The practice of requiring over half of all U.S. food aid to be shipped in U.S.-flagged, privately owned ships under what is called food aid cargo preference should also be ended. This would enable USAID to use markets efficiently when purchasing food aid. By itself, the requirement that at least fifty percent of all U.S. food aid on an annual basis be carried by U.S.-flagged ships - even though 40 percent of these ships are effectively owned by foreign multinational corporations - has been conservatively estimated to increase the cost of shipping food aid by about $150 million a year.
The primary beneficiaries of those indirect subsidies are mostly privately owned shipping companies. These companies have not been reluctant to make campaign contributions to Congressional members whose districts include the ports used by their ships. In other words, the food aid cargo preference program appears simply to be another example of the corporate welfare that derives from crony capitalism.
Advocates for food aid cargo preference claim the program helps ensure that the U.S. mercantile fleet can adequately support sea lift capacity for the military in times of war. Several General Accountability Office reports, as well as independent academic studies by researchers at Cornell and George Mason Universities, have questioned the validity of this claim on several grounds.
First, a substantial majority of the ships used to carry food aid over the past decade have not met Department of Defense criteria for vessels that could viably be used in military sea lift operations.
Second, there are no facts to support the claim that the use of the U.S. mercantile fleet to transport food aid creates a lot of economic activity in the United States, spurring the creation of thousands of new jobs. Independent estimates indicate that no more than 650 jobs for U.S. mercantile sailors and port workers are created by the approximate $150 million being paid to the shipping companies. That amounts to taxpayers paying almost $250,000 per job. Certainly, many more jobs would be created if these monies were spent elsewhere in the U.S. economy.
More important, if the monies were allocated to emergency food aid - to the Food for Peace program - they would save millions of additional lives. American food aid is a genuinely humanitarian effort. It generates a surprisingly extensive amount of goodwill for the United States among aid recipients and government officials around the world, thus contributing to a more secure world. No wonder, then, that a bipartisan group in the Senate Foreign Relations Committee is seeking to ensure that Food for Peace Program funds are used in the most efficient way to help millions of people whose lives have been devastated by natural and man-made disasters.