A sell-out, not a phase-out

In milk alone, these farmers earn more than US $1 billion annually. In foodgrains, they provide a buffer stock of nearly $2 billion a year. They have established that, given command over resources, they can produce miracles. Somehow, planners and policy makers have lost faith in their capacity. Given the right policy mix, Indian farmers have the capacity to ensure food security. But, increasingly, the task of providing food is delegated to a few million farmers on either side of the Atlantic. And therein lies a grave danger.

To say that the logic of protectionism belongs to another era is to ignore ground realities. While India is being forced to remove import curbs on agriculture, the US has ensured complete protection for its agriculture sector. In fact it enjoys a permanent waiver from trade in cereals. These protection policies became GATT-legal when in 1955 the US obtained a permanent waiver from GATT obligations. With the US likely to emerge as the world’s biggest food producer by 2010, the implications need no explanation.In 1929 the US enacted the Smoot Hawley Tariff Act providing for trade protection. In 1933, the Agricultural Adjustment Act (AAA) further strengthened protection of the farm sector. Section 22 of the AAA legalises the imposition of import controls, a position that remains unchanged. It also provides a mechanism for imposing fees or quantitative restrictions on import of agricultural products that “render or tend to render ineffective, or materially interfere with the programmes that the US Department of Agriculture undertakes, or reduce substantially the amount of any product processed in US from any agricultural commodity or product thereof.”

Although the EU failed to get a similar waiver, it managed to sign the “peace clause” which prohibits any country to challenge the amount of subsidies being provided for agricultural exports. Under the clause, the agricultural export subsidies under the EU’s Common Agricultural Policy cannot be challenged till 2003. Who knows that there will not be another US-EU summit in 2003 extending the provisions to the year 2010?

UNDP estimates show that in 1995, the industrialised countries spent $182 billion on subsidies. Considering that these subsidies have to be brought down by 21 per cent over six years as suggested by WTO, and hoping that such a phaseout actually takes place, agricultural subsidies would still be in the vicinity of $150 billion by 2001. Those who suggest liberalisation in the face of such inequalities are advocating not a prescription for improving efficiency but a recipe for massive destruction of livelihoods.

Liberalisation of agricultural imports signals the end of an era of food self-sufficiency. Cheap food imports are sure to exacerbate the conditions that lead to further marginalisation of farming. In the recent past, cheap food imports have played havoc with farming communities in Brazil, Mexico, Argentina, Zimbabwe, Burkina Faso and the Philippines. With profound implications for accentuating rural poverty and regional inequalities, the removal of trade barriers is only going to lead the country back to the days of a “ship-to-mouth” existence.