Why It Matters

USDA Section 32 channels customs receipts into agricultural support and child nutrition, putting the program’s statutory design alongside an unsettled fiscal year 2027 funding estimate, according to a new Congressional Research Service report.

Its three statutory purposes are encouraging agricultural exports, increasing domestic use by diverting surpluses, and restoring farmers’ purchasing power through payments to farmers. The funding formula assigns Section 32 30 Percent of customs receipts from the prior calendar year, linking the program’s resources to collections that can later be revised through refunds.

That estimate was prepared before a Supreme Court decision invalidated the collection of certain tariffs imposed under the International Emergency Economic Powers Act, while the effect of $125 billion in tariff refunds on the final transfer remained undetermined as of Sept. 14.

The Big Picture

Section 32 money is divided among a transfer to the Department of Commerce, spending authority retained by the U.S. Department of Agriculture, and the remaining transfer to the Food and Nutrition Administration for child nutrition programs. The reserved spending authority rises with inflation rather than customs receipts and funds both required and optional purchases of farm commodities.

Required purchases stem from laws that specify food quantities to be delivered in kind to schools and other entities, while the USDA chooses the commodities and amounts for contingency purchases intended to remove emergency surpluses. Schools, childcare centers, and food banks receive commodities bought through the emergency surplus-removal process.

The Congressional Budget Office estimates that child nutrition programs will cost $37 billion in FY2027, but those programs may not obligate more than the amount authorized by law.

The Bottom Line

Emergency surplus-removal spending increased from less than $500 million annually over the past decade to nearly $1 billion. USDA purchased $866 million in emergency surplus-removal commodities in 2025, including fruits, vegetables, dried fruits, nuts, and proteins.

Appropriations acts since fiscal year 2018 have limited Clause 3 direct payments to $350 million from prior-year carryover, and USDA has rarely used that authority.

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