The political economy of shipping US food and aid under the cargo preference regime

The way in which US agricultural cargo preference that regulates the international transportation of US Government-generated goods may affect food aid provision is of concern. This article considers specifically the efficiency of the current arrangements whereby 50 per cent of food aid has to be moved by US registered ships, and the potential implications of changing this. This is done within a much broader critique of the ways in which such policies tend to be evaluated. The findings are that, when opportunity costs are netted out, there are likely to be fewer quantifiable benefits to the US economy of the cargo preference structure than are often posited. In particular, many of the estimates of the economic gains to the United States found in prior studies often involve those of vested interests and are frequently gross calculations based on not only a weak underlying methodology, but also a distorted use of that methodology.