Grain exporters clashed Thursday with the deputy administrator of the Federal Maritime Administration over cargo preference requirements.

These requirements reserve some of their cargoes for U.S.-flag carriers.Steve McCoy, president of the North American Export Grain Association, asked Joan Yim, deputy administrator, "Why not replace cargo preference and other promotional programs designed to help the U.S. fleet with direct subsidies that would help carriers compete for all commodities in the international market?"

He inquired if the administration is considering direct subsidies of about $300 million to replace the cargo preference program.

William Adams, president of Tradigrain Inc. of Memphis, Tenn., followed up with a similar question. Accepting the national security need for a U.S. fleet, why not find some other way to pay for it, he asked.

Replacing the promotional program with outright subsidies is not a policy change that has come under review at Marad, said Ms. Yim, who was addressing a conference sponsored by grain traders.

The cargo preference program is more cost-effective and enjoys the political support of both farm state legislators and maritime proponents in Congress, she said.

"It's (cargo preference) there for a lot of reasons," including the role it plays in helping preserve the fleet for defense reasons, she added. "Still (direct subsidies) are an issue we have to come to grips with at some point," she said.

Cooperation between the Agriculture Department and Marad in recent months has rendered benefits for carriers and exporters, Ms. Yim said in reference to a working group the agencies started after the conflict of interests that occurred earlier this year over high freight rates offered by U.S. lines for the delivery of food aid to Russia.

Carriers are being assured of more prompt payments and a recent bid from a U.S.-flag line of $47 a ton for carrying grain to Russia was "much lower" than rates offered on deliveries this spring, she said.