News

U.S. FLAG SHIPPING AND FOOD AID

March 25th 2014

The Agricultural Trade Development Assistance Act of 1954 – otherwise known as PL 480 – was signed into law by President Dwight Eisenhower. According to President Eisenhower, the purpose of this Program is to “lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands.” It provides commodity-based food assistance to meet emergency hunger needs in the world’s poorest countries.

Since its inception, the PL 480 or Food for Peace Program has been a successful and reliable means of providing assistance to combat world hunger. It has become the principal U.S. government food assistance program, benefitting more than three billion people in more than 150 countries. In fact, the United States provides approximately 60 percent of the world’s food aid.

Equally important, the implementation of the PL 480 Food for Peace Program is a key contributor to America’s economy. It generates and supports jobs for American farmers, shippers, processors, port workers, and merchant mariners, providing employment for over 44,000 people here in the U.S.

From the northwest coast of Oregon to the Great Plains to the southern tip of Texas, American farmers grow crops like wheat, sorghum and corn to nourish and feed people around the globe. After the crops are grown and processed, American truckers, bargemen, freight forwarders and port operators ensure that the commodities are transported securely and efficiently to American ports.

The U.S.-grown and processed agricultural commodities can be shipped in bulk or loaded into bags – bags that are marked clearly with the U.S. flag and “US AID” – for shipment overseas. More than 13,000 Americans are directly employed in the transportation of food aid cargoes, from their point of production in America’s heartland to their foreign destination – the world’s neediest peoples.

Prior to 1985, the law stipulated that no less than 50 percent of food aid cargoes were to be carried on U.S.-flag vessels to the extent such vessels were available at fair and reasonable rates. In 1985, Congress increased the percentage share of food aid cargoes to be transported by U.S.-flag ships to 75 percent. Congress recognized that these food aid commodities provide an important source of cargo for the U.S.-flag merchant marine and significant employment opportunities for American mariners. In fact, the 11,500 American jobs that are directly involved in the carriage of Food for Peace cargoes on U.S.-flag merchant vessels generate more than 97,000 American jobs in other parts of the U.S. economy.

Not only do the continued implementation of the Food for Peace Program and the applicability of U.S.-flag cargo preference requirements to the shipment of these food aid commodities provide important economic benefits to the United States but it is clear that these programs are important to the maintenance of the privately-owned U.S.-flag merchant marine that is essential to our nation’s military security.

In fact, in May 2011 statement, General Duncan McNabb, Commander of the United States Transportation Command, noted that “To date, over 90 percent of all cargo to Afghanistan and Iraq has been moved by sea in U.S. Flag vessels.” He further stated that U.S. cargo preference laws and the Maritime Security Program have helped in “ensuring the continued viability of both the U.S.-flag fleet and the pool of citizen mariners who man those vessels.”

According to General McNabb, “The movement of U.S. international food aid has been a major contributor to the cargo we have moved under the cargo preference law that our U.S. commercial sealift industry depends on,” and he concluded that “[a]ny reductions will have to be offset in other ways to maintain current DoD sealift readiness.”

Unfortunately, this statement affirming the importance of the U.S.-flag cargo preference shipping requirements has recently been ignored by those in government. In 2012, during deliberations on its so-called highway bill (MAP 21), Congress adopted a provision that scaled back the U.S.-flag share of PL 480 cargoes to the pre-1985 level of 50 percent – and did so without any hearings or input from the maritime industry or Department of Defense.

It is estimated by the Maritime Administration that if this change goes into effect the impact on the U.S.-flag merchant marine and American maritime jobs will be significant. It could cost our nation and in particular the Department of Defense as many as 16 U.S.-flag commercial vessels and result in the loss of approximately 640 civilian seagoing jobs. As noted by the Navy League of the United States, once the “U.S.-flag merchant marine’s capability is diminished due to the impact of this provision, the United States could be forced to depend on politically unreliable foreign ships and crews to deliver important military cargo during times of war and national emergency.”

Following this decrease in U.S.-flag shipping requirements, Congressman Elijah Cummings (D-MD) introduced legislation to restore the U.S.-flag share to 75 percent. He and the other Representatives who supported this bill did so because “Without a U.S.-flagged sealift capacity, U.S. imports and exports would move solely on foreign, often state-owned shipping lines. Further, the U.S. military would be left dependent on foreign-flagged, foreign-owned vessels manned by non-U.S. citizens to carry the cargoes essential to supporting troops operating overseas.”

The legislation introduced by Congressman Cummings last year was not enacted last year during the closing weeks of the 112th Congress. Consequently, Congressman Cummings has indicated that he will reintroduce his legislation this year so that it can be considered by the 113th Congress.

MIRAID and the MM&P strongly support this legislation to restore the U.S.-flag share of food aid cargoes to 75 percent. We will be asking all Members of Congress to cosponsor this legislation and to work with Congressman Cummings and our industry for its prompt enactment.