India defends MSP at WTO

New Delhi: India defended its minimum support price programme for procuring domestic foodgrain at a World Trade Organization (WTO) meeting, saying it not only ensured food security but also kept global food prices from surging in the backdrop of the Ukraine war.

Large foodgrain exporters including the US and Canada last month challenged India’s public stockholding (PSH) programme on the grounds that it is highly subsidized, especially for rice, and that this is affecting food security of other countries. India has invoked the ‘peace clause’ several times at the WTO for breaching the prescribed 10% subsidy ceiling on rice procurement.

“They are saying that India’s PSH program is highly subsidized which is affecting the food security of other countries. But we have argued that it is the other way round. Since we were maintaining these stocks, when the crisis hit, we were able to feed our 800 million plus population. Had we not been maintaining these stocks, we would have been depending on the rest of the world—especially because they were talking about rice,” an official stated, requesting anonymity.

The official explained that the global exports of rice in 2021 were 56 million tonnes, while India distributed 58 million tonnes to its 800 million beneficiaries, which meant India’s requirement goes beyond the overall exports of rice in the globe.

India argued at the WTO’s Committee on Agriculture that it does not export common paddy which it procures under the MSP programme. It mainly exports premium quality rice that is in demand the world over, the official added.

“Had we required 58 million tonnes from elsewhere, the price of rice would have skyrocketed. Everyone would have hiked the prices and the food security of smaller countries—the Least developed countries (LDCs)—would have been in grave danger. We have rather ensured the food security of other countries by ensuring our own food security,” the official added.

The official said Indian rice prevented traditional exporters from jacking up their prices during the food crisis and that is the reason large exporters such as Australia, US, Canada and Japan are unhappy with India’s presence in the international market.

Earlier, India had informed the WTO that the value of its rice production in 2019-20 stood at $46.07 billion and that it gave subsidies worth $6.31 billion, or 13.7%, which is above the 10% limit. In case of wheat, though, the ceiling has not been breached. India banned wheat exports last year amid rising domestic prices.

India along with the G-33 grouping and African nations had proposed a permanent solution for public stockholding of foodgrains that would give them flexibility to give out higher farm support.

The G-33, African Group, and the ACP (Africa, Caribbean, and Pacific) had also submitted a joint proposal to the Committee on Agriculture.

The Committee on Agriculture oversees the implementation of the Agriculture Agreement and provides a forum for members to raise and address related questions and concerns. Its key responsibility is to monitor how WTO members are complying with their commitments. The committee, made up of all WTO members, usually meets three or four times a year.

Officials explained that some WTO members create an impression that India has created large stocks and is exporting the surplus. But it is important to note that when open market operations all the bidders are compulsorily asked to give an undertaking that they would not export it.

“So we have checks and balances in place. If you look at the data, the maximum offtake from the Open Market Sale Scheme (OMSS) is by the state governments, not the private players or the exporters or traders,” the official added.

Queries sent to the commerce ministry, US, Canada, Japan and Australia remained unanswered till press time.