Farmers Agitation Will Impact Global Trade

Context: The farmers’ demand for making Minimum Support Price (MSP) a benchmark for domestic and international trade is expected to have tremendous global implications.

 Implications of having agricultural subsidies/MSP:

• Makes farmers an equal partner in growth: Minimum assured price would make farming a viable proposition by acting as a safety net (instead of leaving them to vagaries of markets and debt trap).
  • Global farming community have to keep farm-gate prices artificially low so as to keep the economic reforms viable at the cost of farm livelihoods.
  • For example, 90% of the cocoa farmers were living in extreme poverty, receiving only $1.3 as the average daily income.
• Pressures from the developed world and the World Trade Organization (WTO): over the maintenance of subsidies.
  • Claims of the United States and WTO: While the WTO mandates keeping the MSP below 10% limit under Aggregate Measure of Support (AMS), the US alleges India to have breached that limit.
  • Indian Claims: product-specific subsidies of the developed world distort trade and make it more competitive impacting Indian farmers.
    • US, Canada and the European Union provide 90% of the product-specific support and exceeding the 5% AMS limit for rich countries.

Conclusion: The protesting farmers have now provided policymakers with a direction to rethink and redesign economic policies to usher in Sabka Saath, Sabka Vishwas by revisiting farm policies.