India unlikely to engage on agricultural issues at key WTO meet

India wants members to first find a permanent solution to the issue of public stockholding, the core of country’s public procurement system

​New Delhi: India will not engage in any discussions on agricultural issues at the 13th Ministerial Conference (MC13) of the World Trade Organisation (WTO) unless members first find a permanent solution to the issue of public stockholding, the core of country’s public procurement system, which ensures the food security of 800 million poor people and guarantees minimum support price (MSP) to 95.3 million subsistence -level farmers, two officials aware of the country’s position said.

The 13th ministerial (MC13) of WTO is scheduled to be held between February 26 and 29 in Abu Dhabi. (REUTERS)

Most Indian farmers are poor,and need MSP support, which helps in building a public stockholding (PSH) to ensure food security programmes such as the Prime Minister Garib Kalyan Ann Yojana (PMGKAY), providing free ration to 813.50 million poor people every month, they added, requesting anonymity.

India, a founding member of WTO , is willing to discuss other agenda of developed countries such as farm subsidies and restrictions on exports of food grains at the ministerial conference (MC), provided members first agree on a permanent solution to public stockholding, one official said. The 13th ministerial (MC13) of WTO is scheduled to be held between February 26 and 29 in Abu Dhabi, the United Arab Emirates (UAE). The MC is the highest decision-making body of 164-member WTO and usually meets biannually.

MSP is the key to public stock holding that involves purchase of food-grains such as rice and wheat from farmers at administered rates which are higher than market prices. These are therefore considered trade-distorting subsidies by some WTO members. At the ninth ministerial conference of Bali in December 2013, members agreed to negotiate a permanent solution on the issue of public stock holding for food security by MC11 and in the interim agreed to exercise restraint, which is called the ‘peace clause’, in raising disputes against such programmes at the WTO.

“While the status quo is still maintained and public stock holding cannot be disputed, India wants the interim arrangement to be made a permanent clause of the Agreement on Agriculture (AoA) before taking up any other issue,” the second person said. More than 80 countries, including the coalition of developing countries (G-33) and the African group are supporting India on this matter, he said. The move is opposed by Australia, Brazil, Canada, New Zealand and their supporting groups.

“The ‘peace clause’ is an interim but major relief to developing countries such as India till a permanent solution is arrived at,” the second official said. India has emerged as a major producer of food grains and besides ensuring food security of its people, it is also a major exporter, contributing in food security of the world. “By providing subsidised food to its citizens it is also helping the world in keeping global food prices under control,” he added.

Under WTO norms, a member’s food subsidy bill should be limited to 10% of the value of production based on the external reference price (ERP) of 1986-88. “This price reference should also be changed to make it more realistic,”the second person said. Giving subsidies above the limit are considered as trade distorting.

Developed countries want to discuss export restrictions imposed by India on agricultural products such as rice and onion. “Trade restrictions are instruments to rein in food inflation and keep sufficient domestic supplies for Indian citizens. Besides, India has been providing food items to poor countries on request. Although countries like Japan and Singapore rely on imports of food items, they are quite rich to pay for that. In fact, the arguments of developed countries are more to protect interests of traders rather than farmers and citizens,” the first official said.

Food security is of prime importance to India and the government’s input subsidies to its poor farmers such as free electricity, irrigation facilities, fertilisers and direct transfers of ₹6,000 to over 95 million farmers are “non-negotiable”, the officials said. Even developed counties hand out billions of dollars in agricultural subsidies, they added.

“India believes in a transparent and inclusive multilateral trading system within core principles of non-discrimination, consensus-based decision-making and differential treatment to developing countries,” the first official said.