FNS National Commodity Processing Program — Turning USDA Donated Foods into Processed Products for Schools and Nutrition Programs
Legal Authority
- 7 U.S.C. § 612c — Section 32 of the Agriculture Adjustment Act: appropriates funds for USDA to purchase surplus agricultural commodities to support farm prices and distributes them as donated foods to nutrition programs; the purchasing authority that generates the commodity supply for the NCP program
- 7 U.S.C. § 1431 — Surplus commodity distribution authority: authorizes USDA to distribute surplus commodities to eligible recipient agencies; the distribution authority underlying the donated food system
- 7 CFR Part 252 — FNS regulations governing the National Commodity Processing Program: establishes the agreement framework between FNS, states, and processors; defines processor eligibility, end product data schedules, recipient agency ordering procedures, and audit requirements
Key Mechanics
The National Commodity Processing (NCP) Program converts USDA-purchased bulk donated commodities (whole chickens, ground beef, butter, cheese, canned vegetables) into value-added processed products that school cafeterias and other nutrition program recipients can actually use. Eligible food processors enter agreements with state agencies (which run the school lunch programs) to receive donated commodities at no cost — the commodity is USDA's in-kind contribution — and apply their production capabilities to turn it into finished products: chicken nuggets, ground beef patties, cheese slices, applesauce. The processor submits an "end product data schedule" to FNS certifying how much donated commodity is contained in each case of finished product, so state agencies know they are getting the full value of the commodity. Recipients pay only the processing and delivery costs — not the commodity value. FNS audits processor usage to verify commodity quantities are properly incorporated into finished products and not diverted.
Current Rule (2026)
| Parameter | Value |
|---|---|
| Citation | 7 CFR Part 252 |
| Issuing agency | USDA Food and Nutrition Service (FNS) |
| Statutory authority | 7 U.S.C. § 612c; 7 U.S.C. § 1431 |
| Last major amendment | No recent Federal Register amendments |
What This Rule Does
USDA purchases large quantities of surplus agricultural commodities — ground beef, whole chickens, butter, cheese, canned goods — through its price support programs and distributes them as "donated foods" to school lunch programs, food banks, and other nutrition assistance recipients. But a case of whole canned peaches is not the same as individual fruit cups for a school cafeteria. The National Commodity Processing (NCP) Program is the mechanism that transforms bulk donated commodities into value-added processed products that recipient agencies actually want and can use.
Seven CFR Part 252 governs the NCP program. Under this program, FNS enters into agreements with private food processors who receive USDA donated commodities at no cost, apply their processing capabilities to produce finished goods (like ground beef patties, chicken nuggets, or cheese slices), and deliver the processed products to eligible recipient agencies — primarily state agencies running the National School Lunch Program and other USDA nutrition programs.
The key benefit: processors don't pay for the donated food but use their production lines to turn it into more convenient and usable formats. Recipient agencies get products better suited to their operations. USDA finds a productive market outlet for surplus commodities.
Key Provisions
- § 252.1 — Purpose: FNS and private food processors make agreements to turn donated commodities into processed foods and provide them to eligible recipient agencies; the program is designed to develop new markets for donated food while meeting the needs of nutrition program recipients; processors are expected to apply their marketing and distribution expertise to expand the program's reach
- § 252.2 — Definitions: "agreement value" is the price USDA assigns to a donated food, including its purchase price, transport, and processing costs — this is the value credited to the processor for the donated commodity; "end product" means the processed food item resulting from the donation; "recipient agency" means a state agency, school food authority, institution, or other entity eligible to receive donated foods under USDA nutrition programs
- § 252.3 — Eligible commodities: the Secretary decides which donated foods are available under the NCP; only foods that USDA distributes free in other nutrition programs may be used; FNS administers the program, manages contracts, handles distribution logistics, and pays delivery costs to participant processors
- § 252.4 — Processor applications: food processors may apply at any time to join the NCP using an FNS form; FNS accepts or rejects applications within 30 days (unless more information is needed); FNS evaluates applications based on financial capacity, storage and shipping ability, past performance, available markets and customers, and business integrity; approved processors must maintain the facilities and capabilities stated in their application
- § 252.5 — Recipient agency registration: recipient agencies must register with FNS using an FNS-approved form and maintain clear, complete records of donated food received and processed products obtained; agencies must notify FNS when they become ineligible to receive donated foods; failure to notify can result in claims against the agency for products received while ineligible
How It Affects You
If you operate a food processing company with capacity to process bulk agricultural commodities, the NCP program may provide a source of raw material (USDA donated foods) in exchange for producing and delivering processed end products to school food authorities or other eligible recipients. The commodity comes at no charge — you provide processing, packaging, and distribution. Contact FNS about application requirements and available commodities.
If you manage a school food service operation or other USDA nutrition program recipient, the NCP program gives you access to processed foods derived from USDA donated commodities. Instead of receiving bulk raw commodities, you can work with your state agency to obtain value-added processed products that fit your menu and production capabilities. Contact your state agency's donated food coordinator to learn about available NCP products.
State agencies administering nutrition programs play a central role in NCP — they coordinate between FNS, participating processors, and local recipient agencies; they maintain distribution records; and they manage the process by which local agencies select NCP products. State agencies must register and maintain accurate records as a condition of participation.
Statutory Authority
This rule implements:
- 7 U.S.C. § 612c — Section 32 funds; permanently appropriates a percentage of customs receipts for USDA use in purchasing surplus commodities for nutrition programs; the commodities purchased with these funds are the primary source material for the NCP program
- 7 U.S.C. § 1431 — Commodity distribution programs; authorizes USDA to distribute surplus agricultural commodities to eligible institutions and individuals through federal nutrition programs
Recent Rulemakings
No major Federal Register amendments. The NCP program framework reflects longstanding FNS administration of the donated food processing system.