Commodity Credit Corporation
The stated purpose of the Commodity Credit Corporation is for “stabilizing, supporting, and protecting farm income and prices, of assisting in the maintenance of balanced and adequate supplies of agricultural commodities, products thereof, foods, feeds, and fibers (hereinafter collectively referred to as “agricultural commodities”), and of facilitating the orderly distribution of agricultural commodities, there is created a body corporate to be known as Commodity Credit Corporation (hereinafter referred to as the ‘Corporation’), which shall be an agency and instrumentality of the United States, within the Department of Agriculture, subject to the general supervision and direction of the Secretary of Agriculture.” See 15 U.S.C. 714.
The following is derived from the CRS Report: Commodity Credit Corporation: In Brief (R44606) August 29, 2016. These excerpts concentrate on the financing of the CCC:
Financing the CCC
CCC is responsible for the direct spending and credit guarantees used to finance the federal government’s agricultural commodity price support and related activities undertaken by authority of agricultural legislation (such as farm bills) or the Charter Act itself. It is, in brief, a broadly empowered financial institution. The money CCC needs comes from its own funds (including its $100 million capital stock, appropriations from Congress, and its earnings) and from borrowings. In accordance with government accounting statutes and regulations, CCC is required to submit an annual business-type budget statement. This is released annually with the President’s budget request.
The Office of Management and Budget (OMB) also plays a role in how CCC funds are administered through an apportionment process, which allows OMB to set a limit on the funds available for obligation and subsequent outlay. OMB apportions funds for select CCC programs and operating expenditures. OMB is precluded, however, from apportioning funds “for price support and surplus removal of agricultural commodities.” [31 U.S.C. §1511(b)(1)(A)]
Most CCC-funded programs are classified as mandatory spending programs and therefore do not require annual appropriations in order to operate. CCC instead borrows from the U.S. Treasury to finance its programs. CCC has permanent indefinite authority to borrow from the Treasury (and also private lending institutions) within limits set by Congress. As the amount of money needed to carry out its activities has grown over time, the borrowing limit has been steadily increased. At present, CCC’s borrowing authority is limited to $30 billion [15 U.S.C. §714b(i)] , an amount that has not been increased since 1987. CCC recoups some money from authorized activities (e.g., sale of commodity stocks, loan repayments, and fees), though not nearly as much money as it spends, resulting in net expenditures. Net expenditures include all cash outlays minus all cash receipts, commonly referred to as “cash flow.”
CCC outlays or expenditures represent the total cash outlays of the CCC-funded programs (e.g., loans made, conservation program payments, commodity purchases, and disaster payments). Outlays are offset by receipts (e.g., loan repayment, sale of commodities, and fees). In FY2015, CCC gross outlays were $12.4 billion. Gross cash receipts were $6.0 billion, resulting in net expenditures in FY2015 of approximately $6.4 billion.19 In practice a portion of these net expenditures may be recovered in future years (e.g., through loan repayments). CCC also has “net realized losses,” referred to as nonrecoverable losses. These refer to the outlays that CCC will never recover, such as the cost of commodities sold or donated, uncollectible loans, storage and transportation costs, interest paid to the Treasury, program payments, and operating expenses. The net realized loss is the amount that CCC, by law, is authorized to receive by appropriations to replenish the CCC’s borrowing authority.
The annual appropriation varies each year based on the net realized loss of the previous year. For example, the FY2016 appropriation (P.L. 114-113) continues to provide an indefinite appropriation, covering the net realized loss for FY2015, which was $6.871 billion, down 49% from the net realized loss in FY2014 of $13.445 billion. The reduction does not indicate any action by Congress to reduce program support but rather changes in farm program payments and other CCC activities that fluctuate based on economic and weather conditions. Also, CCC’s assets, which include loans and commodity inventories, are not considered to be “losses” until CCC ultimately disposes of the asset (e.g., by sales, exports, or donations). At that time, the total cost is realized and added to other program expenses less any other program income.
Non-Borrowing Authority Appropriations
CCC also receives annual appropriations for several of its foreign assistance programs and special activities, such as disaster aid. These activities include a specific statutory authority for separate reimbursement, namely export credit guarantee programs, foreign donations, and concessional sales under the Food for Peace Program [Pub. L. 83-480]. The appropriations provided for these programs are unrelated to the borrowing authority described above.
CCC has what it refers to as a “parent/child” account relationship with USAID. CCC allocates funds (as the parent) to USAID (as the child) to fund P.L. 480 Title II and Bill Emerson Humanitarian Trust transportation and other administrative costs in connection with foreign commodity donations. CCC then reports USAID’s budgetary and proprietary activities in its financial statements. In FY2015, CCC provided $1.3 billion to USAID for donation-related activities.
U.S. Government Accountability Office (GAO), Commodity Credit Corporation: Information on the Availability, Use, and Management of Funds, GAO/RCED-98-114, April 1998
USDA, FSA, Commodity Estimates Book FY2017 President’s Budget Commodity Credit Corporation, Presentation Number: 2017-01, February 9, 2016, Output 2,