GAO, AEI release cargo preference studies
October 01, 2015 |12:23 PM
The Government Accountability Office last week released a study of cargo preference for food aid (CPFA) that says the law requiring a preference for U.S. ships increased the overall cost of shipping food aid by an average of 23 percent, or $107 million, over what the cost would have been had the requirements not been applied from April 2011 through fiscal year 2014.
Moreover, differences in the implementation of CPFA requirements by the U.S. Agency for International Development and the Agriculture Department contributed to a higher shipping rate for USDA.
The report said, “Following the July 2012 reduction in the minimum percentage of food aid to be carried on U.S.-flag vessels, USAID was able to substantially increase the proportion of food aid awarded to foreign-flag vessels, which on average have lower rates, helping to reduce its average shipping rate.
“In contrast, USDA was able to increase the proportion of food aid awarded to foreign-flag vessels by only a relatively small amount because it is compelled by a court order to meet the minimum percentage of food aid carried on U.S.-flag vessels by individual country, a more narrow interpretation of the geographic area requirement than what USAID applies,” the report said.
“Despite GAO's past recommendations, U.S. agencies have not fully updated guidance or agreed on a consistent method for agencies to implement CPFA, which would allow USDA to administer CPFA using a method other than country-by-country.”
The American Enterprise Institute this week issued a report on cargo preference that questioned the importance of the policy for military readiness.
The report, written by Vincent Smith and Stephanie Mercier, says, “Although the main political rationale for preserving CPFA has been the need to maintain a viable oceangoing fleet of trained mariners for military preparedness, the most militarily useful ships in the US-flagged commercial mercantile fleet carried only 18 percent of all food aid shipments between 2011 and 2013. Food aid shipments accounted for less than 5 percent of those vessels’ total shipping capacity over that same period.”
The report also says, “By terminating the CPFA, the practice of monetization, and requirements that almost all food aid be sourced in the United States and maintaining current levels of federal funding, US emergency food aid programs could serve an additional 4–10 million people in dire need every year.”
Moreover, differences in the implementation of CPFA requirements by the U.S. Agency for International Development and the Agriculture Department contributed to a higher shipping rate for USDA.
The report said, “Following the July 2012 reduction in the minimum percentage of food aid to be carried on U.S.-flag vessels, USAID was able to substantially increase the proportion of food aid awarded to foreign-flag vessels, which on average have lower rates, helping to reduce its average shipping rate.
“In contrast, USDA was able to increase the proportion of food aid awarded to foreign-flag vessels by only a relatively small amount because it is compelled by a court order to meet the minimum percentage of food aid carried on U.S.-flag vessels by individual country, a more narrow interpretation of the geographic area requirement than what USAID applies,” the report said.
“Despite GAO's past recommendations, U.S. agencies have not fully updated guidance or agreed on a consistent method for agencies to implement CPFA, which would allow USDA to administer CPFA using a method other than country-by-country.”
The American Enterprise Institute this week issued a report on cargo preference that questioned the importance of the policy for military readiness.
The report, written by Vincent Smith and Stephanie Mercier, says, “Although the main political rationale for preserving CPFA has been the need to maintain a viable oceangoing fleet of trained mariners for military preparedness, the most militarily useful ships in the US-flagged commercial mercantile fleet carried only 18 percent of all food aid shipments between 2011 and 2013. Food aid shipments accounted for less than 5 percent of those vessels’ total shipping capacity over that same period.”
The report also says, “By terminating the CPFA, the practice of monetization, and requirements that almost all food aid be sourced in the United States and maintaining current levels of federal funding, US emergency food aid programs could serve an additional 4–10 million people in dire need every year.”
- U.S. Government Accountablity Office — International Food Assistance: Cargo Preference Increases Food Aid Shipping Costs, and Benefits Are Unclear
- American Enterprise Institute — Military readiness and food aid cargo preference: Many costs and few benefits
- — Summary: Pouring Money Down the Drain: Rent-Seeking, Waste, and Inefficiency in US Food Aid Prorgrams
