post wto agriculture trade, food securityand agenda for agriculture negotiations ramesh chand...
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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 Ag share in GDP %
Ag share in employment %
Bangladesh 21 62
India 22 58
Nepal 39 76
Pakistan 23 42
Sri Lanka 19 35
Ref. Bangla- India Nepal Paki- Sri Particular Year desh stan LankaPer capita GNP $ 2002 380 495 230 420 850Income rank in the world 2002 171 161 191 168 142Arable land: ha. per capita 1999-01 0.06 0.16 0.13 0.15 0.05Agri. value added/worker '95 $ 2000-02 318 401 203 716 725Poverty % Late 1990s
Rural 53 30 44 36 27Urban 37 25 23 24 15
Undernourished population % 1999-01 32 21 17 19 25
SELECTED SOCIO ECONOMIC INDICATORS OF SAC
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 2002Three sub periods: Liberalisation
phases and price phasesPeriod Years Int. price indexPre WTO 1991 to 1994 97.6Initial WTO years 1995 to 1998 106.0Post WTO 1999 to 2002 91.8
Index of International Agril. Price base 1990=100
60.0
70.0
80.0
90.0
100.0
110.0
120.0
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
Year
Pri
ce i
nd
ex
IMPORT DEPENDENCE FOR MAJOR FOOD PRODUCTSCountry Wheat Rice Sugar & SweetenerPulses Veg. Oils VegetablesFruits MilkIndia
1991 to 1994 0.8 0.2 2.3 4.5 5.7 0.0 0.4 0.11995 to 1998 1.7 0.1 1.6 6.1 24.4 0.0 0.6 0.01999 to 2002 0.6 0.1 1.4 10.7 47.9 0.1 0.7 0.1
Pakistan1991 to 1994 13.0 0.2 6.0 22.7 98.0 0.8 1.3 0.71995 to 1998 14.3 0.1 6.3 20.9 95.4 2.0 2.1 0.51999 to 2002 6.4 0.3 12.9 36.4 88.4 2.6 3.2 0.4
Sri Lanka1991 to 1994 100.8 9.0 76.0 60.2 101.4 10.5 1.6 49.21995 to 1998 104.7 11.4 89.1 79.4 166.2 17.3 3.5 57.91999 to 2002 103.0 5.1 98.9 94.3 199.1 21.2 6.9 64.3
Nepal1991 to 1994 1.3 1.9 26.7 11.8 58.1 0.2 1.0 1.71995 to 1998 0.7 2.0 23.7 4.3 62.2 2.6 1.1 0.21999 to 2002 1.3 3.3 29.4 11.2 89.5 0.4 1.9 1.4
Bangladesh1991 to 1994 54.6 0.2 7.3 12.1 70.5 5.9 2.4 16.41995 to 1998 48.6 4.4 15.3 8.1 95.6 2.9 6.8 11.71999 to 2002 62.4 4.0 33.0 25.0 120.5 3.8 8.6 18.3
DEPENDENCE ON IMPORT FOR FOOD: AGGREGATECountry 1991 to1994 1995 to1998 1999 to 2002India 0.89 2.02 3.76
Pakistan 8.46 8.12 7.45
Bangladesh 9.20 13.57 17.87
Sri Lanka 34.47 41.08 43.24
Nepal 2.89 2.93 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 TradeIf dX>dM Improvement in self relianceIf 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)
Country 1991 to 1994 1995-1998 1999-2002Million $ Before WTO Start of WTO After WTO
High prices Low pricesBangladesh
Export 128 139 105Import 663 1248 1623Net Trade -535 -1109 -1518
IndiaExport 3085 5557 5087Import 1336 2711 3699Net Trade 1749 2846 1388
NepalExport 49 48 58Import 141 217 194Net Trade -92 -169 -136
PakistanExport 956 1101 1067Import 1405 2135 1814Net Trade -448 -1034 -747
Sri LankaExport 528 923 969Import 500 779 766Net Trade 29 144 202
AGRI. TRADE OF SAC BEFORE AND AFTER WTO
exports required to finance importCountry Aspect 1991 to 1994 1995 to 1998 1999 to 2002India Net trade/GDP % 2.2 2.9 1.3
