The "Section 32" account is funded by a permanent appropriation of 30% of the previous calendar year's customs receipts, nearly $10 billion in recent years. The remainder funds a variety of activities that support both farmers and domestic food assistance programs. The program's name stems from its authorization: Section 32 of the act of August 24, 1935 (P.L.74-320, as amended; 7 U.S.C. 612c). Encourage export of farm products through producer payments or other means; 2. Encourage the domestic consumption of farm products by diverting surpluses from normal channels or increasing their use by low-income groups; and 3. Re-establish farmers' purchasing power by making payments to farmers. $ 144 million , transferred to the Commerce Department for fisheries activities. From this:
$465 million was designated for planned AMS commodity purchases to fulfill the commodity assistance entitlement set by the National School Lunch Act (23.75 cents per meal in the 2016 school year beginning July 1, 2015). $ 306 million was used for contingency fund "emergency removals" of surplus commodities (primarily cranberries, tart cherries, chicken products, raisins, and canned salmon), and provided as a "bonus" to schools (over and above their "entitled" amounts) and to other designated domestic food assistance programs. First, much of the Section 32 permanent appropriation simply is transferred into USDA's Food and Nutrition Service (FNS) child nutrition account (approximately $8.4 billion in FY2015) to help meet the entitlement spending requirements of the National School Lunch Act (42 U.S.C. In addition, the Secretary has chosen to provide food commodities to victims of natural disasters, among other activities. Historically, USDA has had considerable discretionary authority to spend Section 32 funds to help the farm sector via commodity purchases, direct payments, and other activities. Over time, though, Congress has reduced the extent of this discretionary authority through new authorizing provisions and through appropriations riders: (1) the 2008 farm bill capped the amount USDA is permitted to spend after transfers for use in the child nutrition programs and to Commerce for fisheries activities, (2) the farm bill set minimum levels of fruit, vegetable, and nut purchases from Section 32 to support domestic nutrition programs via the Fresh Fruit and Vegetable Program for participating elementary schools, and (3) congressional appropriators have prohibited the use of Section 32 for emergency disaster payments to farmers in each annual appropriation act since FY2012. In general, Section 32 pays for direct federal purchases of commodities such as meats, poultry, fruits, vegetables, and seafood that are not covered by mandatory farm programs through USDA's Commodity Credit Corporation (CCC). Such decisions are left to the Secretary of Agriculture, acting through USDA's Agricultural Marketing Service (AMS). However, in an effort to boost specialty crop purchases and limit USDA's discretion, the 2008 farm bill ( P.L. The premise is that removing products from normal marketing channels helps to limit supply and thereby increase prices. The development of permanent farm disaster programs and enhancements to the federal crop insurance program have reduced the pressure for funding ad hoc disaster programs through Section 32.
"Section 32" is a permanent appropriation that since 1935 has set aside the equivalent of 30% of annual customs receipts to support the farm sector through the purchase of surplus commodities and a variety of other activities. The appropriation has totaled nearly $10 billion annually in recent years. Today, most of the appropriation (about $8.4 billion) is transferred to the U.S. Department of Agriculture's (USDA's) child nutrition account, with a separate amount (about $144 million) transferred to the Department of Commerce for fisheries activities. The Secretary of Agriculture, acting through USDA's Agricultural Marketing Service (AMS), has had broad discretion in how to spend the remaining non-transferred (unobligated and carryover) money.
The program's name stems from its authorization: Section 32 of the act of August 24, 1935 (P.L.74-320, as amended; 7 U.S.C. 612c). Funds are to be used to (1) encourage the export of farm products through producer payments or other means; (2) encourage the domestic consumption of farm products by diverting surpluses from normal channels or increasing their use by low-income groups; and (3) re-establish farmers' purchasing power. In recent years, USDA has pursued primarily the second and third objectives.
The Secretary historically has chosen to use much of the non-transferred money to purchase agricultural commodities like meats, poultry, fruits, vegetables, and fish, which are not typically covered by other mandatory farm support programs. The premise for commodity purchases is that removing products from normal marketing channels helps to limit supply and thereby increase prices and farm income. Purchased commodities are diverted to the National School Lunch Program and other domestic food assistance programs. In FY2015, $465 million was designated for planned AMS commodity purchases to fulfill the commodity assistance entitlement set by the National School Lunch Act. Another $306 million was used for "emergency removals" of surplus commodities throughout the fiscal year (primarily fruits, vegetables, and meat products). The surplus commodities are distributed as "bonuses" to domestic food assistance programs.
Over time, Congress has reduced USDA's discretion to use Section 32 authority via authorizing legislation and through appropriations. Most significantly, the 2008 farm bill (P.L. 110-246) permanently capped the amount USDA is permitted to spend after transfers for use in the child nutrition programs and to the Department of Commerce for fisheries activities. It also required minimum levels of fruit, vegetable, and nut purchases to support domestic nutrition programs and required USDA to use Section 32 to fund the Fresh Fruit and Vegetable Program, which provides snacks to participating elementary schools.
Section 32 is also used less for direct farm disaster assistance than in the past. This policy shift has occurred by the authorization and funding of "permanent" disaster programs in the 2008 and 2014 farm bills, enhancements to the federal crop insurance program, and limitations by appropriators on using Section 32 for disaster payments.