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POST WTO AGRICULTURE TRADE, FOOD SECURITYAND AGENDA FOR AGRICULTURE NEGOTIATIONS

Ramesh Chand

National Centre for Agricultural Economics and Policy Research New Delhi 110012

IMPORTANCE OF AGRICULTURE IN SAC


Country Bangladesh India Nepal Pakistan Sri Lanka Ag share in GDP % 21 22 39 23 19 Ag share in employment % 62 58 76 42 35

SELECTED SOCIO ECONOMIC INDICATORS OF SAC


Ref. Bangla- India Nepal Paki- Sri Particular Year desh stan Lanka Per capita GNP $ 2002 380 495 230 420 850 Income rank in the world 2002 171 161 191 168 142 Arable land: ha. per capita 1999-01 0.06 0.16 0.13 0.15 0.05 Agri. value added/worker '95 $ 2000-02 318 401 203 716 725 Poverty % Late 1990s Rural 53 30 44 36 27 Urban 37 25 23 24 15 Undernourished population % 1999-01 32 21 17 19 25

WHAT AGENDA FOR TRADE NEGOTIATIONS ON AOA?


Experience during post WTO decade

Difference between expectations and reality


Food security: Self sufficiency and Self Reliance

Changes in dependence on food imports


Trade orientation of agriculture Agricultural growth in South Asian Countries before and after WTO

EXPERIENCE AND IMPACT


Period: 1991 to 2002 Three sub periods: Liberalisation phases and price phases
Period Pre WTO Initial WTO years Post WTO Years Int. price index 97.6 106.0 91.8 1991 to 1994 1995 to 1998 1999 to 2002

Index of International Agril. Price base 1990=100 120.0 110.0


Price index

100.0 90.0 80.0 70.0 60.0


1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Year

IMPORT DEPENDENCE FOR MAJOR FOOD PRODUCTS


Country India 1991 to 1994 1995 to 1998 1999 to 2002 Pakistan 1991 to 1994 1995 to 1998 1999 to 2002 Sri Lanka 1991 to 1994 1995 to 1998 1999 to 2002 Nepal 1991 to 1994 1995 to 1998 1999 to 2002 Bangladesh 1991 to 1994 1995 to 1998 1999 to 2002 Wheat 0.8 1.7 0.6 13.0 14.3 6.4 100.8 104.7 103.0 1.3 0.7 1.3 54.6 48.6 62.4 Rice 0.2 0.1 0.1 0.2 0.1 0.3 9.0 11.4 5.1 1.9 2.0 3.3 0.2 4.4 4.0 Sugar & Sweetener Pulses Veg. Oils VegetablesFruits 2.3 1.6 1.4 6.0 6.3 12.9 76.0 89.1 98.9 26.7 23.7 29.4 7.3 15.3 33.0 4.5 6.1 10.7 22.7 20.9 36.4 60.2 79.4 94.3 11.8 4.3 11.2 12.1 8.1 25.0 5.7 24.4 47.9 98.0 95.4 88.4 101.4 166.2 199.1 58.1 62.2 89.5 70.5 95.6 120.5 0.0 0.0 0.1 0.8 2.0 2.6 10.5 17.3 21.2 0.2 2.6 0.4 5.9 2.9 3.8 0.4 0.6 0.7 1.3 2.1 3.2 1.6 3.5 6.9 1.0 1.1 1.9 2.4 6.8 8.6 Milk 0.1 0.0 0.1 0.7 0.5 0.4 49.2 57.9 64.3 1.7 0.2 1.4 16.4 11.7 18.3

DEPENDENCE ON IMPORT FOR FOOD: AGGREGATE Country 1991 to1994 1995 to1998 1999 to 2002 India 0.89 2.02 3.76 Pakistan Bangladesh Sri Lanka Nepal 8.46 9.20 34.47 2.89 8.12 13.57 41.08 2.93 7.45 17.87 43.24 4.87

FOOD DEPENDENCE ON IMPORT: IMPLICATIONS


Liberalisation implies increase, that is obvious What matters is change in self reliance:
Whether SR improved Deteriorated Remained unchanged

This can be seen from changes in Net Trade If dX>dM Improvement in self reliance If dX<dM Decline in self reliance Seen through changes in Net agriculture trade Again two situations: 1995-1998 (high global prices) 1999- 2002 (Low global prices)

AGRI. TRADE OF SAC BEFORE AND AFTER WTO Country 1991 to 1994 1995-1998 1999-2002 Million $ Before WTO Start of WTO After WTO High prices Low prices Bangladesh Export 128 139 105 Import 663 1248 1623 Net Trade -535 -1109 -1518 India Export 3085 5557 5087 Import 1336 2711 3699 Net Trade 1749 2846 1388 Nepal Export 49 48 58 Import 141 217 194 Net Trade -92 -169 -136 Pakistan Export 956 1101 1067 Import 1405 2135 1814 Net Trade -448 -1034 -747 Sri Lanka Export 528 923 969 Import 500 779 766 Net Trade 29 144 202

