Child Nutrition Procurement, Implementing Buy America Procedures Robert Quanstrom Director of Food Services, Val Verde USD

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1 Child Nutrition Procurement, Implementing Buy America Procedures Robert Quanstrom Director of Food Services, Val Verde USD The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

2 Background of why this is a hot topic? Review of Federal language State Administrative (AR) requirements Why this is such a Mess Procedures Keeping all pieces together

3 Background Buy American provision included in the Child Nutrition Reauthorization act of 1998 amended in California local farmer complaint to State legislators. California State Auditor CDE Buy American report July USDA Memo June Compliance with the Enforcement of the Buy American Provision in the National School Lunch Program

4 Buy American. (a) Purchase requirements. When purchasing food products with Federal funds, whenever possible, recipient agencies shall purchase only food products that are produced in the United States (U.S.). Food products produced in the U.S. means: (1) An unmanufactured food product produced in the U.S.; or (2) A food product manufactured in the U.S. primarily using food grown in the U.S. (b) Exceptions. The purchase requirements described in paragraph (a) of this section shall not apply in instances when the recipient agency determines: (1) Recipients have unusual or ethnic food preferences which can only be met through purchases of products not produced in the U.S.; (2) the product is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality; (3) the cost of U.S. produced food products is significantly higher than foreign products, or (4) the recipient agency is located in Alaska, Hawaii, Guam, American Samoa, Puerto Rico, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands. [53 FR 27476, July 21, 1988, as amended at 58 FR 39122, July 22, 1993; 67 FR 65015, Oct. 23, 2002] (highlights added for emphasis)

5 State Administrative Review Requirements (AR) USDA Memo June Compliance with the Enforcement of the Buy American Provision in the National School Lunch Program Buy American Foods produced and processed in the United States or territories Products must consist of 51 percent domestically grown commodities Contracts and solicitations must contain Buy American Provisions Limited exceptions for cost or availability Written procurement procedures include Buy American

6 State Administrative Review Requirements (AR) Buy American Required Documents Labels for the following food categories: Canned vegetables and vegetable juice Frozen vegetable and vegetable juice Canned fruit and fruit juice Frozen fruit and juice Frozen meat/entrée items Refrigerated foods (produce, butter/margarine, other items, etc.) Bakery, pasta, and miscellaneous (flour, cornmeal, sugar, rice, cooking oil, etc.) Condiments (salad dressings, mustard, mayonnaise, catsup, Barbecue sauce, salsa, etc.)

7 Why this is such a Mess State Audit, CDE Buy American report July of the 375 Food items we reviewed at the six school districts had labels that did not clearly identify country of origin for those items or their ingredients. (So 64% of labels do not give you enough information?) State Audit requirement ask for labels?

8 Why this is such a Mess NAFTA? - About 35% of imported commodity food products into the U.S. are from either Mexico or Canada. Code of Federal Regulations (CFR) Title 19, Chapter 1 Part 134 Country of Origin Marking Subpart D Exceptions to Marking Requirements SS J-list exceptions

9 Why this is such a Mess J-List exceptions. Articles of a class or kind listed below are excepted from the requirements of country of origin marking in accordance with the provisions of section 304(a)(3)(J), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)(3)(J)). However, in the case of any article described in this list which is imported in a container, the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked to indicate the origin of its contents in accordance with the requirements of subpart C of this part. All articles are listed in Treasury Decisions 49690, 49835, and A reference different from the foregoing indicates an amendment

10 Why this is such a Mess Livestock. Eggs. List of food items in Country of Origin Exception list Natural products, such as vegetables, fruits, nuts, berries, and live or dead animals, fish and birds; all the foregoing which are in their natural state or not advanced in any manner further than is necessary for their safe transportation Sugar, maple

11 Exports to Canada ($24.7 B) Billions$ Exports to Mexico ($18 B) Billions$ 1 Fruits and Nuts Corn Vegetables Soybeans Beverages Pork & Pork Products Baked Goods Dairy Food Preparations Beef and Beef Products 1.0 Imports form Canada ($22.5 B) Billions$ Imports from Mexico ($23 B) 1 Beef and Pork Fresh Vegetables Baked Goods other Fresh Fruits Vegetables Wine and beer Canola Oil Snack Foods Animal Feed Process Fruit & Vegetables 1.5 Billions$ California Food Products Billions$ *2016 Import and Exports of Food Products Export to Canada 4.1 Imports from Canada * California and the US have a trade surplus on Food products with Canada

12 Country of Origin Labeling (COOL) law COOL requires retailers to notify their customers with information regarding the source of certain foods. A retailer includes any person subject to be licensed as a retailer under the Perishable Agricultural Commodities Act (PACA). USDA s COOL labeling requirements apply to specified food products. COOL regulations refer to these food products as covered commodities. Covered commodities contained in the law include: Muscle cut meats derived from, veal,, lamb, goat, and chicken Ground meats derived from veal, lamb, goat, and chicken Wild and farm-raised fish and shellfish Fresh and frozen fruits and vegetables Peanuts, pecans, and macadamia nuts Ginseng Note: in 2016 Beef and Pork were dropped from the COOL requirement.

