Farmers ask GAO to lift Jones Act provisos citing increased production costs

Written by  //  April 27, 2012  //  Agriculture  //  No comments

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Puerto Rico Farm Bureau President Ramón González (Credit: © Mauricio Pascual)

Members of the Puerto Rico Farm Bureau, which represents a cross-section of the island’s agriculture sector, met with members of the U.S. Government Accountability Office in Hato Rey Thursday to lay out the reasons why the island should be exempt from Jones Act provisos.

Essentially, the group told GAO representatives that applying cabotage laws to Puerto Rico increase the cost of doing business for farmers who must pass them down the chain to consumers.

Bureau President Ramón González told News is my Business that farmers have no choice but to transport bulk shipments of corn, soybeans, fertilizer, and rice on barges subject to Jones Act stipulations.

“They were surprised to hear this because they thought that the grains and fertilizers that we need to feed our animals and harvest our crops were brought in containers inside regular maritime cargo carriers,” said González. “Eliminating Jones Act stipulations would reduce our production costs and would make us more competitive.”

The Jones Act, enacted in 1920, requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. Critics say the restriction results in higher costs for moving cargo and borders on protectionism.

While the trade group could not provide GAO officials with the economic impact caused by the limitation, González said the additional expense is evident when comparing shipping costs in vessels under the Canadian flag and the U.S.

“For example, transporting corn feed for chickens costs $42 a ton from Canada, versus $65 a ton on a U.S. ship,” he said. “Farmers buy between 60,000 and 70,000 tons of grains a year, so that impact in itself is significant.”

The sectors that would benefit from a reduction in production costs would be: dairy; poultry; pigs; cattle; eggs; horses; and most harvests, he said.

“If we were to benefit from lower transportation costs, we could buy more goods from U.S. farmers and we could increase production in Puerto Rico,” González said, adding local farmers could ultimately offer better prices to consumers.

GAO officials did not make any specific commitments Thursday other than producing a study based on the information gathered during their visit to the island this week, which could provide the basis for potential legislative action in Congress, he said.

The GAO visit to Puerto Rico responds to a request by Resident Commissioner Pedro Pierluisi’s to determine the economic impact that the cabotage laws have on Puerto Rico, as News is my Business reported.

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