Economic
Highlight
New Delhi, 5 October 2020
End of MSP
FARMERS IN WTO TRAP?
By Shivaji Sarkar
The new farm laws apparently entrap the Indian
farmers in a World Trade Organisation (WTO)- tailored quagmire to gradually
make them dependent on the large corporate and may substantially change the way
farming is done in India.
Since 1995 the WTO has been
demanding that developing countries make severe cuts in tariffs and tariff
quotas. Now, internationally agricultural products are protected only by
tariffs. Many non-tariff barriers have been eliminated or converted to tariffs
through different regimes. The WTO at its various rounds has been pressurising
India to deregulate. India has been fighting back but with little success.
All three laws -- The Farmers’
Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers
(Empowerment and Protection) Agreement on Price Assurance and Farm Services
Bill, 2020 and The Essential Commodities (Amendment) Bill, 2020 -- now aim to
deregulate the agricultural market mechanism, which is highly controlled by
traders and producers.
The WTO provision for non-tariff
barrier, through Agreement on Agriculture (AoA), means that there should not be
subsidy in any form. The WTO views any State subsidy, including Minimum Support
Price (MSP), preventing integration of agriculture to the free market. It also
needs to be understood that despite it being a supposed multilateral body, the WTO
policy-making is dominated by the US and the European Union as they want to
keep food grain trading under their domination and eliminate all competition
from developing countries, which have an advantage of cheaper labour and lower
production cost.
The West fears that a strong farmer
in the developing nations could virtually end its domination in the world
market. Note that the WTO is
not an economic bargain between governmental trade elites without normative
value. It is a legally binding treaty squarely within the wider ambit of international
law.
It is not only the farmers and the Opposition that are
protesting but even organisations such as the Swadeshi Jagaran Manch or
Bharatiya Kisan Sangathan, part of the Sangh Parivar, which are opposing the
move. It is being perceived as changing the pattern of agriculture in the
country. These bodies fear that relaxations being given would make it
much easier for the corporate to control the pricing of farmers’ products and
in the long run may control the entire farm market.
An interesting phenomenon is that
just a month after the three bills came as Ordinances, Prime Minister Narendra
Modi told the US-India Business Council meeting that since agricultural reforms
have been initiated, the US companies should invest in India, implying that they
no more need to fear about the non-tariff barriers, which have been dismantled
by the government.
Remember, the government is under
tremendous pressure for showing results as the economy is sinking. The rural
economy sees severe constraint on cash flow, low incomes, rising loss of jobs
and higher prices. This is possibly the reason why it pushed through the bills keeping
all niceties at bay.
The move has led to raising many
an eyebrow. It
is not just a matter of MSP, contract farming and hoarding as the new laws seek
to indicate. Its purport is deeper-- aiming at integrating farmers to an open
world market where they would have to fend for themselves without government
support at home. The second bill, The Farmers (Empowerment and
Protection) Agreement on Price Assurance and Farm Services Bill, 2020
provides a framework for farmers to engage in contract farming or
farming as per an agreement with the buyer before sowing, under
which the farmer sells his produce to the buyer at a
pre-determined price.
While it may assure
them a price, post production, it does away with the farmers’ right to remain
independent and not succumb to becoming effectively farm labourers or at best a
tenant as the decision is taken by the buyer. The farmer may virtually become redundant
and through machinations the buyer himself could become the owner of his land
and deprive the farmer of his livelihood.
That the apprehensions
are real is demonstrated by the plight of the cotton farmers in Africa. The WTO
could not force the US to cut its cotton subsidies and at the end it impacted
the African farmers hard.
Importantly, the United Nations itself is a critic of
the WTO. “Globalisation creates big winners and big losers, but where food
systems are concerned, losing out means sinking into poverty and hunger,” said
Olivier De Schutter, UN Special Rapporteur on the right to food. “A vision of
food security that deepens the divide between food-surplus and food-deficit
regions, between exporters and importers, and between winners and losers,
simply cannot be accepted”.
What the UN has emphasised is not only true
for farmers but also for consumers in poor countries, where food bill has
increased manifold since the WTO process began. It says, “More they are told to
rely on trade, the less they invest in domestic agriculture”, almost a stark
reference to dwindling public investment in agriculture in India.
The US spends $ 61286 per farmer and the EU $
8588. Whereas India spends a mere $ 282 and this too is falling. If the subsidy
or in real terms the MSP is done away with, it would be difficult for the
entire farm sector. The bills do not speak of continuance of the MSP, though
separately the government has said that it would continue, fearing perhaps that
it might be interpreted by WTO as subsidy. It does have ramifications on all
other aspects of economy.
If India wants to have a viable farm sector,
public investment is a must. Depriving farmers of direct investment and also
preventing them of price supports (MSP), considered subsidy by the developed countries
and tariff regulations on exports and imports as protectionist policies, are
sure prescriptions for having an ailing farm sector that could ruin not only
farming but also the foundation of the Indian economy. The western and WTO
views are tailor-made for western MNCs, who virtually monopolise the
international farm trade.
There is another catch. Can the Centre enact
such laws? This is primarily a State subject. In a case between ITC Ltd and
APMC 2002, the Supreme Court upheld the validity of several State laws relating
to agricultural produce marketing, and struck down the Central Tobacco Act
1975.
The Centre now is sending a model bill to the
States for enacting similar farm laws to avoid court intervention. Predictably,
there is now a long battle ahead for the farmers. The Centre is no more
reviewing the bills and farmers being in the WTO and corporate trap. The nation
has to wait and see how a remedy works out. --- INFA
(Copyright,
India News & Feature Alliance)
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