Cargo Preference Requirements: Objectives Not Significantly Advanced When Used in U.S. Food Aid Programs
GGD-94-215
Published: Sep 29, 1994. Publicly Released: Sep 29, 1994.
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Highlights
Pursuant to a congressional request, GAO reviewed the effect of cargo preference laws on U.S. food aid programs, focusing on the: (1) extent to which the application of cargo preference laws meet their intended objectives; and (2) effect of certain food management practices on transportation costs.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| If Congress continues to support the objectives for which cargo preference is applied to food aid programs and is willing to continue to devote resources to that end, Congress may wish to consider a more efficient alternative for achieving those objectives. For example, a program like the current operating differential subsidy program, which will be expiring by 1998, could be used to support those ships, and their crews, that DOD finds militarily useful and that could also successfully compete for U.S. foreign commercial cargos. | Congress completed action on the 1996 Farm Bill without addressing the issue of cargo preference in the agricultural trade title of the legislation. No additional congressional action is anticipated. | |
| If Congress decides to continue to apply cargo preference to food aid programs, it may wish to consider giving U.S. shipowners incentives to invest in more efficient ships in order to reduce food aid transportation costs. One possible incentive would be to allow new, foreign-built, U.S.-flag ships to immediately participate in the food aid cargo preference trade. | Congress did not address this recommendation in the 1996 Farm Bill export title or in related transportation legislation. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Transportation | If Congress chooses to continue the application of cargo preference laws to food aid programs and acts to permit U.S.-flag foreign-built ships to immediately carry food aid preference cargos, the Secretary of Transportation should instruct the Administrator, Maritime Administration, to promote the efficiency of the ships that carry food aid preference cargos. |
Congress did not address this issue in the export title of the 1996 Farm Bill.
|
| Department of Agriculture | If Congress chooses to continue the application of cargo preference laws to food aid cargos, the Secretary of Agriculture and the Administrator, AID, should, to reduce food aid transportation costs, experiment with the use of contract terms for the transportation of food aid cargos that are more consistent with contract terms used for similar commercial cargos to determine whether their use will reduce food aid transportation costs. |
The Departments of Transportation and Agriculture, and AID, have been unable to reach agreement on a set of shipping contract terms that are more closely aligned with general commercial shipping contract terms.
|
| U.S. Agency for International Development | If Congress chooses to continue the application of cargo preference laws to food aid cargos, the Secretary of Agriculture and the Administrator, AID, should, to reduce food aid transportation costs, experiment with the use of contract terms for the transportation of food aid cargos that are more consistent with contract terms used for similar commercial cargos to determine whether their use will reduce food aid transportation costs. |
The Departments of Transportation and Agriculture, and AID, have not reached agreement on a set of shipping contract terms that are more closely aligned with general commercial shipping contract terms.
|
| Department of Agriculture | If Congress chooses to continue the application of cargo preference laws to food aid cargos, the Secretary of Agriculture and the Administrator, AID, should, to reduce food aid transportation costs, encourage recipient countries to more evenly space their food aid shipments throughout the year. |
The Department of Agriculture's Foreign Agricultural Service has reviewed how to better space food aid shipments throughout the year by encouraging foreign countries to sign food aid agreements earlier in the year to permit better scheduling of commodity purchases and shipments. However, it has concluded that numerous other factors beyond its control prevent better spacing of food aid shipments.
|
| U.S. Agency for International Development | If Congress chooses to continue the application of cargo preference laws to food aid cargos, the Secretary of Agriculture and the Administrator, AID, should, to reduce food aid transportation costs, encourage recipient countries to more evenly space their food aid shipments throughout the year. |
AID officials have attempted with little success to more evenly space food aid shipments throughout the year by having foreign countries sign food aid agreements earlier in the year. It remains difficult for food aid recipient countries to sign these agreements earlier in the year.
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Full Report
Topics
Armed forces reservesCargo preference lawsCost effectiveness analysisDefense contingency planningFederal aid to foreign countriesFood relief programsFreight transportationMarine transportationShipping industryTransportation costsMerchant vessels