[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5271-5275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2177]



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  Federal Register / Vol. 61, No. 29 / Monday, February 12, 1996 / 
Rules and Regulations  

[[Page 5271]]


DEPARTMENT OF AGRICULTURE

Food And Consumer Service

7 CFR PART 250

RIN 0584-AB99


Waiver Authority Under the State Processing Program

AGENCY: Food and Consumer Service, USDA.

ACTION: Final rule and waiver.

-----------------------------------------------------------------------

SUMMARY: This final rule amends the Food Distribution Program 
regulations by giving the Food and Consumer Service authority to waive 
provisions contained in the Food Distribution Program regulations for 
the purpose of conducting demonstration projects to test program 
changes designed to improve the State processing of donated foods. FCS 
is, at this time, invoking its authority under Sec. 250.30(t) to waive 
certain provisions of Sec. 250.30(f)(1)(i) in order to conduct a 
demonstration project.

EFFECTIVE DATE: This final rule is effective February 12, 1996.

FOR FURTHER INFORMATION CONTACT: Ursula Key, Schools/Institutions 
Branch, Food Distribution Division, Food and Consumer Service, U.S. 
Department of Agriculture, 3101 Park Center Drive, Room 501, 
Alexandria, Virginia 22302; or telephone (703) 305-2644.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule has been determined to be significant and was 
reviewed by the Office of Management and Budget under Executive Order 
12866.

Paperwork Reduction Act

    This final rule reflects no new information collection requirements 
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3502). The 
OMB control number assigned to the existing recordkeeping and reporting 
requirements was approved by OMB for Part 250 under control number 
0584-0007. The current burden hours will not change as a result of this 
final rule.

Executive Order 12372

    This program is listed in the Catalog of Federal Domestic 
Assistance under 10.550 and is subject to the provisions of Executive 
Order 12372 which requires intergovernmental consultation with State 
and local officials (7 CFR Part 3015, Subpart V and final rule-related 
notices published at 48 FR 29114, June 24, 1983 and 49 FR 22676, May 
31, 1984).

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This final rule is intended to have preemptive 
effect with respect to any State or local laws, regulations or policies 
which conflict with its provisions or which would otherwise impede its 
full implementation. This final rule is not intended to have 
retroactive effect unless so specified in the ``Effective Date'' 
section of this preamble. Prior to any judicial challenge to the 
provisions of this rule or the application of its provisions, all 
applicable administrative procedures must be exhausted. This includes 
any administrative procedures provided by State or local governments. 
For disputes involving procurement by distributing and recipient 
agencies, this includes any administrative appeal procedures to the 
extent required by 7 CFR Parts 3015 or 3016.

Regulatory Flexibility Act

    This final rule has been reviewed with regard to the requirements 
of the Regulatory Flexibility Act (5 U.S.C. 601-612). The Administrator 
of the Food and Consumer Service (FCS) has certified that this final 
rule will not have a significant economic impact on a substantial 
number of small entities. The cost of compliance to State processors of 
donated foods is expected to be reduced by the changes proposed in this 
rule.

Background

    Section 250.30 of the current Food Distribution Program regulations 
sets forth the terms and conditions under which distributing agencies, 
subdistributing agencies, and recipient agencies may enter into 
contracts with commercial firms for processing donated foods and 
prescribes the minimum requirements to be included in such contracts.
    On April 13, 1995, the Department published a proposed rule in the 
Federal Register at 60 FR 18781 which would permit FCS to waive any of 
the requirements of the Food Distribution Program regulations at Part 
250 for the purpose of conducting demonstration projects to test 
program changes designed to improve the State processing of donated 
foods. The proposed rule provided a 30-day comment period. This final 
rule incorporates the proposed waiver provision in the State processing 
regulations at 7 CFR 250.30(t).

