To break the impasse on public stockholding (PSH) for food security at the WTO–a top issue on India’s agenda for the 13th Ministerial Conference in Abu Dhabi next month– India could give an undertaking that it will not export from its public stock in return for a permanent solution that gives it flexibility on its MSP programmes, research body Global Trade Research Initiative (GTRI) has suggested.

“They (the US and some others) argue that India has become the largest rice exporter on account of its high price support through MSP. India may undertake not to export rice commercially from its PSH stock. India should get a clean, permanent solution to the public stockholding issue (in return),” per a GTRI brief on `breaking the impasse at the WTO on the PSH programme’. 

As rice production is water-intensive and cost of production is high, India will not suffer economically if its rice export declines, the paper argued.

India, which has on several occasions laid down that it did not export from its PSH stock, is unlikely to have any problem in adhering to an undertaking on the same, in exchange for a permanent solution.

Several developing countries, including members of  the G33 group, of which India is a part, the ACP group and the African Group, have called for a permanent solution to the problem of public stock holding as the Agreement on Agriculture does not allow them to provide food security subsidies, for programmes such as the MSP, beyond 10 per cent of production value.

Permanent solution

The Bali Ministerial decision of 2013 allowed developing countries a peace clause invoking which they can breach the subsidy limit without attracting legal action from other members. But India and the others want a permanent solution to the issue. This would ensure that the provision gets enshrined in the WTO rules and the need for onerous notifications and limiting the MSP coverage to only some crops can be relaxed.

“Reaching an agreement on PSH is difficult as developed countries led by the US are not in favour even though it is not a trade but livelihood issue,” the note pointed out indicating that India needed to play its cards well. 

It further suggested that India could consider adjusting its farm policy to categorise its support programmes under the ‘blue box’ subsidies (subsidies that come with the provision of limiting production). Blue box subsidies come with no limits on spending. “This would involve setting higher production targets for specific crops and restricting support to 75 per cent of the output. While capping production could be politically sensitive, setting ambitious targets could overcome any resistance,” the note suggested.