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Issue with Public Stockholding

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June 04, 2022

Why in news?

G33 has made a proposal before the WTO to find a permanent solution to the issue of public stockholding.

What is the issue with WTO’s Agreement on Agriculture?

  • According to the WTO’s Agreement on Agriculture (AoA), subsidies to farm producers (with reference to an international benchmark) should not exceed 10% of the value of a product.
  • Underestimated Global Benchmark - The issue lies with the methodology used in calculating the global benchmark.
  • The global benchmark is based on 1986-88 prices as the base and does not account for inflation making the international benchmark undervalued.
  • As a result the subsidies provided looks high and overestimated.
  • India’s ‘aggregate measure of support’ in the case of rice is below 10% of the value of the rice.
  • But due to undervalued benchmark it was assumed that India breached the benchmark about two years back.
  • This is despite Article 6.2 of AoA which exempts ‘low income’ and ‘resource-poor’ farmers from the subsidy calculations (price and input support).
  • Most of India’s cultivators are accounted under ‘low income’ and ‘resource-poor’ farmers.
  • Export from public stockholdings - It is agreed that there can be no commercial export from public stocks.
  • But the issue is when WTO members cannot export food grains from public stockholdings even for non-commercial humanitarian purposes, including on government-to-government (G2G) basis as they are subsidised grains.

What the proposal made by G33 seeks?

  • The ‘G-33’ group includes India, China, Indonesia and 30 other African and Central American countries.
  • Most of the G-33 countries are food importers.
  • Due to raging food inflation globally these countries are battling hunger and malnutrition.
  • As a result they want to rule out supply glitches due to producer country subsidies being contested at the WTO.
  • Also the proposal urges the developed nations to find a permanent solution to the issue of exporting from public stockholding on G2G basis for humanitarian aid.
  • The G-33 grouping should push back on efforts to influence food production and trade patterns.

How India deals with the issue?

  • India has secured an indefinite peace clause on food procurement in November 2014 (a year after the Bali Ministerial) pending a permanent solution to food procurement.
  • China and India have pointed out that the developed world skilfully masks its own subsidies asking the rest to set their houses in order.
  • In fact India has rightly decided to make a case for G2G food exports from public stocks at the upcoming WTO Ministerial in Geneva.

 

Reference

  1. https://www.thehindubusinessline.com/opinion/g-33-should-push-for-permanent-solution-to-public-stockholding-at-upcoming-wto-ministerial/article65491133.ece
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