Analysis of Comments

    The Department received a total of 9 comment letters from two 
distributing agencies, a local school food authority, and six 
commercial food processors. All commenters were in favor of the 
proposed rule.
    Four commenters responded favorably to the rule as it was proposed. 
They stated that by allowing FCS to waive certain provisions, more 
processors would be attracted to the program, and the cost of processed 
end products should be reduced. They further stated that some of the 
provisions contained in the State processing regulations are overly 
restrictive and have resulted in processors dropping out of the State 
processing program. These commenters believed that over-regulation 
results in increased costs which are passed on to recipient agencies. 
They supported FCS's proposal to allow pilot projects which could 
provide guideposts for simplification of the regulations. One commenter 
believed that demonstration projects will fully support modifications 
to the current program to generate more competition and improved 
efficiency.
    Five commenters who also supported the proposed rule cited specific 
provisions they would like to see waived as soon as possible. Three 
commenters supported the removal of the Agricultural Marketing Service 
acceptance service grading requirement for processing meat and poultry, 
complaining of excessive costs for obtaining the services of AMS 
graders. However, one commenter favored 

[[Page 5272]]
retaining the requirement. Four commenters supported removing the 
requirement for processors to submit annual certified public accountant 
audit reports, also due to the costs involved. The commenters claimed 
that the requirement has forced some processors out of the program. 
They stated that those companies complying with the audit provision are 
passing on audit costs in prices of end products to schools. FCS 
appreciates these comments and will take them into consideration when 
determining which requirements will be waived during the demonstration 
projects.

Waiver of Requirements

    FCS is invoking its authority under 7 CFR 250.30(t) to waive the 
current prohibition in 7 CFR 250.30(f)(1)(i) of the substitution of 
poultry. In a notice published elsewhere in this issue, FCS is 
announcing a demonstration project under which it will permit selected 
poultry processors to substitute commercial chicken for donated chicken 
in the State processing of donated chicken.

Summary

    Based on the comments received, this final rule adopts 
Sec. 250.30(t) of the proposed rule without change.

List of Subjects in 7 CFR Part 250

    Agricultural commodities, Food assistance programs, Food 
processing.
    For reasons set forth in the preamble, 7 CFR Part 250 is amended as 
follows:

PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS 
TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION

    1. The authority citation for Part 250 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b, 
1431e, 1431 note, 1446a-1, 1859; 15 U.S.C. 713c; 22 U.S.C. 1922; 42 
U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 3030a, 5179, 5180.

    2. In Section 250.30, a new paragraph (t) is added to read as 
follows:


Sec. 250.30  State processing of donated foods.

* * * * *
    (t) Waiver authority. The Food and Consumer Service may waive any 
of the requirements contained in this part for the purpose of 
conducting demonstration projects to test program changes designed to 
improve the State processing of donated foods.

    Dated: January 18, 1996.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.

