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Kansas City Commodity Office Domestic Procurement Division Cheese Procurement Innovations

Basics About Cheese Procurements. Annual procurement with monthly allocationsSealed bid solicitationsIndefinite delivery/Indefinite quantity contractsFixed price with economic price adjustmentBlock and Barrel CMEOrders must be finalized by states 55 days prior to the beginning of the delivery p

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Kansas City Commodity Office Domestic Procurement Division Cheese Procurement Innovations

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    1. Kansas City Commodity Office Domestic Procurement Division Cheese Procurement Innovations 2008 Annual American Commodity Distribution Association Conferences

    2. Basics About Cheese Procurements Annual procurement with monthly allocations Sealed bid solicitations Indefinite delivery/Indefinite quantity contracts Fixed price with economic price adjustment Block and Barrel CME Orders must be finalized by states 55 days prior to the beginning of the delivery period

    3. Price Increases

    4. Changes in Cheese Shortfall of mozzarella prompted a review of current cheese procurement strategy Market Conditions Dairy market volatility High Non-fat Dry Milk Prices High Fuel Prices Very Strong Commercial Demand

    5. Procurement Innovations Goal to Increase Vendor Participation Vendor Outreach Pursued many industry leads Accessed company websites Used industry conference contacts Educated manufacturers about the benefits of Government contracting Industry Market Research Feedback Change to a calendar year procurement cycle Modify pricing formulas to minimize supplier’s market risk

    6. Altering Procurement Schedule Cheese vendors commit capacity to commercial customers in the fall of each year With March ordering, we were just being offered vendors’ remaining plant capacities USDA is the 4th largest domestic cheese buyer Move to calendar year vs. school year States will be asked to input orders accordingly Better market position More vendor participation

    7. Mozzarella Passes the Test Additional participation from 6 new mozzarella vendors Second half 2008 differential prices dropped, on average, 27% Positive feedback from industry

    8. 2009 Dairy Market Outlook Potential milk production growth of 2% during 2008 2008 block and barrel cheese prices anticipated to decrease Possible cheese capacity increases due to indications of plant expansions / new facilities However, must watch increasing overseas demand for US dairy products

    9. Historical Cheese Market Averages

    10. Questions Patricia Jennings 816-926-6304 patricia.jennings@kcc.usda.gov

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