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Farmers in WTO trap?

By Nagaland Post | Publish Date: 10/4/2020 1:19:22 PM IST

 The new farm laws have pushed farmers in many states to hit roads. There is general perception that bills are not in the interest of farmers.

Prime Minister Narendra Modi says that the opposition is misleading farmers and the opposition says the bills are “exploitative”.

The farmers are apprehensive. They have stopped train services in Punjab, blocked highways in UP, protesting elsewhere and symbolically burnt a tractor in Delhi. They feel that they would be redundant as corporate takeover of their livelihood is imminent. The bills per se do not say that though these substantially may change the way farming is done in India.

In the entire discussion both the government and opposition are silent on the aspect that the bills are virtually World Trade Organisation (WTO) Agreement on Agriculture (AoA), free trade on agriculture, compliant. The WTO views state support like subsidies in agriculture preventing integration of agriculture into the free market.

The subsidies became a bone of contention between developing and developed states. The developed countries accused the developing countries of severely subsidising through price supports (like India’s MSP) tariff regulations on exports and imports and protectionist policies. It does not suit western MNCs, who virtually monpolise the international farm trade.

Since the issues were not discussed either in Parliament or outside on the and how these are going to help or not the global players, the apprehension has gone deep.

The three bills - The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 and The Essential Commodities (Amendment) Bill, 2020 – were introduced as ordinances on June 5. A month later Modi addressed the US-India Business Council meeting inviting the US companies to invest in India as agricultural reforms initiated would facilitate ease of business and the food processing industry is expected to worth a trillion dollars by 2025.

The farmers need to see this connection.

The bills do not speak of continuance of the MSP though separately the government has said that it would continue. Any inclusion of price support mechanism could have been interpreted by WTO as subsidy and prevent the opening up of the farm sector to global players.

The MSP as such has no legal backing. If gradually the APMC mandis are dismantled, a fear, farmers and other experts express, the MSP would virtually become ineffective.

 The AoA restricts limits of subsidies like support prices up to 5 percent for developed nations and 10 percent for developing nations. If a country like India gives more, it is considered a violation. The countrymen may recall that a storm brewed at WTO over the Food Security Act in 2013.India was forced to negotiate to procure food grains for its own citizens and got a temporary truce at Bali.

Nobody is discussing it. The Food Security Act entails an investment of Rs 30,000 crore to Rs 80,000  crore a year, sometime more as in post-covid19 situation it touched Rs 1.5 lakh crore. The WTO may consider such generousity as subsidy. In an era of sanctions, this can cause problems. The government is treading cautiously and opposition is helping by not diverting the attention from the issue like ‘threat to market’, market area, trade area in or outside mandis, “dispute resolution” and “market fee” of the first bill, now law.

The government’s contention that APMC mandis have not allowed equal treatment to all farmers is well taken. It is known that only 6 percent of the farmers could avail it. The last season as per data presented in Parliament, 1.24 crore paddy farmers and 44 lakh wheat farmers got the MSP. The PM-Kisan scheme records 8.12 crore farmer families having up to 2 acre of land. Actual numbers are higher. But those not getting the highest MSP, 94 percent, also have the advantage of a floor to negotiate.

The catch is elsewhere. The grey area is whether the centre can enact such laws. This is primarily a state subject. In a case between ITC Ltd and APMC 2002, the Supreme Court upheld the validity of several state laws relating to agricultural produce marketing, and struck down the central Tobacco Act 1975. The SC said raw materials or activity that does not involve manufacture or production cannot be covered under ‘industry’. It interpreted Entry 28 of the State list (markets and fairs) in favour of states and rejected the Entry 52 of the Union List with Entry 33 of Concurrent List for tobacco in this case.

 The Trade and Commerce (Promotion and facilitation) law deviates from APMC. Its clause 6 frees traders from paying any market fee for procuring fee outside the APMC mandis. This is a clever way to subvert the mandis through ‘incentive’ to procure outside.

Agriculture suffers from poor and uneven infrastructure. The number of mandis, warehouses, cold chains need to increase. In 2016, eNam – electronic farm markets - were created to address the deficiencies. Only 1000 out of 6900 APMCs joined the eNAM. Now the new bills virtually bypass the goals of unifying farm market across the country. There are fears that markets would be asymmetric. In such situations, the large segment, comprising 86 percent of the farmers facing bottlenecks connecting to markets would be the sufferer.

They will be forced to turn to local or any trader approaching them. This will cause input cost-price mismatch and increase indebtedness.

 Making MSPs redundant through the new laws is an instance of how the country succumbs to the developed nations’ gallery dominated by MNCs. Contract farming policy will shift the power balance away from farmers to the large corporate turning him a tenant. Power of hoarding extended by the new EC Act gives unfettered powers to corporate.

The WTO regime is more favourable to rich nations which are in AoA Green box. The US spends $ 61286 per farmer and the EU $ 8588. India spends $ 282. If the subsidy or in real terms MSP is done away with, it would be difficult for the entire farm sector. It has ramifications on all other aspects of economy and sovereign aspects.

The three laws call for a review. The nation needs to understand that it is not going into the WTO trap and farmers that they would not be at the mercy of the corporate.

Shivaji Sarkar

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

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