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August 15, 2022
Farm and Food Support Under USDA’s Section 32 Account
Congress created a mandatory appropriation in 1935—the
Recipients of bonus commodities may include schools,
Funds for Strengthening Markets, Income, and Supply (§32
child care centers, and food banks.
of the act of August 24, 1935; 7 U.S.C. 612c). The funds
support producers of agricultural commodities that are not
supported by other farm support programs, such as the
Commodity Credit Corporation (CCC). Commodities
include primarily fruits, vegetables, meats, poultry, and
fish. Ongoing issues for Congress include the scale of
funding and how to direct support to various uses.
Known as Section 32, the fund has three primary purposes
identified as clauses in the law: (1) to encourage the export
of agricultural products; (2) to encourage the domestic
consumption of farm products by diverting surpluses and
increasing their use; and (3) to reestablish farmers’
purchasing power by making payments to farmers.
The Section 32 account is funded by a permanent
appropriation of 30% of customs receipts on all imports
from the prior calendar year. Following imposition of
higher tariffs in 2018, this amount has more than doubled to
exceed $21 billion annually. From that appropriation, three
primary allocations are made: a transfer to the U.S.
Department of Commerce of 30% of customs receipts from
fishery products; a statutory amount retained by the U.S.
Department of Agriculture (USDA) to support farmers and
domestic food assistance programs (known as a “reserved
spending authority”); and a transfer of the remainder to the
USDA Food and Nutrition Service (FNS) for the child
nutrition programs—amounting to nearly 93% of the
Section 32 permanent appropriation in FY2021 (the blue
portions of Figure 1 and top of Table 1). The annual
Agriculture appropriations act amount for child nutrition
includes the Section 32 transfer.
Section 32 Commodity Procurement
Commodities procured with Section 32 funds may be
categorized as either entitlement or contingency (both are
shown in the gray boxes in Figure 1 and Table 1 below the
line). USDA’s entitlement purchases are mandated by
various laws and then planned for what is delivered. For
example, various nutrition acts specify an amount that is to
be delivered in kind to schools and other entities. Based on
local preferences, organizations and USDA develop a
purchase plan for the year. USDA’s Agricultural Marketing
Service (AMS) issues bid specifications, generally for
processed products, for deliveries to specific locations.
USDA’s contingency purchases (also known as emergency
surplus removals) result from Clause 2 discretion to buy
surplus commodities to support agricultural markets when
farm prices are low. USDA may learn about a need through
its own commodity experts or from industry organizations.
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Farm and Food Support Under USDA’s Section 32 Account
Figure 1. USDA’s Section 32 Account
Amounts are for the most recent year with actuals, FY2021
Source: CRS using USDA, Agricultural Marketing Service,
Congressional Budget Justification for FY2023; and Office of
Management and Budget (OMB), FY2023 Budget Appendix.
Table 1. USDA’s Section 32 Account: Funding and Uses
Dol ars in millions
FY2020
FY2021
FY2022
FY2023
Description
Authority
Actual
Actual
Estimate Estimate
Permanent appropriation
7 U.S.C. 612c
+15,123
+22,697
+21,679
+27,123
+ Prior year appropriation carried in
—
+1
+37
+6
tbd
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FY2020
FY2021
FY2022
FY2023
Description
Authority
Actual
Actual
Estimate Estimate
- Transfer to Department of Commerce
15 U.S.C. 713c-3
-184
-262
-254
-363
- Reserved spending authority
7 U.S.C. 612c-6 (b)(2)(A)
-1,404
-1,431
-1,464
-1,561
- Transfer to Food and Nutrition Service
7 U.S.C. 612c-6 (b)(1)
-13,537
-21,040
-19,968
-25,200
Detail for reserved spending authority
Reserved spending authority
7 U.S.C. 612c-6 (b)(2)(A)
+1,404
+1,431
+1,464
+1,561
+ Unobligated balance brought forward
7 U.S.C. 612c
+499
+391
+375
+0
- Recoveries
—
+69
+67
+0
+0
- Sequestration
2 U.S.C. 901a(6)
-72
-71
-73
-78
- Administrative expenses
7 U.S.C. 601 et seq.
-55
-54
-58
-59
- Fresh Fruit and Vegetable Program
42 U.S.C. 1769a(i)
-179
-183
-187
-198
- Entitlement purchases
7 U.S.C. 612c-4, with 42 U.S.C.
-485
-495
-485
-485
1755 and 42 U.S.C. 1762a
- 2008 farm bil specialty crop purchases
7 U.S.C. 612c-5
-206
-206
-206
-206
- Emergency surplus removal (contingency)
7 U.S.C. 612c, Clause 2
-584
-503
-818
-523
- Disaster relief foods
—
na
na
-5
-5
- Removal of defective commodities
—
na
na
-8
-8
= Unobligated balance carried forward
7 U.S.C. 612c
391
375
0
0
Source: CRS using USDA, Congressional Budget Justification for Agricultural Marketing Service; and OMB, Budget Appendix for USDA.
Notes: The itemization of amounts varies between USDA and OMB documents. Amounts here reflect a blended summary of the common
total and may not add due to rounding. The FY2023 USDA budget justification has a high estimate for emergency surplus removal in FY2022
that would leave no carryover. Entitlement purchases are specific amounts of foods required to be delivered to schools and other entities.
Limitations and Uses of Section 32
USDA Procurement Beyond Section 32
Historically, USDA had considerable discretion with
Besides the purchases using Section 32 that are identified in
Section 32. Congress reduced that discretion in the 2008
Figure 1 and Table 1, AMS also procures about $1.5
farm bill, which capped the amount that USDA is permitted
billion of food for FNS from the child nutrition
to spend (P.L. 110-246, §14222). Various farm bills also
appropriation. These purchases fulfil other entitlement
have required minimum purchases of fruits, vegetables, and
requirements in the National School Lunch Act and other
other specialty crops. Further, appropriations acts since
Child Nutrition Programs statutes.
FY2012 have prohibited using Clause 3 authority for direct
payments to farmers for emergencies or disasters. An
Purchases for FNS domestic food programs also may be
exception since FY2018 allows up to $350 million of
made by USDA’s Farm Service Agency using CCC
carryover to be used for Clause 3 direct payments, though
authority. These may include nonperishable commodities,
this exception has been used minimally. The Clause 3
such as grain products, peanut products, dairy products
prohibition evolved with the addition of permanent disaster
(e.g., evaporated milk), and oils. Unlike CCC support,
programs in the 2008 farm bill, ad hoc disaster assistance,
which is normally limited to price-supported commodities
and enhancements to the federal crop insurance program.
expressed in the farm bill (such as milk, grains and oilseeds,
cotton, sugar), Section 32 is less constrained in the variety
A small portion of Section 32 pays for some AMS
of commodities that it may support or the manner of
administrative expenses related to purchasing food and
support (except within the three broad purposes described
oversight of federal marketing orders. Section 32 also
in statute).
provides a limited amount of disaster relief foods to victims
of natural disasters. The fund also may pay to remove a
Jim Monke, Specialist in Agricultural Policy
defective commodity that is found to pose a health risk after
being distributed by USDA. Unobligated balances less than
IF12193
$500 million may be carried forward to future fiscal years.
Disclaimer
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Farm and Food Support Under USDA’s Section 32 Account
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