Cargo Preference Requirements:

Objectives Not Met When Applied to Food Aid Programs

T-GGD-94-212: Published: Sep 29, 1994. Publicly Released: Sep 29, 1994.

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GAO discussed the effect of cargo preference laws on U.S. food aid shipments, focusing on the: (1) extent to which the application of cargo preference laws meet intended objectives; and (2) effect of certain food management practices on transportation costs. GAO noted that: (1) cargo preference requirements have increased food aid transportation costs by almost $600 million because U.S.-flag ships cost more than foreign-flag ships; (2) cargo preference requirements do not meet the objective of ensuring a Ready Reserve Force; (3) the Department of Defense (DOD) does not consider the U.S.-flag ships that transport the majority of food aid tonnage to be militarily useful; (4) DOD does not believe that food aid cargo preferences are a cost-effective method for obtaining Ready Reserve crews; (5) cargo preference requirements do not apply to domestic shipments and food aid cargos account for less than one-fourth of the 4-percent share of export-import tonnage that U.S. ships carry; (6) cargo preference requirements adversely affect U.S. food aid programs by reducing funds the programs could spend on commodities and causing recipients to purchase higher-priced or different commodities because of the unavailability of U.S.-flag ships; and (7) certain Department of Agriculture and Agency for International Development management practices that require shipowners to pay for services that commodity suppliers or buyers usually pay for increase food aid transportation costs.

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