New York Times seeks a just global trade. But not fair only for America, it should be equally fair for the rest of the world.

The New York Times is right. In an editorial of April 19, 2014: This time, Get Global Trade Right (See link here: http://nyti.ms/1niE8x1) the newspaper finally admits the fault it made in assuming that lowering trade barriers would benefit the economy and the consumers."Those gains have not been as widespread as we hoped, and they have not been adequate to assist those who were harmed."

This belated realisation has already done immense damage to millions of livelihoods lost not only in the United States but more so elsewhere. It is here that I agree with the newspaper when it says: it is appropriate to take stock of what we have learned in 20 years since the passage of NAFTA and use that knowledge to design better agreements. But there is a catch here. Designing better agreements should not only be to ensure that the US benefits from the global trade treaties, but everyone across the table also benefits equally.

I agree that increased imports from China has resulted in a 44 per cent decline in manufacturing jobs between 1990 and 2007, but what about the damage to the Mexican labour markets and the farming sector? What about the jobs lost on both side of the border, the destruction of the Mexican farm economy by cheaper imports, and the resulting loss to livelihood security of millions plus the environmental damages that accrues, including large scale deforestation to enhance area under cultivation for corn? A Carnegie Endowment study points to 766,000 jobs eliminated in the first 7 years of NAFTA.

Let's move away from NAFTA. A newspaper report published in the Hindustan Times Chandigarh edition (April 24, 2014) titled Foreign apples poll issue in HP tells how Himachal Pradesh, the land of apples in India, is under threat from imported apples. Imported apples mainly come from China, US, New Zealand, Chile, Iran and Afghanistan. China alone exported 77,560 metric tonnes of apples to India in 2012-13. So while imported apples are flooding the Indian markets, the Indian apple growers are faced with a livelihood threat. Similarly, I don't see any justification in why China has become a major apple exporter to the US cornering close to 45 per cent of its domestic market whereas inferior quality Washington apples are flooding the markets elsewhere.

Even President Bill Clinton had apologised for flooding Haiti with cheaper American rice since the early 1990s thereby destroying Haiti's ability to produce rice for itself. This is what he told the US Senate Foreign Relations Committee March 10, 2010: "It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake." (Read my Huffington Post article: When will America Opens Its Markets, Mr Obama? http://huff.to/1iTH7J00

But has America drawn any lessons? The answer is a big No.

In a study I did for Aprodev in Nov 2005 entitled Trade Liberalization in Agriculture: Lessons from the First 10 Years of WTO (http://aprodev.eu/files/Trade/Devinder%20study%20-%20Final.pdf)
I had explained how cheaper and highly subsidised agricultural commodities from the US, Canada and the European Union (and also the other Cairns Group members) had destroyed agriculture in developing countries driving out millions of small farmers from agriculture to look for menial jobs in the cities. Some other studies have shown that since the time Structural Development Programme was launched by IMF/World Bank (followed by the WTO era) 105 of the 149 Third World Countries had become food importing countries. The only two big gainers were North America and European Union. And let's not forget, importing food is importing unemployment.

Did the WTO do anything to remove the imbalances and make trade fair for everyone across the hemisphere? Didn't the office of the US Trade Representative in fact make it still worse?

Anyway, returning back to the NYT editorial I feel heartened that it talks of imposing intellectual property rights in a manner that it doesn't destroy the ability of Peru for instance to use generic drugs. But I expected NYT to strongly rebuke the US Administration for invoking Special 301 clause with impunity against all those countries (including India) which wants to protect its poor populations from the killing ways of the US drug industry. Take the case of a patented cancer drug Glivec for which Novartis has lost the battle in the Indian Supreme Court. I am aware that the Time magazine had hailed imatineb (Glivec's active ingredient) as a 'magic bullet' for curing cancer but the Supreme Court had in a landmark judgement struck down the patent application. In India, Glivec costs around $ 1,900 per month compared to $ 175 for the generic versions that companies like Cipla makes. (Novartis Loses Glivec Patent Battle in India http://on.wsj.com/QDyGHu).

