WTO Issues - USTR's Advice For Opening Up For Imports May Prove Fatal

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Opening up of Indian imports market may prove fatal for farmers and food security http://www.financialexpress.com/fe_full_story.php?content_id=161262 ASHOK B SHARMA Posted online: Monday, April 16, 2007 at 0000 hours IST NEW DELHI, APR 15: The suggestion of the developed world that India should open up its market for imports is likely to prove fatal for farmers and food security. US trade representative Susan Schwab in the last week urged India to open up its markets for imports, as it would help in its effort to contain the rising trend in prices. She said “Imports can have a positive impact for the average Indian who will then have the surplus for spending on health and education.” This was expected from Schwab. US has always been asking for market access in the developing

world, even as the developed countries continue to heavily subsidise their agriculture and depress global prices and erect tariff and non-tariff barriers. If in this situation the developing world follows Schwab’s suggestion seriously, it would amount to inviting a doom to their farm sector. The farmers’ organisation in the country have rightly reacted to Schwab’s statement. Krishan Bir Chaudhary of Bharat Krishak Samaj said “It is a matter of shame for US to ask for undue matter access in the third world, while it continues with its unfair trade practices. Schwab has ultimately disclosed US intention to destroy the food and livelihood security in the third world.” Recently, India had the experience of reducing its applied tariff on wheat to zero. Imports of wheat was done on both government and private account, but at what cost? Last year in February when India decided to import wheat, the global prices shot up, in phases, from $ 173 a tonne on FoB to over $ 230 a tonne. Not only global prices of wheat but also freight shot up phenomenally as India became a bulk importer. Past experiences show that whenever India or China enter global market as bulk importers, prices shoot up and when they enter as bulk exporters the prices fall. India imported 5.5 million tonne wheat on government account alone in the previous year. Did it help to contain the rise in

prices ? The answer is No. The prices of essential commodities went skyrocketing and the price inflation rate measured on point-to-point movement in wholesale price index touched 6.7% by the last week of January, this year. The wholesale and retail prices of wheat also did not sober down. Government’s Economic Survey 2006-07 had to comment that dutyfree wheat imports did not help to check price rise, rather the rising global prices impacted the domestic market in a subtle way. Previous year’s experience of dutyfree wheat import is an answer to Schwab’s claim– “Imports can have a positive impact (meaning cheaper) for average Indian who will then have the surplus for spending on health and education.” In fact, wheat availability in the country in the previous year was sufficient to meet the country’s consumption needs. Government deliberately resorted to imports as it was unable to purchase wheat from farmers for the buffer stock as the pre-determined purchase price was low. The reasons for rise in prices of essential commodities was, however, different. It was hoarding of stocks and subsequent market manipulations by traders, corporates and multinationals. Several cases of manipulations in futures trading came to

the fore and the government had to initiate some cosmetic measures, falling short of a total drive against hoarding of stocks and market manipulations in all its manifestations. Unilateral import liberalisation can also have another damaging effect. This is when the developed countries would have surplus stocks and they would be able to dump their highly subsidised products in the third world market. This would then severely affect the livelihood of farmers and ultimately in the long run endanger country’s food security. Attempts are now being made by the developed world to water down the demand of developing countries for food and livelihood security through designation of special products and application of special safeguard mechanism. Farmers in the developing countries do not seek protection, but only justice. Real justice would be to remove all subsidies and support in the developed world to ensure a level playing field in global trade. Unless this is done, unilateral opening up of markets in the third world would spell a doom for millions of farmers. ALSO READ - Wheat production pegged at 73.7 mt http://www.financialexpress.com/fe_full_story.php?content_id= 160136 ASHOK B SHARMA Posted online : Thursday, April 5, 2007 at 0000 hours IST NEW DELHI, APR 4: The govt has revised upwards its estimate of current year’s wheat production and pegged it at 73.7 million tonne (mt). Earlier, the second advanced estimate said that production was likely at 72.50 mt. In 2006-07 area under wheat increased by over 28 mt and a bumper crop was expected as the weather conditions too was favourable. In 2006-07 area under wheat increased by over 28 million tonne and hence a bumper crop was expected as the weather conditions too was favourable. However,

