US farm subsidies are unquestionable, while India’s hungry are being conveniently traded at the WTO.

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 47 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.

Source: The WTO is destroying Indian farming. Hindustan Times, Oct 21, 2013.

http://bit.ly/18ATWCS

Subsidy for the hungry is not an economic misadventure.

For the last few years, every time I have participated in TV discussions on the Budget day, I have noticed how the stock markets play its mischievous card. Before the finance minister gets up to present the Budget in Parliament, the Sensex invariably slumps. This indicates the nervousness in the market. As the finance minister goes on reading his speech, the Sensex also steadily rises. This is nothing but a blackmail strategy that markets use across the globe.

So when a day after the UPA government passed the Food Security Bill, the stock markets fell by 590 points, I wasn't the least bit surprised. Nor should it be considered as an expression of an economic blow. It is simply the market's way to express its discomfort and contempt at the poor getting the subsidy benefit.

The Food Bill is expected to cost Rs1.25 lakh crore.

This has prompted the industry barons, economic commentators, and the business media to repeatedly ask the question: Where will the money come from? More so, at a time when the Indian economy is in crisis, and the rupee is in free fall, such a massive financial outlay for 810 million poor and hungry is being touted as a political misadventure. There is no need to feed the poor, the money should have instead been diverted to create infrastructure, and in the bargain create more jobs, goes the refrain.

This is not the first time that such a question has been raised. I remember when the UPA-I announced writing off Rs 62,000 crore (which later became Rs 72,000 crore) of outstanding loans to farmers, a similar hue and cry was raised. I too was faced with a volley of questions on TV channels the day the farm loan waiver was announced. When I asked where the resources for the Sixth Pay Commission, bringing in an additional burden of over Rs1.5 lakh crores every year, came from; there was no answer.

`Subsidies' is a bad word when it comes to the poor. The argument is that subsidies are a drain on the national exchequer, and add on to the fiscal deficit. So whether it is fuel subsidy, fertiliser subsidy or food subsidy, they have perpetually been on the chopping block. All these subsidies not only have provided safety net to India's teeming millions, but have also helped the country become self-sufficient in food and dairy production. It has provided a cushion to the aam aadmi against continuously rising inflation, and at the same time help minimise the impact of rising costs resulting from privatisation of health and education services.

But interestingly, while all eyes are on the subsidies being given to the poor, there is no mention of the massive subsidies being doled out to business and industry years after year. The only difference being that these subsidies are not called subsidies (because it is a bad word) but are classified as efficiency incentives. Since 2005-06, the government has been giving tax concessions, including income-tax concessions, to the industry which is clubbed under the category of `revenue foregone'. Till this year, the tax concessions to industry total to more than Rs 30 lakh crore. In this year's Budget, finance minister P. Chidambaram has allocated Rs 5.73 lakh crore as revenue foregone.

I didn't see the Sensex crashing to express its displeasure at this massive subsidy . Nor do I find any mainline economist ever mentioning that Rs 30 lakh-crore was a wasteful expenditure. After all, despite such a massive subsidy support, the industry output is in minus, the manufacturing sector is gasping for breath, and exports are not picking up. India is faced with jobless growth, and we see a spate of suicides in the urban areas across the country among those who lost their jobs. Does it not mean that the Rs 30 lakh-crore subsidy has gone into a black hole?

In past three years, roughly Rs15 lakh-crore has been given to industry as tax concessions. If this money had been recovered and invested in public infrastructure, not only the entire fiscal deficit would have been wiped out, but lakhs of jobs could have been created.

In addition, despite the downturn in economy, the Reserve Bank of India has admitted that India Inc. is sitting comfortably over a cash reserve of  Rs10 lakh-crore. There is no need for India to bend over backwards to attract foreign direct investments when its own corporates were sitting over a mountain of cash. Forking it out could have created investor's confidence and improved the business sentiments. The rupee would start to look up. The ensuing economic crisis should have been evident in the period 2004-2008 itself when India's economy grew at nine per cent. Behind all the jubilation, a startling study done on behalf of the Planning Commission should have served as an eye-opener.

Accordingly, in the period of high economic growth, 14 million jobs were lost in agriculture, and another 5.3 million in manufacturing. In other words, both agriculture and manufacturing sector became victims of high economic growth. Subsequently, it has now been shown that for the first time in history the number of landless agricultural workers has swelled to more than those who own land.

