Big nations' subsidies distorting rice trade

Countries such as India losing out on exports.

Though global trade in rice is increasing at a faster rate than that of other foodgrains, subsidy-driven trade distortions created by developed countries adversely impacted exports from developing countries.

Rice exporters from across the world attending the on-going 2nd international rice congress, here, feel it would be prudent for developed and developing countries to resume negotiations for a fair global trade under the World Trade Organisation (WTO).

Italy-based director of the Food and Agriculture Organisation (FAO), Prabhu Pingali, said global rice trade grew from 4 per cent of the total production to 7 per cent between 1992 and 2004. Evidence showed that the countries are tending to move away from taxing rice to subsidising it.

Some other trade experts felt that though Indian rice exports had risen by over 400 per cent in the 1990s with the adoption of trade-friendly policies, the country's market was still not well integrated with the global market to take advantage of the growing trade.

Ashok Gulati of the International Food Policy Research Institute (IFPRI) said experts felt that the policy and trade distortions that emanated from developed countries needed to be addressed. Gulati had chaired a session that discussed international trade issues.

The emergency payments (subsidies) made by the US to its rice growers towards end of 1990s helped it retain its share of rice exports at the cost of that of the countries such as India, Thailand and Vietnam.

The matching measures taken by some of these countries, in turn, adversely affected rice sectors in least developed countries such as Bangladesh.

"The lesson, therefore, is to go back to the negotiation table at the WTO," he said.

The studies presented at the meet indicated that even in Asia the level of protection provided to rice industries depended on their economic development.

In Malaysia, domestic prices of rice have been kept at about 150 per cent higher than world prices. In the Philippines and Indonesia too domestic prices are about 50 per cent higher than international prices.

In India, production support through subsidies on inputs varied from state to state depending upon the level of their development.

The input subsidies and credit support were higher in relatively advanced states having higher agricultural productivity compared to low-producing and poverty-ridden eastern states.

The experts felt that the global competitiveness of the Indian rice sector could improve with further development and diffusion of improved technology, spread of mechanisation to save on labour costs and improved crop management.

Reduction in land rentals through tenancy reforms could also help enhance competitiveness, the experts felt.