Importanc e of Indian agri

1.  Employs 65% and contri 29% to GDP( usa 4% employment and 2% gdp)

2.  Provide food grain to Indians

3.  giv raw mat to industry

4.  contri bute to exports

5.   provide fodder to cattle

6.   provide market to industrial products

The Uruguay Round of trade negotiations ended with an agreement founding the World Trade

Organization. In April 1994, 104 members became signatories to the agreement with minor

changes in the original draft and the final Act came into force from January 1, 1995

For the first time, agriculture was brought under the world trading system in the Uruguay Round

of negotiations, which concluded in Marrakesh in April 1994

The AoA has three basic clauses:

A. Market Access commitment requires conversion of all non-tariff barriers into equivalent

tariff barriers.Developing countries that were maintaining Quantitative Restrictions due to

Balance of Payments problems were allowed to offer ceiling bindings instead of tariffication

B. Domestic Support limit for developed and developing countries was fixed at 5% and 10% of

the total value of agricultural output respectively. There are three categories of support measures

that are not subject to reduction under the agreement, they are:

  Green box policies refer to domestic or trade policies that are deemed to be minimally

trade-distorting eg: policies dealing with research, crop insurance 

  Blue Box Measures: These measures include direct payment to the farmers

  Amber Box Measures support measures considered to distort production and trade. Eg:

specific market price supports, direct payments and input subsidies. 

C. Export Subsidies are also to be reduced.

IMPLICATIONS OF AoA FOR INDIAN AGRICULTURE

1.  removal of Quantitative Restrictions on imports is The US is dumping five primary farm

commodities in global markets in clear violation of WTO Agriculture rules. It is

exporting corn, soybean, wheat, rice and cotton at prices far below their production cost

in an effort to wipe out global competition.

 

2.  The continuation of high domestic support to agriculture in developed countries is a

cause of concern as they encourage overproduction in these countries leading to low

levels of international prices of agricultural products.

3.  rich industrialized countries continue to subsidize farmers by giving them direct

 payments which are exempt from any reductions requirement

4.  The result is that the industrialized countries continue to dominate world trade in

agriculture while preventing India and other developing countries from achieving self-

sufficiency in food production.

5.  The AoA’s requirement to reduce domestic support will prevent the Indian government

from providing the necessary support to farmers to compensate for shortage or

overabundance caused by climatic fluctuations in market prices or any other factors.

6.  The Agreement exempts governmental expenditures relating to public stockholding for

food security purposes from reduction requirement if the operation of such a programme

is transparent and follows officially published objective criteria. This automatically

subjects these programmes to external scrutiny.

7.  The export commitment requirements, in turn, prevent India from providing subsidies to

industry that are necessary for it to expand its share of world export markets. This

limitation will also adversely affect the future of Indian agriculture.

8.  The reduction in custom duties and non-tariff barriers as well as guaranteed minimum

market share for imports will force Indian farmers to compete against large Transnational

Corporations

9.  While agricultural trade liberalization was justified on the grounds that Northern

agricultural markets would open to India, India’s exports to Europe have actually

declined from 13 to 6 per cent. This is because the North still maintains high subsidies

and trade barriers.

To conclude, it is feared that the Agreement is not favorable to India due to the following

reasons:

i. The country will be compelled to import at least 3% of the domestic demand for agricultural

 products.

ii. The government will be forced to reduce subsidies to farmers.

iii. The Public Distribution System and Public Procurement System will have to be

abandoned.

CHALLENGES TO INDIAN AGRICULTURE

increasing production and productivity to ensure food security for the raising population.

The right type of technology for growing and processing must be adopted so that there is good

quality production at lower costs, which in turn will reduce the prices and place India in a better

 position to compete globally

 

As far as India is concerned there are some danger signals. Population growth rate and higher per

capita income suggest that demand for foodgrains is growing. But there are doubts about the

supply response. In terms of acreage, area under foodgrains has not increased. Yield growth rates

of food grains are also stagnating in most parts of the country. The productivity of soil has also

started declining. The underground water table in most Indian states is getting rapidly depleted.

