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The farm bill, food aid and the U.S. shipping sector

The farm bill, food aid and the U.S. shipping sector

International food aid programs could face major changes with new farm bill. Opponents say time not right for major reform. Proponents say changes will mean food will reach the hungry quicker, more efficently. 

While a handful of issues – chief among them nutrition program funding, regional crop support differences, and dairy policy – are proving difficult to find middle ground on, the ongoing farm bill conference must also deal with international food aid reform. With the humanitarian crises in Syria and the Philippines looming large, everyone in the debate remain keen to feed the world’s hungry but how the United States will do that in the future is in the balance.

Those opposed to the Senate farm bill’s major revisions of the U.S. food aid model – used in the Food for Peace and Food for Progress – say U.S. jobs and military readiness would be affected if proposed changes are included in the new farm bill. Among those against the Senate’s reforms are trade unions and a broad swath of agriculture advocacy groups.

Read a letter from many of the opponents here.

Meanwhile, proponents of change point out the savings would mean reaching at least 4 million additional hungry people annually – and would do it quicker than is currently possible. The reason for that is cash and vouchers would be distributed directly to the needy, allowing them to make purchases from local markets.

The idea is to move funds to different accounts – including the International Disaster Assistance Account and the Development Assistance Account -- under the control of the U.S. Agency for International Development (USAID). Doing so would allow USAID additional flexibility to make choices depending on the situation.

The Obama administration is pushing for the reforms, as did the Bush administration before it. If adopted, the U.S. flag vessel requirement (where 50 to 75 percent of food aid has to be shipped on U.S. vessels) will be dropped. Currently, only 20 percent of overall U.S. food aid can be in the form of cash vouchers or local purchases.

Proponents of the plan say the requirement has served as a long-time subsidy for the U.S. Merchant Marines.

James Caponiti, executive director of American Maritime Congress, offers an entirely different interpretation. “The merchant marine coalition, it’s fair to say, are generally behind the House (farm) bill in terms of how it treats international food aid. The Senate provisions trouble us.

“We do understand the desire to feed more people. We believe there are things that can be done to improve the efficiency with management of the program. But we also think it’s probably the wrong time to be exporting jobs.

“If we get away from U.S. sourcing in the aid program, it would mean jobs lost – perhaps a permanent loss of jobs. It will have a negative impact on jobs, for sure.

“There are already some emergency programs in place that would allow the flexibility that the Senate (farm) bill is attempting to accomplish. We don’t see the need to permanently change the program from the way it’s currently designed where we use U.S. grain, process it in the United States, send it through our ports and ship it on U.S. flagged ships.”

On the other side of the debate is Eric Munoz, Oxfam America Senior Policy Advisor for Agriculture and Food Security. Asked where the international food aid proposals stand in conference, Munoz says specifics are hard to come by. “The discussions around this issue, as with most others on the farm bill, are being tightly held among a few people.

“There are a few promising signs, though. One is that we’ve heard informally that there’s support (for changes) within the conference.”

In part that’s because California Rep. Ed Royce, chairman of the House Foreign Affairs Committee, along with New York Rep. Eliot Engle, ranking member, are both farm bill conferees. Earlier this year, the pair was behind the Royce/Engle amendment that would have allowed up to 45 percent of U.S. food aid dollars to be spent on local sources.

While the amendment did not pass on a narrow vote, Munoz says the duo have been “very supportive of food aid reform over the last couple of months. Having them at the table is an important indicator that all the conferees will hear about the reasons for making changes.”

Read an earlier interview with Munoz here.


Another argument against making changes centers on the worry that food aid will end up in corrupt, despotic foreign government hands with little recourse.

The current system “is transparent,” says Caponiti. “We know the people running the (aid) programs have the best intent. No one is accusing anyone of not having good intent. But we’re always concerned about the lack of transparency that cash and vouchers could lead to.

“Also, there is talk about ‘local and regional purchases’ but we’re not sure how practical that is in many of the places that are in need.”

Caponiti circles back to the possibility of lost jobs. “The U.S. flag industry views this as cargo that it needs to be viable. There are a couple of different ways we maintain a U.S. flag presence in international trade. (International aid) is one of the ways we do it.”

It is no secret that U.S. flag shipping is more expensive than foreign flagged ships, says Caponiti. “We’re competing against the lowest common denominator in cost and, perhaps, operation. So, this is a source of revenue that our industry depends on. That’s why it’s important to maritime.”

If U.S. jobs are lost will that actually lead to ships being retired?

