In the ongoing debate about agriculture and food security, India has been accused of having acted in a dogmatic manner for refusing to ratify the trade facilitation agreement unless its food security concerns are addressed in the World Trade Organization (WTO). However, this issue and India’s stand have to be seen in the context of the persistent discrimination against Third World countries by advanced countries in WTO. The preamble to Agreement on Agriculture (AoA) speaks about creating a “fair and market-oriented agricultural trading system” by providing for “substantial progressive reductions in agriculture support and protection” and assuring that “developed country Members would take fully into account the particular need and conditions of developing country Members”. Food security was acknowledged as a specific “non-trade concern” where “special and differential treatment for developing countries” was supposed to be an “integral element of the negotiations”. After two decades of the AoA’s coming into effect, it is clear that the progressive elements in its preamble have been converted into a mirage, thanks to the deceit ingrained in the fine print by developed countries.
The biggest proof of this is the fact that domestic farm support has continued to increase in both the US and European Union after the AoA came into effect. Ironically, an overwhelming majority of this support is legal, as it comes under “non trade-distorting category” under the present subsidy regime.
A crude example can be used to explain the hypocrisy of the present subsidy norms in the AoA. The Indian government procuring wheat from a farmer at minimum support price (MSP), which only guarantees normal profits over the cost of production, entails a trade-distorting support to the tune of quantity procured times the difference between MSP and an external reference price based on 1986-88 international prices. The US government handing out direct income support to its farmers, who can then undertake production without having to worry about output, cost or any other concerns, is non trade-distorting. Domestic prices for many crops in the US are less than the cost of production. The US has major export interests in many such crops, even though the cost of production is above internationally competitive prices. So much for non trade-distorting support!
This subsidized export-oriented production competes with domestic production in Third World countries, where millions of small farmers do not have a similar cushion from their governments. Failure to sell above the cost of production, which has gone up steeply in the recent past, means immiserization for farmers. Questions can be asked—Can’t private traders guarantee remunerative prices? What is the need for government procurement? Well, at least the US does not believe in leaving farmers in the hands of private traders. There are more than 5,000 Farmers’ Markets in the US where farmers directly sell their output to consumers who pay for it using government entitlements under SNAP (food stamp programme).
For a long time, Third World countries were led up the garden path of neo-liberal policy prescriptions in agriculture. They were advised to diversify agricultural production and export tropical products to the temperate North in return for cheap food exports from the US and EU. Amidst increasing cereal prices and increasing diversion of cereal production in the developed world for bio-fuel use, they have painfully realized that promoting domestic food production is a must to safeguard food security. The G-33 (a group of countries in the WTO, coordinated by Indonesia) proposal which was the basis of food security talks in Bali was a manifestation of this changed reality in the global economy. To dismiss this assertion by portraying it as an India-centric issue is deliberately misleading.
Roshan Kishore is pursuing his PhD in economics looking at food security in South Asia. He also works at Research and Information System for Developing Countries.
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