Self reliance in agri revealed by ratio of net trade to GDP and ratio of exports required to finance import Country Aspect 1991 to 1994 1995 to 1998 1999 to 2002 India Net trade/GDP % 2.2 2.9 1.3 Import/Export % 43.3 48.8 72.7 Bangladesh Net trade/GDP % Import/Export % Nepal Net trade/GDP % Import/Export % Net trade/GDP % Import/Export % Net trade/GDP % Import/Export % -6.3 518.0 -6.0 288.2 -4.4 146.9 1.4 94.6 -11.7 900.6 -9.9 452.8 -7.7 193.9 5.4 84.4 -12.5 1547.6 -7.1 332.7 -5.0 170.1 7.0 79.1

Pakistan

Sri Lanka

IMPACT OF TRADE LIBERALISATION ON SELF RELIANCE FOR FOOD

Country Bangladesh India Nepal Pakistan Sri Lanka

International Price Phase High Low Deteriorate Deteriorate Improve Deteriorate Deteriorate Improve Deteriorate Deteriorate Deteriorate Improve

Adverse im pact w ould have been far greater if trade w as free

IMPORTANT LESSONS Trade liberalisation reduced self reliance on food for all countries except Sri Lanka If SACs had not taken protective measures and allowed free trade then self reliance on food would have gone very low

Need to keep check on import if liberalisation does not improve export to pay for import

TRADE ORIENTATION OF AGRICULTURE: TRADE/GDP RATIO Country Trade 1991-1994 1995 to 1998 1999 to 2002 India Import 1.7 2.8 3.7 Export 3.9 5.7 5.2 Total trade 5.6 8.4 8.9 Bangladesh Import 7.8 13.2 12.9 Export 1.5 1.5 0.8 Total trade 9.3 14.6 13.7 Nepal Import 9.1 12.7 8.8 Export 3.2 2.8 2.9 Total trade 12.3 15.5 11.7 Pakistan Import 13.7 15.9 10.8 Export 9.3 8.2 7.1 Total trade 23.1 24.0 17.9 Sri Lanka Import 25.1 29.5 26.8 Export 26.5 34.9 30.3 Total trade 51.6 64.4 57.1

INFERENCE
o Share of export in GDP declined for all countries except India in post WTO period compared with pre WTO years

o Reason: Market access in developed countries did not improve

Instability in domestic and international prices during 1991 to 2002

Commodity
Rice Maize Wheat Groundnut Rapeseed Coconut

Bangladesh
0.124 0.122 0.122 0.051 0.135 0.279

India
0.126 0.055 0.064 0.102 0.086 0.195

Nepal
0.129 0.148 0.064

Pakistan
0.077 0.105 0.093 0.125 0.181

Sri Inter Lanka national


0.099 0.117 0.145 0.177 0.163 0.088 0.198

0.227

0.266

Fig 1: Grow th rate in GDP agri. Bangladesh, 1992 to 2003 8 6 4 2 0 -2 -4 1 2 3 4 5 6 7 8 9 10 11

10 8 6 4 2 0 -2 -4

Fig 2: Grow th rate in GDP Agri. India, 1992 to 2003

10 11

Fig 4: Grow th rate in GDP agri, Pakistan, 1992 to 2003 10 8 6 4 2 0 -2 1 2 3 4 5 6 7 8 9 10 11

Fig 5: Grow th rate in GDP agri, Sri lanka, 1992 to 2003 12 10 8 6 4 2 0 -2 -4 1 2 3 4 5 6 7 8 9 10 11

Fig 3:Grow th rate in GDP agri in Nepal 1992 to 2003 8 6 4 2 0 -2 -4 -6 -8

10 11

FOOD SECURITY ISSUES AND TRADE LIBERALISATION


Should food security be based on self reliance rather than self sufficiency:
Yes, at country level At household level: Yes, if volatility in international prices can be absorbed by consumers Food share in expenditure and magnitude of volatility

Prospects of diversification and trade-off with exports

IMPORTANT LESSONS FROM WTO AGREEMENT


Initial post WTO years generally not adverse After 1998 as international prices declined:
Agricultural exports declined Imports increased contrary to global trend

Agriculture growth rate adversely affected

Important lessons from this experience: In Import:


Moderate tariffs are inadequate to guard against volatility SACs need either very high bound tariff or special safeguards to regulate imports of sensitive products

In exports:
Seek better market access SSG in developed countries Some have variable tariff SPS measures

FUTURE STRASTEGY OF SAC


Seek phasing out of measures that distort international prices Reasonable protection for their market. Seek more market access in developed countries markets Weigh special product gains against sensitive product to others Examine the cost of delay in concluding new round

Thank You

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