Report weighs food aid impact on U.S. economy

Report weighs food aid impact on U.S. economy    A coalition of American ocean carriers and maritime unions released a report this week that quantifies not just the cost effectiveness of U.S.-flag vessel transportation for international food aid but also the far reaching impact that the production and handling of this aid has on the nation's economy.
   'This report is designed to refute some of the misinformation circulating out there' that U.S. international food aid is not cost effective, said Clint Eisenhauer, vice president of government relations for Maersk Inc. and a member of USA Maritime, in an interview.
   By explaining in numbers the impact of food aid on the nation's maritime industry and economy, the coalition hopes to set the record straight, he said.
   The report, Impacts on the U.S. Economy of Shipping International Food Aid, which was prepared for USA Maritime by Promar International, said the combination of handling, processing and transporting food aid commodities from farms to U.S. ports and then to overseas ports, equated to about $1.98 billion for U.S. industry, $523 million in household earnings, and 13,172 American jobs. Five states that benefited most from food aid production are Texas, Illinois, Iowa, Louisiana and Nebraska.
   The United States, namely through its Food for Peace (P.L. 480 Title II) program, is the world's largest annual donor to the United Nations World Food Program. In fiscal year 2009, the country exported 2.8 million metric tons of food aid to countries in need, of which 2.4 million metric tons was provided through P.L. 480 Title II.
   In recent years, some administration officials and food aid specialists have advocated for buying food aid directly from overseas sources closest to the location of need, alleging delays and higher cost to transport these products from the United States.
   According to USA Maritime's report, the U.S. Agency for International Development's annual summary of food aid for fiscal year 2008 indicated that the total budget cost of getting products to the ultimate recipients was about 45 cents per pound. 'To put that in perspective, it is less than U.S. consumers pay in grocery stores for basic foodstuffs despite the fact that food aid commodities are moved halfway around the world,' the report said.
   In P.L. 480 Title II, ocean freight costs of $336 million represented 14.5 percent of the $2.3 billion appropriated in fiscal year 2009. Maritime Administration reimbursements to USAID will be about $90 million, according to preliminary data, so the net ocean freight costs are estimated at $246 million or 10.6 percent of appropriations for P.L. 480 Title II, explained Thomas Earley of Promar International, during a teleconference on Thursday.
   The report further noted that the average U.S.-flag vessel rate in fiscal year 2008 for transporting food aid was $166 per ton, or only 8 percent higher than the average foreign-flag rate of $154 per ton.
   Today, preference cargoes account for about half the tonnage carried by the U.S.-flag fleet, of which food aid amounts to 30 percent. Food aid helps maintain the U.S.-flag merchant marine, which is 'constantly in danger of erosion by foreign-flag vessels,' said James Patti, president of the Maritime Institute for Research and Industrial Development (MIRIAD).
   If U.S. food aid volumes were eliminated, the size of the American merchant fleet that could be supported by remaining preferences cargoes would shrink by 15 to 30 percent, Patti warned. Similarly, between 16,500 and 33,000 U.S. jobs would be lost.
   The coalition said the report, which has no connection to President Obama's recently announced National Export Initiative, will be officially circulated on Capitol Hill next Thursday, particularly among the staff of the House and Senate agriculture and foreign affairs committees, Eisenhauer said.
   In addition to Maersk and MIRIAD, other coalition members include America Cargo Transport Corp.; American Maritime Congress; American Maritime Officers; APL Ltd.; Central Gulf Lines; Hapag-Lloyd USA, LLC; Intermarine USA; International Organization of Masters, Mates & Pilots; Liberty Maritime Corp.; Maersk Line, Limited; Marine Engineers' Beneficial Association; Masters, Mates & Pilots Union; Seafarer's International Union; Transportation Institute; Seafarers' Union of the Pacific; United Maritime Group; and Waterman Steamship Corp.
   To view the complete 22-page report, access the USA Maritime Web site at https://www.usamaritime.org. ' Chris Gillis