The Hindu Business Line : Farm talks flounder

BY PRESSURING THE Government to evolve a national consensus before making any commitment at the Hong Kong Ministerial scheduled for December, the alliance partners may have done the farm sector a big favour. Demanding a White Paper on the World Trade Organisation vis-à-vis India, the Left parties expressed fears about the possible adverse consequences of New Delhi's stand at the negotiations. Consequently, the Commerce Minister, Mr Kamal Nath, took an aggressive posture at the latest trade talks among the Big Five (the US, the EU, Australia, Brazil and India) in Geneva, declining any higher tariff cuts than that contained in the paper tabled by the G-20 alliance of developing countries.

No wonder, the talks were deadlocked over the core issue of agriculture and the meeting ended abruptly. Whether there will be any move to defuse the situation in the next few weeks or how the Hong Kong meeting pans out remain to be seen. Despite their squabbling over the nature and extent of farm subsidy reduction, the US and the EU have banded together seeking a trade-off — reduction of farm subsidies for greater market access in developing countries. If experience is any guide, it is unlikely that in real terms the level of decline in the massive agricultural support by industrialised nations will even show up, leave alone reduce, if not eliminate, the distortions in the global agri-commodity market. Some countries are unwilling to respect the WTO ruling — cotton subsidies by the US, is a good example. Farmers in the poor countries of Africa, Asia and Latin America, unfortunately, bear the brunt of the huge farm support of OECD nations that depresses prices and lowers incomes. At nearly $320 billion a year, the support works out to 1.3 per cent of the OECD area GDP.

Among the Big Five or even G-20, India's position is somewhat different. A huge farm sector that provides livelihood to 60 per cent of the population and contributes to a quarter of the national income cannot be immediately exposed to the global market dominated by highly subsidised producers. While working towards a gradual and progressive opening up of the domestic market, New Delhi must keep fighting for protecting the interests of growers who face severe internal challenges. Simply from an agriculture perspective, there is little for India to gain by opening up its market to low-priced subsidised imports. Indeed, a case can be made for imposing an anti-subsidy duty on a number of farm commodities. All this is not to suggest that the agricultural sector should forever be kept insulated from global influences. Before throwing the sector open to competition, the Government must ensure that the large mass of growers are equipped to face competition. If there is no conscious attempt to infuse global competitiveness into the farm sector, there could be danger ahead. The Government would be culpable of lulling millions of growers into complacency by creating an atmosphere or a sense of false security. There is not much time to postpone the inevitable opening of the economy. The earlier we recognise this the better.

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