Appendix to Preamble of Final Rule--Regulatory Impact Analysis

Date: June 1995
Agency: USDA, FCS
Contact: Ursula Key
Phone: (703) 305-2644

    1. Title: Food Distribution Program--Waiver Authority Under the 
State Processing Program.
    2. Action:
    a. Nature: Final Rule.
    b. Need and Purpose: This action is discretionary and is taken 
to support the goal of regulatory relief, increased State 
flexibility, increased program efficiency, and paperwork reduction. 
This authority will be used to conduct demonstration projects to 
test program alternatives to determine whether changes or greater 
flexibility will improve the efficiency of the State processing 
program. Of particular interest are changes that would increase 
competition among processors, which should result in lower costs to 
recipient agencies.
    This action amends the Food Distribution Program regulations by 
giving the Food and Consumer Service authority to waive provisions 
pertaining to State processing of donated commodities in the Food 
Distribution Program regulations at 7 CFR Part 250.30 only for the 
purpose of allowing demonstration projects. Current State processing 
regulations may be overly restrictive, thus increasing processor 
costs and discouraging the participation of processors.
    3. Background: Section 250.30 of the current Food Distribution 
Program regulations sets forth the terms and conditions under which 
distributing agencies, subdistributing agencies, and recipient 
agencies may enter into contracts with commercial firms for 
processing donated foods and prescribes the minimum requirements to 
be included in such contracts. This activity is typically referred 
to as State processing.
    State processing is an activity principally of the Child 
Nutrition Programs by which State or substate agencies arrange to 
have USDA donated commodities further processed into end products 
more readily usable by schools. For example, fresh bulk pack chicken 
might be processed into chicken nuggets, coarse ground beef into 
hamburger patties, whole turkeys into fully cooked breast meat and 
turkey ham, etc. About a third to half of all USDA donated meat and 
poultry is further processed under State processing contracts. For 
State processing, USDA either sends the commodities directly to a 
processor contracted by the State, or sends them to a State 
distributing agency, which in turn arranges to have the product 
backhauled to a processor. In either case, under State processing, 
State or recipient agencies pay the cost of any additional 
processing directly to the processor.
    The total value of USDA commodities donated to the Child 
Nutrition Programs was $667 million in FY 1994. A little under half 
of this, of which a third, or $100 million worth, was further 
processed under State processing arrangements. This figure has been 
constant for the last several years. While the degree of State 
processing varies by the specific type of product donated by USDA, 
typically about two thirds of beef is processed under State 
contracts, while less than a third of the pork, chicken and turkey 
are processed. Under current FCS regulations, processors may 
substitute like kind commercial commodities for USDA commodities for 
their convenience in manufacturing, except the rules specifically 
prohibit the substitution of meat and poultry.
    On April 13, 1995, the Department published a proposed rule in 
the Federal Register at 60 FR 18781 which would permit FCS to waive 
provisions relative to the State processing of donated commodities 
that are contained in the Food Distribution Program regulations at 
Part 250 for the purpose of conducting demonstration projects to 
test program changes designed to improve the State processing of 
donated foods. The proposed rule provided a 30-day comment period. 
This final rule incorporates the proposed waiver provision in the 
State processing regulations at 7 CFR 250.30(t).
    The Department received a total of 9 comment letters, all of 
which were in favor of the proposed rule.
    Commenters stated that by allowing FCS to waive certain 
provisions of the State processing regulations, more processors 
would be attracted to the program, and the cost of processed end 
products should be reduced. They further stated that some of the 
provisions contained in the State processing regulations are overly 
restrictive and have resulted in processors dropping out of the 
State processing program. These commenters believed that over-
regulation results in increased costs which are passed on to 
recipient agencies. They supported FCS's proposal to conduct 
demonstration projects which could provide guideposts for 
simplification of the regulations. One commenter believed that 
demonstration projects will fully support modifications to the 
current program requirements to generate more competition and 
improve efficiency.
    One of the first demonstrations being considered is the 
substitution of commercially acquired chicken for USDA donated 
chicken. Currently, only four poultry processors are participating 
in the State processing of donated foods. Processors have stated 
that the current policy which prohibits the substitution of 
commercially acquired chicken for donated chicken reduces the 
quantity of donated chicken they are able to accept and process 
during a given period. The prohibition against the substitution came 
about as a result of program abuses by processors in the past (e.g., 
substituting lesser grade commercial chicken for donated chicken, 
substituting mechanically boned chicken meat for high quality breast 
meat, etc). In FY 1994, USDA donated approximately $68 million worth 
of chicken to the Child Nutrition Program, about a third of which 
underwent State processing. Chicken purchased by USDA for further 
processing is typically bulk chill packed. In 

