Farm and Food Support Under USDA’s Section 32 Account

Congress created a mandatory appropriation in 1935—the Funds for Strengthening Markets, Income, and Supply (Section 32 of the act of August 24, 1935; 7 U.S.C. 612c). The account supports producers of agricultural commodities that are not supported by other farm support programs, such as the Commodity Credit Corporation. Such 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 in law: Clause 1—to encourage the export of agricultural products; Clause 2—to encourage the domestic consumption of farm products by diverting surpluses and increasing their use; and Clause 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 funds the Section 32 account. Following imposition of higher tariffs in 2018, this amount has more than doubled to exceed about $25 billion as of FY2026, but that has not provided more funding for the U.S. Department of Agriculture's (USDA's) discretionary use.

Three allocations flow from the permanent appropriation: a transfer to the Department of Commerce of 30% of customs receipts from fishery products; a statutory amount retained by USDA to support farmers and domestic food assistance programs that increases with inflation (known as "reserved spending authority"); and a transfer of the remainder to the Food and Nutrition Service (FNS) for the child nutrition programs. The Section 32 transfer to FNS is the largest portion (blue portions of Figure 1 and top of Table 1) and partially funds the mandatory amount needed to pay for the child nutrition programs, with other Treasury funds.

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. 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. 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) are possible with USDA's discretion in Clause 2 to increase demand for surplus commodities when farm prices are low. Recipients of bonus commodities include schools, child care centers, and food banks.

Figure 1. Flow of Funds in USDA's Section 32 Account Amounts vary and are budget projections for FY2026

Source: CRS using USDA, AMS, FY2026 Congressional Budget Justification; and OMB, FY2026 Budget Appendix.

Limitations and Uses of Section 32

Historically, USDA had considerable discretion with Section 32. Congress reduced that discretion in the 2008 farm bill, which established the reserved spending authority to limit USDA spending (P.L. 110-246, §14222). Various farm bills also have established provisions with minimum purchase requirements of fruits, vegetables, and other specialty crops.

Appropriations acts from FY2012-FY2017 prohibited using Clause 3 authority to make direct payments to farmers for emergencies or disasters. Since FY2018, appropriations acts have limited up to $350 million of carryover may be used for Clause 3 payments, though this exception has been used minimally. The Clause 3 limit has existed at the same time that permanent disaster programs, ad hoc disaster assistance, and federal crop insurance have grown.

Section 32 pays for some administrative expenses and oversight of federal marketing orders. Section 32 also provides a limited amount of disaster relief foods during natural disasters, and may pay to remove a defective commodity that is found to pose a health risk after being distributed by USDA. Unobligated balances less than $500 million may be carried forward to future fiscal years.

USDA Procurement Beyond Section 32

In recent years, AMS has procured more than $4 billion of food for domestic uses, including the Section 32 purchases that are identified in Figure 1 and Table 1. Some of these other purchases are for FNS from the child nutrition appropriation and fulfil other entitlement requirements in the National School Lunch Act and other Child Nutrition Programs statutes (CRS Report R48141, Trends in USDA Procurement of U.S. Food and Agricultural Products).