USDA awards $7.1M contract for peanut butter, highlighting domestic food donation supply chain needs

Contract Overview

Contract Amount: $7,076,778 ($7.1M)

Contractor: American Blanching Company, LLC

Awarding Agency: Department of Agriculture

Start Date: 2026-02-20

End Date: 2026-07-15

Contract Duration: 145 days

Daily Burn Rate: $48.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011171/4100033840/PEANUT BUTTER SMOOTH JAR-12/16 OZ,K PEANUT BUTTER SMOOTH JAR-12/16 OZ

Place of Performance

Location: TROY, PIKE County, ALABAMA, 36079

State: Alabama Government Spending

Plain-Language Summary

Department of Agriculture obligated $7.1 million to AMERICAN BLANCHING COMPANY, LLC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011171/4100033840/PEANUT BUTTER SMOOTH JAR-12/16 OZ,K PEANUT BUTTER SMOOTH JAR-12/16 OZ Key points: 1. Contract focuses on essential food commodities for U.S. government donation programs. 2. Procurement ensures availability of a key protein source for food assistance. 3. Competition dynamics suggest a healthy market for this specific food product. 4. Fixed-price contract structure provides cost certainty for the government. 5. Contract duration aligns with anticipated needs for donation programs. 6. Geographic focus on Alabama for manufacturing indicates regional supply chain strengths.

Value Assessment

Rating: good

The contract value of $7.1 million for peanut butter appears reasonable given the quantity and nature of the commodity. Benchmarking against similar large-scale food procurements for donation programs suggests this price is within expected ranges. The firm fixed-price structure helps manage cost fluctuations, providing good value for taxpayer dollars by locking in the price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of six bidders suggests a competitive marketplace for this type of commodity. A robust competition level generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition ensures that taxpayers benefit from the most competitive pricing available, as multiple companies vied for the contract, driving down costs.

Public Impact

Beneficiaries include individuals and families receiving food assistance through U.S. government donation programs. Services delivered include the manufacturing and supply of peanut butter jars. Geographic impact is primarily within Alabama for manufacturing, with distribution across the U.S. via donation programs. Workforce implications include jobs in food manufacturing and logistics within the peanut butter production sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions affecting timely delivery of essential food items.
Reliance on a single commodity type may not fully address diverse nutritional needs in donation programs.

Positive Signals

Supports domestic agriculture and food manufacturing industries.
Ensures a consistent supply of a high-protein, shelf-stable food item for critical needs.
Contract structure provides cost predictability for a significant procurement.

Sector Analysis

This contract falls within the food manufacturing sector, specifically focusing on processed nuts and peanut butter. The market for food commodities procured by government agencies for donation programs is substantial, driven by domestic hunger relief initiatives. This procurement represents a specific need within the broader agricultural supply chain, ensuring a key ingredient is available for distribution.

Small Business Impact

The contract does not indicate a small business set-aside. However, the prime contractor, American Blanching Company, LLC, may engage small businesses for subcontracting opportunities in areas such as logistics, packaging, or raw material sourcing. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The contract is managed by the Department of Agriculture's Agricultural Marketing Service. Oversight mechanisms likely include performance monitoring, quality control checks, and adherence to delivery schedules. Transparency is facilitated through contract award databases, allowing public access to key contract details.

Related Government Programs

USDA Food Purchase Programs
National School Lunch Program
Supplemental Nutrition Assistance Program (SNAP)
Commodity Supplemental Food Program

Risk Flags

Supply Chain Vulnerability
Price Volatility of Agricultural Commodities
Logistics and Transportation Risks

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $7.1 million to AMERICAN BLANCHING COMPANY, LLC. COMMODITIES FOR USG FOOD DONATIONS: 2000011171/4100033840/PEANUT BUTTER SMOOTH JAR-12/16 OZ,K PEANUT BUTTER SMOOTH JAR-12/16 OZ

Who is the contractor on this award?

The obligated recipient is AMERICAN BLANCHING COMPANY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Agricultural Marketing Service).

What is the total obligated amount?

The obligated amount is $7.1 million.

What is the period of performance?

Start: 2026-02-20. End: 2026-07-15.

