Muhammad Hamed / REUTERS U.S. humanitarian aid en route to Lebanon, in Amman, Jordan, August 2006.

U.S. Food Aid's Costly Problem

Why It's Time to Eliminate Cargo Preference

Conflicts across the Middle East have brought many in the region to the verge of starvation. The United States urgently needs to organize and deliver more food aid to hundreds of thousands of displaced people in Syria, northern Iraq, and refugee camps in the surrounding countries, particularly as the campaign against the Islamic State, or ISIS, intensifies.

Washington’s emergency food aid programs form the core of the world’s efforts to meet the basic needs of about 12 million displaced and desperate Syrians. Since 2011, emergency assistance from the United States to Syria has amounted to $2.3 billion, nearly four times more than what the European Union, the second-largest donor, provides.

But the support that the United States and other countries give does not come close to meeting Syria’s humanitarian needs. Last year, funding shortages forced the United Nations World Food Program to cut its food aid budget for Syrian refugees in Jordan by 50 percent. According to the 2016 UN Humanitarian Response Plan, donors have so far committed enough funding to meet only 38 percent of Syria’s humanitarian needs for this year. 

Container ships in Newark, New Jersey, June 2012.

Container ships in Newark, New Jersey, June 2012.

Given the urgency of the humanitarian disaster in Syria, Iraq, and elsewhere, the U.S. Agency for International Development (USAID) and the U.S. Department of Agriculture (USDA), the agencies tasked with managing U.S. food aid programs, should strive to use their funds as effectively as possible. Yet through a number of burdensome regulations, Congress has severely restricted their efficiency.

The 2014 farm bill requires that USAID and the USDA source over 90 percent of all food aid from producers in the United States. It also requires that the government hire U.S.-flagged vessels to ship at least half of that aid abroad—a policy that is known as cargo preference. The cargo preference requirement is costly: U.S.-flagged vessels charge higher rates for shipments of food aid carried under the policy, since they face no competition from foreign-flagged vessels with lower shipping costs. 

It should come as no surprise that when competitive bids by foreign companies are permitted, food aid becomes less costly to ship. U.S. Marine Administration data indicate that shipping food aid on U.S.-flagged vessels under cargo preference costs 46 percent more than aid shipped at internationally competitive rates. Cargo preference alone increases annual shipping costs by at least $60 million. Combined with the United States’ food sourcing requirements, the policy adds up to $300 million a year to food aid transportation expenditures, according to studies by scholars at Cornell University and the American Enterprise Institute.

Taken together, these sourcing and shipping policies have contributed to a situation in which only 40 percent of the funding for Food for Peace, USAID’s biggest food-aid program, was used for food in 2012, the most recent year for which such data is available. In comparison, Canada, which generally requires neither cargo preference nor Canadian sourcing for aid, spends about 70 percent of its emergency aid budget on food.

For decades, the U.S. shipping industry has argued that cargo preference is essential for U.S. national security. According to the shipping industry’s lobby, the Department of Defense needs a U.S. flagged cargo-preference fleet in case of wars that involve transoceanic shipments of personnel and material, since the U.S. military does not have enough cargo-carrying capacity on its own and cannot rely upon foreign shipping in the event of a conflict. Yet that argument no longer holds water. Over the past five years, more than 80 percent of U.S. food aid carried under cargo preference has been shipped on vessels that the Department of Defense considers inappropriate for military purposes, often because they are too old or too slow.

Eliminating cargo preference and the requirement that the government source food aid from U.S. producers could save U.S. food agencies up to $350 million a year.

The age and sluggishness of U.S. ships used under cargo preference has contributed to another problem. Compared to employing newer vessels and stocking them with regionally or locally sourced food, food deliveries under cargo preference are slow—sometimes as much as 14 weeks slower than that alternative. In dire emergencies—precisely the kinds of situations that civilians in Aleppo, other parts of northern Syria, and Mosul now face—delays in the delivery of food aid can mean the difference between life and death.

Instead of maintaining regulations designed to benefit U.S. shipping companies, Congress should enable U.S. aid agencies to deliver emergency aid as quickly and cheaply as possible. Eliminating cargo preference and the requirement that the government source food aid from U.S. producers could save U.S. food agencies up to $350 million a year, or about 30 percent of the current U.S. emergency food aid annual budget, according to studies by the Government Accountability Office and scholars at George Mason University. Those kinds of savings could be used to deliver food aid to an additional four million to ten million people. The effect on national security would be negligible. 

Internally displaced Syrians who are shut off from food aid and in danger may try to flee to safety abroad. Another wave in the Syrian refugee crisis would increase the strain on Syria’s neighbors and exacerbate an already politically difficult situation in Europe and the United States. Food aid reform would mitigate that problem, making the Syrians most in need, the United States, and the rest of the world better off. 

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