercial purchases. Pricing of commodities is an average calculation using formulations developed by the USDA which takes into consideration market fluctuations and historical data provided by the Department of Agriculture.
The USDA provides the industry with a set price per pound that is published in November of each year for all commodities available to allocate entitlement towards. This set price is a benchmark to be used by the manufacturer to allow a rebate pre-case for the amount of raw material (apples) used in each case of finished product, along with the value of the commodity that is in each finished case. The amount of raw commodity and the associated value is deducted through a NOI. The distributor invoice will show a rebate for each NOI commodity delivered to the RA.
Sunset Orchard utilizes Processor Link for NOI tracking. The system runs like a bank account with each district’s account having a running total of pounds. Each case of Sunset Orchard fresh sliced apples delivered will have the raw pounds used to make the case and the associated commodity value deducted from the RA’s NOI bank. The SFAs and RAs track pounds and entitlement value through the Processor Link site. RAs can verify cases delivered by distribution as well as monitor over all entitlement usage. Processor Link provides reports to help RAs with the monitoring of entitlement. The reports also provide RAs with tools that can help in forecasting future allocations.
The NOI program allows for the transferring of pounds throughout the school year. Each state agency has a unique method for allowing RA’s to request additional entitlement “pounds” to be added to their banks in the event that they exceed what they originally allocated. The transfer of pounds into RA’s NOI banks is based on availability, utilization and need of all districts involved in the USDA NOI program for a specific manufacturer.
The Net Off Invoice (NOI) program allows school districts the flexibility to select specific manufacturers’ brands, allowing them to fill menus with the products that their students expect. The program is designed with options built in to allow for 100% utilization of commodity entitlement. NOI options provide each RA with the ability to offer a wide variety of products limited only by the manufacturer’s commodity catalogue and can help in accommodating the changing and sometimes fickle palate’s of students.