John Phipps: Is the Jones Act Hurting American Agriculture?
U.S. Farm Report 08/27/22 - Customer Support
This question from a U.S. Farm Report viewer took some research:
“What would be the economic effect of repealing the Jones Act on U.S. Agriculture?”
The quick answer is repealing the Jones act would be minimally beneficial for U.S. ag as a whole, but enormous for specific locations and industries.
To summarize, the 1920 Jones Act requires all waterborne shipping between U.S. ports to be done on U.S.- built, -owned, -flagged and -manned ships. Rooted in memories of WWI and WWII, the idea our national security is dependent on our ability to move troops and equipment across oceans is not merely outdated but has essentially crippled our domestic maritime industry.
We are not a maritime shipping country. Our container capacity is less than one-tenth of a percent of global capacity. Our shipbuilding industry is almost non-existent with 7 deep draft builders, four of which are exclusively military like carriers and subs. In contrast, Japan has over 1000 shipyards.
Our domestic ocean shipping industry is wildly uncompetitive, with costs as much as double for ships. It’s stuck in the 1940’s thanks to the Jones Act. Meanwhile, Alaska, Hawaii, Puerto Rico, and other U.S. territories bear extravagant costs on their economies, including ag. Hawaiian cattle ranchers ship animals through Canada, North Carolina hog operations buy corn from Canada, and Puerto Rico sources fuel from Nicaraguan refineries due to the cost of Jones-compliant shipping.
To be sure, such headaches don’t nudge the soybean supply and demand much, but this counterproductive law has not saved our merchant marine, nor improved our national defense. During Desert Storm, the U.S. military used ships from everywhere, and shipped only about one-sixth of the materiel on U.S. bottoms.
It is hard to project what would happen in the unlikely event of repeal, but some experts suspect the efficiency of water transport would restructure coastal agriculture trade by finding new ways to avoid crowded truck and rail routes.
The repeal of the Jones Act has been a nominal ag priority for decades but the burdens it imposes are carried by so few that it falls too far down our list of legislative goals.