Import/Export % 43.3 48.8 72.7
Bangladesh Net trade/GDP % -6.3 -11.7 -12.5Import/Export % 518.0 900.6 1547.6
Nepal Net trade/GDP % -6.0 -9.9 -7.1Import/Export % 288.2 452.8 332.7
Pakistan Net trade/GDP % -4.4 -7.7 -5.0Import/Export % 146.9 193.9 170.1
Sri Lanka Net trade/GDP % 1.4 5.4 7.0Import/Export % 94.6 84.4 79.1
Self reliance in agri revealed by ratio of net trade to GDP and ratio of
IMPACT OF TRADE LIBERALISATION ON SELF RELIANCE FOR FOOD
International Price PhaseCountry High LowBangladesh Deteriorate Deteriorate
India Improve Deteriorate
Nepal Deteriorate Deteriorate
Pakistan Deteriorate Deteriorate
Sri Lanka Improve ImproveAdverse impact would have been far greater if trade was 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 RATIOCountry Trade 1991-1994 1995 to 1998 1999 to 2002India Import 1.7 2.8 3.7
Export 3.9 5.7 5.2Total trade 5.6 8.4 8.9
Bangladesh Import 7.8 13.2 12.9Export 1.5 1.5 0.8Total trade 9.3 14.6 13.7
Nepal Import 9.1 12.7 8.8Export 3.2 2.8 2.9Total trade 12.3 15.5 11.7
Pakistan Import 13.7 15.9 10.8Export 9.3 8.2 7.1Total trade 23.1 24.0 17.9
Sri Lanka Import 25.1 29.5 26.8Export 26.5 34.9 30.3Total 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 2002Bangla- India Nepal Paki- Sri Inter
Commodity desh stan Lanka nationalRice 0.124 0.126 0.129 0.077 0.099 0.145
Maize 0.122 0.055 0.148 0.105 0.117 0.177
Wheat 0.122 0.064 0.064 0.093 0.163
Groundnut 0.051 0.102 0.125 0.088 0.198
Rapeseed 0.135 0.086 0.181
Coconut 0.279 0.195 0.227 0.266
Fig 6: International prices of wheat UH HRW
100
120
140
160
180
200
220
Year
Fig 7: International prices of rice Thai
150
200
250
300
350
400
450
500
550
600
Year
Fig 8: International prices of sugar Carribean port
0
100
200
300
400
500
600
700
Year
Fig 9: International prices of cotton, Liverpool index
900
1100
1300
1500
1700
1900
2100
Year
Fig 10: International prices of soyabean seed, US CIF Roterdom
190
210
230
250
270
290
310
Year
Fig 11: International prices of groundnut, Nigerian, London
300
500
700
900
1100
1300
1500
Year
Fig 1: Growth rate in GDP agri. Bangladesh, 1992 to 2003
-4
-2
0
2
4
6
8
1 2 3 4 5 6 7 8 9 10 11
Fig 2: Growth rate in GDP Agri. India, 1992 to 2003
-4
-2
0
2
4
6
8
10
1 2 3 4 5 6 7 8 9 10 11
Fig 4: Growth rate in GDP agri, Pakistan, 1992 to 2003
-2
0
2
4
6
8
10
1 2 3 4 5 6 7 8 9 10 11
Fig 5: Growth rate in GDP agri, Sri lanka, 1992 to 2003
-4
-2
0
2
4
6
8
10
12
1 2 3 4 5 6 7 8 9 10 11
Fig 3:Growth rate in GDP agri in Nepal 1992 to 2003
-8-6
-4-20
24
68
1 2 3 4 5 6 7 8 9 10 11
FOOD SECURITY ISSUES AND TRADE LIBERALISATION
Should food security be based on self reliance rather than self sufficiency:Yes, at country levelAt 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 declinedImports 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 accessSSG in developed countries
Some have variable tariffSPS 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 othersExamine the cost of delay in
concluding new round
Thank You