In a bid to emphasize its stance on the issue of public stockholding of food grains, India has taken a firm stand at the World Trade Organisation (WTO) asserting the necessity of finding a lasting solution before progressing to other agricultural negotiations.
During the recent WTO Mini-ministerial meeting on agriculture, convened virtually at India's request, Minister of Commerce and Industry Piyush Goyal underscored India's approach to the matter. Goyal highlighted that addressing public procurement and stockholding of food grains is critical, serving the dual purpose of ensuring food security and providing income support.
The Indian government acknowledges that while public procurement and stockholding guarantee stability domestically, they can distort international markets. The minimum support price (MSP) acts as a pivotal price indicator for Indian rice and wheat, impacting their global prices by keeping them relatively suppressed.
India defended its stance by reiterating that its MSP and public distribution programs play a significant role in maintaining stability in global agricultural prices. With a food grain production of approximately 330 million tonnes, even a mere 10% of this demand entering global trade could potentially disrupt markets and trigger a surge in prices. According to the Food and Agriculture Organisation (FAO) of the United Nations, the global trade in cereals for the upcoming 2023-24 period is expected to reach 460 million tonnes. India highlighted how its public stockholding system proved pivotal during the COVID-19 crisis, enabling the country to sustainably feed its population during extended lockdowns.
India's stance on public stockholding and procurement at government-set prices has garnered support from several developing countries. Nations like Japan and Egypt, who heavily rely on food imports, advocate for restrictions on food exports due to concerns about their own food security.
Export restrictions, as highlighted by some developing economies including India, are viewed as essential policy tools to address domestic food insecurity. These nations argue that the impact of export restrictions on global food security warrants a more comprehensive examination.
The upcoming 13th Ministerial Conference in Abu Dhabi, slated for February next year, will serve as a platform for India to reinforce its position on finding a permanent solution to the issues of public stockholding and procurement at government-set prices. The debate around these issues has been ongoing at the WTO for years. The 'peace clause,' agreed upon at the WTO Ministerial Meeting in Bali in 2013, was an interim measure that placed conditions on governments utilizing it to avoid trade-distorting subsidies and provide pertinent information.
India is advocating for the 'peace clause,' which had no stipulated end date, to be made permanent. Seeking amendments in the formula to calculate the food subsidy cap and inclusion of post-2013 implemented programs under this clause are among India's key requests for a permanent solution.
The current global trade norms dictate that a WTO member country's food subsidy bill should not surpass 10% of the value of production based on the reference price of 1986-88. Any subsidies exceeding this ceiling are deemed trade-distorting.
India's support in rice production exceeds the 10% cap, prompting some countries to suggest that it has facilitated India's rise as a prominent rice exporter. India counters this claim, stating that it predominantly exports premium rice varieties that are not part of the public procurement system.
The forthcoming ministerial conference holds the promise of crucial discussions on these contentious issues, signifying the importance of reaching a permanent solution that balances domestic needs with global trade concerns.
The intricate negotiations and diverse perspectives reflect the complex interplay between national interests and global economic cooperation within the WTO framework, making the upcoming discussions pivotal in shaping the future of agricultural trade on a global scale.