Industry thrives on masive subsidies.

In 2009, when the world was bogged down by economic recession, and some ripples were also felt in the country, India too provided a bailout package, in three installments, totaling approximately Rs 3.5 lakh crore.

While we blame farmers and the people living ‘below the poverty line’ for living on government doles, the fact remains that business and industry receive several times more subsidies and tax holidays. In many ways, the profits that business and industry post every year is directly related to the subsidies they get. And you thought it was economic growth! 

In February 2010, when Finance Minister Pranab Mukherjee was to present the annual Budget, the media had launched an orchestrated campaign saying that the economic bailout package should not be withdrawn. You could see almost every TV channel (and the pink newspapers) bombarding day and night how damaging it would be for the national economy if the bailout package was withdrawn.

In my interventions, I did make it loud and clear (to the discomfort of the economists on the TV panels) that the bailout package was not required in the first instance, and should be withdrawn immediately. Subsequently, I heard the Prime Minister say that only 1.5 lakh jobs were created in 2009 against the projected 1.2 crore. I guess this statement was used by the industry and business to defend the need for the continuation of the bailout package.

In my understanding, the bailout package was actually a dole to the industry and business to strengthen its bottom line. If you think that the layoffs in the industry were because of the economic recession, you are highly mistaken. Recession was very conveniently used by the industry to go in for labour-shedding, nothing more than that. Ask those journalists who have lost their job recently, and they will tell you they were laid-off not for reasons of economic meltdown. 

I fail to understand how business and industry, at times of an economic crisis, be on an acquisition spree buying companies in Africa, Latin America and Europe. There have been 11 major acquisitions by Indian companies in the recent past. In fact, India has emerged as a major player in global mergers and acquisitions, and surprisingly at times of economic crisis.  

Godrej Consumer Products Ltd (GCPL) for instance is now planning to make its 6^th global acquisition, this time in Argentina. Since 2000, Tata group has acquired as many as 27 companies abroad at a total cost of over Rs 16,000 crore.  The proposed merger between Bharti Telecom of India and MTN of South Africa is billed as the biggest merger in recent times. And so on.

In reality, the economic meltdown provided an excellent opportunity for the rich to amass more wealth. Otherwise there is no way that the world's wealthiest club can grow wealthier at times of an economic meltdown. The financial bailout packages came handy for the rich to accumulate more wealth, and that too in the name of rebuilding the national economy.

Otherwise, how can one explain that the number of billionaires from India has doubled in 2009-2010? Income of the rich doubling at a time of recession is something that is not easily palatable. Let us look at another indicator. Not only had the rich, even the middle class purchased 25 per cent more cars in 2009-2010, buying 1,526,787 cars. I don’t think people buy cars at a time when they have less money in their pocket. In fact, 2009-2010 also saw the highest number of car launches in India so far. 

According to Forbes magazine, the richest-of-rich club has 49 billionaires from India, up from 24 last year. Isn't it strange that at a time when the sails were fluttering, the number of billionaires from India should actually double? I don’t understand how can an industry, which could not create more than 1.5 lakh jobs in a year, ensure that its own wealth swells? How can that be possible at a time when the chips were down?

What made the wealth of the richest actually multiply were the bailout packages. It is as simple as that. In other words, the world follows an amazing economic prescription: “Socialising the costs, privatising the profits.” You and me pay for the bailout packages, and the rich pocket it neatly. What we don’t realise is that it is the people who actually subsidise industrial growth. There is no bigger fool than the average citizen, who refuses to understand the corporate manipulation of what is actually his due.

Take the case of Uttar Pradesh government, which has sanctioned a new international airport at Kushinagar, near Gorakhpur. After a lot of deliberations and consultations, the UP government has finally agreed to provide 550 acres of land (out of a total of 750 acres allocated for the airport, and real estate ventures like malls and hotels) at a nominal fee of Rs 100, for a 60 years lease. An acre of land being given for Rs 5.50 paise for a period of 60 years!  

Strange that a time of economic crisis, more than 1046 proposals for setting up Special Economic Zones (SEZ) be granted approvals in various parts of the country. Maharashtra and Andhra Pradesh have the largest number of approved SEZs in the country. Large number of SEZs have been granted approval in Tamil Nadu, Goa, Gujarat, Orissa and West Bengal as well. Ten year tax holiday plus a whole lot of concessions make it easier for the companies to make more money.  

