Global Rice News

India Takes Firm Stand at WTO Conference on Farm Support

India has made it clear that it will not negotiate any other agriculture issues at the upcoming World Trade Organisation (WTO) ministerial conference in Abu Dhabi until it receives permanent protection for its public procurement of grains through minimum support price (MSP) operations. This announcement was made by a senior official on Thursday.

Currently, India operates under a “peace clause” or interim relief for its MSP operations and public stock-holding of grains. This clause was first granted in 2013 and was extended in November 2014 until a permanent solution is found.

The Indian official stated that they want to codify their stance by changing the schedule of the Agreement on Agriculture. The country is adamant that the public stockholding issue must be resolved before engaging in any other discussions on agriculture.

During preparatory meetings leading up to the conference, the US made it clear that it would not be able to meet India’s demand for a permanent solution for public stockholding at the meeting.

India finds itself at odds with the Cairns Group, a collection of 19 agricultural exporting countries including Argentina, Australia, Brazil, Canada, Chile, and Colombia. This group seeks to curb India’s domestic support, arguing that procurement at fixed prices and public stock of grains distort markets and keep global prices for Indian rice and wheat suppressed.

The US and Europe also oppose India’s public stock-holding, while India has the backing of G-33 developing countries, the Africa Group, and the Organisation of African, Caribbean and Pacific States. With close to 90 countries in support of India, the issue will likely be contentious as all decisions at the WTO are taken by consensus.

India contends that public procurement and stockholding of food grains serve the dual objective of food security and income support. As part of the permanent solution, India wants the base year for calculating agriculture subsidies to be revised to a more current one. Currently, the subsidy is capped at 10% of total production value at 1986-1988 prices.

India’s subsidies on rice exceed this limit at around $7 billion, constituting 15% of the production value. However, India cannot be taken to the dispute settlement mechanism due to the peace clause.

India also faces challenges in defending its export restrictions on food grains. While India argues that these restrictions are for domestic food security, countries such as the European Union, US, UK, Japan, Australia, and Costa Rica label them as a major factor for global food insecurity.

The global trade in food grains is 30 million tonnes, and if India enters the market to meet just 10% of the demand, which is 25 million tonnes, it could lead to a crisis.

India will also challenge the amount of agricultural market support allowed for Europe and the US. While these countries are capped at 5% subsidy for each product, the US has the ability to provide $19 billion in Agricultural Marketing Support (AMS) and Europe has $72 billion. India argues that these large sums can be allocated to any commodity, leading to market disruptions in smaller countries.

India will defend its entitlement for the Special Safeguard Mechanism in agriculture, which imposes different obligations on members.

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