Agriculture has become a losing proposition. Every day, some 2,500 farmers are quitting agriculture and probably migrating to cities looking for menial jobs. This is no `inclusive growth'. Kaushik Basu, the former chief economic advisor to Prime Minister and now a chief economist with the World Bank, has himself admitted that the time of `inclusive growth' is over. He has tweeted, suggesting `intelligent growth' to be the new plank of economic growth.

The only way to bring prosperity into the rural areas, and thereby boost the country's economy, is by making agriculture sustainable and economically viable. Most importantly, the road to all-around economic development passes through the village of Hiware Bazaar in Maharashtra.Once a drought-prone village, where rural-urban migration was the only way to survive, this village now boasts of 60 millionaires.

This village has effectively demonstrated how an ecologically devastated landscape can become a bustling market place. It is, therefore, time to invest in agriculture, rural development and food security. That's where the future of India lies.

Source: Deccan Chronicle, Aug 29, 2013. bit.ly/1ciCseP

Will the WTO torpedo India's massive cheap food programme?

By bringing in an Ordinance on the food security bill, the UPA-II has certainly bypassed the need for a cumbersome and noisy parliamentary debate. But there still hangs a bigger hurdle that needs to be crossed to make the dream programme a reality. With the United States hardening its position on the G-33 proposal to exempt public stock holding programmes and is unwilling to extend the subsidy limit for addressing the nutrition needs of the hungry and malnourished, the National Food Security bill could run into serious problems.

President  Pranab Mukherjee signed into law the National Food Security bill on July 5, 2013, two days after the Union Cabinet decided to issue on Ordinance. 

While Commerce Minister Anand Sharma has gone on record saying there can be no compromise on feeding the poor and hungry, the US WTO Ambassador Michael Punke has launched a blistering attack on the developing countries proposal, singling out India as “creating a massive new loophole for potentially unlimited trade-distorting subsidies.” Calling it as a step backward, he said “The new loophole, moreover, will be available only to a few emerging economies with the cash to use it. Other developing countries will accrue no benefit – and in fact will pay for the consequences.”

The controversial proposal moved by G-33 countries, which is a group of countries including China, India, Indonesia, Pakistan and others that came together to protect food security, livelihoods and rural development in the Doha Development Agenda, seeks amendments in the revised Doha draft modalities for agriculture. Knowing that procurement of wheat and rice under the National Food Security bill will rise manifold, India is wanting that the enhanced subsidy outgo for food procurement from small farmers as not being seen as a trade-distorting subsidy support. These subsidies, required to meet the food security needs of the hungry population, should be outside the maximum limit of ‘Aggregate Measurement of Support’ (AMS) that each country has to adhere to. The food the developing countries buy at a minimum support price from ‘low-income, resource poor farmers’ should not be computed in the AMS limit. At the same time, India wants the ‘de-minimis’ requirement for public stock holding – which at present stands at 10 per cent of the total production of wheat and rice that can be procured for meeting the nutritional needs of the food insecure population – be also suitably amended.

Despite Anand Sharma’s behind the scene discussions with the outgoing WTO Chief Pascal Lamy and the Director General-designate Roberto Carvalho de Azevedo of Brazil, the US continues to harden its stand. It has warned that if India’s new proposal on the table are not rejected “it will hurtle the WTO talks to irrelevance”.

Interestingly, India’s proposals are closely linked with the developed country’s proposal for an agreement on trade facilitation. Trade facilitation actually means setting up the required infrastructure at the ports, and making available appropriate transport and communication facilities that would make it easier for the trade and business to operate. In other words, the developed countries are actually pushing the developing countries to invest on facilitating the trade interests of its corporations and agribusiness giants. This agreement, which has some 600 contentious clauses or what is called as brackets in WTO language, will have serious implications for the domestic agriculture sector in developing countries. Unfortunately, Anand Sharma is willing to go by the trade facilitation agreement without even assessing the negative fallout it will have by acerbating the prevailing agrarian crisis and food security requirements.

Nevertheless, it is important to understand why the G-33 proposal that calls for appropriate measures to ensure food and nutritional security for the poor and needy, is so important. First, let us be very clear that the AMScalculations were done keeping the prevailing prices in 1986-88. Since then, and especially after the 2007 global food crisis, the farm commodity prices have seen a quantum jump. The 1986-88 reference prices, which was a period when prices were very low, no longer holds true and have lost all its relevance. Secondly, the trade distorting subsidies that the US/EU has been providing all these years have not been done away with. In fact, the developed countries have expressed jubilation over the fact that the massive agricultural subsidies that OECD provides for agriculture, with 80 per cent going to big corporations and rich farmers, are not on the negotiating table at the forthcoming Bali Ministerial in December 2013. 

