The double standards are clear. In 2012, the US provided $100 billion for domestic food aid, up from the $95 billion it spent on feeding its 67 million undernourished population in 2010 including spending on food coupons and other supplementary nutrition programmes. In India, the Food Bill is expected to cost $20 billion and will feed an estimated 850 million people. Against an average supply of 358kg/person of subsidised food aid (including cereals) in the US every year, India promises to make available 60 kg/person in food entitlement. And yet, while the World Trade Organisation (WTO) is quiet on the subsidy being doled out in America for feeding its poor, the US has launched an attack on India for “creating a massive new loophole for potentially unlimited trade-distorting subsidies.”
India’s subsidies for feeding its hungry are being blamed for distorting trade in agriculture while the US, which provides six times more subsidies than India for feeding its hungry, is seen as doing humanitarian service. The US subsidies are unquestionable, while India’s hungry are being conveniently traded at the WTO. Public posturing notwithstanding, India is believed to have given in to US pressure. Commerce minister Anand Sharma is believed to have assured the WTO director-general that India is committed to take the multilateral trading regime to its logical conclusion. That India is not willing to contest the unfair provisions, and has agreed to a compromise, becomes evident from what the WTO chief said: “What we have agreed in Geneva is we are going to be working on a Peace Clause.”
The US/EU is pushing for a Peace Clause lasting two-three years. India is willing to accept it since it allows the food security programme to continue without any hiccup till 2014. The Peace Clause is a temporary reprieve. Although it expired in 2003, it is being reinvented now to allow India to continue with its food subsidies for the specified period during which its subsidies cannot be challenged before the WTO dispute panel.
The main issue here is the increasing amount being spent on public stockholding of foodgrains and thereby the rise in administered prices for wheat and rice that is procured from small farmers. According to the WTO Agreement on Agriculture, the administered price cannot exceed the ‘de-minimis’ level of 10% of the total volume of production. This exemption is allowed under the Aggregate Measure of Support. India has already exceeded the limit in the case of rice where the procurement price has shot up to 24% from the base year 1986-88 that was agreed upon.
It is, therefore, not the food subsidy Bill that is under the radar, but the procurement price system in India which is now on the chopping block. If India is forced to limit the rice procurement price at 10% of the total production, and refrain from increasing the wheat procurement price in future, it will sound the death knell for agriculture. Agreeing to a Peace Clause only shows how India is trying to skirt the contentious issue and is ready to sacrifice the livelihood security of its 600 million farmers.
According to the US-based Environment Working Group, America had paid a quarter of a trillion dollars in subsidy support between 1995 and 2009. In the 2013 Farm Bill, these subsidies have been further increased. This results in the dumping of foodgrains, thereby dampening farm gate prices, and pushing farmers out of agriculture. In India, wheat and rice growers have merely received $9.4 billion as procurement price in 2012. Forcing India to freeze procurement prices means that the WTO is being used to destroy Indian agriculture.
Devinder Sharma is a food policy analyst.
The views expressed by the author are personal.