Agriculture: There are lessons from China.

Pic courtesy: depositphotos.com 

Speaking at an international conference in 1998 at the University College Cork, in Ireland, to commemorate 150 years of the Great Irish Famine that killed nearly one million people, I was asked a question: who will feed India? This question cropped up at a time when the world was already deliberating a hypothesis floated by the well-known environmental researcher and thinker, Lester Brown. 

Founder of the US-based environmental think tank, the Worldwatch Institute, and later president of the Earth Policy Institute, Lester Brown in 1995 had built on his analysis to come out with a book Who Will Feed China? This had triggered a hot debate, prompting numerous seminars and conferences across the globe. I remember having participated in a few of these conferences, witnessing heated debates that followed. There were terrific academicians who would support Lester Brown’s hypothesis, and there were experts who openly challenged it. Nevertheless, 25 years later, faced with record high domestic grain prices, China has emerged as the world’s biggest food importer – a reminder of what Lester Brown had warned decades back. 

While the severity of China’s food crisis is being denied, questions continue to be raised especially after President Xi Jinping launched an  ‘Operation Clean Plate’ campaign in August last year, asking people to ensure that no food is wasted. With an estimated 6 per cent food wasted every year, good enough to feed 200 million people, the campaign even involved restaurants to ensure people are not provided with lavish spreads. If the consumers order for five meals, the quantity of food served by some restaurants would equal to the requirement for four people. 

This reminds me of the times when in 1965, the then Prime Minister Lal Bahadur Shashtri had asked Indians to observe a fast on Monday, every week. This was primarily to ensure that people learn to ‘share and care’ at a time when food was in great shortage. In fact, in 1965, a year prior to the launch of Green Revolution, India had imported 10 million tonnes of foodgrains to tide over the severe food crisis. Shows how precarious the situation was. But after the launch of Green Revolution, India attained food ‘self-sufficiency’ but with the easy availability of food over the years, a kind of complacency has set in. 

Similarly, China too had taken long strides in food production. It was in 1996 that China had brought in a policy focus to ensure that it meets 95 per cent of its food needs from domestic production. But by 2011, as per the World Trade Organisation (WTO), China had become world’s largest food importer. With rising incomes, the food preferences of the burgeoning middle-class had undergone a change that shifted the food habits from staples to an exploding demand for meat and nutritious products, including dairy. 

The changing food habits prompted the government to shift the policy focus from food self-sufficiency to allowing ‘moderate imports’. Denials notwithstanding, mass urbanisation and the efforts to move bulk of the farming population away from agriculture to join the industrial workforce in the cities did leave a gap in production. At the same time, intensive farming practices resulted in heavy soil contamination, groundwater decline as well as pollution, and the resulting environmental degradation reduced the extent of arable lands, prompting China to announce that it will protect 120 million hectares of farmlands to meet its food security needs. 

As the average farm size in China declined to 1.6 acres, the growing appetite for chemical fertilisers, including nitrogen, coupled with direct income support for farmers had resulted in grain surplus accumulating to 600 million tonnes in 2017. Although the silos were bursting, the growing demand for nutritious foods, including beef, also soared meanwhile. To give you an idea, the sale of beef to China in a decade had grown by 19,000 per cent. A change in diet therefore forced China to scout for food all over the world, including India and Pakistan. 

According to Fitch Ratings, China’s imports of corn, wheat, sorghum and barley in 2020 soared by 136 per cent, 140 per cent, 437 per cent and 36.3 per cent, respectively. It expects the trend to continue in 2021 as well. Already it has exhausted soybean supplies from Brazil, the world’s biggest soya producer, and is now turning to USA. So much so, as Forbes points out that despite being the world’s second biggest wheat producer, China holds over half of world’s wheat stocks. Similarly, it has 65 per cent of world’s corn inventories.  

Unable to meet its growing food needs domestically, China has been on an aggressive spree buying farmlands in Africa and Latin America, and is now turning its attention to purchase farm lands in America, European Union and Australia. The website farmlandgrab.org estimates that since 2010, China has already made an investment of $ 94 billion in farm activities abroad, purchasing 3.2 million hectares. 

While China is clearly at the edge of a severe food crisis, there are important lessons here for India. In a country where mainline economists ravel in cut paste prescriptions in the name of agricultural reforms, the Chinese example illustrates how the transformation from a state-regulated farming to a market-oriented agriculture has brought it to face an unmanageable food crisis, perhaps pointing to a bigger crisis ahead. With the experiment to transform China into a manufacturing hub going awry, especially after Africa was able to provide cheap workforce, restoring farm viability now is becoming a still bigger challenge. 

China provides $206 billion of farm subsidies ever year (add to it tens of billions spent on importing food year after year) shows if the same amount had gone into converting small farm lands into an economic powerhouse, the world’s biggest grain producer could have easily avoided turning into world’s biggest grain importer. There was an alternate economic pathway, more sustainable in the long run, that China failed to undertake. 

India cannot afford to go on the same beaten track. Or else, the question as to who will feed India will continue to haunt future generations. #

Lessons for India from China's food import. The Tribune. April 21, 2021. https://www.tribuneindia.com/news/comment/lessons-for-india-from-chinas-food-import-241793?fbclid=IwAR0lcM3vV8wRpZE2b3g4AwbM2KjUNQPnNs0JTW7JgP3b2Ip8VML2Y47zJjM

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India must keep agriculture out of RCEP

Map of the RCEP trade block --   From the web

At a time when the call for deglobalisation is gaining momentum and increasing protectionism has lead to pulling down of global growth in merchandise trade for the second quarter this year, India’s foray into the Regional Comprehensive Economic Partnership (RCEP) treaty, a mega trade agreement between 16 countries of Asia-Pacific region, is being seen as an overtly risky adventure. More so at a time when agriculture is passing through a terrible agrarian crisis and manufacturing sector continuous to limp.

