Issue with Public Stockholding

Why in news?

G33 has made a proposal before the WTO to find a permanent solution to the issue of public stockholding.

What is the issue with WTO’s Agreement on Agriculture?

According to the WTO’s Agreement on Agriculture (AoA), subsidies to farm producers (with reference to an international benchmark) should not exceed 10% of the value of a product.
Underestimated Global Benchmark - The issue lies with the methodology used in calculating the global benchmark.
The global benchmark is based on 1986-88 prices as the base and does not account for inflation making the international benchmark undervalued.
As a result the subsidies provided looks high and overestimated.
India’s ‘aggregate measure of support’ in the case of rice is below 10% of the value of the rice.
But due to undervalued benchmark it was assumed that India breached the benchmark about two years back.
This is despite Article 6.2 of AoA which exempts ‘low income’ and ‘resource-poor’ farmers from the subsidy calculations (price and input support).
Most of India’s cultivators are accounted under ‘low income’ and ‘resource-poor’ farmers.
Export from public stockholdings - It is agreed that there can be no commercial export from public stocks.
But the issue is when WTO members cannot export food grains from public stockholdings even for non-commercial humanitarian purposes, including on government-to-government (G2G) basis as they are subsidised grains.

What the proposal made by G33 seeks?

The ‘G-33’ group includes India, China, Indonesia and 30 other African and Central American countries.
Most of the G-33 countries are food importers.
Due to raging food inflation globally these countries are battling hunger and malnutrition.
As a result they want to rule out supply glitches due to producer country subsidies being contested at the WTO.
Also the proposal urges the developed nations to find a permanent solution to the issue of exporting from public stockholding on G2G basis for humanitarian aid.
The G-33 grouping should push back on efforts to influence food production and trade patterns.

How India deals with the issue?

India has secured an indefinite peace clause on food procurement in November 2014 (a year after the Bali Ministerial) pending a permanent solution to food procurement.
China and India have pointed out that the developed world skilfully masks its own subsidies asking the rest to set their houses in order.
In fact India has rightly decided to make a case for G2G food exports from public stocks at the upcoming WTO Ministerial in Geneva.

Reference