Globalisation and Its Impact on Agruculture.pdf

Unit V: Globalisation and impact on Agriculture (18 Hours)
Role of MNCs- Globalization of Indian Economy: Problems and Prospects of Indian Agriculture- Impact of WTO on Indian Agriculture- Agreement on Agriculture (AoA) -WTO Agriculture.

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Dr. U. Ramesh

Unit V: Globalisation and impact on Agriculture (18 Hours)
Role of MNCs- Globalization of Indian Economy: Problems and Prospects of Indian
Agriculture- Impact of WTO on Indian Agriculture- Agreement on Agriculture (AoA) -WTO
Agriculture.
Opening up the agriculture sector for MNCs - Advantages and Disadvantages.
Introduction:

Uncertain monsoon and plight of farmers are pointing towards India as the country that is at
the verge of losing one of its most crucial sectors for economy. Instead of passing more bills
and enforcing wills of power, we should be concentrating on making the best out of what we
have and others don't. Agriculture in India, being the foremost occupation of people in rural
areas, should not be suffering under grievances of debts. One of the articles by Chetan Bhagat
for TOI called for "let's bake in India before we make in India." The writer talks about the
sufferings of Indian farmers and how to it can be rectified by opening agriculture sector for
MNCs. Though farmers get "subsidies, tax breaks, welfare schemes" and politicians and
NGOs claiming to be pro-farmers, where exactly are we lacking?
Advantages:

1. Since independence India has gone global from anything to everything. We have
encouraged multinational giants to extend business in almost every sector of Indian economy,
except agriculture. Those hands that feed the entire nation are left with nothing at the end.
Their sufferings are looked down upon with mere compensations for natural calamities and
for lives lost due to distress. These farmers do have the right to extend their occupation and
make it bigger and better if agriculture sector is opened for MNCs.
2. Half of the Indian population, the entire rural map of the country, is into farming. They do
have the capability to serve within India as well as outside India. If MNCs are allowed to
invest in Indian agriculture, their advanced technologies, better funds for irrigation, and
modern knowledge of farming can change the lives of Indian farmers. And then farming will

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not be something forced upon them for livelihood through generations but a productive
means of better living.
3. Farmer in India is expected to serve only two needs, the bread and butter for the
middlemen and vote bank for corrupt executives. Why can't we allow globalisation in
agriculture sector while we allow middlemen and politicians to treat our farmers like slaves?
Our farmers are still bound slaves, forced to produce only for India. They are perceived as
poor and illiterate people who are meant to be like that forever. We are the reason why they
are like that and will continue to be like that always until they are allowed to explore and be a
part of multinational ventures. This would give those millions of farmers who are
discouraged enough to think of ending their lives, a hope and income stability for their hard
work. This is the least we can do for what they give us in return.
4. It is clear that all the policies being made to ease woes of farmers are failing miserably.
Subsidies, compensations and tax ease are not making any difference in solving the issues
surrounding farming in India. In such a situation when the government and NGOs have failed
to bring farmers any relief, it is definitely worth it to give a chance to MNCs to raise farming
standards in India.
5. Giant manufacturers, given a chance, can utilize the efforts of farmers and shape it in the
best possible way, improving their lives as well as increasing production and economy.
Collaborations between agriculture sector and multinational companies can be beneficial for
the country as well as farmers.
Disadvantages:

1. Opening agriculture sector for MNCs would eventually increase the price of food
commodities, to which the upper and middle class might somehow sustain but the low class
will be at a bigger disadvantage that we can comprehend.
2. There is no being sure that multinational ventures would not further add to the woes of
farmers by deploying for the benefits of other nations. This would enslave the farmers at the
hands and mercy of giant companies who will still consider them as cheap labours, their
energy to be harvested for their benefits.

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3. MNCs are not sure about investing in Indian agriculture sector because of the uncertainty
in climate and harvest. Not being able to meet the target is their reasonable concern.
Manufacturers cannot face the risks of compromised production of raw materials. Even if
India opens its agriculture sector for MNCs, there are less chances that they would be willing
to be a part of complicated tax schemes and policies that our government has induced. We are
unable to pass a simple land bill for the farmers without creating major controversy, forget
opening up to multinational ventures.
Conclusion:

Though the advantages outcast the few disadvantages of opening agriculture sector to MNCs,
it can also not be secluded that nothing in India can change all of a sudden and we have to be
patient and indulgent in the making of new polices to ensure that it takes good care of all the
fractions of our agriculture sector. We wouldn't want to end up doing what the government
has done earlier by opening up seed buying from private sectors. With well weighted policies
and easy collaborations with the MNCs, Indian agriculture sector can see huge difference in
terms of harvest and manufacturing. We can bake in India only when we have the proper
tools and techniques of baking. Meanwhile, we can encourage make it India and for India.
DESCRIBE THE IMPACT OF GLOBALISATION ON INDIAN AGRICULTURE
The Impact of Globalisation on Indian Agriculture and on several aspects of the county’s
economy has been significant. However, agriculture in India faltered. Being one of the
primary occupations in the rural areas of India, agriculture is of great importance.
Globalisation has had a great impact on it.
The process of contact and integration between individuals, organizations, and governments
on a global scale is known as Globalisation. Since the 18th century, Globalisation has
accelerated due to advancements in communications and transportation technologies.
Impact of Globalisation on Indian Agriculture
The impact of globalisation can be seen during colonisation. In the nineteenth century,
European traders came to India to trade Indian spices exported to various countries. Farmers