The Rs 40,000-crore IPL cricket honey pot has also seen freebies being given to billionaires and millionaires. Ironically, this is happening at a time when the government is desperate to bring down the food subsidy bill. The current projected cost, computed on the basis of the proposal to provide 25 kgs to every BPL family at Rs 3 works out to Rs 28,860 crore. It will touch Rs 40,400 crore if the government raises the entitlement to 35 kgs per family. Even in the case of the second scenario, the burden on the exchequer would be lower than the existing Rs 56,000 crore annual food subsidies.  

The cost of feeding the hungry must be reduced, and only then can we feed the rich.

This happens every time when the world faces an economic crisis. In 2007-08, when the world was faced with an unprecedented food crisis, the stocks of the food giants swelled to an unprecedented level. The poor went hungry (with the number of hungry going up by another 100 million) whereas the food companies profited. More recently, when India was faced with an unprecedented rise in sugar prices, the stocks of nearly 25 sugar companies went up. 

Mainline economic thinking has made it much easier and simple for the corporate and big business to make more money. You don't have to indulge in any financial swindle; the credit rating agencies and the economists do it for you. And that too without the world even questioning what in simple terms means thuggery. #

How to feed the hungry

Work out a bankable plan
http://www.hindustantimes.com/Work-out-a-bankable-plan/H1-Article1-534659.aspx

By Devinder Sharma

At a time when granaries are overflowing, and stockpiles of food are rotting in the open, India is preparing to bring in a National Food Security Act. Saddled with the world’s largest population of hungry and malnourished, the draft bill certainly provides a ray of hope for the hungry millions.

If enacted properly, it can turn appalling hunger into history. But if the intention is to only repackage old wine in a new but broken bottle, it will turn out to be a historic blunder.

The primary objective of the draft Bill, as being suggested by the empowered Group of Ministers (eGoM), seems to be to simply re-classify the population below the poverty line which is entitled to receive 25 kg (or 35 kg if the eGoM agrees) of grain at Rs 3 per kg. Moreover, by relying once again on a bogus Public Distribution System (PDS) to reach food to the needy, I think we are neither serious nor sincere in pulling the country out of hunger for all time to come.

As the new harvest flows in, the question that needs to be asked is why acute hunger prevails in the villages that actually produce food? How come a large population of the hungry reside in those very areas that constitute the country’s food bowl? I fail to understand why in Punjab, where food rots in the open, almost 10 per cent of the population should go to bed hungry? Why is that Punjab, the best-performing state in terms of addressing hunger, should be ranked below Gabon, Honduras and Vietnam in the Global Hunger Index?

There is something terribly wrong in the way we have looked at hunger all these years. We have failed to realise that any programme aimed at providing food-for-all on a long-term basis has to look beyond food stamps and the PDS. Including the destitute and the homeless in the food distribution channel and by ensuring 35 kg of food entitlement per family (including nutritious millets and pulses) is not enough to remove hunger.

Instead of sending search teams to 22 countries that have food security programmes, the eGoM will do well to look inwards, and will find sustainable answers that can be easily replicated. Ironically, the answer lies in the hunger belt of Kalahandi-Bolangir-Koraput in western Orissa. Many years ago, I had stumbled on a cluster of villages in the heart of Bolangir district, which had not witnessed hunger for nearly three decades. My colleagues have since then travelled to numerous other villages throughout the country, which have adopted a socially workable ‘sharing and caring’ approach to remove hunger. If these villages can do it, I see no reason why a majority of the six lakh villages cannot become hunger-free.

In Bolangir, or in rural Pune, some villages have built traditional but small foodgrain banks. Those who are poor and jobless find solace in these grain banks. They are provided an adequate quantity of grains on credit, with the promise that they will return it in kind (along with a small portion as interest) at the time of the harvest when they find work. This cycle of ‘sharing and caring’ has built quite a sizeable foodgrain bank in these hunger-free villages. All that is needed is to train women self-help groups and NGOs in other villages, and food security will become the responsibility of the people.

Making villages hunger-free will also limit the dependence on the unreliable PDS and thereby reduce the mounting food subsidy. It has to be backed by policies that ensure that agriculture is not sacrificed for the sake of industry, mining and exports. As Hivre bazaar in central Maharashtra has shown, the answer lies in giving control over jan, jal and jungle to the people.