“A permanent loss of cargo in the food aid program could lead to ships no longer being able to remain under U.S. flag,” says Caponiti. “We are concerned that would be a permanent loss. If we don’t have this (aid) cargo to rely on from year to year, it could result in the loss of ships.”

Opponents to the reform estimate that the current system supports 33,000 jobs in the transportation sector alone.

“We’re not saying that 33,000 jobs would be eliminated by the proposal – but it would have a negative impact if there is less grain originated from the United States,” says Caponiti. “It’s kind of hard to be specific on what the impact would be (with proposed changes). The Senate proposal talks about ‘up to’ this and ‘up to’ that. It depends on what they actually do with it, the degree they might adopt these things.”

Munoz backs the Senate approach to reform. “We stand behind our analysis that the Senate bill provides the basis for the kind of incremental reform that it’s important to achieve given what the (Obama) administration wants to go in. We still believe the House version of the bill isn’t a serious effort at reform.”

The Senate farm bill, says Munoz, takes a number of steps to provide greater flexibility to USAID. “There are administrative steps, steps related to cash for in-kind commodities, for example. The Senate would give USAID more flexibility to decide what kind of response is most appropriate. That particularly true when looking at non-emergency development programs.”

In addition, the Senate would make permanent what was in the 2008 farm bill: a pilot program for the local and regional procurement of food. That is up to $60 million annually and would be administered by the USDA.

“The House bill does not include the flexibility and local and regional procurement,” says Munoz. “In fact, the House bill takes us several steps backwards – particularly in terms of maintaining USAID annual reports touting the benefits of modernization.”

Lastly, there is a significant issue that hasn’t gotten much attention, says Munoz. “That includes funding for the ‘famine early warning system.’ That’s an early-warning, protection and response capacity that USAID employs around the world. The House has a much smaller budget for that line-item than the Senate. That really threatens the viability of that program as it does the overall capacity of the agency to conduct meaningful and rigorous oversight of the programs.”

Lots of grey

One of the problems in approaching the debate, says Caponiti, is the lack of black-and-white answers to many of the posed questions. “There isn’t much ‘if you do X it will absolutely result in Y.’ We just don’t want to see us go away from a very transparent program that uses U.S.-sourced food. You know when a shipment of U.S. grain has reached a foreign port. Cash, vouchers and local and regional purchases get into an area that’s less transparent. This isn’t the time to make these changes.

“Again, the people proposing these new initiatives have good intentions. I want that to be very clear on that. This is just a difference of opinion.”

Then, there is the issue of U.S. flagged ships’ roles in national security.

“It’s important to know that the shipping industry is important to national security,” says Caponiti. “You can’t go to war without ships.

“And even though some of the ships involved in (international aid programs) aren’t militarily useful – and we readily concede that – all the merchant mariners employed on the ships, are. To our thinking, you can’t have a mariner pool that’s large enough because when we go to war, commerce continues.”

The demand on ships accrues “when we’re supporting the military during war,” continues Caponiti. “We need a large enough merchant marine to sustain commerce but also to sustain military movements. That’s true for both commercial ships and government-owned ships. The government-owned ships, when activated, the merchant mariners drive those ships over to the war. Most people don’t know that.”

Asked about the opponents to aid reform, Munoz says he’s often heard the arguments about “very, very large implications for U.S. jobs. Given the overall size of the shipping industry and U.S. food aid programs, we felt those probably aren’t an accurate reflection of the true impact of reform on jobs.

“Having said that, it’s very important to have a real conversation about what the impact potentially could be. We need to figure out what reforms or assistance can be provided to the U.S. shipping industry to offset any losses they would face.”

As OXFAM employees are not experts in maritime economics or the shipping industry, “we can’t come up with those solutions for them although we’re sensitive to the need to help. Up to now, however, the conversation hasn’t been to collectively find good solutions that meet the multiple interests at stake. Instead, the conversation has been to keep from enacting reforms because of some of the implications. That puts us in a place preventing a constructive dialogue with Congress. In fact, it’s been a conversation about them wanting to stop reform in any form.”

If the reforms had been enacted prior to the recent typhoon in the Philippines, aid organizations would theoretically be able to go to India or China or somewhere closer to get aid to victims much quicker?

“Yes,” says Munoz. “I’m not sure where the direct source of aid would come from. There may be places in the Philippines where grain remains available. Indonesia is close, as well.

“I don’t know what the response under such reforms would look like. But it is feasible that with greater flexibility the aid response would be improved.”

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The next couple of weeks will be very important in the debate.

“The ongoing situation in Syria and what we now face in the Philippines underscores the need for a more flexible response by USAID for its food security and food aid programming,” says Munoz. “I think that will become part of the discussion among farm bill conferees.”

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