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WTO AND INDIAN AGRICULTURE
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| FARMERS’ DECLARATION |
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On the initiative of the Shetakari Sanghatana the Maharashtra-based
farmers organisation, a Kisan Kumbh (Farmers Rally) was held in New
Delhi on 6th April. The Krishi Yogakshem Sanshodhan Nyas, Pune (Foundation
for Research and Development of Agriculture) issued a Declaration on
the eve of this rally. The preamble to this Declaration had this to
say: "We the farmers of India, at this moment of historic change, having
assembled in New Delhi on 6th April 2001 with all the strength at our
command, would like to plead our case before the world." The first important condition in the WTO agreement on agriculture is
- get rid of the licence-permit system in imports and exports. During
the socialist era in India, almost all imports were banned under the
guise of saving foreign exchange. Imports were totally controlled by
bureaucrats doling out import licenses and permits. Only those who had
‘connections’ with the government and bureaucracy could obtain such
permits and licences. In most cases, the licensees for import did not
actually use the quotas. The quotas were sold in the black market and
the original licence-holders made huge windfalls. The quotas allotted
for import through licences and the quantity of goods actually imported
never tallied. This led to extreme fluctuations in the domestic prices
of the commodities concerned. |
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The beneficiaries of the old license-permit system want us to believe that the removal of these restrictions will damage the economic health and autonomy of India. However, the experience of lifting the ban on 714 items last year tells a different story. The import of only 10 of these items increased and that too by a measly Rs. Five to Ten crores. We have not experienced any other ill effects after the import bans were lifted. Why Palm Oil is Imported There is no denying that imports of some agricultural commodities, such as palm oil have significantly increased. It would be wrong to attribute this to the lifting of the ban on imports. Oilseed production in India has been on the decline since 1993-94. On the other hand, rising incomes have enhanced the demand for edible oil. To meet this demand, import was inevitable, since we were not producing enough cooking oil. At the same time countries like Malaysia, Indonesia, Papua New Guinea have developed the technology of extracting edible oil from other non-seed sources like plant trunks, etc. The production cost of oil from such non-traditional sources is very low. That is why cheap palm oil is being imported into India in large quantities. Due to this import, Indian oil mills and oilseed producers have undoubtedly been under stress. However, even in such exceptional cases, proposals to offer protection by imposing import duty to its maximum permissible levels will be counter-productive. It would be naïve to assume that other countries will not take retaliatory action by imposing similar high tariffs on imports from India. |
| Benefiting the Consumer |
| Given that exports from India are already very low, we will be put to greater disadvantage if new hurdles are put in the way of our exports. There are still larger issues of public good at stake in such decisions. If producers from other countries were able to offer better commodities at far cheaper prices, it would be unjust and unfair to the Indian consumers to restrict or ban such imports indefinitely. Expecting such protection as a time bound measure may be reasonable, if during that limited time span, we make determined efforts to increase productivity in agriculture, improve the infrastructure and upgrade the efficiency of Indian industry to face global competition. We, the farmers of India are confident that with judicious measures of protection during the brief transition period of 4-5 years, we will be able to successfully face international competition by building world class agriculture, provided the government gets off our backs and stops putting new hurdles in our way. |
| The Question of Subsidies |
| Another important stipulation in the WTO Agreement on Agriculture is that Government’s direct support to agriculture i.e. non-product-specific. The Aggregate Measurement Support (AMS) should not exceed 5% in the case of developed countries and 10% in the case of developing countries. USA, Europe, S. Korea, Japan etc., support agriculture in various ways. In rich countries, it has become necessary to ensure that agriculture continues and that some people stay in agriculture. Besides, if the whole of the country becomes a forest of industries and cement concrete, there is a risk of the environment being destroyed. For these reasons, richer countries feel the need to keep agriculture operating and even flourishing. Subsidies and income guarantees are given for producing as also for not producing. There is a subsidy for producing a commodity and another subsidy for not producing the same commodity. There is also a subsidy for keeping the land fallow. Apart from this, governments spend liberally on research in agriculture; the development of underdeveloped areas; infra-structure, transport and communication to mention a few. The situation in India is quite the contrary. In rich countries 1 to 2% of the population depends on agriculture. In India, it is more than 70%. 98% of the population of developed countries can extend ample help to their 2% farmers. On the other hand, 30% of India’s population cannot extend much help to 70% farmers; nor is there the political will to do so. Therefore, the Indian farmer faces the continuing prospect of being crushed under negative subsidy for decades to come. |
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Some suggest that the Government should get included in the WTO Agreement, new ways and means to support farmers. As of today, there isn’t any condition in the WTO Agreement on Agriculture (AoA), which stops the Indian government from helping farmers. Therefore, talking of fresh provisions is pointless. |
| Exporting Agricultural Produce |
| Coming to ground realities, what are the prospects and scope for the
export of Indian agricultural produce? Potential exporters will face difficulties
both in the domestic and foreign markets. The demand for Indian farm products
(excluding some exceptions like Basmati Rice, Darjeeling Tea etc.) is
very low. The reason is that Indian products are of poor quality. India
lacks a system of grading and testing our produce. There is little awareness
of regulations that are accepted the world over as necessary for the protection
of the health of a consumer. Due to the license-permit system, Indian
exporters have earned a bad name as unreliable suppliers. Indian agricultural
exports are limited to ethnic markets catered through cousin-to-cousin