India's Shameful Paradox of Plenty

Dealing with Hunger:
It happens only in India
http://www.deccanherald.com/content/64997/it-happens-only-india.html

By Devinder Sharma

There is no reason why in the 6 lakh villages of India, that produce food for the country, people should be living in hunger.

There is no other country that presents a more shameful paradox of plenty- grains rotting in the open while millions live in hunger. At the same time, no other country allows its staple food to be exported while the population of hungry and malnourished continues to multiply.

It can happen only in India.

In the United States, from where India borrows its economic prescriptions, food is only allowed to be exported after the country ensures that in addition to 309 million people, 168 million cats and dogs have also been well-fed. In India, food — and that includes wheat, rice, maize, pulses, fruit and vegetables — is routinely exported, and the government often provides subsidies to offset the losses incurred in trade.

In America, where one in every ten citizen lives in hunger, it provides a massive federal support of US $ 205 billion for a period of five years to feed its hungry under various nutrition supplement programmes. This marks a continuous increase over the year. In India, which has the world’s largest population of hungry, the food subsidy bill is proposed to be pruned, from Rs 56,000-crore for 2010-11 to Rs 28,000-crore, under the proposed National Food Security bill.

It happens only in India.

The plethora of government scheme to fight hunger and malnutrition is at least impressive on paper. The ministries of women and child development, human resource development and of food and agriculture between them run 22 programmes to alleviate hunger and poverty.

Despite such a wide array of programmes already running, the budget allocation for which is enhanced almost every year, the poor still go hungry. Unicef tells us that more than 5,000 children die every day in India from malnourishment. More than 320 million people, as per a conservative estimate, are unable to manage three square meals a day.

Let us accept that the existing programmes and projects have failed to make any appreciable dent. We will once again fail the nation if we refuse to bring about a radical overhaul of the existing approach to fight hunger. I have the following suggestions to make a beginning:

Poverty line: First and foremost, the time has come to draw a realistic poverty line. The Suresh Tendulkar committee has demarcated 37 per cent of the population to be living in poverty. Earlier, Arjun Sengupta committee had concluded that 77 per cent of the population is able to spend not more than Rs 20 a day. And more lately, former supreme court judge, Justice D P Wadhwa committee has recommended that anyone earning less than Rs 100 a day should be considered as living below the poverty line.

Knowing that India has one of the most stringent poverty lines in the world, I think we need to accept that faulty projections will not address the reality of hunger. It should therefore have two lines to demarcate the chronic hungry from those living in poverty.

The Tendulkar committee’s recommendation of a cut-off of 37 per cent should actually constitute the new Hunger Line, which needs low-cost foodgrain as an emergency entitlement. In addition, the Sengupta committee's recommendation at 77 per cent should be the new Poverty Line.

The approach for tackling absolute hunger and poverty would therefore be different.

Make villages hunger-free: There is no reason why in the 600,000 villages of the country, which produce food for the country, people should be living in hunger. These villages have to be made hunger-free by adopting a community-based localised foodgrain bank scheme. Such traditional systems exist in several parts of the country, and there is an immediate need for its revival.

Food for all: In the urban centres and the food deficit areas, instead of reducing the number of beneficiaries, a universal public distribution system is required.

The existing PDS system has to be overhauled, and this requires a strong political will. Also, there is a dire need to involve social and religious organisations in food distribution. At the same time, nothing can succeed if we do not ensure safe drinking water and sanitation to be part of the hunger mitigation programmes.

Financial support: It is often argued that the government cannot foot the bill for feeding each and every Indian. This is not true. In the budget 2010, Finance Minister Pranab Mukherjee has announced a ‘revenue foregone’ of Rs 5 lakh crore, which means the sales, excise and other tax concessions plus income tax exemption for the industry and business. The annual budget exercise is for roughly Rs 11 lakh crores. Which means, the government is doling out massive subsidies to the industry.

I suggest that Rs 3 lakh crore from the 'revenue foregone' be immediately withdrawn. This should provide resources for feeding the hungry, and also for ensuring assured supply of safe drinking water and sanitation.

Policy changes: But all this is not possible, unless some other policy changes that do not take away the emphasis on long-term sustainable farming, and stop land acquisitions and privatisation of natural resources. This is what constitutes inclusive growth. A hungry population is an economic burden. #

The Barbaric Ways of Micro-finance

The ugly face of micro-finance was never in doubt. But now even the dark underbelly is coming out in the open. I wonder how much more evidence is required to put a stop to this barbaric activity that goes on unchecked in the name of empowering the poorest of the poor.

