Giving U.S. agencies more flexibility in managing food aid shipments

The international food security crisis, exacerbated by Vladimir Putin’s war of aggression in Ukraine, has become a global catastrophe to which the United States must respond. Our success in combating this tsunami of hunger will be measured not by dollars contributed but by lives saved. That is why Congress should move swiftly to eliminate outdated mandates that impede the delivery of life-saving food aid.

In 2022 alone, the number of food insecure children and adults surged to 1.3 billion — an increase of 10 percent over the past year. Over 220 million people are likely to suffer from acute hunger in early 2023. The growing needs obviously have put a strain on the emergency food aid programs of the United States and its partners such as Canada, the European Union, the United Kingdom, Australia and Japan. The U.S. Congress, in particular, has responded swiftly and generously to the global humanitarian crisis provoked by Putin’s war. Yet, major increases to humanitarian budgets are not sustainable over the long term. It is now more critical than ever that emergency food aid programs operate efficiently to ensure every dollar saves as many lives as possible.

There is a lot of talk about humanitarianism and foreign aid reform in Washington, D.C., and Congress has enacted a number of important foreign aid transparency and accountability measures over the years. Still, there is at least one glaring anti-competition mandate that continues to test the mettle of self-proclaimed humanitarians and foreign aid reformers: the Cargo Preference Act of 1954.

The Cargo Preference Act requires that at least 50 percent of international U.S. food aid commodities be transported on U.S.-flagged ships. Initially, the mandate was put in place to ensure the availability of U.S.-flagged commercial vessels and the American mariners who crew them in a time of crisis. The concept harkens back to the days of Dunkirk. Yet, nearly 70 years and multiple major wars later, there’s never been another Dunkirk. The Cargo Preference Act has outlived its statutory purpose.

Today, the overwhelming majority of U.S. food aid is carried on bulk carriers, yet not one of the four bulk carriers remaining in the U.S. flagged fleet is militarily useful. While containerized ships may have some military value, the majority of U.S. containerized food aid shipments are carried on subsidiaries of foreign conglomerates. This means that U.S. food aid shipments may not even be carried on U.S.-flagged vessels in support of the U.S. maritime industry.

This bears repeating: the four bulk carriers owned by just two U.S. companies are not militarily useful and the U.S.-flagged container ships moving food aid tend to be owned by subsidiaries of foreign shipping companies. At the same time, the U.S. Military Sealift Command maintains a fully capable, mission-ready reserve of Strategic Sealift Officers in order to meet U.S. maritime security needs.

So who does benefit from applying cargo preference to food aid?

In the 1950’s, U.S. agriculture was a major beneficiary because international food aid accounted for about 30 percent of all agricultural exports. Today, however, food aid accounts for less than 1 percent of those shipments. Applying cargo preference to U.S. international food aid exports reduces the amount of U.S.-sourced food aid that can be purchased.

The major beneficiaries of this outdated requirement turn out to be a small number of shipping companies, and those in Washington, D.C. with a vested interest in subsidizing them.

U.S. cargo preference requirements have severely diminished the effectiveness of U.S. international food aid programs over the years. A recent study has shown that ocean transportation rates for bulk food aid shipments (for example, wheat or corn) are 100 percent higher when carried on U.S. flagged vessel than on others. For food aid shipments that are containerized, the cargo preference markup over commercial rates averages 60 percent.

Overall, the requirements have raised annual transportation and related costs by $300 to $400 million and delayed deliveries by four to six months. These increased costs have prevented the United States from reaching as many as 8 to 10 million men, women, and children in dire need every year. Unless the United States waives cargo preference requirements for emergency food assistance, those mandates could cause even more extensive damage in 2023.

U.S. international food aid programs have widespread diplomatic and defense implications. Beyond helping people in dire need, a critical role for U.S. aid programs is to cement relationships with countries who otherwise would be vulnerable to the influence and actions of malign state and non-state actors. Limiting the scope and reach of these programs by diverting 25 to 30 percent of the budget through burdensome and outdated cargo preference requirements damages these efforts in the long term. 

Now is the time to eliminate cargo preference for U.S. international emergency food assistance. That is why the bipartisan Securing Allies Food in Emergency (SAFE) Act was introduced during the last Congress, which would give U.S. agencies much more flexibility in managing food aid shipments, while still encouraging U.S. sourcing for many commodities. This represents a responsible and safe way for the United States to address the current global food crisis while making the United States and many other parts of the world safer.

The SAFE Act is exactly what is needed, both in terms of advancing U.S. national security and ensuring that Congress serves as an effective steward of U.S. taxpayer dollars. Those who continue to oppose reforms need to seriously reconsider the real and astonishingly damaging humanitarian and national security consequences of the current cargo preference mandates they support, just as foreign aid reformers within and beyond congress do.

Jim Risch is ranking member of the Foreign Relations Committee and Vincent Smith is director to the American Enterprise Institute’s agricultural policy initiative.