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in south India were encouraged to grow these crops due to high demand. Staple crops were
profitable and had a good export potential in the limited market.
Here are some of the agricultural Impact of globalisation:
 High financial returns
 Rural social order transformation
 Extraction of natural resources
 Forced labor
When the Indian economy opened up to the global market in 1990, Indian agricultural
products struggled to compete, despite being a major producer of rice, cotton, coffee, rubber,
tea, jute, and spices. This was due to the fact that agriculture is heavily subsidised in many
developed countries. The need of the hour is to help marginal farmers by providing subsidies
and making agriculture profitable.
IMPACT OF WTO ON INDIAN AGRICULTURE
India is a land of agriculture where the prime and the largest source of livelihood is
agriculture. This article looks at the impact WTO has had on Indian agriculture.
The first step in understanding the impact of the World Trade Organisation (WTO) on Indian
agriculture is knowing the importance of agriculture in India. In India, agriculture is the
prime and largest source of livelihood, especially in rural areas. About 70% of the Indian
population is dependent on agriculture. Also, India has a significant share in world
agriculture exports which increased to 2.1% in 2019 from 1.71% in 2010. Agriculture also
contributes a recognisable figure to the Gross Domestic Product (GDP). The agriculture
sector in India has witnessed many revolutions in the past, such as the green revolution, white
revolution, yellow revolution and blue revolution.
At present, agriculture is also facing problems due to the World Trade Organisation. To get a
better picture, we need to know WTO’s work, importance, role, and impact.
WORLD TRADE ORGANISATIO N (WTO)

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The World Trade Organisation (WTO) is the only body that works globally on trade between
nations. It regulates and facilitates trade between countries. The core purpose of WTO is to
make things easy for the producer of goods and services and importers and exporters carrying
their business.
WTO AGREEMENT ON AGRICULTURE
The WTO agreement on agriculture is called the ”International treaty of the World trade
organisation”. It was one of the most important agreements negotiated during the Uruguay
Round. It included participation from 123 countries. It took over seven years of negotiation
and concluded on 15 December 15, 1993. However, it was approved only in April 1994 in
Marrakesh, Morocco.
The agreement on agriculture mainly says that the reduction commitment of six years will
wind up 20% of base period support in developed countries. In the case of developing
countries, it will complete the reduction commitment in 10 years, which is 13%. And least
developed countries were not provided with any cuts. However, the members of WTO had
available choices on implementing their commitments and modifications on the ground basis
of crop, calendar, etc. In the initial years, there was a lot of unfairness and inequality. In
western countries, the subsidies (part of the amber box) were very high; in contrast, India had
limited subsidies.; in contrast, India had limited subsidies. The amber box is a subcategory of
domestic support, including trade-distorting, subsides. Later these subsidies were increased
due to inflation in the price of agricultural products. This agreement only includes
agricultural products, and forestry and fishery products are kept out of it.
Reduction commitment can be defined as ”Total Aggregate Measurement of Support” (Total
AMS). All non-product-specific and product-specific support are considered in one single
frame or figure.
The three main areas of agriculture and trade policies included in the WTO agreement
on agriculture are:
1. Market access
2. Domestic support
3. Export subsidies

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Market access
Market access includes access opportunities, reduction in tariff and tariffication. Tariffication
means removing and converting all non-tariff barriers such as minimum import price, state
trading measures, quotas, etc., into an equivalent tariff.
The benefit of this conversion was that all the non-converted barriers were included in
ordinary tariffs and reduced by 36% on average, including a minimum reduction rate of 15%
over six years on every tariff. Also, in 10 years, developing countries will reduce tariffs by
24%.
Domestic support
Domestic support mainly relates to and aims at reducing commitment. Reduction
commitment can be explained as involvement and acknowledgement of the total level of
support rather than individual communities. The domestic support policy agreed on a 20%
reduction of reductions commitment for developed countries and 13.3% for developing
countries.
Reduction commitment excluded policies that had no or minimal trade-distorting effect on
the production of the goods.
Also, the domestic subsidies are categorised into three boxes.
1. Green box – it includes subsidies that are no or least market-distorting.
2. Blue box – It only includes ”production limiting subsidies”.
3. Amber box – It includes trade-distorting subsided.
Export subsidies
Export subsidies policies in the agreement of agriculture commit the reduction of export
subsidies to developing countries or are required to reduce the expenditure on other sports
subsidies by 24% and volume by 14% in equal annual instalments over ten years. For
developed countries, the percentage cuts are 36% and 14% respectively in six years. This
agreement has clarified that no such subsidies can be granted for the products which are not
subjected to export subsidy reduction commitment.

