USDA Purchases $5.7M in American Cheese for Food Donations, Awarded to Associated Milk Producers Inc

Contract Overview

Contract Amount: $5,707,647 ($5.7M)

Contractor: Associated Milk Producers Inc

Awarding Agency: Department of Agriculture

Start Date: 2025-11-07

End Date: 2025-12-31

Contract Duration: 54 days

Daily Burn Rate: $105.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011023/4400002314/4100033101/CHEESE NAT AMER FBD BARREL-500 LB(40800)

Place of Performance

Location: PAYNESVILLE, STEARNS County, MINNESOTA, 56362

State: Minnesota Government Spending

Plain-Language Summary

Department of Agriculture obligated $5.7 million to ASSOCIATED MILK PRODUCERS INC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011023/4400002314/4100033101/CHEESE NAT AMER FBD BARREL-500 LB(40800) Key points: 1. Significant purchase of a staple commodity for federal food assistance programs. 2. Associated Milk Producers Inc. is a major dairy cooperative, indicating potential market concentration. 3. Fixed price with economic price adjustment introduces potential for cost overruns. 4. The contract supports the Agricultural Marketing Service's role in commodity procurement.

Value Assessment

Rating: good

The price of $5.7M for 20,000 barrels of cheese appears reasonable given market rates for bulk dairy products. Benchmarking against similar large-scale commodity purchases would provide further validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. This method generally leads to better price discovery and value for the government.

Taxpayer Impact: Taxpayer funds are used to procure essential food items for donation programs, supporting food security initiatives.

Public Impact

Ensures availability of nutritious food for vulnerable populations through federal donation programs. Supports American dairy farmers and the agricultural economy by providing a market for their products. The procurement process aims for cost-effectiveness while meeting program requirements for quality and quantity.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to increased costs if market prices rise significantly.
Lack of small business participation noted, though not explicitly required for this commodity.

Positive Signals

Awarded through full and open competition, indicating a robust procurement process.
Supports a critical federal food donation program, addressing food insecurity.
Long-term contract duration provides supply stability.

Sector Analysis

This procurement falls within the agricultural commodities sector, specifically dairy processing. Spending benchmarks for similar food donation commodity contracts would be relevant for comparison.

Small Business Impact

The contract was not awarded to a small business. While this is a large commodity purchase, opportunities for small business participation in the supply chain or related services could be explored.

Oversight & Accountability

The contract is managed by the Agricultural Marketing Service, which has established procedures for commodity procurement and oversight to ensure program goals are met.

Related Government Programs

Cheese Manufacturing
Department of Agriculture Contracting
Agricultural Marketing Service Programs

Risk Flags

Potential for cost escalation due to economic price adjustment.
Lack of small business awardee.
Market concentration risk with a single large supplier.
Dependence on a single commodity type.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $5.7 million to ASSOCIATED MILK PRODUCERS INC. COMMODITIES FOR USG FOOD DONATIONS: 2000011023/4400002314/4100033101/CHEESE NAT AMER FBD BARREL-500 LB(40800)

Who is the contractor on this award?

The obligated recipient is ASSOCIATED MILK PRODUCERS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $5.7 million.

What is the period of performance?

Start: 2025-11-07. End: 2025-12-31.

What is the historical price trend for barrel cheese, and how might the economic price adjustment impact the final cost?

Historical price data for barrel cheese shows volatility influenced by factors like feed costs, global demand, and seasonal production. The economic price adjustment clause allows for contract price changes based on an index, typically tied to market fluctuations. This protects both the government from excessively high prices if the market drops and the contractor from losses if prices rise, but it introduces uncertainty regarding the final expenditure.

What are the specific quality and nutritional standards for the cheese being procured, and how are these verified?

The contract likely specifies detailed quality and nutritional standards aligned with the requirements of the USDA's food donation programs. Verification typically involves pre-award inspections, product testing by independent laboratories, and post-delivery quality checks. Compliance with federal food safety regulations and specific grade standards (e.g., USDA Grade A) would be mandatory.

How does the volume and type of cheese procured align with the needs of the food donation program recipients?

The procurement of 20,000 barrels of American cheese is intended to meet the demand for a versatile and widely accepted dairy product within the food donation network. The Agricultural Marketing Service likely bases these quantities on program utilization data and recipient agency feedback to ensure the procured commodities effectively address nutritional needs and preferences of the target populations.

Industry Classification

NAICS: Manufacturing › Dairy Product Manufacturing › Cheese Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 123J1424B0627

Offers Received: 10

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 315 N BROADWAY ST, NEW ULM, MN, 56073

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

Financial Breakdown

Contract Ceiling: $5,707,647

Exercised Options: $5,707,647

Current Obligation: $5,707,647

Actual Outlays: $5,492,320

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1425D0002

IDV Type: IDC

Timeline