Codification of Poultry Substitution and Modification of Commodity Inventory Controls for Recipient Agencies

This rule amends USDA's Food Distribution Program regulations. The rule has two distinct parts. The first part of the rule allows limited poultry substitution and full substitution of all other commodities except for beef and pork. The second part of the rule reduces current commodity recordkeeping and reporting requirements for some local level recipient agencies, such as schools. The Department has operated a demonstration project program since Feb. 1, 1996, which has allowed commercial poultry to be substituted for commodity poultry in processing. Substitution of most donated foods with commercial foods has always been permitted under current regulations. Current regulations provide a list of 16 commodities that may be substituted without the prior approval of the Food and Nutrition Service (FNS). Any other commodity, except for meat and poultry, may be substituted with the prior written approval of FNS under 7 CFR Sec. 250.30(f)(4) of the current regulations. Required Certified Public Accountant (CPA) audits have not shown any significant problems with these substitution options. No substitution of inferior or non-domestic product has been identified. Therefore, this rule amends the regulations to allow limited poultry substitution, with a substitution plan approved by both FNS and Agriculture Marketing Service (AMS) grading; and full substitution for all other commodities except for beef and pork, on a permanent basis, without prior written approval form FNS. Secondly, because of changes in the commercial market and the food donation programs, USDA has tested the effects of allowing vendors to use commercial labels on some commodity products purchased for schools. Commercial labeling had already been introduced in other USDA food donation programs with good results. However, commercial labels complicate the current inventory procedures that require commodity inventories to be kept separate from purchased inventories. Therefore, FNS is amending the current inven