The European Union gives massive to only 5 per cent of its citizens engaged in farming which generates just 1.6 per cent of its GDP. EU’s Common Agriculture Policy (CAP) accounts for more than 40 per cent of its annual budget. In 2013, the budget for direct payments to farmers as subsidy and rural development – the twin pillars of CAP – is 57 billion euros or 49 billion pounds, out of the total EU budget of 132.8 billion euros –amounting to 43 per cent of the total.

Strangely subsidies are also given for keeping the lands fallow, citing environmental reasons.

At present, direct payments and price support account for more than 70 per cent of the CAP budget, while rural development gets less than a quarter. Direct payments account for more than half of the farmers’ income in EU. The average annual subsidy per farm is about 12,200 euro or 10,374 pound. Large agri-businesses and big landowners get more from CAP than Europe’s small farmers who rely on traditional methods and local markets. About 80 per cent of the assistance goes to about a quarter of EU farmers with large landholdings like the British royal family and European aristocrats with big inherited estates. The older 15 EU members benefit more than the new members.

Milk quotas protect the income of dairy farmers. Though EU had promised to phase out this trade distorting measure by 2015, it is raising the quota by one per cent each year so that a high level is reached before phasing out begins. The sugar industry is adequately protected by high guaranteed price.

The United States is not behind in the race. The US food stamp programme is pegged at $60 to 70 billion every year. The support given to farmers in US is less transparent than that in the EU. The 2013 US Farm Bill gives unlimited crop insurance subsidy. Some policyholders get more than $ 1 million annually in premium support and more than 10,000 policyholders receive more than $100,000 in subsidies. As there is no cap on crop insurance subsidies, the largest one per cent among policyholders get about $227,000 annually while the bottom 80 per cent receive about $5,000. Crop insurance subsidies flows largely to agri-business corporations and farmers with large landholdings.

Unlike other farm subsidies, crop insurance subsidies are not subject to means testing or payment limits and farmers are not required to adopt basic environmental protects. The crop insurance scheme cost the taxpayers about $9 billion a year.

Compared to the massive trade distorting subsidies given by the US and the EU, India’s subsidy under the new food security programme is only Rs 90,000 crore. This scheme is designed to feed 75 per cent of the rural poor and 50 per cent of the urban poor at subsidised rates. This gigantic scheme needs public stockholding. Public stockholding will mean purchase from farmers at minimum support prices (MSPs) which is necessary to give support to farmers. India’s programme is not trade distorting in any way. It is meant to cater to the poor, which is line with the UN Millennium Development Goals.

Negotiations in the WTO reached the deadlock due to the unwillingness of the developed counties to forego their high trade distorting farm subsidies, which has placed the farmers in the developing countries at a serious disadvantage. The developing countries have long being demanding a level playing field in global trade, but of no avail. The new WTO Director General Roberto Azevedo has rightly remarked that the multilateral trade body since its inception in 1995 has not been able to produce a single agreed multilateral text.

Instead of reforming their policies for facilitating free and fair trade, the developed countries have become more protectionist in trade since the collapse of Lehman Brothers in US in August-September 2008 leading to global financial crisis which was further aggravated by the ‘Sovereign Debt Crisis’ in European Union and Fukushima disaster in Japan. The developed countries imposed high non-tariff and technical barriers to trade including stringent and politically motivated sanitary and phytosanitary measures (SPS) to keep off exports from the Third World. The developing countries with export-dependant development strategies, like India, suffered increased current account and fiscal deficits, sluggish growth, growing joblessness and wage deflation. Rising oil and commodity prices at the global level have further caused price inflation problems in the developing countries. Though South-South trade has increased, but it has its own limitations. The developed countries also restricted the movement of professionals from the Third World.

The unconventional monetary expansion policies in the EU and in the US added to the problems of the developing countries. A single announcement by the Chairman of the US central bank, Ben Bernanke in May that US may start to rein back its $85 billion-a-month bond-buying programme which would release cheap money into the system sent the Indian rupee, Brazilian rial, Indonesian rupiah and South African rand in a downward spin. It also caused the flight of hot capital from India. The multinational companies operating in the country began evading tax payments by citing their operations elsewhere.

With the recent shutdown crisis in US, the matters may turn out to be worse for India and other developing countries. G-20 Summit is over, so also is the 68th UNGA Summit. No global solution in immediate sight. Expansion of UN Security Council is awaited. The promised reform in the IMF for increase in quota and voting rights of developing countries remain a distant dream. Negotiations on climate change for moving toward common but differentiated responsibilities on emission cuts are under deadlock. What remains is the forthcoming WTO Ministerial at Bali.

In Bali, India and the developing countries should stress for separate Food Subsidy Box to accommodate food subsidy for the poor instead of bringing back the controversial Peace Clause, which helped the developed countries to hide their trade-distorting subsidies. The Third World should demand phasing out of all trade-distorting subsidies and practices of the developed world.

The 68th UNGA has noted that the UN Millennium Development Goals will not be met by 2015, leaving one billion of the world’s poor in distress. The developed countries have not met their commitments under the Monterrey Consensus and Doha Declaration on Financing for Development. They are lagging behind their commitment of financing under ODA to the extent of 0.7 per cent Gross National Income.

According to the World Bank India now has a greater share of the world’s poorest than it did 30 years ago. The State of the World’s Mother Report-2013 says that India has the highest number of deaths of newborns on the first day of life, estimated at 309,000. The UNICEF report says India has 43 per cent of underweight children in the age group 0-5 years, which is much less than the average in sub-Saharan Africa at 21 per cent.

According to official estimates about 56,000 maternal deaths recorded in 2008 and 11.64 lakh infant deaths occurred in 2011. Neo-natal mortality rate was 31 per 1000 live births in 2011 indicating deaths of 3.1 per cent new born babies within first month of their birth.

Keeping these facts in mind India’s negotiators at the WTO Ministerial in Bali should do appropriate homework and work along with other developing countries to negotiate a Food Security Box for the poor instead of buying back the controversial Peace Clause which would benefit the developed countries. (IPA Service)