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D. Murali

`Among the OECD countries, the largest 25 per cent of the farmers receive 50-90 per cent of the support and very little of the support goes to poor and family farms'

In the world trade arena for agricultural goods, the fight is between non-equals. On the one side are the rich countries that impose stiff tariffs and also provide support to their farmers. And, on the other side, are the developing countries that struggle for a foothold in the global agri biz. As an ironical twist to the tale, there are the rich in the rich countries who corner the subsidy benefits, informs a recent publication of a Delhi-based think tank RIS (Research and Information System for Developing Countries).

Average tariffs on industrial goods have declined, from 40 per cent to 4 per cent, but agricultural tariffs continue to be significantly higher, it says in `World Trade and Development Report 2007', from Oxford (www.oup.com) . "Average (unweighted) import tariff on agricultural products is over 62 per cent."

Non-ad-valorem tariff instruments, such as specific tariffs, used primarily by developed countries, tend to camouflage tariff peaks in these countries and pose relatively greater restrictions on the exports of developing countries, notes the report, in a chapter titled `Agriculture: Addressing the class between interests of rich and poor farmers'.

Apart from tariffs, what also impacts the competitiveness of the developing countries is the direct support that the developed countries give to their farmers through a variety of programmes. PSE or `producer support estimate' is the most comprehensive measure of agricultural protection, one learns. This stood at $238 billion a year during 2001-03, for the OECD countries as a group, "almost unchanged from its 1986-88 average level of $241 billion." PSE, as a percentage of total farm receipts, was 31 per cent, or nearly a third.

Producer protection

The bulk of PSE is in the form of market price support, based on `the difference between domestic and international prices caused by border barriers such as tariffs and quantitative restrictions.' RIS says that these border measures account for about 63 per cent of total producer protection. ``The remaining component of producer support consists of direct payments such as output and input based subsidies to farmers.''

These subsidies given by the rich countries are supposed to benefit 5 per cent of the population, which is dependent on agriculture, compared to nearly 50 per cent in the developing countries. Supposed to, because, "among the OECD countries, the largest 25 per cent of the farmers receive 50-90 per cent of the support and very little of the support goes to poor and family farms." The report cites `farmsubsidy.org' for its finding that the list of beneficiaries in the rich countries includes ``large commercial farms, agri-business farms, wealthy individuals, members of royal families, and politicians''.

"In the EU, the biggest gainer is the British dairy trading company, Fayrefield Foods, which alone received support totalling more than $40.7 million over 2004 and 2005." In the US, beneficiaries of agri subsidy cheques include ``several Fortune 500 companies, such as Archer Daniels Midland, Chevron, and Texaco''. Topping the list in the US was Riceland Foods; it received almost $70 million, ``which was more than the combined support received by nine of the states in the country''.

RIS (www.ris.org.in) observes, "Given the current pattern of distribution, it is not surprising that the farm lobbies in these countries are very well organised, and influential with policymakers."

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