Yes, most MFIs operate in an inhuman and barbaric way. In fact, as you have read in these columns the entire concept of micro-finance is based on exploitation.

As a Hyderabad dateline news report in The Hindu (April 19, 2010) states: "Some Collectors sent reports about the harassment of borrowers, intimidation, manhandling, abusing and outraging the modesty of women and extreme punishment like making defaulters stand in the hot sun, tying them to trees and making them run in open grounds."

What more evidence is required.

We call these poor 'beneficiaries'. They fit into the classic model of exploitation that the late C K Prahalad envisioned. They are the "fortune at the bottom of the pyramid" which Prahalad very cleverly camouflaged in the guise of 'eradicating poverty' but actually provided a recipe for making huge profits. There may be some sensible suggestions that he gave, but rest of it was simply on how to exploit the poor and make money. No wonder, the crooks in business and trade have always held him in high esteem.

These poor have been earlier victims in the hands of private money lenders and now the organised class of highly educated (often hailing from the prestigious management schools) money lenders. They have suffered silently for years, and are now being subjected to all kinds of physical and mental torture by the MFIs. They live in perpetual mental agony, always under pressure to repay (on a weekly basis) the heavy compound interest on petty loans. As the report below states, 15 per cent flat interest rate at which the poor borrow, results in an effective rate of 33 per cent per annum on a declining balance.

What do you expect these poor people to do?

I will not be surprised if many of them eventually join the ranks of Maoists.

Here is the disturbing news report, under the seemingly less damaging headline: Andhra Pradesh -- State for de-recognition of MFIs. It says that the MFIs are accused of forcibly enrolling poor women in the rural areas. Some Collectors' reports cite intimidation, manhandling, and outraging modesty of women

Andhra Pradesh -- State for de-recognition of MFIs.
http://www.hindu.com/2010/04/19/stories/2010041960410600.htm

by Ravi Reddy

HYDERABAD: As the spectre of coercive recovery practices, lack of transparency and questionable acts of some micro finance institutions (MFIs) looms large once again after a gap of four years, the Andhra Pradesh government plans to approach the Reserve Bank of India (RBI) seeking their de-recognition.

Following reports of objectionable practices of MFIs in harassing borrowers in rural areas of in Khammam, Mahabubnagar, Warangal and several Coastal Andhra districts, the government has drafted a letter to the RBI seeking de-recognition of the erring MFIs, which will be despatched in a day or two.

The 40 MFIs operating in the State with total finance portfolio of Rs. 3,000 crore are accused of forcibly enrolling poor women in the rural areas even though a majority of them are already part of the carefully nurtured Self Help Groups (SHGs) under the banner of Indira Kranti Patham.

Principal Secretary, Rural Development, R. Subramanyam told The Hindu on Saturday that the MFIs were back to their old tricks forcing the government to act fast. “They (MFIs) are violating norms by enrolling SHG members and claiming them as their own. They are not disclosing the list of members and resorting to coercive recovery practices,” he said.

Some Collectors sent reports about the harassment of borrowers, intimidation, manhandling, abusing and outraging the modesty of women and extreme punishment like making defaulters stand in the hot sun, tying them to trees and making them run in open grounds.

The State had witnessed a similar situation in 2005-06, when borrowers, caught in the debt trap, ended their lives. This forced the YSR Government to appoint a one man committee headed by a senior IAS officer V.P.Jauhari. He had recommended the government to crack the whip on the MFIs for grossly violating the human rights of borrowers in the name of loan recovery and enactment of Money Lenders Act to rein in the MFIs.

Strange modus operandi

The modus operandi is to lure SHG members into taking loans ranging from Rs. 3,000 to Rs. 25,000 at 15 per cent flat interest rate, which results in an effective rate of 33 per cent per annum on a declining balance. There is no loan appraisal or analysis of the borrower's source of income and repayment capacity. Lending institutions are least bothered about pre-existing loans taken from banks, SHGs, other MFIs and unregistered moneylenders.

Mr. Subramanyam said the government had set up district-level task force headed by the Collector to look into each case of coercion. “Harassed borrowers can call up 24X7 Call Centre (number 155321) to report their woes,” he added. Apart from this, the government plans to identify at least three mandal level SHG federations and ten Village Organisations in each district for bulk loaning to provide relief to the poor women.

