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What are the Impacts of International Commitments on Indian Agriculture?

What are the Impacts of International Commitments on Indian Agriculture?

Owlgen
Course: ba economics

1 Answer

Implications of International Commitments.

Commitments made at the international level have major impact on Indian agriculture. However, if the AoA is implemented effectively and trade distortions are eliminated, India and other developing nations and. transition economies would stand to gain in agricultural trade since India is a net-exporter of agricultural
products. The implications of these global commitments in terms of three major aspects given below.

Trade competitiveness.

The two factors on which trade competitiveness depends are:
  • Productivity, and
  • The cost of production.

It was envisaged after implementing WTO regulations that distortions in agricultural trade would be reduced and developing countries would have more scope to export their products. A fair trade regime would offer better prices to the efficient producers for the products and later for the benefits of growth to reach the lower rungs of farm workers also in time. However, even after the implementation of WTO regulations the agriculture of developing countries less competitive in the global market because of the heavily subsidized large scale mechanized agriculture in developed countries.

The developing countries producers have not realized increased profits because of the non-compliance of international commitments by the industrialized’ countries. Because of the shortcomings in the AoA, developed countries continued to heavily subsidize their agriculture. Thus, the AoA’s achievement in terms of Market opening/access has been limited even as it has achieved a great deal with regard to defining the rules for international trade. During various discussions, agendas, proposals and arguments, developed countries have bargained for better market access for their farm products in the developing countries through negotiations on tariff reduction and increase in Tariff Rate Quota (TRQ), yet they do not negotiate reduction of domestic support and elimination of export subsidies in their own countries.

Food and Livelihood Securities.

About 3 to 5 per cent population depends on agriculture in developed countries, but more than 50 per cent population directly depends on agriculture in most of the developing countries. Food security cannot be ensured by liberalization of trade, but the agricultural producers livelihood status would be negatively affected by any volatility in the food prices in the global market. Thus, the food and livelihood needs of poor farmers have. to be protected with special safeguards for which both demand-side and supply-side factors have to be taken into account.

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The, food security covers the availability and stability of food supplies and the issues of access to this supply in terms of resources required to procure the quantity of food required. Because of these, countries with a large percentage of population depending on agriculture would like to have some degree of autonomy and flexibility in deciding their domestic farm policies towards improving productivity, increasing income levels, minimizing vulnerability to market instability and ensuring price stability.

India suggests that there should be requisite flexibility within the AoA for the developing countries to tackle their legitimate non-trade issues. Developing countries should be allowed to provide domestic support to their agriculture to deal with the challenges of food security and correlates such as viability of employment in rural areas. Developing countries require sufficient safeguards to protect the food and livelihood securities of their poor has been highlighted. These safeguardsĀ  are important because the AoA has been ineffective in disciplining the farm subsidies in the developed nations.

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Marginal and Small Farmers.

According to Agricultural Census 2010-11, India has 138 million operational holdings. Operational holdings increased 22.5 per cent from 2001-11 and small farmers recorded 8.9 per cent increase. The combined share of the two segments rose from 82 per cent to 85 percent during 2001-2011. Marginal and small farmers have 44 per cent of total operated area and 85 per cent of operational holdings. One of the key development and policy challenges for India thus is to sustaining the livelihood needs of per cent of the country’s farmers.

The capability to introduce mechanized farming in India has been restricted because of the small holding character of Indian agriculture. Agricultural growth can be sustained and the objective of food security is achieved through increased government support in the use of inputs such as technical know-how, HYV seeds, infrastructural development, irrigation, electricity, fertilizers, pesticides and market support. Government subsidies would fulfill a major part of the financial burden of increased inputs.

In the WTO negotiations, the needs of small farmers should be addressed as these they cannot compete with the large-sized mechanized farming of developed nations. Market access without cutting of domestic support and export subsidies provided in the US, Japan and other developed countries would have negative implications for India if the trade liberalization policies are adopted without the meeting the commitments by other nations.

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September 22, 2019
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