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