On the other hand, in an analysis presented by Jacques Berthelot of France, the angry outburst of the US Ambassador to WTO appears completely unjustified. Accordingly, the average food aid that in 2010 that India gave to its 475 million people (65 million families below poverty line plus 10 million above poverty line) to meet their food security needs was to the tune of 58 kg/per person. Comparatively, the US provides 385kg/person to its 65 million people, who received food aid under several programmes like the food coupons, child nutrition programme etc.

Moreover, the procurement of wheat and rice from resource poor farmers by India does not mean the grains are being dumped in the international market thereby distorting trade. In reality, Jacques Berthelot has computed that the low global prices of wheat and rice in 1986-88 – the reference period – were because of massive dumping by both US/EU. Given that 53.2 per cent of the global exports of wheat came from US/EU, the role dumping played in depressing the global prices becomes quite obvious. The reference period of 1986-88 against which the administered prices of 2012-13 are being evaluated therefore becomes meaningless and absurd.

But still, at the WTO negotiations, it is the might of the developed countries that have so far controlled the directions and the outcome of the negotiations. If the US/EU continues to oppose the proposal floated by India through the G-33 countries, India will find it difficult to implement the National Food Security bill. And let us not forget, India has no provisions of introducing an Ordinance this time to bypass the WTO. #

Source: भारतीय खाद्य सुरक्षा कानून में अंतरराष्ट्रीय अड़ंगे, BBC Hindi. July 6, 2013. http://bbc.in/1aLEB4H

Instead of making hunger history, India's Food Security bill is for posterity.

Will India's proposed Food Security bill ever put an end to such queues for food?  

Several years ago I and Dr M S Swaminathan were speaking at a conference on hunger at Rome. Also speaking at one of the session was the Brazilian Minister for Zero Hunger Programme, the dream programme of ex-President Luiz Inácio Lula da Silva. After he had listened to us, he sat down with us to know of how India was battling hunger, specially the way India was managing its food self-sufficiency and the massive food procurement programme.

Yesterday, when I read the news report No hunger in Brazil by 2015 (IPS, June 19, 2013 http://www.ipsnews.net/2013/06/no-hunger-in-brazil-by-2015/) I was reminded of the ability of the Brazilian leadership to learn from others, and draw up a programme to fight hunger based on the central premise:  supporting family farms – which currently provide 70 percent of the food eaten by Brazilians – is central to poverty alleviation.

It is really heartening to know that ever since Brazil launched the Zero Hunger programme in 2001, it has pulled out 30-40 million people from poverty. While Brazil promises to remove hunger by 2015, there is no such clarity and promise being doled out under the ambitious National Food Security bill in India. To me it seems that while Brazil's Zero Hunger was time-bound and aimed at making hunger history, India's food security bill is simply targetted at the 2014 and 2019 elections, and is there for posterity.

India's proposed food security bill therefore is a lost opportunity. Sonia Gandhi did provide a historic opportunity for the National Advisory Council (NAC) to come up with a proposal to fight hunger in such a meaningful way that makes hunger history. But the opportunity was squandered. I would have been keenly looking for a policy programme which could have spelled out how much hunger would go away in the next five years, in the next 10 years, in the next 15 years and so on. The proposed law could have been easily designed in a manner that aims to remove hunger once for all rather than keep the majority population dependent on food doles for all times to come. An economically viable and sustainable agriculture should have been at the centre of the food security programme. With nearly 2,500 farmers quitting agriculture every day, and nowhere to go, the scourge of hunger is only going to multiply.

Meanwhile, I find a lot of excitement among the educated elite over the possibility of launching cash transfers for food. While I have already spelled out how cash transfers will hot at the very foundations of agriculture and food self-sufficiency, news reports of US Senate crackdown on the abuse of food stamps programme is quite unnerving. Just to quote from one news report: "The hearings follow last month's shocking audit by Bump's office showing millions in welfare benefits going to more than 1,100 dead people. Linsky's committee is also investigating the $ 100,000 in welfare benefits given to the family of marathon bomber Tamerian Tsarnaev. The farm bill, passed 66-27 by the US Senate last week, also calls for blocking college students from collecting SNAP benefits if their families are not considered low income; targeting retailers who traffic in EBT cards and forbidding liquor stores ad tobacco shops from accepting food stamps." (Food stamps and the lottery, http://foxmuldar-conservative-thinker.blogspot.in/2013/06/food-stamps-and-lottery.html).