The farm deal that needs to be reworked

More than two and a half decades after the signing of the global Agreement on Agriculture (AoA) under the World Trade Organization (WTO), and its amendments at the biennial ministerial meets, a level playing field for agricultural trade between developing and developed countries is still elusive. The agreement has numerous asymmetries and imbalances built into it and they tilt it towards developed countries. These anomalies adversely affect the interests of small-holder farmers of developing countries, who are looking for a broader market for their farm produce to realise better prices. Besides, several critical issues concerning domestic support to farming, export facilitation subsidies, and grain stockholding for food security also remain unresolved, posing formidable problems for the developing countries.

The AoA, therefore, needs a holistic review to ensure a rule-based, fair, and equitable trade regime sensitive to the special needs of the small and marginal farmers and resource-starved people of developing countries. The appropriate occasion to do so would be the WTO’s 12th ministerial conference, which was scheduled to be held in June 2020 in Kazakhstan but was put off due to the pandemic. With the ebbing of the infection in most countries, this meet should hopefully be convened in the near future.

The AoA was crafted at a time when negotiators from developing countries, mostly officials of their trade and commerce departments, did not fully appreciate the needs of the farm sector. Most of the Indian officials who participated in these talks were also from the commerce ministry. Farm experts were hardly consulted when the deal was struck. Nor was the agriculture ministry kept in the loop the way it should have been. The advanced nations, whose negotiators dominated at the negotiation table, had their way in setting the terms. They managed to safeguard their commercial interests, disregarding those of the developing countries, which were viewed merely as the prospective markets for their industrial and agricultural goods.

Little wonder, therefore, that this accord left ample room for the rich nations to raise their farm subsidies (technically termed aggregate measure of support, or AMS) while denying the similar space to the developing countries, which actually needed it. Even the benchmark for measuring this support —the prices of farm commodities prevailing during 1986-88 —suited the rich nations. It allowed them to further increase their financial assistance to their farmers while the developing countries were merely permitted to continue their ongoing support programmes for a limited period as a special favour. This resulted in overproduction of many farm goods in developed countries, thereby, depressing the global prices to the disadvantage of the growers in the developing world. Countries like India have often faced difficulties in utilising exports as an outlet for their surplus produce due to limited scope for offering financial sops for this purpose.

India has, in fact, been a major victim of the flaws in the AoA. It finds itself highly constrained in taking up welfare measures for the growers and end-users of the farm commodities, thanks to the strict disciplines imposed by this pact. The country has been facing many disputes at the WTO regarding its support programmes for agri-commodities like sugar, cotton, wheat, and rice. Even India’s price support-based grain procurement and stockholding for the purpose of food security are under constant attack. The country has often been questioned even if it tried to capitalise on some of the flexibilities provided in the AoA.

The National Academy of Agricultural Sciences (NAAS), which brought out a policy paper on WTO-related issues in December last, has counselled the government to develop a road map for negotiations to seek redress for the existing drawbacks in the AoA. Stress has been laid on the need to revisit the aggregate measure of support entitlements which enable the developed countries to provide relatively high trade-distorting benefits to their farmers under the special provision called “Amber Box”. This box mentions the subsidies which need to be merely reined in but not eliminated. Besides, given that many countries, including India, are undertaking price support-backed food procurement and buffer-stocking, the period of “reference prices” (stipulated in the AoA as 1986-88) also needs to be updated. This issue has a bearing on the minimum support prices a country like India can provide to its farmers.

More importantly, the developing countries need to continue to oppose any bid to dilute the special and differential treatment provisions for them. The advanced nations have, in particular, been seeking to cap the support under the “Development Box” (Article 6.22). This would essentially mean curtailing the de minimis limits —the minimal domestic support the developing countries can provide even if it distorts the trade. This support is pegged at present at 10 per cent of the value of the produce. All these are vital issues that the government needs to keep in view while formulating the country’s strategy for future negotiations on agriculture-related matters in various WTO forums.

surinder.sud@gmail.com