[[Page 5273]]
FY 1994, USDA donated 9.5 million pounds valued at $5.3 million. 
Processors must schedule production around deliveries of the donated 
chicken since it is a very highly perishable product. Some of the 
processors must schedule production around deliveries of donated 
chicken for up to 30 individual States. Vendors do not always 
deliver donated chicken to the processors as scheduled, causing 
delays in production of end products. These delays may be eliminated 
if the processors can substitute commercial chicken for donated 
chicken. Any substituted commercial chicken must be at least as high 
in quality as USDA chicken in terms of grade, condition, and other 
attributes.
    The demonstration project will enable FCS to evaluate whether to 
amend program regulations to provide for the substitution of donated 
chicken with commercial chicken in the State processing program. 
Particular attention will be paid to whether such an amendment of 
the regulations would be likely to increase the number of processors 
participating, and whether it would probably increase the quantity 
of donated chicken that each processor accepts for processing. Also, 
FCS will attempt to determine whether the expected increase in 
competition and the expected increase in the quantity of donated 
chicken accepted for processing in fact enable processors to 
function more efficiently, producing a greater variety of processed 
chicken end products in a more timely manner at lower costs. 
Further, FCS must determine whether USDA and the States have the 
practical capability to ensure that substitutions are, in fact, for 
comparable or better quality product.
    4. Justification of Alternative: This final rule would authorize 
the Department to conduct demonstration projects to study the effect 
of waiving certain expensive and burdensome requirements in the 
State processing program. For example, Agricultural Marketing 
Service (AMS) acceptance service grading certificates may be used in 
lieu of company generated production and quality control records. 
Through these demonstration projects, the Department hopes to 
determine if the cost of compliance for food manufacturers, as well 
as the record-keeping burden associated with the administration of 
the program, can be reduced. The Department's goal is to attract 
more manufacturers to participate in the State processing program. 
We are aware of three major poultry processors who sell commodity 
product to USDA but do not participate in the State processing 
program. We are not able to determine at this time exactly how many 
additional processors will decide to participate in the State 
processing program but AMS is optimistic that more processors will 
be interested in participating. This increased competition should 
ultimately lead to lower prices to recipient agencies. By conducting 
the demonstration projects, the Department can determine if relaxing 
certain requirements will adversely affect program accountability. 
It is important to note that all remaining controls and requirements 
of the State processing regulations and the State processing 
contracts will remain in effect. We are only considering reductions 
or waivers which are feasible because other program controls can 
perform the function of the changed or waived requirements. If the 
results of the demonstration projects indicate that certain 
requirements can be modified or waived without compromising program 
integrity, the Department can consider amending certain current 
State processing program requirements. The Department expects this 
rule will support efforts to streamline the administration of the 
State processing program and improve customer service to recipient 
agencies (primarily schools).
    Two other alternatives were considered: (1) doing nothing and 
(2) eliminating the audit and substitution regulations entirely. The 
option of selected waivers for demonstration projects was the 
preferred alternative.
    5. Effects:
    a. Effects on food manufacturers: Through conducting 
demonstration projects, FCS can determine if it is possible to 
eliminate or reduce reporting and recordkeeping requirements for 
processors. Some of the more burdensome requirements include 
inventory records, production records, quality control records, 
sales records, monthly performance reports, grading and inspection 
requirements, performance, supply, and surety bonding requirements, 
and the certified public accountant audit requirement. For example, 
processors which receive donated food valued at $250,000 or more 
each year are required to submit an annual independent certified 
public accountant audit report. This requirement may be relaxed to 