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THE IMPACT OF THE WTO A GREEMENT ON INDIAN AGRICULTURE
Agricultural total prices raised at the international level due to the reduction of trade barriers
and domestic substitution of agriculture resulted in benefits for India in the form of high
export earnings.
The negative impact of the WTO agreement on TRIPs includes patenting of plant varieties.
Due to this, Indian agriculture might face serious implications as patents in plant varieties
transfer all grains into the hands of MNCs, which will explore and develop new varieties.
Also, the main concept of the agreement to promote free and liberal trade was misused. Due
to this, the exporting countries started discarding their products to importing countries which
caused serious issues for the economies of developing countries in which Indian agriculture
was most recognisable. The Indian market witnessed many shock waves in the case of
agriculture products, as cheap and low-quality products were repeatedly supplied to the
Indian market.
Conclusion
India is a land of agriculture, and more than half of its population depends on it. The WTO
agreement on agriculture has benefited and brought significant changes like reducing trade
barriers and domestic subsidies. However, some issues still affect Indian agriculture and are
yet to be sorted out, such as patenting plant varieties. WTO is helping protect biodiversity
and aiding the Indian economy in getting in shape.
AGREEMENT ON AGRICULTURE
The Agreement on Agriculture (AoA) is a WTO treaty that was negotiated during the
Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and formally
ratified in 1994 at Marrakesh, Morocco. The AoA came into effect in 1995.
 According to its provisions, developing countries were to complete their reduction
commitments by 2000 and developing countries by 2004.
 The Least Developed Countries were not required to make any reductions.

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 The Agreement covers products that are normally considered part of agriculture but
excludes forestry and fishery products and also rubber, sisal, jute, coir and abaca.
 The focus of the AoA is the elimination of what are called “trade distorting”
agricultural subsidies.
 According to the WTO, the overall aim of the Agreement is “to establish a fairer
trading system that will increase market access and improve the livelihoods of
farmers around the world.”
Features of WTO Agreement on Agriculture
The provisions of the WTO Agreement on Agriculture relate mainly to three broad categories
of agriculture and trade policy, which are discussed below.
 Market Access
o This includes:
 Tariffication – implies all non-tariff barriers to be abolished and
converted to tariffs. Non-tariff barriers include variable levies,
minimum import prices, quotas, state trading measures, discretionary
licensing, etc.
 Tariff reduction – Developing countries were obligated to reduce
tariffs by 24% in 10 years.
 Access opportunities – Minimum access equal to 3% of domestic
consumption in 1986-88 will have to be established for the year 1995
rising to 5% at the end of the implementation period.
o This head includes improving access to markets by removing trade barriers.
 Domestic Support
o This concerns the policy support and subsidies given by countries to enhance
domestic production. WTO has classified agricultural subsidies and policies
into different boxes, which are explained in a section below in detail.
 Export Subsidies
o Here, there are provisions related to member countries’ commitments to
reduce export subsidies.

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o Developed countries are mandated to reduce their export subsidy volume by
21% and expenditure by 36% in 6 years, in equal installment (from 1986 –
1990 levels).
o Developing countries need to reduce export subsidy volume by 14% and
expenditure by 24% over ten years in equal installments.
The WTO AGRICULTURE Agreement provides a framework for the long-term reform of
agricultural trade and domestic policies, with the aim of leading to fairer competition and a
less distorted sector.
The Agreement covers:
 Market access — the use of trade restrictions, such as tariffs on imports
 Domestic support — the use of subsidies and other support programmes that directly
stimulate production and distort trade
 Export competition — the use of export subsidies and other government support
programmes that subsidize exports.
Under the Agreement, WTO members agree to “schedules” or lists of commitments that set
limits on the tariffs they can apply to individual products and on levels of domestic support
and export subsidies.
Committee on Agriculture
The Committee on Agriculture oversees the implementation of the Agreement on agriculture
and provides a forum for members to raise and address related questions and concerns. The
current chair is Ms Anna LEUNG (Hong Kong, China).
Agriculture negotiations
Agricultural trade reform did not end with the birth of the Agriculture Agreement. WTO
members are continuing to negotiate agricultural trade reform.
WTO members adopted important decisions on agriculture at the 2015 WTO Ministerial
Conference in Nairobi, Kenya. These include a commitment to abolish subsidies for farm

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exports as well as decisions on public stockholding for food security purposes, on a special
safeguard mechanism for developing countries, and on trade rules for cotton.
At the 2013 WTO Ministerial Conference in Bali, Indonesia, ministers also agreed on a
package of issues in agriculture.
Cotton
Cotton is discussed at the WTO on two tracks: 1) the trade reforms needed to address
subsidies and high trade barriers for cotton, and 2) the assistance provided to the cotton sector
in developing countries.
Food security
The WTO Agreement on Agriculture explicitly recognises the need to take account of food
security — both in the commitments that WTO members have made, and in ongoing
negotiations.