India seeks new benchmark for farm subsidy at WTO

India, along with 80-odd developing countries, has sought a revision of the over three-decade-old external reference prices of farm commodities that are used by the World Trade Organization (WTO) to calculate current domestic farm subsidies extended by developing nations, official sources told FE.

While not much headway was made on these issues at the recently-concluded 12th ministerial of the WTO, as the focus was shifted to deals in curbing fishery subsidies and a patent waiver for Covid vaccines, the multilateral body is expected to take up these issues soon at its meetings on agriculture. “These issues will continue to be raked up by India and other like-minded countries at every possible opportunity at the WTO,” one of the sources said.

In a joint paper, submitted at the WTO, New Delhi and others have also pushed for a permanent solution to the issue of food security and permission to export grain stocks from its official reserves, a senior official said. These countries mainly include those from the G-33 grouping and other African nations. This is for the first time that India has managed to partner so many countries to submit a “harmonised text” on agriculture, placing their joint proposals.

As part of the permanent solution, the developing countries are seeking protection against disputes on any food procurement or other support programmes that have been launched after 2013 (when a peace clause for immunity was granted to them for existing programmes) and those that are going to be rolled out in future.

Importantly, for India, any such permanent solution, if agreed upon by all WTO members, will offer protection against disputes to the flagship PM-Kisan programme, under which the government offers Rs 6,000 to every farmer annually, according to a senior official.

As for calculating farm subsidies, New Delhi and others in the group believe that the extant reference prices – based on the three-year average rate of a commodity between 1986 and 1988 — is grossly outdated. Under the WTO rules, developing nations can’t extend farm/food subsidy beyond 10% of the production value of a commodity, calculated on the basis of these outdated reference prices. Consequently, it severely impairs developing countries’ ability to offer any meaningful support to their farmers, while their developed counterparts continue to extend massive farm subsidies under a different formula meant for them.

The extent of asymmetry between the support extended by the developing and the developed countries was brought to the fore in an earlier paper jointed submitted by India, China and some others. The US’ domestic support per farmer in the US was $60,586 in 2016, 267 times of India’s ($227), though Beijing’s support ($863) was almost four times of New Delhi’s, according to the paper. Massive subsidies have led to huge competitive advantage of farm products of developed countries in the global market. While agriculture accounts for less than 2% of the total employment in the US, it is as much as 44% in India and 20% in China, suggesting much lower level of industrialisation in this country.

India’s key procurement programmes are protected from penal provisions under the peace clause secured at the WTO’s Bali ministerial in 2013 (its permanent status was affirmed in late 2014). But some countries started making fresh demands on safeguards and transparency obligations after New Delhi invoked the peace clause for its rice procurement in 2018-19 and 2019-20.