Food Security: What the Government Says And What We Want

Yesterday, I attended briefly a concluding seminar organised by the Right to Food campaign. It was a pleasant surprise to find a significant change in the approach the RTF campaign has now adopted, moving beyond the entitlement criteria to restructuring agriculture policies in such a way that it does not compromise on food security, livelihood security and thereby the right to food.

In June 2009, when I last attended a Right to Food seminar in the Gandhi Peace Foundation, I did express my dismay at the narrow focus of the campaign, which was somehow not willing to look beyond public distribution system, mid-day meals and anganwadi programmes. But since then, a lot of effort has been made by some of the grassroot leaders of the movement, to bring in focus on the real causes behind growing hunger as well as increasing marginalisation of the farming communities. Food security cannot be divorced from agriculture.

I am aware that the new position of right to food campaign is at a discomfort of some of the well-known faces of the movement, but I think this is a true reflection of democracy and people's participation. I hope the government also begins to listen directly to the new emerging leadership of the right to food campaign, which is more grounded to the existing realities. I have always maintained that when people take control, right solutions flow in.

A set of slides under the title -- Food Security: What the Government Says and What We Want -- says it all. There is still some room for improvement, as it is always, and I welcome your suggestions and inputs. I am highlighting some of the salient points that have been made (in addition to the entitlements, and the social security programmes mentioned):    

Food Security Must Ensure Nutritional Security and Health

We believe that basic services such as food, education, health, work and social security must be universally available for all. All residents of the country must be covered, and while arguing for universal services, further affirmative action is required for those who are socially excluded. To achieve this, it is suggested:

1. ICMR norms for moderately active male (2700 calories required) be followed

    Food grains -- 14 kg per month or 50 kg per family

    Edible oils -- 800 grams per month or 2.8 kgs per family

    Pulses -- 1.5 kgs per head per month or 5.25 kgs per family month

Inclusion of millets is essential because these are nutritious, healthy, cheap and often culturally preferred.

Food Security In A Vacuum

National Food Security Act povides food security without considering production aspects -- as if food procurement and food distribution can be divorced from production.

In reality, production, procurement and distribution have to be considered together.

Use an Expanded PDS to Revive Agriculture

There is a severe agricultural crisis in the country. Procurement for an expanded PDS will give a boost to production and can become an important instrument for the revatilisation of the farm economy.

Procurement from all mandis, so that all areas benefit from government procurement (not just major procurement from Punjab, Haryana, western UP, and AP as is now the case).

Procurement at MSP of millets, pulses and oilseeds etc to boost these crops which are now facing neglect due to low and uncertain prices and due to low investment.

These crops are easily grown in dryland areas and not water/input intensive.

Procurement should be at a fair and remunerative price.

Local Distribution of Local Procurement

Distribution of grain procured from beyond the district/zone should be resorted to only if there is a shortfall in local procurement. This will allow:

1. procurement, and therefore support to farmers, from all areas.

2. locally preferred grain to be distributed.

3. Drastically cut down storage and transportation costs.

4. Help curb corruption by allowing easier tracking of grain movement.

Policies To Increase Food Production, Consumption, Nutrition

1. Immediate ban on export of food until malnutrition ends in the country.

2. Protect farmers from 'dumping' of unfairly subsidised imports.

3. First call on all natural resources, including food and water, must be for food. No forcible diversion of land, water and forest resources away from food production.

4. Stop corporatisation of agriculture and control of food by agribusiness corporations.

5. Immediate moratorium on genetically modified (GM) seeds, GM food imports, and use of GM food in government food schemes.

6. All speculation and future trading in food items should be banned.

7. Government must eliminate the entry of corporate interests (including contract farming) and private contractors in food production, food market, regulatory bodies and nutrition-related schemes.

8. Government must not enter into any partnership with the private sector where there is a conflict of interest.

9. Government must ensure access to safe drinking water and sanitation for all. 

Universal PDS: Availability of Funds

Compared to many wealthy nations including USA, Sweden etc. India has a very low tax GDP ratio (around 18 per cent compared to 28 per cent in USA and around 45-50 per cent for Scandinavian countries).

