PDF _ RL34081 - Farm and Food Support Under USDA’s Section 32 Program
20-Feb-2009; Geoffrey S. Becker; 21 p.

Update: Previous Releases:
May 29, 2008

Abstract: “Section 32” is a permanent appropriation that since 1935 has earmarked the equivalent of 30% of annual customs receipts to support the farm sector through a variety of activities. Today, most of this annual appropriation is transferred to the U.S. Department of Agriculture (USDA) account that funds child nutrition programs (i.e., $5.7 billion transferred of approximately $7 billion total). However, the Secretary of Agriculture has long had broad discretion in how to spend the nontransferred (unobligated and carry-over) money, which now amounts to approximately $1.5 billion annually. The Secretary historically has chosen to use much of this non-transferred money to purchase non-price-supported commodities like meats, poultry, fruits, vegetables, and fish, which are diverted to school lunch and other domestic food programs; and to fund farm economic and disaster relief activities, among other things.

The 110th Congress in May 2008 passed a new omnibus farm bill (P.L. 110-234). Provisions in this new law now spell out more explicitly how the Secretary is to use the annual Section 32 appropriation. One section of P.L. 110-234 requires new higher minimum levels of fruit, vegetable, and nut purchases (in fresh, frozen, canned, or dried forms) to support domestic nutrition programs. A separate section requires the Department to use Section 32 to fund a fresh fruit and vegetable program for participating elementary schools, with spending to grow from $105 million in FY2009 to $150 million by FY2012. Another part of the new law delineates how the Secretary is to allocate the annual Section 32 appropriation — in order to cover the cost of the fresh fruit and vegetable purchases.

Separately, USDA’s FY2008 appropriation (part of the Consolidated Appropriations Act, 2008, P.L. 110-161) also appears to limit somewhat the availability of Section 32 monies. It rescinds a total of $684 million, including $184 million that otherwise was projected to be available in FY2008 for surplus purchases (called “Estimated Future Needs” in AMS budget parlance) and $500 million in prior unobligated balances.

These congressional actions may be expected, in effect, to limit the wide discretion that policymakers have long exercised with regard to program spending under this account. Meanwhile, various Members of Congress and their constituents still want to ensure that a portion of the Section 32 fund will continue to be available — and be used, when necessary — to help producers recover at least a portion of their losses when natural disasters or unanticipated economic setbacks arise and to help domestic nutrition programs through surplus purchases. [read report]

Topics: Agriculture, Legislative

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