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SNAP Requirements for Reauthorization: Your Dairy Inventory

SNAP Requirements for Reauthorization: Your Dairy Inventory

Did you get a letter from the USDA at your place of business about licensing authorization that discusses details of your inventory of dairy items?  Quite often, the USDA will announce that a grocery store or market falls short of the dairy criteria if you don’t stock any, or sometimes you stock insufficient items in the dairy category.  Over the past year, this claim by the USDA has become seemingly obligatory.  It is the result of the revisions to SNAP legislation that were officially enacted in January 2018, which necessitated participating grocers to bring in more inventory.  One shortfall the USDA had perceived was in the dairy inventory in smaller businesses.  Dairy, as a product group, is difficult for smaller stores to commit to because the products in this category are costly, perishable and they require refrigeration. In addition, profit margins on items in the dairy category are relatively narrow.  These factors made it simple for the USDA to deploy this dairy obligation as their newest strategy to further reduce the quantity of participating licensees – especially small ones.

The attorneys on our team have done battle and prevailed on a great number of these SNAP re-authorization denials from the time that the regulations were rewritten.  Our firm boasts an impressive and lengthy track record of winning reversals to these verdicts and making it possible for our grocers to get their EBT machines online again.

The Dairy Requirements for SNAP Licensees

Two groups of criteria are in the legislation that retailers must meet to qualify:

  • Criterion A is a list of inventory necessities.You will have to bring your inventory up to this standard for you to qualify; and
  • Criterion B mandates that more than 50% of your sales must be made in the form of  purchases in “staple foods.”

Largely, stores qualify under Criterion A, which is why staying abreast of the dairy inventory requirements is so critical.

According to the rules under Criterion A, a SNAP retailer is obligated to shelf seven (7) different varieties in the Dairy Category.  The term variety is used to mean a different type of product in the same category.  Milk, cheese, yogurt, infant formula, and cottage cheese, for example, are all different varieties under the dairy category.  Stocking various brands of the same variety will not suffice to meet the requirement to stock separate varieties.  The fact that non-dairy beverages such as soymilk and almondmilk are counted as varieties in the dairy category is worthy of note. Having these two can count towards meeting your dairy inventory obligation. The Department has stated that they implemented this provision to make it possible for there to be a broad variety of nutritious and health promoting food choices for SNAP recipients to choose from.

How do I determine if I stock enough diary varieties?

A simple rule of thumb in figuring out what different items in your store can be considered a unique dairy variety is to consider both the type of product and the principle ingredient in it.  For instance, if you stock whole milk and skim milk, these are in the same variety because for both of these,  the main ingredient is cow’s milk.  On the other hand, almond milk and skim milk have unique main ingredients – almonds versus cow’s milk.  Because of this, these are two different varieties.  In another example, if you have dehydrated milk and fluid milk those are classed as two different varieties because the type of product differs, even though they are both cow’s milk-based.  They are different product types because while the fluid is sold as a ready to consume product, the powder necessitates an extra step of preparation before consumption.

Some more varieties that can work as viable options when making inventory choices to meet the dairy obligations at your grocery store include: plant-based dairy category items, like almond-based cheese, soy-based milk, soy-based cheese, and rice-based milk. Any of these would be classed as a separate variety because they differ as product types and have different main ingredients. Additionally, having items like cow’s milk-based soft cheese and cow’s milk-based hard cheese can also help you quickly bring your stock up to the criteria because these are considered different varieties from each other. You definitely don’t want to be caught selling liquor.

More items on the Criteria A list you can choose to sell include: butter substitute (like margarine), powdered milk, cow milk-based infant formula, goat cheese, and goat milk.

Store Inspections

If you Receive a letter that calls your dairy inventory into question, a store inspection is probably how the red flag got raised.  Such inspections are conducted by USDA contractors (these are not employees of the USDA) who go around checking into stores and are paid for each inspection they accomplish.  They employ a simple checklist and question the store managers or store owners.

One of their main goals in the inspection is to get photos of the shop’s inventory and to complete a rather simple inventory report.  The inventory report groups your inventory into the four staple food segments: (1) dairy, (2) fruits and vegetables, (3) breads and cereals, and (4) meats and protein.  The inspector is asked to simply check off the amount of different varieties that they see on your store shelves, and write down the quantity of units that they saw on display.

When the contractors finish these reports, a program at the USDA peruses it thoroughly and flags inventory deficiencies they find (such as insufficient dairy inventory).  Then, they mail you a letter.  In the letter, the USDA will ask that you show them documentation to prove that the store was indeed stocking sufficient varieties and SKU counts of approved dairy inventory products.  You can furnish copies of invoices or other paperwork, but keep in mind, you have to show them that those purchases were made within 21 days of the store visit.

What Happens After Receiving a Letter

If your store relies heavily upon EBT sales, or needs the additional revenue in the coming weeks or months, the action you can take is to reach out to our firm. You can get in touch with us by phone at 1-833-SNAP-LAW.  We are armed with the expertise to properly handle these matters and win your case, and the USDA staff know us.  We will collect all of the records that will help the USDA to grant your authorization, and we will pull together the brief to present the case of why your store must be authorized.  Our Attorneys will also review your entire application to make sure that the Department will have no good reason to reject it for other causes.

If you choose to deal with the response on your own, do understand that, if the USDA denies your application, you will be obligated to wait at least 6 months before you will be eligible to refile.  You stand to miss out on months of revenue at your place of business, so be very sure that you have documented your inventory as meticulously as possible.

We can give you a free consultation, and we are available to answer any of your pressing questions about the process.

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