Even this very low rate is not realised. The tax foregone (waived) by the Central governemnt on Corporate Income tax, personal income tax, excise and customs was Rs 5,02,299 crores in 2009-10 (79.54 per cent of the aggregate tax collection), and it was Rs 4,14,099 crores (68.59 per cent of the aggregate) in 2008-09. This is about 11 times the current food subsidy bill.

The Story of India remains embedded in the tussle for BPL, APL and IPL

Minister of State for Foreign Affairs Shashi Tharoor has been asked to resign. Reports, quoting BCCI officials say that the Indian Cricket Board will most certainly ask Lalit Modi to quit as commissioner of the Indian Premier League (IPL). The lid covering the sleazy and murky world of IPL has been finally blown off.

The resignation drama coincided with another development that did not evoke the same kind of media frenzy. More than 1.1 crore poor people (or 11 million) have been added to the list of Below Poverty Line (BPL) families who are eligible to receive a monthly entitlement of food ration. At the insistence of Sonia Gandhi, the Planning Commission has been forced to revise the estimates of the hungry, accepting the Tendular committee recommendation of 37.2 per cent population living in poverty, as the new line for hunger.

Once these estimates are accepted by the empowered Group of Ministers (EGoM) and the National Food Security Act comes into place, the Above Poverty Line (APL) category will stop receiving any subsidised ration. There are at present 115.2 million APL families who are entitled to subsidised food.

The story of India remains embedded in the tussle between BPL, APL and IPL.

Writing in the New Indian Express, Aditya Sinha puts the IPL honeypot to be worth Rs 20,000-crore (US $ 4.5 billion). "Actually, such is the money involved that during the league’s last burst of expansion the auction figures were quoted in US dollars... For IPL commissioner Lalit Modi it is perhaps fitting that the numbers are in dollars. Rupees are the currency of people living in Orissa, Chhattisgarh, Bihar, Jharkhand... well, you get the picture."

According to the Times of India (April 18, 2010): "The current projected cost, computed on the basis of the proposal to provide 25 kgs to every BPL family at Rs 3 works out to Rs 28,860 crore. It will touch Rs 40,400 crore if the government raises the entitlement to 35 kgs per family. 

"Even in the case of the second scenario, the burden on the exchequer would be lower than the existing Rs 56,000 crore annual food subsidy."

The cost of feeding the hungry must be reduced, and only then can we feed the rich.

In his edit page article: How to feed your billionaires (The Hindu, April 17, 2010), P Sainath asks the pertinent question: "How about questions on public subsidies going to some of the ricjest people in the world? The BCCI-IPL cost the public crores of rupees each year in several ways. The waiving of entertainment tax worth Rs 10-12 crore for the IPL in Maharashtra alone was discussed in the State Assembly. Maharashtra has extended other support to the IPL, which is yet to be quatified. This, despite being a state whose debt will cross Rs 200,000 crore in the coming year."  This is not the only concession, there are several other concealed freebies from the public resources.

Maharashtra is also the State where lakhs of cotton growers in the infamous hunger belt of Vidharbha have ended their lives.

As a discerning reader of the Hindustan Times (April 18, 2010) points out: "Nothing mirrors the widening gap between the rich and the poor in our society more starkly than the IPl phenomenon. While millions of people are struggling hard to eke out an existence, the sharks in business and politics are busy capitalising on our love of cricket to make millions of rupees. The dramatic personae in the side-show represents the rottenness in the IPL. Evidently, their fracas is over "to which pocket how much" should go. Nobody at the helm of BCCI-IPL can claim that their actions are completely above board. The valid quation is of why tax waivers, write-offs and subsidies are given as freebies to billionaires and millionaires behind the IPL under the pretext of making it a grand success at a time of drastic cuts in food subsidy despite the rising hunger goes unasked and unanswered." (G David Milton, via email)

European Agriculture: Some facts you should know

Statistics, they say is like a bikini. It conceals more than what it reveals. I am not sure whether this saying holds true anymore, but statistics often helps us to put things in the right perspective. It is in this context that I think it is important to share certain facts and figures about European Agriculture.

-- European union is the world's largest producer of food and beverages, employing 8.66 per cent of its workforce and 4 per cent of EU's GDP. EU remains the world's leading exporter of agricultural goods (roughly 17 per cent of total global trade).