The latest round of negotiations that ended at Singapore in mid-November abandoned the proposal of reaching a basic agreement by the end of this year, and set a new goal for reaching a final conclusion by the end of 2019. This is primarily because India, Thailand and Indonesia are scheduled to go for general elections next year, and none of these countries is willing to bite the bullet before the formation of the new government. The news agency Nikkei quoted an Indian diplomat as saying: “if a basic deal on lowering tariffs was announced, the government in New Delhi will collapse.”

Seeking greater commitment to liberalise trade, RCEP is a mega trade agreement between 10 Asian countries and their six FTA partners – Japan, South Korea, China, Australia, New Zealand and India. This trading block, when the treaty comes into place, will cover 45 per cent of the global population and account for 25 per cent of global GDP and a whopping 40 per cent of global trade. The treaty has been under negotiations for six years, and is focused on three pillars – goods, services and investment. When signed, the RCEP will turn into world’s biggest trade block.

Since India’s trade deficit with the RCEP countries exceeds $ 100 billion, which is roughly 64 per cent of the total trade deficit, India is looking forward to bridge the yawning trade gap in the years to come. But given the huge trade deficit that India has with China, Korea, Indonesia and Australia, and given the huge domestic market that India will provide by eliminating import duties and bringing these to zero on a majority of the tradable goods will invite flood of cheaper imports. Already several Ministries have raised the red flag, and domestic industries, including steel and metal; pharmaceuticals, food processing and dairy have expressed serious concern.

The RCEP framework entails providing zero duty on 92 per cent of the tradable goods, with another 5 per cent added over the years. This is what the ASEAN nations and Japan, countries with which India has free trade agreements, are insisting; the three other major non-FTA partners are seeking elimination of import duties on 80 per cent products with an inbuilt margin of plus and minus 6 per cent. As per reports India is willing to provide tariff concessions on 72 to 74 per cent of goods to China, Australia and New Zealand. It has sought 20 years to remove these tariffs. But with China, it wants still more time to eliminate duties for which negotiation are underway.

Over the past few decades, especially after the World Trade Organisation (WTO) came into existence, rich countries have been seeking steep reduction in farm subsidies and demanding more market access. What was attempted initially under the WTO was subsequently pushed aggressively under the free-trade agreements (FTAs) and numerous bilateral agreements. While a number of studies have shown how reduction in import duties have turned a majority of the developing countries into net food importers, destroying in the process millions of farm livelihoods, the implications of the proposed RCEP treaty on India’s food security have been least studied. What makes the implications more worrisome is that the RCEP negotiations are being held in secrecy, with not even the industry and NGOs being allowed to participate.

Isn’t it strange that six years after the RCEP negotiations began India is now initiating studies to understand the implications and potential losses from the proposed trade agreement? It has belatedly entrusted the task to Centre for Regional Studies, New Delhi and IIM, Bangalore. Meanwhile, several experts and industry representatives, including steel and pharma, have expressed uneasiness. According to Jayan Mehta, senior general manager of Amul dairy cooperative, 15-crore livelihoods engaged in dairy farming will be severely hit from the current RCEP negotiations.

Let’s examine what is at stake. With production exceeding 176 million tonnes this year, India is the biggest producer of milk in the world. Presently, the imports of milk and milk products are allowed with an import duty ranging between 40 to 60 per cent. This provides enough protection for the local dairy industry to build its level of competitiveness. At a time when US/EU dairy industry is in a terrible crisis, opening up the flood gates will inundate India with cheaper milk flowing in from Australia/New Zealand. Let us not forget that while Australia which has only 6,300 dairy farmers; and New Zealand with 12,000 dairy farmers are pushing in aggressively to protect the economic interests of their small dairy farming community, India is willing to put the dairy sector on the chopping block.  

At a time when reduction in import tariffs have already flooded the country with edible oils, turning the country into world’s second biggest importer, and the zero duty import of pulses in the past three years have caused a steep fall in farm gate prices for farmers, opening up for imports of wheat from Australia, which has been wanting India to lower import duties for several years now, will be the final nail. Coupled with the WTO pressure to restrict MSP payments for public stockholding, it will only destroy India’s ability to retain food sovereignty and erode farm livelihoods.  

Still worse, such floods of imports coming in food crops, plantation crops, fruits and vegetables as well as in processed foods will strike a severe blow to Indian farming already reeling under distress. Member countries on the other hand are already seeing tremendous trade opportunities. Australia’s Trade Minister Simon Birmingham, who was in New Delhi last week, said almonds exports from Australia have grown five-fold in the past decade and items such as these showcased the opportunity to diversify the trade basket.  

I therefore wonder why agriculture can’t be kept out of RCEP. After all, if US President Donald Trump could pull out of the ambitious 12-nation Trans-Pacific Partnership (TPP) treaty to save American jobs, India too needs to protect its food security built so assiduously over the decades. Let’s not forget that importing food is akin to importing unemployment, and a vibrant agriculture has the potential to revitalise the economy more so at a time when the country is faced with jobless growth. #

India must keep agriculture out of RCEP. The Tribune. Dec 5, 2018.
https://www.tribuneindia.com/news/comment/india-must-keep-agriculture-out-of-rcep/693433.html

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