FACT SHEET

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY

Page 1

May 2012

Commodity Operations

Background

The Farm Service Agency’s (FSA) 

Commodity Operations mission area 

handles acquisition, procurement, 

storage, disposition, and distribution 

of agricultural commodities, and 

administration of the U.S. Warehouse 

Act (USWA) and the Dairy Product 

Price Support Program (DPPSP). It 

helps achieve domestic farm program 

price support objectives, produces 

a uniform regulatory system for the 

storage of agricultural products, and 

ensures the timely provision of food 

products for domestic and international food assistance programs and 

market development programs.

Deputy Administrator for 

Commodity Operations

The office of the Deputy Administrator for Commodity Operations 

(DACO) is responsible for purchasing and delivering bulk and processed agricultural commodities for 

donation by the U.S. Government 

to various food assistance programs, 

and for acquiring and disposing of 

agricultural commodities forfeited to 

the Government under Commodity 

Credit Corporation (CCC) commodity loan programs. 

Commodity Operations administers 

the USWA, providing a uniform 

regulatory system for the storage of 

agricultural products so that commodities owners have reliable protection of their stored asset. The USWA 

provides for warehouse receipts that 

are evidence of ownership and can be 

used as loan collateral, and requires 

warehouse operators to accept agricultural products for storage without 

discrimination. 

Kansas City Commodity Office

The Kansas City Commodity Office 

(KCCO) provides price discovery 

mechanisms for wheat and feed 

grains, soybeans and other oilseeds, 

and pulse crops. Each business 

day, KCCO gathers market data 

in 28 terminal market locations by 

conducting surveys and considering data obtained via wire services. 

These terminal market prices are then 

“backed-off” using a system of localized market differentials to establish 

marketing loan repayment rates in 

each county for the supported commodities. The posted county prices 

(PCP’s) reflect changes in prices in 

major terminal grain markets, adjusted for historical price difference 

between the county and the terminal. 

PCP’s are used to develop marketing 

assistance loan rates and determine 

loan deficiency payment and marketing assistance loan repayment rates.

Commodity Procurement

Commodity procurement includes 

contracting, inspecting and arranging for shipment of food products 

for domestic and international food 

assistance programs. In fiscal year 

2011, approximately 2.0 million 

metric tons of commodities valued 

at approximately $1.4 billion were 

procured and distributed to improve 

the nutritional welfare of adults and 

children worldwide.

Commodity Operations is responsible for the procurement, 

transportation, and disposition of 

food commodities to fulfill USDA 

and U.S. Agency for International 

Development (USAID) program 

commitments. USDA contracts 

with private industry to furnish high 

quality, nutritious products that meet 

program requirements and contracts 

for commodity related services such 

as product sampling and testing 

protocols, vessel loading observation, and overseas discharge surveys 

in an effort to protect the quality of 

U.S. food aid. USDA also partners 

with industry, non-governmental 

organizations, universities, and other 

Government agencies to accommodate food aid program requirements. Commodity Operations is 

called upon to quickly procure and 

distribute food and at times makes 

expedited purchases of food as part 

of disaster relief efforts (following 

hurricanes, earthquakes, etc.). Commodity Operations also provides 

administrative support to USDA’s 

Agricultural Marketing Service 

(AMS) by arranging and processing 

payments for offshore transportation 

of AMS-purchased commodities and 

certifying payments to vendors for 

commodities procured by AMS.

Under the National School Lunch 

Act and the Emergency Food Assistance Act of 1983, Commodity 

Operations provides nutritious foods 

to school children and others by 

procuring commodities such as dairy 

products, processed grain products, 

peanut products, and vegetable oil for 

domestic food assistance programs.

When surplus commodities are 

available, agency personnel assist in 

the donation of government-owned 

commodities for use in food assistance programs using CCC Charter 

Act authority for the procurement, 

distribution, and invoicing of commodities on behalf of USDA’s Food 

and Nutrition Service (FNS) and the 

Foreign Agricultural Service (FAS). 

In addition, Section 416(b) of the Ag-
FACT SHEET

Commodity Operations May 2012

riculture Act of 1949 also allows for 

the donations of eligible commodities held by CCC to foreign countries 

in need.

International Program 

Descriptions

Title II, P.L. 480 (Food for Peace) 

provides for the donation of agricultural commodities to meet emergency and nonemergency needs.

Title III, P.L. 480 (Food for Development), when funded, provides for 

government-to-government grants to 

support long-term growth in agriculture and related activities in lesser 

developed countries.

Food for Progress provides U.S. 

agricultural commodities to developing countries and emerging democracies committed to introducing and 

expanding free enterprise in the 

agricultural sector under the Food for 

Progress Act of 1985.

Section 416(b) authorizes the donation of CCC-owned commodities 

in surplus of domestic program requirements to carry out programs of 

assistance in developing and friendly 

countries under the Agriculture Act 

of 1949.

The McGovern-Dole International 

Food for Education and Child Nutrition Program helps promote education, child development and food 

security for some of the world’s most 

food insecure children. It provides 

for donations of U.S. agricultural 

products, as well as financial and 

technical assistance, for school feeding and maternal and child nutrition 

projects in low-income countries.

Commodity Operations personnel monitor, evaluate and reconcile 

ocean transportation contracts with 

regard to the carriage of USAID/FAS 

humanitarian food aid shipments. 

