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Mainstream, VOL 62 No 10, March 9, 2024

Quit WTO for crop MSPs And Food security | Soma Marla

Saturday 9 March 2024, by Soma S. Marla


In early March the price of Kinnow fruit at Gaddiannaram fruit market, Hyderabad is Rs 40 a Kilogram. While oranges and apples are increasingly dumped into Indian markets from California or New Zealand, small farmers in Punjab are distressed for not receiving even half the cost of production. Today, WTO has become a major barrier for both crop MSPs and Public Stock Holding (cheap ration under PDS). This is the outcome of India’s entry into WTO nearly three decades back. After nearly three decades of WTO, our farmers are in distress, and over 10,000 died by suicide in 2019 alone (Down to Earth, 2020). That’s why agitating farmers are demanding India to quit the WTO.

When India joined WTO, big promises were made to farmers. It was stated that increased access to global markets for farmers will mean more exports and additional income. However, contrary to the original claims, World Trade Organisation instead of facilitating free trade among developed and developing nations through negotiations, all through its three decade long existence proved to benefit only rich western multinational corporations on the expense of poor farmers from developing nations. Often urging developing countries to further open up their markets by lifting all tariffs and subsidies. For long the Cairns group (Western nations) have been resorting to un-ethical trade barriers and artificially lowered prices of agricultural products exported from developing countries.

Under the “trade Facilitation” flood of heavily subsidized agricultural products from Rich western countries, much lower to local crop cost of cultivation bankrupted the lives of millions of small farmers. Today we are experiencing the influx of apples from New Zealand and oranges from USA, costing high prices to consumers and depriving remunerative prices to our farmers. After accepted WTO conditions, our agricultural produce (starting from rice, chenna dal to Methi and Jeera) is being traded by Western stock & feature market brokers and grain whole-sale dealers bringing misery to our farmers. Even, originally claimed WTO mechanism of Quantitative Restrictions (QRS) failed India in for settling trade disputes in most of the disputes. Now, developed countries are seeking removal of subsidies like Minimum Support Prices , low Public Stock Holding of food grains (by FCI for PDS needs). Already Amazon, Walmart and other multinationals have entered online the local food markets and started seriously affecting lives of farmers, small and medium retail traders. That’s why agitating farmers are demanding a law to legally ensure implementation of crop MSPs.

Subsidies, Boxes and Peace Clause

WTO equates produced food a mere trading commodity in markets and convinently ignores the prime responsibility of feeding billions of hungry poor in developing world. In WTO terms any subsidy given to a small farmer in Sudan or Jharkhand is viewed in only trade angle. WTO agriculture negotiations, sanctions on subsidies revolve around the way trade-distorting subsidies. In WTO terminology, subsidies in general are identified by “boxes” which are given the colours of traffic lights:where green (permitted), amber (slow down and need to be reduced), red (forbidden).. Developing countries should not exceed a subsidy cap (on cost of production) of 10 percent of Amber Box. While the rich developed nations in to the Green box, where there are practically no limits on subsidies on food production given to their farmers. The subsisdies are calculated based on cost of inputs (seeds, electricity, diesel, MSPs) at 1986 prices and are not revised conqurently.

Thus, making developing south’s products cheaper in comparison to those of developed western countries. In fact, the cost of food production has increased 6 times (between 1986 and 2022 and livelihoods of millions of farmers became severely vulnerable. Developed Western nations routinely allege that developing nations are dumping in to world markets much cheaper food produce, which is a blatant lie. It is highly objectionable to compare a small farmer from Sudan making high profits by dumping cotton in to world market and causing losses to an American cotton farmer.

By imposing a 10 % cap on domestic support prices to cost of production, WTO is restricting India and other developed nations not to rise agricultural subsidies. For example, USD 630 billion went to producers individually either directly from government budgets or implicitly through market price support.Much of this support goes to large agri-business corporations and not to individual farmers. A huge problem with WTO’s provision on subsidies are heavily tilted to favour rich nations. Both USA and European Union regularly subsidize their farmers. The subsidy limits they provide are not directly visible but hidden behind several clauses of WTO Green Box. They do not invite penalties as the hidden sub-clauses protect them from legal challenges and WTO sanctions.

Obstacles for Right To Food

WTO imposed 10 percent cap on procurement of food grains by Indian government to meet needs of Public Distribution System (PDS), Is increasingly being challenged by USA and other western nations. For example in 2022 India procured 60 mllion tons of rice from small farmers to meet its PDS Needs under National Food Security Act. So far, India is able to partially protect it self from Peace clause provisions negotiated in Bali (2014). As now, the 10 percent subsidy limit is crossed, WTO is objecting limits of India’s Public Stock Holding (of food gains) system and asking to rewind MSP and subsidies or face WTO trade sanctions. The Aggrement on Agriculture (WTO) has been a key barrier to realizing the right to food. The existing rules need to change.

The fact that nearly 40 percent of global food grain, pulses and oil seeds trade is being controlled by. Corporate control of food production is not just limited t seeds, fertilizers, markets and food marketing value chains but the hold of global multinational grain cartel is very strong. A handful of agribusiness corporations like Cargil, ADM, Zenoh control nearly 50 percent of global grain trade. By creating artificial shortages thse cartel are suspected to be responsible for severe food shortages in Africa and Asia in 2009.

India is a big foodgrain market of 140 crore people. These western agribusiness cartels in collusion with our major domestic traders like Reliance and Adani want to eliminate crop MSPs, subsidies, PDS and eventually dismantle food soverenity. Grain Public Stock Holding is used to stabilize domestic prices and reduce consumers’ exposure to food price volatility, as well as to distribute food to vulnerable groups.

Increased integration of Indian agriculture with world agricultural markets endangers livelihoods of crores of small and tenant farmers and landless farm workers and opens gates to corporate sector. The pursued state policies (which accelerated in present BJP regime) is in favor of handing over both agriculture, markets and food trade to domestic corporate and global grain multinationals. Alternatively, India should mobilize all developing nations in WTO to delink Quantitative Restrictions (QRs) to selectively delink their agricultural economies from the purview of AOA, WTO. This action alone will safeguard domestic subsidy support, protect MSPs, Public Grain stock holding so as to secure food security. That’s why farmers are demanding legal guarantee for MSPs and agitating to protect PDS together with workers.

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