[This piece has been published in Restoring America to highlight how a food aid policy giving an advantage to U.S. vessels could increase costs for consumers].
Soaring food and energy prices are putting hundreds of millions of people’s lives at risk worldwide. It is thus especially disappointing, though perhaps not surprising, that the U.S. maritime sector is asking Congress to increase the share of food aid shipments that must be carried by U.S.-flagged vessels in this time of crisis.
This request, if met, would further raise the cost of providing emergency food assistance to millions of desperately poor families facing a genuine food security crisis. Many legislators and commentators were shocked by the March 2022 disclosure that nearly 60% of the cost of providing international food assistance with resources drawn from the Bill Emerson Humanitarian Trust would go to cover processing and shipping, with the remaining 40% to cover the purchase of the food. This news prompted the introduction of a concurrent resolution in Congress to waive the food aid cargo preference requirement for the next few years.
Our published research estimates that under the current 50% cargo preference requirement, the higher rates charged for shipping U.S. food aid on U.S.-flagged ships increases the overall cost of operating the programs by about $50 million per year. If one or more amendments to the National Defense Authorization Act (NDAA) for 2023 — proposed by House of Representatives member John Garamendi (D-CA) — were to be adopted, the cost increase would be even more substantial.
Worse still, recent events indicate that the U.S. maritime industry does not have the capacity to meet the increased demand for shipping food aid that it is seeking from Congress. According to data provided by the U.S. Agency for International Development, companies owning U.S.-flagged vessels were unable to submit bids to carry about 60% of all fiscal year 2022 bulk food aid shipping contracts (allocated through mid-June of 2022) under the Title II “Food for Peace” program. And based on the U.S. maritime industry’s performance thus far in FY22, food aid logistical experts do not believe that the industry has the capacity to carry a higher share of U.S. food aid shipments, as Representative Garamendi’s amendment to NDAA would require.
Finally, our research also indicates that food aid cargo preference contributes very little to its primary objective: to support and maintain the U.S.-flagged civilian fleet’s capacity to carry military cargo in the event of widespread conflict. In fact, the three U.S.-flagged bulk carriers most used to transport food aid shipments under cargo preference laws are not deemed to be “militarily useful” by the U.S. Department of Defense.
Based on our findings, we believe that Congress should adopt the concurrent resolution to waive cargo preference requirements for international food aid and rebuff any efforts to increase them.
This piece originally appeared in the AEIdeas blog and is reprinted with kind permission from the American Enterprise Institute.