Let me now draw the attention of NYT editorial writers to the highhandedness with which the US pushed aggressively for taming the Indian food subsidies, calling it trade distorting. Everyone knows that India has the largest population of hungry in the world. feeding these poor is not an easy task and certainly cannot be left to market forces. The US would know better since it is also struggling with the rising food subsidy bill (under SNAP) to feed its 47 million hungry. America provides 385 kg of food support every year (including cereals/grains) to its hungry millions, under food stamp, mid-day meal programme etc. In 2012, it’s food subsidy bill stood at $100 billion, up from $90 billion in 2010. Against this, India promises to provide 60 kg of wheat/rice/millets to its 830 million hungry. The total financial outlay for food security in India is about $20 billion or Rs 1.25 lakh crore. The US is objecting to India’s food subsidy but has no problem with its own food subsidy which is five times more than India.

There are at least 14 agricultural commodity trading groups which have written to the USTR expressing their unhappiness over the failure of US Govt to bring Indian food subsidies under the chopping block. They are not happy with the 4-year grace period that India has been able to wrest at the Bali Ministerial in December. They have said very categorically that the decision will negatively impact their commercial interests (Read my analysis Bali Ministerial: The very future of Indian Agriculture is at stake. http://devinder-sharma.blogspot.in/2013/11/bali-ministerial-very-future-of-indian.html).

What is good for America is certainly not good for the World. Let global trade treaties therefore be beneficial to all and sundry, and should not be dictated by the power of the powerful. While NYT is rightly worried at the decline in employment in America, please don't forget that the billions who are being pushed out of jobs in the developing world are also human beings. Add to this the deteriorating environment, the rise on greenhouse gasses and the resulting global warming. The cost of an unjust and iniquitous global trade is too heavy for the global community to be a mute spectator. I hope the NYT stands out as the voice of the voiceless across the globe. More power to your  pen.    

Do tractors play a role in aggravating farm crisis?

Big and attractive tractors are increasingly in demand in Punjab. In this picture a farmer is looking at tractors lined up for sale. 

(Pic courtesy: www.frontlineonnet.com)

Every Monday, second hand tractors start arriving early in Kotkapura grain market in Punjab. By around noon, the grain market turns into a tractor mart. A large number of tractors, of different make and size, are available for a bargain. Many of these are procured by middlemen who market these second-hand tractors in Uttar Pradesh, Rajasthan and Bihar.  You may be thinking that most Punjab farmers are now fed up of tractors and that is why they are keen to dispose these four-wheelers.  No, the reality is that most of those who come to sell have actually acquired a new tractor, much bigger in size, and of course flashier. 

For several decades now, tractor has been a status symbol for Punjab farmers. Unless they own a tractor, irrespective of the fact whether they need it or not, they don’t feel they too have arrived. With over 5 lakh tractors existing in Punjab, once the status symbol has now turned into a symbol of suicide. But still farmers have not given up of tractors. Like the neo-rich in the cities, farmers too have developed a fetish for latest brands. Not many regret the big wheels. The craze for big machines has in fact grown.  

Not everyone of course does it as a style statement. While a large number buy tractors as a necessity, there are some small farmers who often purchase tractors out of social compulsions as it comes in easy instalments and at affordable low interest rates. They buy tractors, even if costs Rs 5 lakh and more, and sell it in a few weeks and from the money they get they buy a small car to be given as dowry for their daughter’s marriage. Many others of course are lured by the marketing blitz and want to join the ranks of progressive farmers since tractor has been promoted as a symbol of pride.   