require an audit every two or three years for those processors with 
a history of good performance. The Department is interested in 
determining whether any of the above requirements can be eliminated 
or reduced while still maintaining program accountability for the 
donated food. Also, the Department intends to determine how much 
costs can be reduced for processors as a result of participation in 
the demonstration projects. Since program controls may not be as 
strong as under current rules, FCS would seek to determine the 
extent to which the benefits of burden reduction are worth potential 
costs due to less control.
    b. Effects on State distributing agencies: Through the 
demonstrations projects, the Department will determine if it is 
possible to streamline the administration of the processing program 
at the State level. Currently, States must enter into agreements or 
renew them annually. Additionally, States must review end product 
data schedules, performance, supply, and surety bonds, performance 
reports and grading certificates on a monthly basis, and certified 
public accountant audit reports as submitted. During the 
demonstration projects, the Department hopes to review the current 
responsibilities of the State agencies and determine areas where 
there is duplication of effort and where reductions in reporting may 
be possible.
    c. Effects on Recipient agencies: Currently the processors' 
costs of all the record-keeping and reporting requirements (e.g., 
acceptance service grading, performance, supply, and surety bond, 
and certified public accountant audit reports) are being passed on 
to the recipient agencies via higher prices for end products. Also, 
fewer processors are participating in the program, claiming that 
certain requirements are too burdensome and expensive. FCS has been 
informed that the typical cost of an independent certified public 
accountant audit report can run from $10,000 to $25,000 depending on 
the volume of food processed by a manufacturer. If we could require 
the audits less frequently for processors with a history of good 
performance, their costs could be significantly reduced. Since 
processors pass their costs on to recipient agencies, this should 
enable them to reduce the prices of the products they sell to 
schools. By conducting demonstration projects to study the 
possibility of removing or reducing some of the requirements, the 
Department hopes that more processors will participate in the State 
processing program, thereby increasing the competitive base. By 
reducing costs for the processors and increasing competition, it 
should be possible to reduce prices of end products to the schools. 
Processing adds about $0.78 to $1.09 per pound to the value of the 
end product. For example, coarse ground beef costing USDA $1.08 per 
pound would be worth $1.86 to $2.17 per pound to the State after 
processing. In other words, processing roughly doubles the value of 
donated beef.
    As with beef, processing typically adds about $0.78 to $1.09 per 
pound in value to chicken, roughly the same per pound as beef 
processing. It is hoped that the flexibilities offered through the 
demonstrations under this rule could reduce this by perhaps 5 to 10 
percent. If the demonstrations prove these savings out, and the 
flexibilities had been available and fully used in 1994, States 
would have saved about $1 to $2 million of their processing costs 
(i.e., 25 million pounds times $0.93 per pound processing (the 
midpoint) equals $23 million minus 5 percent to 10 percent equals 
$1.2 to $2.3 million). If a comparable savings rate were achieved in 
all processed meat and poultry in 1994, the States would have saved 
perhaps $7 to $14 million total. The demonstration projects will 
allow FCS to quantify potential savings more accurately. See 
attached tables for more detailed illustration.
    d. Effects on program costs and integrity: As demonstration 
projects are conducted, the Department hopes to determine if certain 
administrative costs associated with the State processing program 
can be reduced. The Department is also concerned that program 
integrity be maintained. If elimination of audit requirements or 
allowance of substitution should result in an increase in fraudulent 
behavior, the potential savings desirable could be completely 
eliminated.
    e. Effects on small entities: This rule would not have a 
significant economic impact on a substantial number of small 
entities. Commercial food processors participating in the 
demonstration projects will be most affected to the extent that they 
have the greatest record-keeping and reporting requirements in the 
State processing program.