-- There are 13.6 million people employed directly in agriculture, forestry and fishery sectors, with an additional 5 million people working in agri-business industry. It generates over €355 billion in production. After EU's enlargement (2004 and 2007) an additional 7 million farmers were added to EU's farm workforce.

-- There are 14.5 million agricultural holdings, occupying 47 per cent of the total land area. Small farms still remain predominant in EU, with the average farm size being 12 hectares.

-- Average agricultural income in EU-27 is less than 50 per cent of the rest of the economy. farm incomes decreased by an average of 12.2 per cent in 2008-09 (primarily due to economic meltdown).

-- EU claims its greenhouse gas emissions caused by agricultural activity (including rearing of livestock) decreased by 20 per cent between 1990 and 2007 in the 27 Member States; whereas the proportion of these emissions produced by agriculture dropped from 11 per cet in 1990 to 9.3 per cent in 2007, inter alia as a result of more effective use of fertilisers and liquid manure, the recent structural reforms of the CAP and the gradual implementation of agricultural and environmental initiatives.

-- The share of Common Agricultural Policy (CAP) expenditure in the EU budget has steadily decreased from nearly 75 per cent in 1985 to a projected 39.3 per cent in 2013.

-- As a result of CAP reforms, EU claims it has become a net importer of agricultural goods with over €78 billion worth of products being imported each year.

-- There are over 40 million poor people in the EU who do not have enough to eat.

-- Since the adoption of decoupled Single Farm Payments there has been a resolute move away from trade-distorting measures in line with WTO requirements [Jacques Berthelot says this is another lie: the SPS is coupled 7 times].

-- European Parliament believes that the EU cannot afford to rely on other parts of the world to provide for European food security in the context of climate change, political instability in certain regions of the world and potential outbreaks of diseases or other events potentially detrimental to production capacity [On the contrary, India thinks it can abandon agriculture and depend on other countries to meet its food security needs -- my view].

-- European Parliament thinks that one of the main reasons why the EU needs a strong CAP is to contribute to the development of viable and dynamic rural communities, at the heart of European cultural diversity, and with a view to ensuring sustainable and balanced socio-economic development across all European territory; and points out that there is an urgent need to attract younger generations to rural areas and provide new and alternative economic opportunities for them to ensure a sustainable rural population.

--  EU believes that rural unemployment should be tackled by providing opportunities for diversification and new income sources. (emphasis mine) 

Delivering benefits in terms of public goods, which justifies the need for strengthening CAP, the European Parliament observes:

1. It recognises that farmers deliver a range of public goods which the market does not reward them for; therefore insists that they must be fairly rewarded and further incentivised to continue delivering higher-quality products, better animal welfare conditions and additional environmental benefits;

2. Recalls, therefore, that unless farming activity is preserved across the EU, no provision of public goods will be possible;

3. Recognises that generations of farmers have shaped the valued EU landscapes and, therefore, should be rewarded for continuing to do so in a sustainable way, especially in naturally disadvantaged areas; believes that they are actively contributing to the great cultural value and attractiveness of Europe, providing the backdrop for successful rural tourism; 

4. Points out that farmers have the potential to deliver additional environmental benefits that match societal demands, in particular soil preservation and restoration, sound water management and quality improvement and farmland biodiversity preservation, and that they must be encouraged to do so;

5. Believes that agriculture has a tremendous potential to adapt to and mitigate the impacts of climate change;

6. Believes, in line with the latest research available, that without a common agricultural policy, unbalanced modes of production would develop across the EU (extreme intensification on the best land and widespread land abandonment in disadvantaged areas), causing serious damage to the environment [clearly!]; insists that the cost of support through a strong CAP is nothing compared to the costs of no action and its negative unintended consequences.

7. Notes that the market fails to reward farmers for protecting the environment; therefore believes that the CAP must become greener by incentivising farmers to maximise the delivery of eco-system services to further improve the sound environmental resource management of EU farmland;

8. Believes that farmers are well placed to contribute to green growth and respond to the energy crisis through the development of green energy in such forms as biomass, biowaste, biogas, second-generation biofuels and small-scale wind, solar and hydro energy, which will also help create new green job opportunities.

These are exactly the reasons for which India and for that matter other developing countries are being asked to withdraw State support, and allow markets to deliver public goods.

[Source: Draft Report on the Future of Common Agricultural Policy after 2013 presented by Committee on Agriculture and Rural Development to the European Parliament on Mar 24, 2010]