A tractor alone is not of much use to a farmer. It is the heavy implements, which comes as attachments that are important. So it is the total package -- implements, along with the tractor – that adds on to the growing indebtedness on the farm. In neighbouring Haryana, the subsidy for land leveller has been increased from Rs 50,000 to Rs 75,000; on multiple crop planter from Rs 10,000 to Rs 20,000; on happy seeder from Rs 25,000 to Rs 50,000; on straw reaper from Rs 40,000 to Rs 60,000 and on zero till machine from Rs 15,000 to Rs 20,000. More the expensive implements, means more indebtedness. But this does not mean I am against mechanisation on the farm. What I am asking is the justification in selling the expensive and sophisticated implements and machines to farmers who are already in economic crisis. 

With every second farm household in Punjab owning a tractor, and considering the average farm size is less than 4 acres, tractors have become uneconomical. But still worse, more than 20,000 tractors are being purchased every year. These new tractors are really big machines, ranging from 60-90 horse power, the kind of huge tractors that were available in erstwhile Soviet Union. Generally, the minimum land area required to ensure a tractor remains economically viable is 10 acres. But over the years, under pressure from the industry, governments have reduced the requirement to just 2 acres. Also, a few years back, P Chidambaram, in his earlier avatar as Finance Minister, had reduced sales and excise duty on tractors by 18 per cent making it more attractive for buyers.

It was sometimes in late 1980s that I had visited Cambodia (it was then called Kampuchea). I was appalled to find huge tractors from Soviet Union being used in the country which was devastated under the Pol Pot regime. Since Kampuchea was only recognised by the Soviet block then, the use of massive tractors in the otherwise small farms was therefore quite understandable. I remember having told the Indian Ambassador that it will be good if India could supply small tractors – in the range of 25 to 35 horse power – to Kampuchea as part of the diplomatic initiative to build goodwill among the Kampuchean farmers.

While Cambodia has meanwhile gone for small tractor, Punjab is going for big wheels on small farms. The arrival of huge tractors in Punjab therefore defies any economic logic. I am told some tractor manufacturers are now planning to bring in tractors with 105 horse power.  And so when you hear the next time a story of growing indebtedness on the farm in the frontline state of Punjab, just be sure a tractor is more often than not, the primary reason. 

The tragedy is that the continuing agrarian crisis in the country, which has taken a heavy human toll with 290,470 deaths reported from suicides in past 15 years, provides a huge market for selling machines. In Punjab, despite heavy mechanisation, two farmers are killing themselves every day. Somehow the feeling is that more machines you sell, more sanity would prevail on the farm. Agriculture is being viewed as a machine-deficit sector, and more the machines sell more will be the reduction in farmer suicides. At least, this is what is visible from the way State Governments are aggressively promoting machines for the trouble-torn farming sector employing 57 per cent of the country's workforce.

Interestingly, the price of tractors has gone up by more than 100 per cent in the past five years. Isn’t it strange that while the market price of cars and two-wheelers has not risen by more than 20 per cent (and that too despite the annual inflation), the price of tractors has been on an unprecedented upswing. In other words, who will ensure that the tractor manufacturers do not end up fleecing the gullible farmers? Moreover, I am surprised that the tractor manufacturers have now roped in the agriculture universities in southern parts of India to market tractors. Some universities have reportedly signed MoUs with tractor manufacturers.

I agree that the farm sector faces a terrible paucity of farm workers. But will aggressive sale of all kinds of implements and huge tractors take out farmers from the crisis? Has it helped Punjab farmers tide over agrarian distress? It hasn’t. So why is it that the State governments are blindly promoting tractors? Why can’t the Punjab and Haryana governments and for that matter other state governments instead urge the formation of cooperative societies which help in leasing farm implements to farmers? Why can’t the governments encourage formation of private companies for custom hiring tractors and farm machinery?

I am not suggesting setting up another State cooperative agency, but am seeking encouragement for social entrepreneurship. It is here that I would like to provide the example of Zamindra Farm Solutions in Fazilka in Punjab. It provides big machines as well as farm implements on lease. Over the years, its membership has grown to over 4,000 farmers. Similarly, I know of several small village cooperatives in Punjab which provide implements for a rent. It is time such initiatives are aggressively promoted and encouraged. It is time to save farmers from getting deeper and deeper into a debt trap. #