[[Page 5274]]


                                                 Table 1.--Child Nutrition Programs, Commodity Donations                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Dollars in thousands                                   Pounds in thousands                 
                                           -------------------------------------------------------------------------------------------------------------
                                               1990       1991       1992       1993       1994       1990       1991       1992       1993       1994  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child nutrition commodities:                                                                                                                            
    Entitlement...........................   $520,845   $533,188   $558,154   $573,281   $574,598    952,311  1,009,384    842,193    887,012    894,648
    Bonus.................................    110,601     84,306    122,162     90,163     92,226    139,820    109,105    315,727    163,940    147,851
                                           -------------------------------------------------------------------------------------------------------------
      Total commodities...................    631,446    617,494    680,316    663,444    666,824  1,092,131  1,118,489  1,157,920  1,050,952  1,042,499
                                           =============================================================================================================
of which:                                                                                                                                               
    Beef patties, frz.....................     10,484     11,545     12,732     14,335      6,801      7,748      8,426      9,262     10,597      4,986
    Beef patties, frz w/vpp...............     12,350     19,004     25,193     25,067     20,749     11,428     16,909     22,177     22,514     19,068
    Beef patties, extra lean..............  .........  .........      6,810     10,736      8,931  .........  .........      3,830      6,771      5,563
    Beef frozen ground....................    103,661    110,964    115,473    116,522     94,796     80,778     84,581     88,938     92,698     74,104
    Beef roasts, choice...................  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........
    Beef, canned W/J......................        942  .........        906        753         72        612  .........        612        504         47
    Beef, frz grd course process..........      7,014      8,880     11,759     16,035     21,039      5,437      6,930      9,072     12,390     16,422
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, beef......................    134,451    150,393    172,873    183,448    152,388    106,003    116,846    133,891    145,474    120,190
                                           =============================================================================================================
    Chicken, canned boned.................  .........  .........  .........  .........      2,103  .........  .........  .........  .........      1,083
    Chickens, chilled bulk................      6,260      5,844      7,274      5,594      5,343     10,908     11,232     14,611     10,188      9,496
    Chickens, chill leg...................  .........  .........  .........      4,807      5,377  .........  .........  .........      9,108      9,830
    Chickens, drums.......................  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........
    Chickens, frozen, cut up..............     36,732     32,187     33,257     19,869     20,536     55,506     53,946     60,454     31,737     31,753
    Chickens, frozen breaded..............      3,235  .........      4,596     12,544     13,646      2,611  .........      3,988     11,424     12,762
    Chickens, leg qtrs....................  .........  .........  .........  .........      1,133  .........  .........  .........  .........      3,080
    Chickens, nuggets frz soc.............  .........  .........        241      4,183      1,370  .........  .........        468      2,652      2,028
    Chickens, diced frz...................  .........  .........     22,107     12,074     18,066  .........  .........      9,921      5,271      8,133
    Chickens, patties, soc................  .........  .........  .........        121        474  .........  .........  .........         78        702
    Chickens, thighs......................  .........  .........  .........  .........          1  .........  .........  .........  .........  .........
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, chicken...................     46,227     38,031     67,475     59,192     68,048     69,025     65,178     89,442     70,458     78,867
                                           =============================================================================================================
    Pork, canned W/NJ.....................        336      2,045        923        680      1,572        252      1,369        720        540      1,269
    Pork, frz ground......................     17,481     23,833     15,349     20,217     15,794     16,252     20,744     16,947     19,744     15,579
    Pork, frz grd coarse process..........  .........  .........      1,986      3,170      3,733  .........  .........      2,020      3,247      3,841
    Pork, frz patties.....................  .........  .........  .........  .........        291  .........  .........  .........  .........        277
    Pork, ham, frz cooked.................     19,618        114      9,641  .........     25,513     12,915         72      6,652  .........     16,011
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, pork......................     37,435     25,992     27,899     24,067     46,903     29,419     22,185     26,339     23,531     36,977
                                           =============================================================================================================
    Turkey roasts, frozen.................     26,122     26,769     18,637     34,166     27,634     18,747     20,071     13,221     24,874     19,962
    Turkey, commercial pack...............  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........
    Turkey, frozen ground.................      5,957      5,928      5,978     11,012      9,858      9,098      8,189      7,847     18,817     16,926
    Turkey, frozen whole..................     11,700     12,191      7,551      7,612      9,364     17,352     17,754     10,949     12,406     15,043
    Turkey, chilled, bulk.................      3,832      3,613      5,870      8,212      7,287      5,976      5,544      9,821     13,752     11,720
    Turkey, frz ground burgers............  .........  .........        809      3,166      1,648  .........  .........        756      3,348      1,872
    Turkey, sausage chubbs................  .........  .........  .........  .........        371  .........  .........  .........  .........        468
    Turkey, sausage patties...............  .........  .........  .........  .........        606  .........  .........  .........  .........        540
    Turkey, sausage links.................  .........  .........  .........  .........        409  .........  .........  .........  .........        320
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, turkey....................     47,611     48,501     38,845     64,168     57,177     51,173     51,558     42,594     73,197     66,851
                                           =============================================================================================================
      Total, meat and poultry.............    265,724    262,917    307,092    330,875    324,516    255,620    255,767    292,266    312,660    302,885
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                 Table 2.--Child Nutrition Programs, Commodity Donations                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Dollars in thousands                                   Pounds in thousands                 
                                           -------------------------------------------------------------------------------------------------------------
                                               1990       1991       1992       1993       1994       1990       1991       1992       1993       1994  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Likely to be further processed by States:                                                                                                               
    Beef, frozen ground...................   $103,661   $110,964   $115,473   $116,522    $94,796     80,778     84,581     88,938     92,698     74,104
    Beef, frz grd coarse process..........      7,014      8,880     11,759     16,035     21,039      5,437      6,930      9,072     12,390     16,422
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, beef......................    110,675    119,844    127,232    132,557    115,835     86,215     91,511     98,010    105,088     90,526
                                           =============================================================================================================
Additional processing costs at $0.93 per                                                                                                                
 pound....................................  .........  .........  .........  .........     84,189  .........  .........  .........  .........     90,526
    Chicken, chilled bulk.................      6,260      5,844      7,274      5,594      5,343     10,908     11,232     14,611     10,188      9,496
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, chicken...................      6,260      5,844      7,274      5,594      5,343     10,908     11,232     14,611     10,188      9,496
                                           =============================================================================================================
Additional processing costs at $0.93 per                                                                                                                
 pound....................................  .........  .........  .........  .........      8,831  .........  .........  .........  .........      9,496
    Pork, frz ground......................     17,481     23,833     15,349     20,217     15,794     16,252     20,744     16,947     19,744     15,579
    Pork, frz grd course process..........  .........  .........      1,986      3,170      3,733  .........  .........      2,020      3,247      3,841
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, pork......................     17,481     23,833     17,335     23,387     19,527     16,252     20,744     18,967     22,991     19,420
                                           =============================================================================================================