channels. The deficiencies in Indian agriculture pose severe problems in entering the world market. Land in India, due to various land-related Acts and chronic penury, is fragmented. Efforts to encourage the consolidation of land and production of quality-produce in viable volumes have been ineffective. Besides, the infra-structure for storage, transport, processing, grading and rating quality-standards are almost non-existent. Farmers fail to comprehend the sophistication of global markets, as their experience is limited to primitive APMC operations. |
| The Plight of Indian Farmers |
| Up to 1996-97, the prices of most agricultural commodities in the global
markets were higher than those in India’s domestic market and, therefore,
there was a clear comparative advantage in exports. At least at the farm
gate, the Indian farmer was capable of competing with any farmer in the
world. By the time the produce reached the point of embarkation, poor
infrastructure wiped out most of the advantages. Even then, in some areas
like organic farming products, medicinal and aromatic plants, multiplication
of hybrid seeds etc., India had an advantage in global markets. This situation has rapidly changed in the last 2-3 years. Modern technology has helped improve agricultural productivity in many countries around the world. As a result, there is a glut in the agricultural commodity market and a recession in prices. Therefore, the Indian farmer is not able to export several agricultural products, as our domestic prices are higher than those in global markets. The condition of the Indian farmer is like that of a debilitated convalescent trying to face a flood. Exploited by the white colonial rulers and now by our own brown rulers, our land has been fragmented and depleted of fertility resulting in low production, capital evasion, lack of new investment, poor infrastructure; the lack of storage and marketing facilities; inadequate irrigation and electricity, the absence of roads and the insufferable burden of indebtedness. And then one fine morning, our farmers in such a condition, see a surging flood of globalization and revolution in biotechnology. The basic objective of globalization is to improve the global ‘Division of Labour with reference to comparative advantage’. Indian agriculture has the benefit of abundant sunlight, ample water and a hardy peasantry. Ultimately, these elements will be decisive in global competition. But while taking the such big leap from traditional agriculture to world-class competitive agriculture, some measures need to be taken that will be immensely useful and essential. These are: |
| Freeing Indian Agriculture from State Control |
| Laws and by-laws, rules and regulations, red-tapeism, and inefficiency of governmental machinery have strait-jacketed Indian agriculture. Ousting the State from agriculture and privatization of the agriculture sector are the most important measures. At present, land is owned by the State. It is leased to farmers for cultivation. The State, at its whim, can acquire land on the pretext of public purpose and dislodge farmers. Understandably, farmers are not willing to undertake sizeable investment on their land. The State controls all farm inputs like fertilizers, pesticides and farm equipment, etc. Disposal of the produce is also under comprehensive State control. |
| Unifying the Indian Market |
| The entire world is getting unified as a market, but India itself is not a unified market. State barriers like district bans, state bans, zoning and levy have fragmented the domestic market. On the other hand, different countries in Europe, with different languages, faiths and cultures, and despite a history of two world wars have come together and developed a unified common market (The European Economic Community or the EEC). In India, it has become imperative to scrap the Essential Commodities Act and other restrictive measures emanating from it and to create a unified market when we are on the threshold of globalization. A unified Indian market will increase the demand for agricultural produce; besides, the market will facilitate cropping patterns consistent with agro-climatic realities and comparative advantage. |
| Modernization of Market Networks |
| In India, agricultural commodities are sold mostly through Agricultural Produce Marketing Committees (APMCs). At one time, these Committees helped to improve agricultural marketing. But, today they do not provide even minimal facilities required for marketing, like shelter, godowns, facilities for processing, grading, sorting, quality evaluation, packaging, and information on various commodity markets, etc. Commission agents and adatiyas dominate these markets. If, instead of this system, another one like ‘super-market networks’ so common in many developed countries take over, farmers will feel comfortable entering global markets. |
| Information Network |
| Information regarding price, the demand and supply positions of commodities in different markets all over the world, weather reports and forecasts and agricultural extension advice must be easily accessible to farmers in the villages. Websites and portals providing such information and services are available. Development of information and communication networks enabling farmers to have access to this information is necessary. |
| Warehousing Receipts |
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The present system for the purchase of cereals and other farm produce must be changed and replaced by a system of storing farm produce in warehouses and extending to farmers credit to the extent of 70% of the value of material kept in godowns, needs to be introduced. This can easily be done by recognizing warehouse receipts under the Negotiable Instruments Act. |
| Corporatisation with Land Equity |
| All these measures are beyond the ambit of the State. They are also
beyond the capabilities of co-operative establishments. For this, the
efficiency of the company structure (joint stock companies) and the sense
of participation and involvement of co-operatives will have to be brought
together to forge new forms of economic institutions. Farmers could come
together and form companies with share holdings proportionate to their
land. Joint Stock Companies should take responsibility for finance, management,
technology, and post-harvest work like warehousing, storage, processing,
sales and export. If this is achieved, Indian farmers will be able to
handle the challenge of global competition. After thousands of years of enslavement and exploitation, with changes in the situation worldwide the chain that binds the hands and legs of the farmers - are breaking. Opportunists would like us to believe that there is happiness in living as slaves and that freedom is painful. Farmers cannot be deceived by such calumnies and allow themselves to be diverted from their determination to live with self-respect and in freedom. Editor’s Note: This extract has been edited to make for easier reading without in any way changing the meaning or the thrust of this part of the Declaration. |
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Kerala farmers driven to death by falling produce prices Thiruvanathapuram,
April 11 |
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