Source: https://lawreview.vermontlaw.edu/staff-note-jumping-ship-on-cargo-preference-promoting-local-procurement-through-private-sector-organizations-as-a-long-term-solution-to-global-food-insecurity/
Timestamp: 2018-03-23 18:49:42
Document Index: 560153558

Matched Legal Cases: ['§ 55301', '§55305', '§1241', '§55305', '§ 55305', '§ 381']

Jumping Ship On Cargo Preference: Promoting Local Procurement Through Private Sector Organizations As A Long-Term Solution To Global Food Insecurity - Vermont Law Review
As roughly one-third of the world’s nations struggle to keep their populations alive, food-insecure regions have sought to implement food assistance programs.[6] While some nations, such as India, are able to implement their own food assistance programs using domestic food surpluses or cash-for-food initiatives, most countries—especially those in SSA—look to more traditional food aid sources like imported food.[7] The United States and Europe have played tremendous roles in importing such resources. In 2011, these imports reached a record high $43.6 billion in SSA and exceeded India’s imports by $16 billion the following year.[8] Though wheat dominates these deliveries, the shipments also include rice, vegetable oil, and dairy products.[9] Due to the tremendous dependence on this assistance, international agreements such as the Food Assistance Convention are intended to hold nations accountable for the quality and quantity of the food promised to recipient countries.[10]
There is no doubt that the number of food insecure nations would be much greater if the United States did not help fight global hunger. The United States has overwhelmingly established itself as the largest contributor to hunger reduction efforts through food aid.[11] As the country that is ranked highest for food security and a signatory to international commitments, the United States has demonstrated unmatched influence over global food aid programs.[12] The United States currently spends about $2 billion per year on food aid that is sent to low-income nations, mostly in Africa, Southeast Asia, and South America.[13] Congress has delegated the authority to distribute this aid to executive agencies, specifically the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA) and the U.S. Agency for International Development (USAID).[14] The Agricultural Act of 2014 (the Farm Bill) provided these agencies with funding for programs authorized under Food for Peace Act (Title II activities), Food for Progress Act of 1985, and the McGovern-Dole International Food for Education and Child Nutrition Program as well as for Local and Regional Procurement (LRP) Pilot Programs.[15] These latter programs represent a major deviation from the nation’s traditional food aid policy, one that is historically and legislatively tied to international shipment of U.S. food commodities.
The U.S. government originally developed its food aid protocol to send excess commodity crops to Europe during World War II, and while the recipient nations have changed overtime, this original concept of food aid as commodities sent overseas is still quite prevalent. As the number of hungry people in the world continues to rise despite significant assistance from the United States, it is time for the nation to evolve its food aid model.
Arguably, the most problematic aspect of the United States’ traditional view of food aid is that it perpetuates policies that inextricably link the procurement, transportation, and distribution of food aid to the nation’s shipping industry, a connection that is legislatively reinforced through “Cargo Preference.”[16] As USAID simply explains:
[C]argo preference is a law that requires at least 50 percent of the gross tonnage of all Government generated cargo meaning cargos procured, furnished, or financed by the U.S. government to be transported on privately owned, U.S.-flag commercial vessels to the extent such vessels are available at fair and reasonable rates. International food assistance provided by USAID and USDA is included in the definition of ‘Government generated cargo.’[17]
In other words, cargo preference is a law that requires the government to contract American-owned vessels in order to ship government cargo.[18] Among implementing partners, however, there is a general consensus that this preference awarded to U.S.-flagged carriers is the primary barrier to a more cost-efficient food aid system.[19]
Despite continued investment in agency-administered food aid programs, cargo preference laws present a legal impediment that substantially undermines the potential for U.S. food aid to effectively reduce global food security. Concerned lawmakers have argued that “[w]hen 842 million people around the world go hungry every day, making every food aid dollar count is both a responsible use of taxpayer money and a moral imperative. We should allocate more of our resources to feed the poor and most vulnerable, not less.”[20] Yet by focusing on the percentage of food aid that must be transported via U.S. vessels, Congress reinforces the notion that food aid should be in the form of overseas commodity shipments. In order to increase this percentage and thus increase profits, the U.S. shipping industry has lobbied hard to keep this percentage and the overall amount of food aid shipped overseas as high as possible. This unexpected marriage of food aid and shipping interests has been in effect since Congress passed the Cargo Preference Act in 1954 as part of the Merchant Marine Act of 1936.[21]According to the Act, “at least 50 percent of the freight revenue and tonnage of cargo generated by the U.S. Government Grant, Guaranty, Loan or Advance of Funds be transported on privately owned United States-flag commercial vessels.”[22] Thus, as the United States continues to view food aid through a traditional lens of commodity shipments, cargo preference laws become increasingly imposing on the nation’s food aid agenda.