[[Page 5275]]
                                                                                                                                                        
Additional processing costs at $0.93 per                                                                                                                
 pound....................................  .........  .........  .........  .........     18,061  .........  .........  .........  .........     19,420
    Turkey, frozen ground.................      5,957      5,928      5,978     11,012      9,858      9,098      8,189      7,847     18,817     16,926
    Turkey, chilled bulk..................      3,832      3,613      5,870      8,212      7,287      5,976      5,544      9,821     13,752     11,720
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, turkey....................      9,789      9,541     11,848     19,224     17,145     15,074     13,733     17,668     32,569     28,646
                                           =============================================================================================================
Additional processing costs at $0.93 per                                                                                                                
 pound....................................  .........  .........  .........  .........     26,641  .........  .........  .........  .........     28,646
                                           -------------------------------------------------------------------------------------------------------------
      Total, meat and poultry.............    144,205    159,062    163,689    180,762    157,850    128,449    137,220    149,256    170,836    148,088
                                           =============================================================================================================
Additional processing costs at $0.93 per                                                                                                                
 pound....................................  .........  .........  .........  .........    137,722  .........  .........  .........  .........    148,088
Potential State processing savings at:                                                                                                                  
    1 percent.............................  .........  .........  .........  .........      1,377  .........  .........  .........  .........  .........
    5 percent.............................  .........  .........  .........  .........      6,886  .........  .........  .........  .........  .........
    10 percent............................  .........  .........  .........  .........     13,772  .........  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Approved:
    Dated: June 28, 1995.
William E. Ludwig,
Administrator, Food and Consumer Service.

    Dated: August 29, 1995.
Stephen B. Dewhurst,
Director, Office of Budget and Program Analysis.

    Dated: August 4, 1995.
Keith Collins,
Acting Chief Economist.

    Dated: September 11, 1995.
Ellen Haas,
Assistant Secretary for Food, Nutrition and Consumer Services.

[FR Doc. 96-2177 Filed 2-9-96; 8:45 am]
BILLING CODE 3410-30-U