Pursuant to a legislative requirement, GAO reviewed the incidence and effect of states restricting commercial processors from combining federally donated meat or poultry from multiple sources for processing, focusing on the: (1) reasons for and extent of states' and school districts' batching restrictions; (2) impact that batching restrictions have on commercial processors, schools, and the federal government; and (3) mechanisms that state agencies and schools use to ensure compliance with batching restrictions.

GAO found that: (1) states and schools impose batching restrictions to prevent deteriorated taste from meat and poultry that have been stored too long or improperly; (2) 46 of 54 state agencies that distribute federally donated meat and poultry have contracts with commercial processors that receive products from several states; (3) 28 of these agencies have batching restrictions in their contracts, but processors can request waivers from batching restrictions under certain circumstances; (4) most multistate processors say that batching restrictions do not significantly increase their costs or decrease yields because batching is not the standard processing procedure for some processors; (5) batching is not an issue for poultry products, since poultry is usually processed to a finished form by its producer before shipment; (6) a few multistate processors believe that failure to obtain waivers from batching restrictions limits their ability to operate at full capacity and increases costs; (7) processors usually absorb the higher operating costs that result from batching restrictions and do not pass them directly on to the schools; (8) batching restrictions have no effect on the federal government, since they occur after transfer of ownership; and (9) state agencies and schools rely on on-site Agricultural Marketing Service graders, periodic independent audits, and Department of Agriculture Inspector General reviews to ensure compliance with their batching restrictions.