The primary functions are to:

• Establish and adjudicate debts 

by and against CCC;

• Provide guidance and operational oversight to Private Voluntary Organizations (PVO) and 

intergovernmental organizations 

in connection with marine losses 

and debts arising under the food 

aid shipments;

• Approve and process payments 

relative to the ocean movement 

of food aid shipments;

• Provide USAID/FSA/FAS with 

reports that relate to issues such 

as packaging, food safety/quality, PVO and ocean carrier performance, load port and foreign 

port performance; and

• Provide robust, detailed and 

comprehensive risk assessments for USAID/FSA/FAS 

humanitarian food aid cargoes to 

document loss trends, potential 

logistical deficiencies, PVO 

deficiencies, potential commodity specification problems, and 

performance issues regarding 

modes of transportation.

Dairy Product Price Support 

Program

Under the authority of the Agricultural Act of 1949, as amended, national 

policies and procedures are formulated and administered through the 

DPPSP. In order to stabilize domestic 

dairy prices as required by law, dairy 

products are purchased at announced 

prices under this program. Commodity Operations arranges for 

warehouse storage, transportation, 

handling and inspection of the dairy 

products until the commodities are 

used in domestic or foreign food 

assistance programs or otherwise 

disposed of by CCC.

CCC has not purchased products 

under DPPSP since October, 2009, as 

market prices have exceeded DPPSP 

support levels. Generally, industry 

does not believe that DPPSP is effective, and has suggested alternative 

programs to Congress.

Contract Management and 

Technical Support Projects

Commodity Operations works 

closely with other agencies, the private sector and academia to develop 

product specifications that provide 

domestic and international program 

recipients with safe, wholesome, nutritious foods. In addition, Commodity Operations works closely with 

academia and the packaging industry 

to ensure that only food grade packaging is used and types of packaging 

systems are adequate for the types of 

handling expected to occur.

U.S. Warehouse Act

The USWA protects the interests of 

all depositors storing commodities in 

USWA-licensed warehouse facilities. 

In providing this uniform regulatory 

system for storage of agricultural 

products, Commodity Operations 

has worked with various industries 

to establish electronic warehouse 

receipts for grain, cotton, peanuts, 

rice, coffee, cocoa, and orange 

juice. Electronic warehouse receipts 

have greatly enhanced the efficient 

transfer and marketing of agricultural 

products.

To qualify for a license under the 

USWA, a warehouse operator must 

have a suitable and properly maintained warehouse; have a good business reputation and must meet the 

minimum net worth requirements; 

furnish an acceptable bond or other 

acceptable financial instrument; and 

employ qualified personnel to weigh, 

sample, inspect and grade agricultural products stored or handled in 

the licensed warehouse.

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In fiscal year (FY) 2011, Commodity Operations had the following 

warehouse facilities licensed under 

the USWA:

CommodityNo. of 

Facilities

Capacity

Cotton 209 10.4 million 

bales

Grain 2,618 4.9 billion 

bushels

Peanuts 298 2.9 million 

tons

Dry 

Edible 

Beans

33 44.3 million 

cwt.

Warehouse Examinations

Commodity Operations is responsible for administering storage 

agreements between commercial 

warehouse operators and CCC 

for the storage of CCC-interest 

commodities. These commodities 

include CCC-owned inventory 

and commodities pledged as collateral for CCC loans. There are 

currently five storage agreements: 

Cotton Storage Agreement, Peanut 

Storage Agreement, Processed 

Commodity Storage Agreement, 

Sugar Storage Agreement, and the 

Uniform Grain and Rice Storage 

Agreement.

Commodity Operations personnel, 

under the authority of the USWA 

and the CCC Charter Act, administer USWA licenses and examine 

warehouses, periodically making 

unannounced examinations of the 

storage facilities, commodities 

stored, and the warehouse operator’s records to ensure protection 

of depositors against potential 

losses in the stored agricultural 

products. The examinations ensure 

compliance with the USWA and 

CCC storage agreements. Onsite 

examinations provide the foundation for industry-wide confidence 

in the integrity of the USWA warehouse receipts, and facilitate the 

orderly marketing of agricultural 

products. The USWA examination 

functions are supported by fees 

collected from the warehousing 

industry. In addition, because of 

the integrity of the federal licensing and examination programs, 

USWA-approved warehouse 

receipts issued to depositors are 

widely accepted by financial 

institutions as loan collateral. All 

major commodity exchanges, such 

as the Chicago Board of Trade and 

the Kansas City Board of Trade, 

accept warehouse receipts for 

value. In FY 2011, Commodity 

Operations warehouse examiners 

performed more than 2,000 warehouse or other types of examinations protecting the assets of CCC 

and private depositors across the 

United States.

The U.S. Department of Agriculture 

(USDA) prohibits discrimination in all 

of its programs and activities on the 

basis of race, color, national origin, age, 

disability, and where applicable, sex, 

marital status, familial status, parental 

status, religion, sexual orientation, 

political beliefs, genetic information, 

reprisal, or because all or part of an 

individual’s income is derived from any 

public assistance program. (Not all 

prohibited bases apply to all programs.) 

Persons with disabilities who require 

alternative means for communication 

of program information (Braille, large 

print, audiotape, etc.) should contact 

USDA’s TARGET Center at (202) 720-

2600 (voice and TDD). 

To file a complaint of discrimination, 

write to USDA, Assistant Secretary 

for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 

Independence Avenue, S.W., Stop 9410, 

Washington, DC 20250-9410, or call 

toll-free at (866) 632-9992 (English) or 

(800) 877-8339 (TDD) or (866) 377-

8642 (English Federal-relay) or (800) 

845-6136 (Spanish Federal-relay). 

USDA is an equal opportunity provider 

and employer.

FACT SHEET

Commodity Operations May 2012

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