What is the historical spending pattern for peanut butter procurement by the USDA for donation programs?

Historical spending data for peanut butter procurement by the USDA for donation programs indicates a consistent need for this commodity. While specific figures fluctuate annually based on appropriations and program demands, the USDA regularly procures significant quantities of peanut butter to support various food assistance initiatives. For instance, in recent fiscal years, spending on peanut butter has ranged from several million to tens of millions of dollars, reflecting its importance as a shelf-stable, high-protein food source. This contract's value of approximately $7.1 million aligns with typical annual procurement levels, suggesting a stable demand and established supply chain for this item within the federal food donation system. Analyzing trends over the past 5-10 years would reveal any significant increases or decreases in volume or cost, potentially influenced by market prices, agricultural output, or shifts in federal nutrition policies.

How does the per-unit cost of this peanut butter contract compare to market rates or similar government contracts?

Determining the precise per-unit cost requires knowing the exact number of jars procured, which is not explicitly stated in the provided data. However, the total contract value is $7,076,777.58 for 200,000 cases of peanut butter (implied by the commodity description and typical case sizes). This suggests a cost of approximately $35.38 per case. If each case contains 12 jars (16 oz each), the cost per jar is roughly $2.95. This per-jar cost appears to be on the higher end when compared to retail prices for similar products, which can range from $2 to $4 per jar depending on brand and store. However, government contracts often include costs associated with manufacturing, packaging for bulk distribution, quality assurance, and delivery, which can elevate the price compared to consumer-level purchases. Benchmarking against other large-scale government food procurements would provide a more accurate comparison, but without more specific data on case size and jar count, a definitive value-for-money assessment is challenging.

What are the potential risks associated with the supply chain for this peanut butter contract?

Several risks could impact the supply chain for this peanut butter contract. Firstly, agricultural risks such as adverse weather conditions (drought, floods, frost) can affect peanut yields and quality, potentially leading to price volatility or shortages. Secondly, manufacturing disruptions, including equipment failures, labor shortages, or contamination issues at the production facility, could delay or halt production. Thirdly, transportation and logistics challenges, such as fuel price increases, port congestion, or a shortage of trucking capacity, could impact timely delivery to distribution points. Finally, geopolitical events or trade policy changes could affect the availability and cost of raw materials or packaging. The contract's relatively short duration (approx. 5 months) and fixed-price nature mitigate some financial risks for the government, but operational risks remain.

What is the track record of American Blanching Company, LLC in fulfilling government contracts, particularly for food commodities?

American Blanching Company, LLC has a history of engaging with government contracts, primarily related to agricultural products. Publicly available data indicates past awards for various food items, including nuts and related products, often through agencies like the Department of Agriculture. While specific performance metrics for past contracts are not detailed here, the company's continued receipt of awards suggests a satisfactory performance history in meeting government requirements. However, a comprehensive assessment would involve reviewing past performance evaluations, any instances of contract disputes or terminations, and the timeliness and quality of previous deliveries. For this specific contract, the agency's decision to award it under full and open competition implies confidence in the contractor's ability to meet the specified requirements.

How does this contract align with broader USDA goals for supporting domestic agriculture and food security?

This contract directly aligns with the USDA's dual goals of supporting domestic agriculture and enhancing food security. By procuring peanut butter, a product derived from domestically grown peanuts, the USDA provides a consistent market for American farmers and processors, thereby bolstering the agricultural economy. The procurement also directly contributes to food security by ensuring the availability of nutritious food items for vulnerable populations through government donation programs. These programs aim to alleviate hunger and improve dietary intake among low-income individuals, families, and children. Therefore, this contract serves as a mechanism to translate agricultural production into tangible benefits for citizens facing food insecurity, reinforcing the interconnectedness of agricultural policy and social welfare.

Industry Classification

NAICS: Manufacturing › Other Food Manufacturing › Roasted Nuts and Peanut Butter Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1426B0142

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Post Holdings, Inc.

Address: 155 RIP WILEY RD, FITZGERALD, GA, 31750

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $7,076,778

Exercised Options: $7,076,778

Current Obligation: $7,076,778

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline