B-181966, NOV 5, 1974

B-181966, NOV 5, 1974

GAO HAS NO OBJECTION TO PROPOSAL BY COMMODITY CREDIT CORPORATION TO PERMIT EMERGENCY GRAIN SHIPMENTS TO SAHEL REGION OF AFRICA TO BE BAGGED AT DESTINATION.

COMMODITY CREDIT CORPORATION:

THE ASSISTANT SECRETARY OF THE DEPARTMENT OF AGRICULTURE HAS REQUESTED OUR OPINION AS TO WHETHER THE COMMODITY CREDIT CORPORATION (CCC) CAN PAY THE COST OF BAGGING GRAIN BEING DONATED ABROAD WHERE THE BAGGING IS DONE ABROAD.

AS A RESULT OF SEVERE AND LENGTHY DROUGHT CONDITIONS IN THE SAHEL REGION OF CENTRAL WEST AFRICA, LARGE QUANTITIES OF SORGHUM AND OTHER GRAINS ARE BEING SHIPPED TO HELP RELIEVE THE ACUTE DISTRESS IN THE AREA. BECAUSE OF THE LACK OF ADEQUATE TRANSPORTATION FACILITIES FOR HANDLING BULK SHIPMENTS IN THE COUNTRIES RECEIVING THE GRAIN, IT IS NECESSARY TO BAG THE GRAIN BEFORE IT CAN BE MOVED INLAND FOR DISTRIBUTION.

REFLECTING THE GREAT NEEDS OF THE AREA, THE QUANTITIES OF GRAIN TO BE BAGGED ARE SUBSTANTIALLY LARGER THAN IN THE PAST. IT IS ESTIMATED THAT ONLY 25 PERCENT OF THE APPROXIMATELY 400,000 METRIC TONS OF GRAIN TO BE DONATED CAN BE BAGGED IN THE UNITED STATES. THE CCC PROPOSES THAT, AFTER ASSURING FULL UTILIZATION OF ALL FEASIBLE BAGGING FACILITIES IN THE UNITED STATES, OCEAN CARRIERS OF THE GRAIN BE AUTHORIZED TO CONTRACT FOR BAGGING UPON ARRIVAL AT DESTINATION. IT IS PROPOSED THAT CCC WOULD PAY AN ALL INCLUSIVE TRANSPORTATION CHARGE WHICH WOULD INCLUDE THE COST OF BAGGING AT DESTINATION.

THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954, ACT OF JULY 10, 1954, CH. 469, 68 STAT. 454, COMMONLY REFERRED TO AS PUBLIC LAW 480, ORIGINALLY PROVIDED TWO SEPARATE PROGRAMS OF COMMODITY DISTRIBUTION. UNDER THE FAMINE RELIEF PROVISIONS OF TITLE II, THE CCC WAS AUTHORIZED TO MAKE AVAILABLE SURPLUS AGRICULTURAL COMMODITIES F.O.B. VESSELS IN UNITED STATES PORTS. TITLE III OF PUBLIC LAW 480 AMENDED THE AGRICULTURAL ACT OF 1949 TO ALLOW FOR THE DONATION OF COMMODITIES IN ORDER TO AVOID WASTE. UNDER TITLE III, CCC WAS AUTHORIZED TO PAY FOR "REPROCESSING, PACKAGING, TRANSPORTING, HANDLING, AND OTHER CHARGES ACCRUING UP TO THE TIME OF THEIR DELIVERY... FREE ALONGSIDE SHIP OR FREE ON BORARD EXPORT CARRIER AT POINT OF EXPORT. ..."

PAYMENT FOR OCEAN FREIGHT CHARGES FROM UNITED STATES PORTS TO DESIGNATED PORTS OF ENTRY ABROAD WAS AUTHORIZED FOR TITLE II COMMODITIES BY THE SOIL BANK ACT, ACT OF MAY 28, 1956, CH. 327, SEC. 208, 70 STAT. 201. HOWEVER, PAYMENT OF ANY COSTS INCURRED ABROAD WAS NOT PERMITTED.

