India Should Compromise On Agriculture?
July 25th, 2007
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Doha round of WTO talks failed primarily because the developed countries couldn’t come to an agreement with the developing countries led by Brazil and India on agricultural subsidies. In an interesting op-ed, Rjiv Kumar argues that India has more at stake in expanding world trade, and hence should be ready to compromise even in the face of an intransigent West.
On agriculture, India has to make up its mind on two counts. First, whether small and marginal farmers suffer today because of cheap imports or because of extensive state intervention that has prevented the emergence of an integrated domestic market, distorted resource allocation and cropping patterns because of extensive subsidies, seen a near breakdown of technology generation and dissemination systems in agriculture, and prevented the entry of modern trading and logistics. I don�t think anybody can rightly argue that the WTO or the external world is primarily responsible for the woes of our farmers. In most cases, bound tariff rates in agriculture are far above the applied rates, as in cotton, where our bound rate is 100 per cent and the applied rate only 10 per cent! Second, we have to ask if India will be a net importer of cereals and foodgrains in coming years. Our farmers are already shifting to more value-added crops. Given our adverse land-man ratio and the difficulties in establishing a land market, we cannot expect to emerge as an exporter of wheat, rice, corn and edible oils, which are land-intensive crops.
Though one wonders even if India is ready to compromise, will it be able to carry the rest of the developing world–especially Africa which has far more to gain from lowering of agricultural tariffs West with it?
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