13 The Retail industry Has Major Compliance issues with COOL Graph from Consumer County of Origin information at the point of sale 2016 This a measure of non compliance findings (red bars) in comparison to the percentage of each category present for the total commodities sold (green bars) at retail. efault/files/media/2016retailcomp liancedata.pdf

14 Spices? The US imports more than 40 separate spices. Highest volume of imports, Vanilla Beans, Capsicums, black and white pepper, Sesame seed, cinnamon and cassia, mustard and oregano. Domestic spices include, Dehydrated garlic and onions, capsicums, mustard seed and herbs. Imported spices that are cleaned, sorted, or graded in the United States are considered to be domestic articles when exported Note: For my District, No vendor bid domestic spices last year.

15 Documentation challenges Orange Juice Label = Ingredients: Water, Orange Juice Concentrate from U.S.A., Brazil, Honduras or Mexico Apple Juice Label = Ingredients: Apple Juice Concentrate (Contains concentrates form Argentina, China and/or U.S.A) Ingredient list do not give you enough information to determine if the product is 51% or more domestic product. (The vendor verified that the Orange Juice was compliant, but Apple Juice wasn t)

16 Why this is such a mess We have over 12 billion dollars worth of Fresh Fruits and Vegetables being imported yearly from Canada and Mexico that may or may not be individually labeled depending on how it was shipped to the U.S. If these products end up being furthered processed or comingled during processing with canned or fresh products with like items in the U.S. such as; salad mix, chopped vegetable, pre-cut melons, they are going to indistinguishable from U.S. produced products. Studies at the retail level indicate that there is a 50% chance for fresh vegetable products that the Country of Origin is mislabeled/missing when you purchase the product.

17 Why this is such a mess International standards for Labeling of Prepackaged Food (CODEX STAN ) Country of origin The country of origin of the food shall be declared if its omission would mislead or deceive the consumer When a food undergoes processing in a second country which changes its nature, the country in which the processing is performed shall be considered to be the country of origin for the purposes of labelling. So if Avocados are imported from Mexico, processed in the U.S. into guacamole. The County of Origin for the product is the United States? When the Buy America Regulation became law there was about $40 Billion Dollars of yearly imported food products. Last year, there was about $120 Billion dollars of imported food products to the U.S.

18 Documentation challenges Labels are mostly useless!!! Unless it was canned in a foreign country Country of Origin on a label may be misleading. If shelled nuts are shipped from the U.S. to Mexico, shelled and packed for individual sale, then shipment back to the U.S. It would be a 100 % U.S. commodity food product and the label may state that Mexico is the Country of Origin. The only way to Document for Buy America is a Certification Letter from the Processor/manufacture/vendor for every food item. The USDA guidance presented earlier this year listed specific language for the Buy America Documentation. I certify that the following item(s) are produced and processed in the U.S. And contains over 51% of its agricultural food components, by weight or volume, from the U.S.

19 Procedures Keeping all of your pieces in place Department Purchasing Manual Bid/purchasing documents Documentation from Vendors Work with your sale staff/vendors on sourcing new products

20 Process for Updating you Procedures Buy American. (a) Purchase requirements. When purchasing food products with Federal funds, whenever possible, recipient agencies shall purchase only food products that are produced in the United States (U.S.). (b) Exceptions. the product is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality; Do I have to take the time and resources to prove the negative every year? I sent my bids out to three vendors and received no bids for Spices, Pineapple and Bananas that met the Buy America Requirement. Are my copy of the bids enough documentation? Do I need separate letters from a Vendor(s) every year stating that Bananas are not produced in the U.S.? Since the SFA is the Determining Agency, I believe it all depends on your written Purchasing Procedures & bid/quote documents.

21 Process for Updating you Procedures Buy American. Food products produced in the U.S. means: (b) Exceptions. The purchase requirements described in paragraph. (3) the cost of U.S. produced food products is significantly higher than foreign. Who Determines Significantly Higher SFA is the Determining Agency, I believe it all depends on your written Purchasing Procedures & bid/quote documents. If piggybacking on other School District Bids does the Piggyback bid have the same criteria for Significantly Higher exceptions as your Department s written Purchasing Procedures.

22 Department Purchasing Procedures Need Specific language in your Department s written Buy America purchasing procedures. If no U.S. domestically grown food or manufactured food products are bid/quoted an any one category or item, this demonstrates that there is a lack of availability for the domestically grown commodities that are produced or manufactured in the U.S. in sufficient and reasonable available quantities Generally, most spices and tropical fruits, such as; bananas, pineapple and mandarin oranges are not produced in the U.S. The District reserve the right to purchase non-domestic grown or manufactured food products if the cost of the U.S. produced item, that contains (51%) or more domestically grown commodities, is ten-percent (10%) or more expensive than the non-domestic product.

23 Update bid/purchasing documents Specifications. Work with sales person to look for and specify U.S. produced products when possible. We switched our Green Salsa to a U.S. brand this year. When possible do not specify brand names that are manufactured in a foreign country. Bid documents should include generic availability Update bid/purchasing documents Determine best way to approach? Line item certification in bid document? Line item method had some errors when we tried it last year. Separate certification submitted for each line item?

24 Synopsis Update written purchasing procedure manual Work with sales person to specify American made products Update purchasing bid/quote documents. For Documentation Labels are mostly useless. Foreign Canned products will list Country Of Origin Labeling (COOL) A Country of Origin Label does not always equal where product was grown. Need Specific language from vendors for letters of certifications. Must include: I certify that the following item(s) are produced and processed in the U.S. And contains over 51% of its agricultural food components, by weight or volume, from the U.S.

25 Questions? Robert Quanstrom Director of Food Services Val Verde USD

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