Cargo preference laws require that a percentage of U.S. government cargo, including international food aid, be transported on U.S. flagship carriers. The policy has recently received increased scrutiny from those on Capitol Hill, as agricultural groups continue to defend its use.
The Senate Foreign Relations Committee held a hearing recently to look at ways to modernize the U.S. Agency for International Development's (USAID) Food For Peace Program. Committee chairman Sen. Bob Corker (R., Tenn.) is a frequent critic of the current program structure and has sought to push through various reforms with the goal of increasing cash/voucher-based food aid and reducing or eliminating in-kind aid.
Corker opened the hearing calling for the total elimination of the current cargo preference for food aid (CPFA) program requiring that 50% of all food aid shipped overseas is on U.S. flagship carriers. Ranking member Sen. Ben Cardin (D., Md.) endorsed the need to eliminate the cargo preference but also broadened the scope of reform to include prepositioning, monetization and an increase in the use of cash and local and regional purchase-based food assistance.
Four witnesses -- from the USAID Office of Food For Peace, the Government Accountability Office (GAO), Catholic Relief Service and Cornell University -- were unanimous in their agreement about the need to reform the Food For Peace Program to achieve greater efficiencies and made strong statements about the need to eliminate cargo preference and increase cash-based assistance.
The U.S. agricultural community historically has worked together in coalition with the maritime industry and private voluntary organizations to fight for food aid budgets and to keep U.S. programs focused on in-kind food aid.
"We believe current U.S. food aid programs work, and while there is always room for reform and improvement in these programs, we maintain that food must continue to be a critical part of all future U.S. food assistance programs," USA Rice Food Aid subcommittee chairman Bobby Hanks said. “We will face ongoing criticism of the current food aid paradigm, and it will be critical going forward for the agricultural community to communicate the success and importance of these programs."
Cargo preference laws require agencies to ship half of U.S. food aid to a given geographic area on U.S. ships. The intent is to ensure that a merchant marine — both ships and mariners — will be available to help the military when needed, according to the GAO.
Thomas Melito, director of international affairs and trade at GAO, testified that cargo preference increased food aid costs by $107 million over about three years and that its effect on mariner availability was unclear. Also, without a definition in the law, "geographic area" is open to interpretations that can raise costs.
Congress lowered the minimum percentage of food aid to be carried on U.S.-flag vessels from 75% to 50% in 2012. Following this reduction, USAID — which applies a broader interpretation of the geographic area requirement under CPFA — was able to substantially increase the proportion of food aid awarded to foreign-flag vessels, which have lower shipping costs, on average, helping to reduce its average shipping cost.
The U.S. Department of Agriculture was able to increase the proportion of food aid awarded to foreign-flag vessels by only a relatively small amount, because a court order compels it to meet the minimum percentage of food aid carried on U.S.-flag vessels by legislation that was introduced to clarify the definition of “geographic area,” which could allow USDA to administer CPFA using a more flexible method.
In remarks to the American Enterprise Institute (AEI) on Oct. 19, Corker stated that he has talked to farmers and said farmers “do not care” about U.S. in-kind food aid.
Wheat grower groups denied that claim.
“I don’t know what farmers Sen. Corker is talking to, because I can assure you, wheat farmers care a lot about in-kind food aid,” Dighton, Kan., wheat farmer Ron Suppes said. “In 2016, U.S. government donations of milling wheat that helped feed food-insecure populations or were monetized by (non-government organizations) to fund local food security projects reached a level that would be equal to a top 10 export market.”
“Sen. Corker’s call to eliminate in-kind food aid donations in favor of all cash gifts is an extreme position shared by AEI, a group that regularly attacks farm programs and farmers,” said Gordon Stoner, a wheat farmer from Outlook, Mont. “In-kind food aid and monetization are still important tools for delivering greater food availability and easing local market price volatility.”
During a June 2017 House Agriculture Committee hearing, Suppes testified on food aid and a trip he took to Tanzania, where he saw development programs that utilized wheat.
In fact, one of the goals of the U.S. PL-480 food program is to get food to the places where it is needed most. Over time, this program has also had beneficial effects for U.S. farmers. The Philippines and Taiwan are countries that once received in-kind food aid from the U.S. Today, both markets are major importers of U.S. wheat and other food ingredient commodities.
Stoner said the U.S. Wheat Associates and the National Association of Wheat Growers "believe time-honored U.S. food aid programs have been engines of peace, food security and local capacity building in countless countries around the world. In-kind food donation and monetization should remain a vital part of America’s tradition of global generosity.”