By Mark Esposito, Weekend Contributor
Well, Captain Phillips hit the small screen at the end of January and the DVD supposedly captures everything good in America. Courageous sea-captain battles ruthless Somali pirates to save crew and cargo bound for parts unknown. Navy sharpshooters end hostage stand-off with might and right. Danish shipping line, Maersk, vindicated for its caution in protecting its freight. All hunky dory! Hunky, that is , until you start asking why are all those Maersk container ships floating oh so near the coast of East Africa and into harm’s way. Well, a significant number of them are carrying food aid from the U.S. to the nutrition-deprived people on the African continent and getting a hefty above-market price in return. Still, you must ask, what’s wrong with that — corporate citizen conducting a business that helps people and makes a profit for its shareholders. All’s right with the world, everyone must agree. Not every one.
A new article in Foreign Policy Magazine details the intense fight Maersk Lines is waging in the halls of Congress to scuttle a key feature of this year’s farm bill. That provision would likely feed a conservatively estimated 2-4 million more souls and perhaps up to 10 million. Yet, Maersk and its flotilla of lobbyists is fighting it tooth and nail. To understand why, you have to understand the basis and process of America’s food aid program and acquaint yourself with the history.
The U.S. food aid program to starving people overseas started as a domestic rather than foreign policy initiative. Developed in the 1950s by the Eisenhower Administration it’s stated purpose was not all together altruistic. It had a capitalist ring to it. The Food for Peace Program, also known as “Public Law (PL) 480,” was signed into law as the Agricultural Trade Development Act on July 10, 1954. The purpose of the legislation, Eisenhower said, was to “lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands.” Kennedy expanded the program when he saw that buying surplus food from America’s over productive farmers kept food process stable at home and led to foreign policy dividends abroad. “Food is strength, and food is peace, and food is freedom, and food is a helping hand to people around the world whose good will and friendship we want,” Kennedy said. We also wanted to rid ourselves of cheap prices that overstocked food warehouses surely meant for U.S. farmers. So it was a win-win for U.S. policymakers.
Food produced here was shipped to starving nations via relatively cheap shipping routes run on abundant coal or cheap petroleum. The world’s energy profiled changed quite a bit since the early 60s with the Arab Oil Embargo, tough environmental laws, and orders of magnitude increase in energy costs. Still the hoary “American Food for Peace” program sailed on as it always had done making food here and shipping it there. An unexpected beneficiary of America’s food abundance are shippers like Denmark’s, Maersk Group. Making up a full 15% of Danish GNP, the shipping giant has ancillary corporations worldwide including U.S. subsidiaries counting on cheap, mobile American food flowing to places like East Africa.
Maersk announced that its full-year net profits would be $3.5 billion, up from the previous forecast of $3.3 billion and declared to the world its commitment to “to promot[ing] the health and safety of our employees and others in the industry and in the world around us.” Amen.
That’s why this year’s farm bill and its modest proposal to buy food destined for starving people in the close by regions where it is grown and slashing transportation costs hit the shipping industry like a gale force wind. About half of every dollar spent in America’s food program goes for shipping and transportation costs. That’s about 1.7 billion dollars over three years destined for the pockets of shippers like Maersk. The figure is particularly concerning since we’re not getting our money’s worth with all that business given to shippers. In fact, American taxpayers pay above market rates to ship free food abroad. Due to agricultural cargo preference (ACP) restrictions placed on United States food aid programs, U.S. taxpayers shelled out about 46% more than competitive freight costs would have been on the open market. Maersk and its American subsidiaries are major corporate welfare queens under this aid to business or raid on the Treasury — however you care to characterize it.
And what the heck is this brigand, the ACP, you ask? The Agricultural Cargo Preference is a policy requiring that 75 percent of US food aid commodities be shipped on privately owned, registered U.S. ‐flag vessels, regardless of whether these vessels offer a competitive bid for the service. According to the Maritime Administration (MARAD), ACP’s primary objectives include:
Provision of essential sealift capability in wartime.
Maintenance of skilled jobs for American seafarers
Maintenance of the financial viability of US flag vessel operators
Protection of US ocean commerce from foreign domination
However, given that “70% of ACP vessels did not satisfy the criteria that deem them militarily useful, a large share were ultimately owned by foreign corporations, and no ACP vessel crew has been mobilized for national service,” this rationale rings a tad hollow.
So when a few earnest Congress persons read a report from the U.S. Agency for International Development saying that the U.S. could save a whopping $155-$215 million in annual gross efficiency savings and feed 2 to 4 million more people some synapses somewhere fired saying, “let’s do it.” “Not so fast” came the word from shippers like Maersk as well as dock worker unions. Claiming that 44,000 Americans would lose their jobs, Maersk launched a lobbying broadside on Capitol Hill trying to overturn the proposal. “Growing, manufacturing, bagging, shipping, and transporting nutritious U.S. food creates jobs and economic activity here at home,” defended the shipper’s lawyers. So now we have it –American largesse and benevolence is really a jobs program aimed at making foreign shippers rich. Now, how could we not know that?
But should we be so cavalier about 44,000 American jobs? The Defense Department says don your plumed hat. If fully enacted, the proposal to buy food close to where people are starving and helping those farmers to produce more would only “affect 8-11 vessels — all non-militarily useful — and roughly 360 to 495 mariners.” Oh, the horror just to save a few million lives!
It takes a certain kind of callousness to put profits over even one life but over 2 to 10 million? That’s callousness with cajones.
So, the question becomes when those Navy Seal sharpshooters were in their mission briefing aboard the Maersk Alabama looking to end piracy on the high seas once and for all, did they truly have the right targets?
So, what do you think:
~Mark Esposito, Weekend Contributor