Since the advent of Standard Yield and then Net-off Invoice, the idea that one cannot exist without the other has been the source of many questions. While it is true that the ideal scenario would be to have substitutable products produced under Standard Yield and sold by way of an indirect sales discount, there is nothing in the Regulations that requires this. Substitution of commodities, however does take place under Standard Yield as the process requires manufacturers to "add" commercial product to reach the desirable base from which to produce.

Simply stated, Standard Yield is a production mechanism whereas Net-off Invoice (Indirect Sales Discount) is a means of invoicing.

Here are the definitions that USDA/Food & Nutrition Services currently use:

Substitutable Food: A USDA donated food that may be replaced by a commercially purchased food of domestic origin and of equal or better quality to the donated food provided by USDA.

Standard Yield: A concept that originated in poultry processing whereas the Processor guarantees a fixed number of cases that will be produced using a fixed amount of commodity. The standard yield is always fixed at a level that requires the processor to add some commercial product to achieve the required yield.

Net-off Invoice (Indirect Discount): The Processor sells finished product containing commodities to a Distributor at a gross price. The distributor sells that product to an eligible Recipient Agency at the commercial price minus the value assigned to the commodities contained in the case as a net price. Under this system, the distributor must then apply for the refund from the Processor for the value of the donated food.

Example: You can receive your hamburger patties from your current commercial distributor at a discount. The work behind the scenes is what makes this a viable option; the distributor must create a SKU for the hamburger patties and allow sales only to qualified Recipient Agencies; the manufacturer and distributor work together to maintain this information. The fact that the commodity (in this case, beef) has not been produced under Standard Yield or is Substitutable has nothing to do with how the Recipient Agency receives the "value" for the commodity.