Impacts of WTO on Indian Agriculture

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The adverse impacts of WTO on our agriculture emanate mainly due to the basic premises, which are wrongly conceived, and the vital issues, which are demoted to auxiliary position under WTO. The impacts will be discernible if farmers instead of farming are taken in to account. The situation would further accentuate through the application of agricultural biotechnology under the patronage of TRIPS in a Third World country like India, says Dr. Prakash, an agricultural economist who also edits a farmer friendly journal – Hittalagida.


To assess the impacts of WTO on Karnataka agriculture, all the related issues are grouped in to three categories; the core issues, the issues concerned to basic premises of WTO and the vital issues associate with WTO. The core issues are the main components of WTO, which include trade liberalization, market access; export subsidy and Intellectual Property Rights.

The WTO is carrying through these core issues with three basic premises: protected agriculture, perfect market condition and uniformity in agricultural economies across the World. In addition the issues related to three vital subjects; food security, economic concentration and the environmental sustainability are kept ‘auxiliary’.

Main conclusions are:

  1. If the misconceived “protectionism” to agriculture under WTO is taken out, along with the medium and poor peasantry, organised working classes and the urban middle classes are also going to be affected.

  2. Instead of acknowledging the competitive nature of the domestic agriculture, if our farmers are subjected to rigorous GATT disciplines, the imbalance in the inter sectional growth within the domestic economy and increased disparity between the developed and the Third world nations would eventually increase. The ultimate sufferers are medium and poor farmers. The unattended domestic market imperfection also affects the middle class consumers.

  3. Super imposition of uniform rules, which ‘govern the agricultural trade’ creates more distortions in the domestic sectors; both production and consumption. This not only increases the 'transaction cost’ of ensuring the predictability and stability in catering to the needs of domestic consumers but also vulnerability of the domestic producers who have sufficient marketable supply.

  4. The liberalization of the world trade in agriculture, under the present circumstance, is going to benefit more to developed countries rather than the developing countries. The expected gain to the members from the Third World (125 or almost 4/5th of total WTO members) together is hardly $116 billion or the 23 percent of the projected benefit.

  5. Under this circumstance of a very high rate of tariffs in the developed world and a low or nil tariffs in the developing countries, the removal of quantitative restrictions on agricultural commodities will tilt the balance in the global trade in favor of former with a detrimental effects on the producers in the Third World.

  6. This would affect the stability and predictability of income earnings of farmers of Karnataka producing coffee, fruits: mango, lemon, vegetables like cucumber, Gherkins, onions and potato, plantation crops such as coconut, and arecanut, spices; cardamom, field crops like rice, maize and bajra. Even the traditional items, unique to Karnataka such as ragi and sandal wood products are in the list to lift the quantitative restrictions! Paradoxically, most of the agricultural commodities where the Government of Karnataka is seized with the ‘problems of plenty’ and finding it difficult manages the surplus the recent years are included in the list.

  7. At the individual products level, the subsidies provided by some developed countries exceeds the actual cost of production or the market prices Agricultural commodities with such a high levels of support and subsidies, when enter, in to the domestic markets of a developing country like India, causes detrimental effects on domestic producers. The stories of farmers producing oil seed and coconut should be an eye opener. The next item to be hit by WTO in this respect may be milk and milk products.

  8. The IPR under WTO restrictive and narrow one. It advocates for
    (a) patenting of life form,
    (b) exclusion of indigenous knowledge from patenting, and
    (c) they do not recognize farmers as breeders.

    These in turn would block or restrict the free access to farmers and even scientists, the required genetic materials for future use, research and innovations.

  9. The biotechnological advancement if backed by TRIPS would tilt the world trade in agriculture total in favor of the developed world. In this respect, our traditional export items like coffee may be first to lose its share in the global trade.

  10. If the same trend continues, India may face the shortage of food grains especially, of rice, in the future. Decoupling the food security from self-sufficiency in food production would have a deleterious effect on the vulnerable sections. When our food need depends on import, volatility, unpredictability and uncertainties of international trade will be passed on to the domestic economy. This will further accentuate the food security problems in India.

  11. Also, the Genetically Modified Products like the Soya oil, which are rejected by the affluent Western consumers, may be dumped through the MNCs in our markets; the impacts of GM products on human health are not fully tested. This will affect the nutritional food security options of our middle and upper classes.

  12. The increased market concentration and enhanced control by the MNCs will result in the charging of higher ‘monopoly margin’ on inputs and technologies and increases the cost of production for farmers. This is also going to affect the consumers in the long run. When once, the internal competitions either through the state trading enterprises or from the domestic sectors is disrupted, the MNCs may resort to charge higher prices. The concentration of market power for agricultural inputs and outputs in the hands of a few Northern MNSc would further worsen the already existing global income disparity between the rich North and poor South.

  13. In the absence of any form of government ‘interventions, highly natural resource based products are undervalued and hence further deteriorate the “export terms of trade”, for a developing country. With high content of resources and labour in our exports, an unaccounted production “externality” i.e. ecological damages during the production would only results in over exploitation of our precious natural resources and mounting adverse effects on farmers, workers, surrounding eco systems, flora and fauna. Biotechnology accelerates the depletion of earth's resources. Therefore, genetically engineered products pose greater risks to our environment in the long run.

Author's Address:

Dr. T. N. Prakash
Associate Professor,
Department of Agricultural Economics
University of Agricultural Sciences,
BANGALORE – 660 065 Karnataka

Tel: 91-80-3637002 (O), 8560267 (R)
Email: prakashtnk@yahoo.com; hittalu@bgl.vsnl.net.in

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