Globalization and food policy dilemmas in developing countries: contextualizing the Indian scenario.

Author:Ghosh, B.N.
Position:THIRD WORLD PROBLEMS AND ISSUES: PAST AND PRESENT - Essay
 
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INTRODUCTION

Although there are some nuances between globalization and liberalization, for the purpose of this paper, they are regarded as synonymous. Neo-liberal globalization is basically an attempt for capitalist integration through the processes of marketization and trade openness. The contradictory dynamics of neo-liberal globalization are now becoming more and more obvious in various phenomena that it produces such as, economic integration and political disintegration, the movement towards free trade and yet protectionism, greater power of international institutions and multinational corporations (MNCs) and weakening power of nation states in the matter of independent policy formulations.

The contradictions of globalization are nowhere found so obvious and clear than in the agricultural sector of less developed countries (LDCs). In many of these countries, agriculture remained outside, or shielded from the onslaught of globalization in the first phase of the process. Market access was often denied to the agricultural sector although it was liberally granted to the industrial sector of LDCs. However, ever since the establishment of the World Trade Organization (WTO), the MNCs and DCs (developed countries) are pushing for greater degree of liberalization of the agricultural sector primarily for their own benefits. But when recently market access has been accorded to the agricultural sector through the efforts of the WTO, it has been found that it produces many types of conflicts in the matter of formulations of agricultural policies, particularly food policies in LDCs. Policy contradictions of globalization are very pronounced for the agricultural sector of a country like India. In such a country, on the one hand, there is an attempt to integrate the sector with the international market so as to reap the economies of comparative advantages through increasing export to international markets, and on the other, there is often an explicit policy presumption to develop the domestic agricultural sector to provide subsistence and self-sufficiency in food production, often called food security. These two policies are now in conflict with each other, and a clear-cut policy announcement often becomes difficult for the government.

The present paper is concerned with the analysis of such policy dilemmas of LDCs in general and of India in particular. The discussion of the paper is organized in the following way. Immediately after this introduction, section two will discuss the issue of globalization and agricultural trade in LDCs. Section three analyzes the food policy dilemmas in developing countries, and section four brings out the problem of globalization and commodification of agriculture, and the last section makes some concluding observations.

GLOBALIZATION AND AGRICULTURAL TRADE IN DEVELOPING COUNTRIES

In the first part of modem globalization in the 1980s, agricultural trade was not accorded any special consideration, and discriminations and unequal treatments among the participating countries were rampant. There were many disputes but they could not be solved on the basis of any rule of law. The roles of the regional trading organizations became over-riding. Thus, the European Union could restrict the Moroccan exports of tomatoes and other agricultural products, and the banana war between the U.S. and the EU became a nagging issue. However, with the establishment of the WTO, many countries, particularly the developing ones, anticipated the growth of their agricultural exports and the settlement of all trade disputes in a neutral manner without any favor or fear, as the organization openly depended on the rule-based system to settle disputes. The WTO promised to mitigate the protectionist trade practices and sought to eliminate many types of trade distortions and emasculate other forms of interventionist barriers to international trade. Agricultural trade was not made an exception in these regards. It was committed to free the agricultural trade practices in many ways from protectionism and interventionist clutches. Thus the agreement on agriculture (AOA) stipulated the following:

Overall, the results of the negotiations provide a framework for the long-term reform of agricultural trade and domestic policies over the years to come. It makes a decisive move towards the objective of increased market orientation in agricultural trade.... In the area of market access, non-tariff border measures are replaced by tariff that provide substantially the same level of protection. Tariff resulting from this 'tariffication' process, as well as other tariffs on agricultural products, are to be reduced by an average 36 per cent in the case of developed countries and 24 per cent in the case of developing countries, with minimum reductions for each tariff line being required [15 per cent for developed and 10 per cent for developing countries]. Reductions are to be undertaken over six years in the case of developed countries and over ten years in the case of developing countries. Least developed countries are not required to reduce their tariffs (WTO : Legal Texts)

The AOA's emphasis on the market access strategy and tariff reductions was supposed to go a long way in the development of agricultural trade in LDCs. In the reforms package for the agricultural trade, the WTO has incorporated several critical measures including market access, tariff reduction, export subsidies and domestic support. The market access clause is the most crucial for LDCs since it gives an opportunity to these countries towards more liberalization and to increase their share in the agricultural trade. The market access is a clear signal that the protectionist measures may be converted to tariffs. Domestic support is in the form of an aggregate measure of support which is delimited. In principle, there were definite attempts to reduce tariff, export subsidies and domestic support for a greater degree of market access for the agricultural sector in LDCs. The Doha Ministerial Conference (2001) fully recognized the possibility that LDCs would be able to take care of their food security problem when negotiations take place for reduction of domestic support and elimination of export subsidies being provided by the developed countries to their farmers. (1)

However, the picture is not so rosy in actual practice for the LDCs. It was never made clear as to how conveniently and appropriately these countries would negotiate the market access without jeopardizing their food security problem and without increasing dependency on the powerful developed countries (DC), in which capital-intensive method of agricultural industries increase the range of subsidies to farmers and have shifted rather than reduced various forms of protection. (2) So long as the subsidies to farmers are not reduced, the prices of agricultural goods in the international markets will remain distorted. In fact, there are possibilities in the AOA for...

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