The Hindu Business Line : Strengthen farm base

IF MANY AMONG the developing countries (G-21) that met in the Capital last weekend to discuss agriculture-related issues left with a smug feeling, it could be short-lived. The New Delhi Declaration has rightly called for substantial cuts in trade-distorting domestic agricultural support and elimination of all farm export subsidies by developed countries within five years. It is a heady feeling to demonstrate oneness of purpose and adopt a resolution that seeks to pressure developed nations. However, if the experience of last few years is any guide, little may come out of such meetings. This is not to belittle the efforts of G-21. Without doubt, massive subsidies given out by OECD nations (over $300 billion a year) distort the global agri-commodity market, depress prices and hurt the growers of developing economies, many of which depend heavily on exports. The WTO has ruled against cotton subsidies given out by the US, so has the case been with the European Union's sugar. But nothing has changed on the ground. There is a strong case for a quick reduction of producer subsidies and export subsidies; but it is unrealistic to expect miracles to happen soon.

It must be recognised that globally the policy environment is becoming increasingly complex. The dilemma most governments face, whether of developed or developing countries, is how to reconcile the conflict arising out of their international commitment under the WTO and domestic compulsions, economic, political and social. Phase-out of subsidies, reduction of tariffs and greater market access are key issues under the WTO; and these issues affect different countries differently, depending on the competitiveness of their agriculture and policy support of the government. While it may be wishful to think the rich nations will succumb to the pressure of developing countries and start reducing subsidies, the G-21 countries must on no account give up their opposition to subsidies or step down the pressure.

While maintaining the public position against subsidies and demanding distortion-free world trade in agriculture, the group should take urgent steps to strengthen their agricultural base. India is a classic example of an agrarian economy paying lip service to the farm sector. Though nearly 65 per cent of the population draws its livelihood from agriculture and related activities, policy support for agricultural development has been inadequate. Public investment has been falling since the mid-1990s. Trade liberalisation has created competitive markets, but for real benefits to flow to primary producers, non-trade initiatives are necessary. Strengthening of the input delivery system, including timely farm credit, expansion of irrigation facilities, building rural infrastructure and dissemination of price and market information among farmers are critical tasks that need immediate attention. The developed economies have invested heavily in these key areas, as a result of which their productivity level is high and quality globally acceptable. Instead of self-pity, the weak must constantly endeavour to gain strength to withstand competition. Of course, it is easier said than done; but an earnest attempt can begin right now.

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