Agriculture and WTO: Is India still guilty of wanting to support its agriculture?
Momagri Editorial Board
March 27, 2017
Once again, the WTO members sadly proved their inability to make progress on the thorny issue of agriculture. The discussions showed a clear absence of convergence of views, proof if it were needed that underlying interests and programs continue to disagree.
During a regular meeting on March 27, “the Committee [on Agriculture] considered 29 questions concerning subsidies and market access in agriculture, with 16 of these items being raised for the first time. They also reviewed notifications of members’ farm policies”1 reported the WTO website. India was the object of special attention from Australia, Canada, the EU, Ukraine and the United States regarding its domestic support to agriculture.
As far as Australia is concerned, the New Delhi government has, each year since 2006, raised the support price of wheat to the current level of $320/ton, while the major exporters’ export price is below $2002. Meanwhile, the United States criticized the price difference between the domestic market and exports generated by reserves––they would be $35 lower than the minimal valid price in India. Seconding the accusation, Canada also questioned India’s rationale of building a two million-ton buffer stock of pulses3.
As a response, India did not hesitate to point out that these programs’ objective is above all to safeguard farmers’ livelihood, and stated that its support prices depend on various factors, including costs of production and market prices4.
This latest episode at the WTO is not insignificant and shows the stalemate of the WTO doctrine on agricultural issues. International prices keep declining and have now reached levels that do not even cover production costs in the most competitive countries. In such context, there is a temptation by exporting nations to denounce the protections of developing or intermediate countries such as India and China, which want to ensure their food security and political stability by protecting their rural population from inconsistent international quotations.
But why would they do so when exporters in developed countries keep refusing to join in stabilizing international trade and prices, and even contest the validity of stockpiling policies by rejecting genuine progress on this issue since the 2013 Bali Summit? In fact, this stabilization is crucial to restore confidence in the ability of international trade to fully contribute to food security, a confidence that was widely undermined by the 2007/2008 food crisis.
Admittedly, it is not a question of filing a complaint, as in the recent case of China5. Yet, this fight clearly shows that the “peace clause” obtained in Bali regarding stockpiling policies only hangs by a thin thread6. In addition, it seems all the more excessive since India, which must feed 17.5 percent of the world population, exports less grain (excluding rice) than it imports––fewer than two million tons over the past few years.
Tackling Europe’s agricultural protections has led to higher international prices during the 1990s. The Cairns Group––the cluster of the major grain exporters––may nevertheless have to seek another strategy. Food security and political stability are far greater challenges for India, China and most of developing countries than it was in Europe, where public budgets allowed to pay for the agreement of an already reduced agricultural commodity. Lacking a change of impulse that includes recognizing the food security imperative and the ineffectiveness of international agricultural markets (the inability of real pries to converge toward equilibrium prices), the current standoff could regrettably lead to a new trade war.
2 This data is presented by the ICTDS and is available from:
5 On this issue, please see Momagri’s article “The United States did not wait for Donald Trump’s election to challenge the Chinese agricultural policy”