Context
∙ India, in the 13th ministerial conference (MC13) of the World Trade Organisation (WTO) will push for a solution of the issue on public stockholding for food grains.
What is the issue of Public Stock Holding?
∙ Public stockholding programme is a policy tool used by the government to meet food security and safeguard millions of its hunger-stricken population.
∙ As per WTO norms, agricultural subsidies should not exceed 10 percent of the value of agricultural production for developing countries.
∙ However India and many other developing countries have been pushing for a permanent solution to the issue of providing subsidies for PSH, as it would allow them to expand schemes like MSP for foodgrains without worrying about breaching limits.
Peace Clause
∙ WTO members at the Bali ministerial meeting in 2013 put in place a mechanism called the Peace Clause to tackle the differences between nations on food subsidy.
∙ Under this clause, developing nations could not be dragged to arbitration if they did breach the prescribed limit of 10 per cent on support to farmers.
∙ However, there was confusion over whether the temporary reprieve would continue after four years.
Concerns of Western Nations
∙ Large agriculture commodity exporters such as the US and Canada are critical of such a move as they believe that higher subsidies are distorting agriculture prices in the global market.
∙ It is also argued that public stockholding at administered prices gives countries such as India an unfair competitive advantage in trade, contradicting the WTO’s principles of open and fair trade.
∙ The US stated that the decision in the Bali agreement had caused detrimental consequences and enabled India to become the biggest rice exporter.
India’s Stand
∙ India, proposed that domestic support provided by a developing country for PSH programmes should be considered compliant with the WTO’s AoA (Agreement on Agriculture) rules and not subject to reduction commitments.
∙ The external reference price for calculating the subsidy element is pegged to 1986-88 prices, which leads to inflated subsidy calculations because existing international prices are much higher.
ο It also argued that it has enacted the National Food Security Act, 2013, to provide subsidized foodgrains to protect the interest of the farmers and poor population. Hence public procurement at subsidized rates and storage is required.