against the government’s conservative estimate, the food industry say that wheat output would be a little over 74 million tonne, while the farmers’ organizations peg it at over 80 million tonne. In the previous year with lesser area under wheat crop, the government’s initial estimate pegged the output at around 73 million tonne. This figure was later scaled down to 69.35 million tonne to justify government’s import of 5.5 million tonne wheat. Government’s wheat import and scaling down of production estimate figure has been challenged by a public interest litigation (PIL) in the Supreme Court. The total consumption demand for wheat in the country is around 60 million tonne. According to the government’s third advanced estimate released on Wednesday, rice production in 2006-07 is likely to be at 91.05 million tonne as against the earlier estimate 90.13 million tonne. In the previous year rice output was to the tune of 91.79 million tonne. The total foodgrain output is likely to rise by 1.5% and be at 211.78 million tonnes compared to 208.6 million tones in 2005-06. Oilseeds production is estimated to decline sharply by 17% and be at 23.26 million tonnes in 2006-07 compared to 27.98 million tonnes in the previous year, mainly due to fall in groundnut and mustard. Mustard output is slated to fall by 18% to be at 6.69 million tonne. In the previous year mustard output was 8.13 million tonne Groundnut production is expected to fall sharply by 47% to be at 7.99 million tonne. The output of tur or arhar (a variety of gram) is estimated at 2.51 million tonne as against 2.74 million tonne in the previous year. Govt stipulates norms for private players purchasing wheat directly http://www.financialexpress.com/fe_full_story.php?content_id=159495 ASHOK B SHARMA Posted online : Friday,

March 30, 2007 at 0000 hours IST NEW DELHI, MAR 29: The Union agriculture minister, Sharad Pawar said that he was not in favour of imposing a ban on direct purchase of agricultural produces by corporates and multinationals from farmers. But they should give details of the about their stock position, if they purchase cereals more than 50,000 tonne. The minister, on Thursday, said, “Government has not banned any purchase of cereals by corporates and MNCs directly from farmers.

But we have stipulated norms for disclosure of stocks by corporates, MNCs and traders. I want the farmers to get a better price for their produce and at the same time I do not want any hoarding of stocks leading to market manipulations which may adversely affect the consumers.” Pawar assured that the government designated agencies would do their best to purchase grains from farmers for maintaining the buffer stock and at the same time it would not hesitate to import if the situation demanded. He said that global market trends show that wheat prices are on a downslide and hence imports at this stage would be cheaper. He expects that the wheat production in the country in the current season would cross the official estimate of 72.6 million tonne, while trade estimate suggest it would be more than 74 million tonne and farmers estimate a bumper harvest crossing 80 million tonne - a record output. Thus all estimates suggest abundant wheat availability in the country, against the estimated demand for only 60 million tonne. In the previous year according to the government’s initial wheat output was about 73 million tonne which was later scaled down to 68.5 million tonne to justify import of 5.5 million tonne

wheat. Pawar complained about high mandi (regulated market) tax charged in Punjab and Haryana to the tune of 11.5% and 10.5% respectively as against 1% in Bihar and Gujarat, 2.2% in Madhya Pradesh, 3.6% in Rajasthan and Maharashtra. He urged the Punjab and Haryana governments to reduce their local taxes so that farmers get a better price. On the issue of whether the Election Commission has given clearance to the sugar export incentive package of the government, the minister said : “I have not

checked.” The Cabinet Committee on Economic Affairs (CCEA) on March 24 had approved an export subsidy of Rs 1,350 a tonne for sugar mills in coastal areas and Rs 1,450 a tonne for mills located in other areas. It had also approved the proposal for creating a buffer stock for sugar. The CCEA’s approval was referred to the Election Commission, keeping in view that it does not violate the norms as polls are round the corner in Uttar Pradesh

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