Something Rotten in the State of Denmark
How one of the world’s major shipping companies is hindering the fight against world hunger.
Maersk Group is Denmark’s largest company, making up more than 15 percent of the country’s GDP. The shipping firm employs more than 121,000 people worldwide, operates in 130 countries, generated $59 billion in revenue last year, maintains a fleet of 600, and announced at the end of 2013 that its full-year net profits would be $3.5 billion, up from the previous forecast of $3.3 billion. Maersk has also proudly declared itself a good corporate citizen, stressing a theme of "constant care" with a dedication "to promot[ing] the health and safety of our employees and others in the industry and in the world around us." The company is a member of the United Nations Global Compact, which encourages companies to embrace a set of core values in the areas of human rights, labor standards, and the environment. Indeed, in many ways Maersk prides itself as the face of Denmark’s modern economy: diversified, humane, and enlightened.
Why then is the company, through its U.S. subsidiaries, aggressively fighting common-sense reforms that would help deliver desperately needed food assistance to millions of hungry people everywhere from Syria to South Sudan?
The answer traces back to the ongoing battle in the United States to reform international food-assistance programs, a battle currently playing out in the debate over the farm bill. The United States has a proud tradition of delivering food to some of the world’s poorest people living under the most harrowing of conditions. This food has sustained millions when their lives have hung in the balance. But the process of acquiring and delivering food aid is deeply flawed.
Currently, the vast majority of food for U.S. government relief and development programs is purchased in the United States and then shipped thousands of miles overseas, often at great cost. Such a system is great for the bottom line of large shippers, like Maersk, but not for people in need or for taxpayers. In cases where U.S. food aid is "monetized" by humanitarian organizations receiving U.S. commodities, the sales of U.S. crops can depress prices in local food markets, making it harder for local farmers to flourish and for poor countries to end their dependence on aid. That is why most other major donors, including the World Food Program, procure food through local and regional systems, recognizing that it is more cost-effective, more efficient, and more sustainable to buy food closer to where it is needed.
Just how inefficient is the U.S. system, which was created decades ago to help find a way to dispose of government-held stocks of agricultural commodities? More than half of every dollar spent on U.S. food programs currently goes to shipping and transportation costs, rather than to lifesaving food, which means that a great deal of that money is ending up in coffers of companies like Maersk. The obvious waste inherent in such a system has only become more and more apparent with rising fuel costs over the last decade.
To correct this problem, Congress is currently considering reforms as part of the farm bill that would make food aid more flexible and efficient by purchasing a higher percentage of food closer to where it is actually needed. The reform proposals have generated significant bipartisan support, and a range of humanitarian groups, including Oxfam, Care, and Save the Children, have spoken out strongly on their behalf. It is no wonder: Experts at the U.S. Agency for International Development (USAID) indicate that they could feed an additional 4 million people annually with the savings from these reforms. Other outside analysts have put the number as high as 10 million people.
Yet Maersk, along with U.S. maritime and agricultural unions, has mounted a ferocious attack on the reforms, with Maersk’s U.S. subsidiary often cloaking its concerns in naked economic terms. For instance, a group of companies and unions has said, "Growing, manufacturing, bagging, shipping, and transporting nutritious U.S. food creates jobs and economic activity here at home" and has made wild, unsubstantiated claims that food aid reform could cost 44,000 American jobs. Andrew Natsios, the USAID administrator under President George W. Bush, has called claims that food-aid reform would be bad for exports "ridiculous," pointing out that aid accounts for only about half of 1 percent of U.S. food exports.
Maersk and others seem to have lost sight of the fact that the point of international food assistance is not to create inefficient, subsidized jobs for any company — in the United States or anywhere else. Rather, the point is to save lives. And, for the record, the actual number of U.S. maritime jobs potentially affected by reforming American food aid would be small: A Defense Department analysis found that even the administration’s more sweeping reform proposals would only "affect 8-11 vessels — all non-militarily useful — and roughly 360 to 495 mariners."
Maersk and the Moeller family, which founded and still runs the company, are well known for their philanthropic contributions, ranging from donating the lavish Copenhagen Opera House to the state of Denmark to providing emergency container schools after the Chinese earthquake. Denmark, meanwhile, has long dedicated one of the highest international percentages of GNP in the world to official development assistance and is known as a leader in the development field. It is thus all the more a shame that Maersk’s lobbying is standing in the way of the United States, long the world’s largest provider of food assistance, delivering more aid to more people at a time when every single newscast seems to bring more stories of people in need.
The time is ripe for Maersk to do the right thing.