Cargo preferences cost $140 million that could have helped the hungry

Cargo preferences are the regulations that require a large part of U.S. food aid to be shipped in U.S. ships.  The regulations are more cumbersome and expensive than you might think, leaving even some U.S. businesses out of luck, simply because they use other countries' ships for parts of a cargo's journey.  The losers from these policies are the world's hungry.

We think of a food aid as a way to demonstrate American generosity to the world, but the governments of countries that receive the food aid instead see a tragically mixed message, a sort of gesture toward generosity combined with greed at the expense of some of the poorest people in the world.

Cornell professor Chris Barrett in today's Washington Post explains:

Cargo preference was launched in 1954 alongside modern American food aid programs. By requiring the U.S. government to ship three-quarters of its international food aid on U.S. flag vessels, the policy was intended to maintain essential sealift capacity in wartime, safeguard maritime jobs for American sailors and avoid foreign domination of U.S. ocean commerce. But in a comprehensive - and, to date, the only peer-reviewed - analysis of available shipping data and shipping vessel ownership records, we found that cargo preference falls well short of these objectives. Our study of the shipping data and the fiscal 2006 food-aid shipment records - the only full year records were available - from the U.S. Agency for International Development found that by restricting competition, the policy costs U.S. taxpayers a 46 percent markup on the market cost of ocean freight. 

Along with my Friedman School colleague Dan Maxwell, Barrett wrote the authoritative book on U.S. food aid.