Based on these facts, various studies have pointed out that India will be a net importer of rice in

the near future.

SUGGESTIONS 

Cases of suicides by farmers have been reported from many States. Agricultural prices are

drastically falling. Farmers have been kept out of market by the pricing policies pursued by the

government in terms of the minimum support prices of food grains and the issue prices in Public

Distribution System.

, policy measures need to be taken to strengthen the agricultural sector to safeguard the interests

of the farming community.

Listed below are some suggestions to meet the challenges facing Indian agriculture

a. formulate a consistent policy for exports of agricultural products and processed products

 b. Anti-dumping safeguard measures  

c. Agriculture Research and Extension

d. Crop rotation system should be promoted to increase the fertility of the soil and improve

the cash flow of the farming community.

e. More investment in latest technology and rural infrastructure

f. Provide better incentives to farmers to increase the farm exports

g. Ensure adequate credit support and crop insurance to the farmers.

h. reduce the cost of production by cultivation of hybrids and integrated pest management

strategies.

i. training to the farmers on increasing productivity and reducing cost.

k encouragement for high pot agri areas

.

WTO BALI SUMMIT, 2013 (India’s stand on Food Security) 

 

1.  Wto agreed to allow countires to provide subsidy on staple food crops without punitive

action (bcos indias food security act will require gov to giv his MSp to boost production

 

hold large stock of foodgrain and sell it at subsidized rate to poor and this will breach the

green box clause of AoA WTO)

2.  A new draft adrees india food security concerns where it provide a interim mechanism to

safegauard min support price to faramers against wto caps till apermanent solution is

reached by 2017

3.  Allows india to fix MSP to farm produce and sell staple foodgrains at subsidized prices

4.  Also permits countries to store food grains to meet contingency requirements

5.  . Trade Facilitation or measures to standardize and simplify customs procedures

globally.

6.  Extending duty-free quota-free (DFQF) status to Least Developed Countries (LDCs). 

What is the TFA? 

The TFA aims to fast track any movement of goods among countries by cutting down

bureaucratic obligations. The problem with TFA runs in a clause that says farm

subsidies cannot be more than 10 percent of the value of agricultural production.

impose trade sanctions on the country.

India agreed to the TFA in Bali only under the condition that interim relief would be

provided to the developing nations. It said no legal actions or sanctions would be

imposed on the developing nations till 2017, by which time a solution would be worked

out among the nations. However, this interim relief would not be applicable if such

subsidies would lead to trade distortions, by which one means, that prices of exports

and imports cannot be affected by this.

Why is India opposed to TFA? 

India's Food Security Act,

The first problem is with the 10% cap on subsidies which will not be possible for India to

achieve. Adding to the woes is the fact that the 10% cap is calculated based on 1986-88

 

(india wants 2010 as base year) prices when the prices of food grains were much lower.

So the cap has to be updated taking into account the present prices of foodgrains.

The second problem is that even for providing subsidised food, India will have to open

up its own stockpiling to international monitoring. It will not be able to add protein heavy

grains like say, lentils, if it wants to, due to riders in the peace clause.

Third, it might seem unfair to developing countries to not crack down on farm subsidies

that the United States provides to its farmers to the tune of more than $20 billion per

year. While the WTO is binding the developing countries to protocols, the issue of

subsidies by developed giants like US seems to be off the table.

What does India want? 

India now wants a permanent solution to the issue of public stock holding of foodgrains.

G33 members including China have supported India's stand on the ability to subsidise

agricultural production and distribute it to the poor at low cost.

Why does WTO have a problem with high subsidies? 

WTO argues that if the developing countries continue to give prices to farmers which

are higher than the market prices, it might harm the poor farmers in other parts of the

world