Farm and Food Support Under USDA’s Section 32 Account

Farm and Food Support Under USDA’s Section 32 Account

link to page 2 link to page 2 link to page 2 link to page 2

Updated September 5, 2023
Farm and Food Support Under USDA’s Section 32 Account
Congress created a mandatory appropriation in 1935—the
industry organizations. Recipients of bonus commodities
Funds for Strengthening Markets, Income, and Supply
may include schools, child care centers, and food banks.
(Section 32 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.
A permanent appropriation of 30% of customs receipts on
all imports from the prior calendar year fund the Section 32
account. Following imposition of higher tariffs in 2018, this
amount has more than doubled to exceed $27 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), which increases with inflation, 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. The latter is nearly
93% of the Section 32 permanent appropriation in FY2023
(the blue portions of Figure 1 and top of Table 1). The
amount provided for child nutrition in the Agriculture
appropriations act incorporates this 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.
Contingency purchases (also known as emergency surplus
removals) result from USDA’s discretion to use Clause 2 to
buy surplus commodities, which increases demand in
agricultural markets when farm prices are low. USDA may
learn about a need through its own agencies or from
https://crsreports.congress.gov

Farm and Food Support Under USDA’s Section 32 Account
Figure 1. Flow of Funds in USDA’s Section 32 Account
Amounts are budget estimates for FY2023

Source: CRS using USDA, AMS, FY2024 Congressional Budget
Justification; and OMB, FY2024 Budget Appendix.
Table 1. USDA’s Section 32 Account: Funding and Uses
Dol ars in millions
FY2021
FY2022
FY2023
FY2024
Description
Authority
Actual
Actual
Estimate Estimate
Permanent appropriation
7 U.S.C. 612c
+22,697
+21,679
+27,123
+30,801
+ Prior year appropriation carried in
—
+37
+6
+16
tbd
https://crsreports.congress.gov

link to page 2 link to page 2 Farm and Food Support Under USDA’s Section 32 Account
FY2021
FY2022
FY2023
FY2024
Description
Authority
Actual
Actual
Estimate Estimate
- Transfer to Department of Commerce
15 U.S.C. 713c-3
-262
-254
-363
-377
- Reserved spending authority
7 U.S.C. 612c-6 (b)(2)(A)
-1,431
-1,464
-1,561
-1,878
- Transfer to Food and Nutrition Service
7 U.S.C. 612c-6 (b)(1)
-21,040
-19,968
-25,215
-28,545

Detail for reserved spending authority

Reserved spending authority
7 U.S.C. 612c-6 (b)(2)(A)
+1,431
+1,464
+1,561
+1,878
+ Unobligated balance brought forward
7 U.S.C. 612c
+391
+375
+430
+350
+ Recoveries
—
+67
+36
+4
+0
- Sequestration
2 U.S.C. 901a(6)
-71
-73
-78
-107
- Rescissions
—
0
-11
-16
0
- Administrative expenses
7 U.S.C. 601 et seq.
-54
-59
-59
-59
- Fresh Fruit and Vegetable Program
42 U.S.C. 1769a(i)
-183
-187
-191
-195
- Entitlement purchases
7 U.S.C. 612c-4, with 42 U.S.C.
-485
-485
-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
-447
-348
-602
-773
- Disaster relief foods
7 U.S.C. 7502 (c)
-67
-78
-5
-5
- Removal of defective commodities
7 U.S.C. 612c note
na
na
-3
-3
= Unobligated balance carried forward
7 U.S.C. 612c
375
430
350
396
Source: CRS using USDA Congressional Budget Justification for Agricultural Marketing Service (AMS); and OMB Budget Appendix for USDA.
Notes: Entitlement purchases are specific amounts of foods required to be delivered to schools and entities. Itemization of amounts varies
between the USDA and OMB sources. Amounts here reflect a blended summary for policy analysis. The amount of emergency surplus removal
for FY2023 is computed to yield the projected carry forward. Amounts for emergency surplus removal in other years are computed from total
commodity purchases in the source documents, which do not differentiate some of the uses shown. Amounts may not add due to rounding.
Limitations and Uses of Section 32
USDA Procurement Beyond Section 32
Historically, USDA had considerable discretion with
Besides the Section 32 purchases that are identified in
Section 32. Congress reduced that discretion in the 2008
Figure 1 and Table 1, AMS also procures more than $1.5
farm bill, which established the reserved spending authority
billion of food for FNS from the child nutrition
to limit USDA spending (P.L. 110-246, §14222). Various
appropriation. These purchases fulfil other entitlement
farm bills also have required minimum purchases of fruits,
requirements in the National School Lunch Act and other
vegetables, and other specialty crops. Appropriations acts
Child Nutrition Programs statutes.
from FY2012-FY2017 prohibited using Clause 3 authority
to make direct payments to farmers for emergencies or
Purchases for FNS domestic food programs also may be
disasters. Since FY2018, up to $350 million of carryover
made by USDA’s Farm Service Agency using CCC
may be used for Clause 3 payments, though this exception
authority. These may include nonperishable commodities,
has been used minimally. The Clause 3 limit has evolved
such as grain products, peanut products, dairy products, and
with the addition of permanent disaster programs, ad hoc
oils. Unlike CCC support, which is normally limited to
disaster assistance, and federal crop insurance.
price-supported commodities expressed in the farm bill
(such as dairy, grains and oilseeds, cotton, sugar), Section
Section 32 pays for some administrative expenses related to
32 is less constrained in the variety of commodities that it
purchasing food and oversight of federal marketing orders.
may support or the manner of support (except within the
Section 32 also provides a limited amount of disaster relief
three broad purposes described in statute).
foods during natural disasters, and may pay to remove a
defective commodity that is found to pose a health risk after
Jim Monke, Specialist in Agricultural Policy
being distributed by USDA. Unobligated balances less than
$500 million may be carried forward to future fiscal years.
IF12193

https://crsreports.congress.gov

Farm and Food Support Under USDA’s Section 32 Account
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF12193 · VERSION 3 · UPDATED