Rather than conform to this stagnant and inflexible food aid model, other nations and international organizations have recognized that this traditional approach to food aid is inefficient and have thus adopted an alternative food aid model: Local and Regional Procurement (LRP). LRP is “the purchase of food aid by donors in countries affected by disasters and food crises or in a different country within the same region.”[23] Studies show that in SSA in particular, Local and Regional Procurement costs substantially less and is delivered much faster than food aid shipments from the U.S.[24] USAID has found that “cash-based food security assistance can get food to people in critical need 11 to 14 weeks faster than commodity shipments from the United States and at savings of 25% to 50%.”[25] Furthermore, studies have found that “LRP offers some food safety advantages over transoceanic shipments,” which, due to the prolonged storage and transit times, actually heightens “the risk of mold growth and pest infestation in food aid commodities.”[26] It is unsurprising then, that other nations have quickly moved towards this more effective and more efficient food aid distribution model. In fact, “[w]ith the exception of the United States, most major donors—including the European Union, the United Kingdom, and most recently Canada—now provide all of their food aid as cash that may be used for local and regional procurement (LRP) by WFP and NGOs.”[27]
This Note analyzes how U.S. commitment to the traditional transoceanic model for food aid based on international commodity shipments has prevented the nation from fulfilling its potential as the world’s largest donor. Beginning with a historical overview of the major role that the United States has played in international food aid, Part I will also introduce the U.S. government’s food aid model, centered around Title II of its Food for Peace Act, and how the nation’s interpretation of food aid has fostered the major legal impediment at issue in this Note: Cargo Preference laws. Finally, Part I will identify three potential solutions to improving the effectiveness of the nation’s food aid policy: (1) eliminate cargo preference laws entirely; (2) reduce the impact of cargo preference by minimizing ocean shipments of food aid administered by U.S. government agencies; or (3) invest in LRP programs run by Private Voluntary Organizations. Each of these solutions is explored in the subsequent sections.
[1] Food Security, World Health Organization (WHO), http://www.who.int/trade/glossary/story028/en/ (last visited Mar. 29, 2015).
[2] FAO, State of Food Insecurity in the World 1 (2014), available at http://www.fao.org/3/a-i4037e.pdf.
[4] UN Warns of ‘Hunger Catastrophe’ for South Sudanese Children, U.N. News Centre (July 25, 2014), http://www.un.org/apps/news/story.asp?NewsID=48352#.VF_4_4ctvkc.
[5] Why Hunger? Feed Found. (Feb. 3, 2015), http://www.thefeedfoundation.org/the-problem.asp. This “hungry” population is also concentrated in just seven countries: China, Pakistan, Bangladesh, India, Ethiopia, Indonesia, and the Democratic Republic of Congo. Id.
[6] Christopher B. Barrett & Daniel G. Maxwell, Food Aid After Fifty Years: Recasting its Role 10 (Paul Mosley ed. 2005).
[7] Id.; India Sees Surge in Agricultural Exports to Least Developed Countries, USDA Foreign Agric. Service (Sept. 23, 2014), http://www.fas.usda.gov/data/india-sees-surge-agricultural-exports-least-developed-countries.
[8] Data and Analysis: Agricultural Imports Soar in Sub-Saharan Africa, USDA Foreign Agric. Service, (Aug. 20, 2013), http://www.fas.usda.gov/data/agricultural-imports-soar-sub-saharan-africa.
[9] See FAO, Food Security and Agricultural Development in Sub-Saharan Africa: Building a case for More Public Support 1 (2005), available at http://www.oecd.org/tad/agricultural-policies/36784159.pdf (explaining that since the late 1960s, these imports have increased from five percent of cereal consumption to twenty-five percent of cereal consumption).
[10] See Charles E. Hanrahan & Carol Canada, Cong. Research Serv., RS21279, International Food Aid: U.S. and Other Donor Contributions 1–2 (2013) (describing the United States’ renewed commitment to the FAC starting January 1, 2013. In 2012, “[t]he Food Aid Convention was renamed the Food Assistance Convention to reflect the fact that food aid included not only commodities but also cash-based forms of assistance to provide food security.”).
[11] Randy Schnepf, Cong. Research Serv., R41072, International Food Aid Programs: Background and Issues 1 (2014).
[13] Ron Nixon, Obama Administration Seeks to Overhaul International Food Aid, N.Y. Times (Apr. 4, 2013), http://www.nytimes.com/2013/04/05/us/politics/white-house-seeks-to-change-international-food-aid.html?_r=0.
[14] See Schnepf, supra note 12, at 2 (providing a detailed break-down of U.S. International Food Assistance Programs, authorizing legislation, pilot year, funding type, and implementing agency (FAS, USDA, USAID)).
[16] Passenger and Cargo Preferences, 46 U.S.C. §§ 55301–55336 (2014).
[17] U.S. Agency for Int’l. Dev., Fact Sheet: Cargo Preference (page number?), available at http://www.usaid.gov/sites/default/files/documents/1866/Cargo%20Preference%20Fact%20Sheet%205%2015%202014.pdf (last visited Mar. 29, 2015).
[18] 46 U.S.C.§55305 (2006). The original Cargo Preference Act was codified as 46 App. U.S.C. §1241(b). In 2006, Pub. L. No. 109–30 re-codified this provision under 46 U.S.C.§55305 (2006). Id.
[19] U.S. Gov’t. Accountability Office, GAO-11-636, International Food Assistance: Funding Development Projects through the Purchase, Shipment, and Sale of U.S. Commodities is Inefficient and Can Cause Adverse Market Impacts 77 (2011).
[21] 46 U.S.C. § 55305 (2014).
[22] 46 C.F.R. § 381.7 (2013).
[23] U.S. Gov’t. Accountability Office, GAO-09-570, International Food Assistance: Local and Regional Procurement Provides Opportunities to Enhance US Food Aid, But Challenges May Constrain Its Implementation 1 (2009).
[24] Charles E. Hanrahan, Cong. Research Serv., R40759, Local and Regional Procurement for US International Emergency Food Aid 0 (2009).
[25] Schnepf, supra note 12, at 23.
[26] Christopher B. Barrett, Erin C. Lentz, Cynthia Mathys, Joanna B. Upton and Kira M. Villa, Misconceptions About Food Assistance 2 (GPPi Research Paper No. 2 2011), available at http://www.gppi.net/fileadmin/user_upload/media/pub/2011/barrett-et-al_2011_cornell-policy-brief-food-misconceptions_web.pdf.
[27] GAO-09-570, supra note 23, at 11.