THE FOOD FOR PEACE ACT OF 1966, ACT OF NOVEMBER 11, 1966, PUB. L. NO. 89- 808, 80 STAT. 1526, COMBINED THE TITLE II AND III PROGRAMS OF PUBLIC LAW 480, 83D CONGRESS, AND EXPANDED THE LIST OF PERMISSIBLE EXPENSES. NOW CODIFIED IN 7 U.S.C. 1723 (1970) THIS LAW PROVIDES:

"THE COMMODITY CREDIT CORPORATION MAY, IN ADDITION TO THE COST OF ACQUISITION, PAY WITH RESPECT TO COMMODITIES MADE AVAILABLE UNDER THIS SUBCHAPTER COSTS FOR PACKAGING, ENRICHMENT, PRESERVATION, AND FORTIFICATION; PROCESSING, TRANSPORTATION, HANDLING, AND OTHER INCIDENTAL COSTS UP TO THE TIME OF THEIR DELIVERY FREE ON BOARD VESSELS IN UNITED STATES PORTS; OCEAN FREIGHT CHARGES FROM UNITED STATES PORTS TO DESIGNATED PORTS OF ENTRY ABROAD, OR, IN THE CASE OF LANDLOCKED COUNTRIES, TRANSPORTATION FROM UNITED STATES PORTS TO DESIGNATED POINTS OF ENTRY ABROAD; AND CHARGES FOR GENERAL AVERAGE CONTRIBUTIONS ARISING OUT OF THE OCEAN TRANSPORT OF COMMODITIES TRANSFERRED PURSUANT THERETO."

SECTION 2 OF PUBLIC LAW 480 PROVIDED:

"IT IS HEREBY DECLARED TO BE THE POLICY OF CONGRESS TO EXPAND INTERNATIONAL TRADE AMONG THE UNITED STATES AND FRIENDLY NATIONS, TO FACILITATE THE CONVERTIBILITY OF CURRENCY, TO PROMOTE THE ECONOMIC STABILITY OF AMERICAN AGRICULTURE AND THE NATIONAL WELFARE, TO MAKE MAXIMUM EFFICIENT USE OF SURPLUS AGRICULTURAL COMMODITIES IN FURTHERANCE OF THE FOREIGN POLICY OF THE UNITED STATES, AND TO STIMULATE AND FACILITATE THE EXPANSION OF FOREIGN TRADE IN AGRICULTURAL COMMODITIES PRODUCED IN THE UNITED STATES BY PROVIDING A MEANS WHEREBY SURPLUS AGRICULTURAL COMMODITIES IN EXCESS OF THE USUAL MARKETINGS OF SUCH COMMODITIES MAY BE SOLD THROUGH PRIVATE TRADE CHANNELS, AND FOREIGN CURRENCIES ACCEPTED IN PAYMENT THEREFOR. IT IS FURTHER THE POLICY TO USE FOREIGN CURRENCIES WHICH ACCRUE TO THE UNITED STATES UNDER THIS ACT TO EXPAND INTERNATIOAL TRADE, TO ENCOURAGE ECONOMIC DEVELOPMENT, TO PURCHASE STRATEGIC MATERIALS, TO PAY UNITED STATES OBLIGATIONS ABROAD, TO PROMOTE COLLECTIVE STRENGTH, AND TO FOSTER IN OTHER WAYS THE FOREIGN POLICY OF THE UNITED STATES."

WE THINK THAT IT IS CLEAR THAT CONGRESS INTENDED THE COMBATING OF HUNGER AND MALNUTRITION ABROAD AS ONE OF THE PRIMARY PURPOSES OF THE ACT. NEITHER THE LAST MENTIONED PURPOSE NOR THE INTENT THAT DOMESTIC BAGGING FACILITIES BE USED WOULD BE DEFEATED BY THE USE OF FOREIGN BAGGING CAPACITY. ACCORDINGLY, WE WOULD HAVE NO OBJECTION TO THE PROCUREMENT OF OVERSEAS BAGGING IN THE INSTANT CASE PROVIDED THE CCC ASSURES FULL UTILIZATION OF ALL FEASIBLE BAGGING FACILITIES IN THE UNITED STATES.

WE RECOMMEND, HOWEVER, THAT THE BAGGING COSTS BE SEPARATELY STATED TO PERMIT IDENTIFICATION AND AUDIT OF THE OCEAN TRANSPORTATION CHARGES.