7/29/2019 Ramesh 10

1/28

POST WTO AGRICULTURE TRADE,FOOD SECURITYAND AGENDA FORAGRICULTURE NEGOTIATIONS

Ramesh Chand

National Centre for AgriculturalEconomics and Policy ResearchNew Delhi 110012

7/29/2019 Ramesh 10

2/28

IMPORTANCE OF

AGRICULTURE IN SACCountry Ag share in

GDP %Ag share inemployment %

Bangladesh 21 62

India 22 58

Nepal 39 76

Pakistan 23 42

Sri Lanka 19 35

7/29/2019 Ramesh 10

3/28

Ref. Bangla- India Nepal Paki- Sri

Particular Year desh stan Lanka

Per capita GNP $ 2002 380 495 230 420 850

Income rank in the world 2002 171 161 191 168 142

Arable land: ha. per capita 1999-01 0.06 0.16 0.13 0.15 0.05Agri. value added/worker '95 $ 2000-02 318 401 203 716 725

Poverty % Late 1990s

Rural 53 30 44 36 27

Urban 37 25 23 24 15

Undernourished population % 1999-01 32 21 17 19 25

SELECTED SOCIO ECONOMIC INDICATORS OF SAC

7/29/2019 Ramesh 10

4/28

WHAT AGENDA FOR TRADENEGOTIATIONS 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

7/29/2019 Ramesh 10

5/28

EXPERIENCE AND IMPACT

Period: 1991 to 2002

Three sub periods: Liberalisation

phases and price phasesPeriod Years Int. price index

Pre WTO 1991 to 1994 97.6

Initial WTO years 1995 to 1998 106.0

Post WTO 1999 to 2002 91.8

7/29/2019 Ramesh 10

6/28

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

Price

index

7/29/2019 Ramesh 10

7/28

IMPORT DEPENDENCE FOR MAJOR FOOD PRODUCTS

Country Wheat Rice Sugar & Pulses Veg. Oils Vegetable Fruits Milk

India

1991 to 1994 0.8 0.2 2.3 4.5 5.7 0.0 0.4 0.1

1995 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

Pakistan

1991 to 1994 13.0 0.2 6.0 22.7 98.0 0.8 1.3 0.7

1995 to 1998 14.3 0.1 6.3 20.9 95.4 2.0 2.1 0.5

1999 to 2002 6.4 0.3 12.9 36.4 88.4 2.6 3.2 0.4

Sri Lanka

1991 to 1994 100.8 9.0 76.0 60.2 101.4 10.5 1.6 49.2

1995 to 1998 104.7 11.4 89.1 79.4 166.2 17.3 3.5 57.9

1999 to 2002 103.0 5.1 98.9 94.3 199.1 21.2 6.9 64.3

Nepal

1991 to 1994 1.3 1.9 26.7 11.8 58.1 0.2 1.0 1.7

1995 to 1998 0.7 2.0 23.7 4.3 62.2 2.6 1.1 0.2

1999 to 2002 1.3 3.3 29.4 11.2 89.5 0.4 1.9 1.4

Bangladesh

1991 to 1994 54.6 0.2 7.3 12.1 70.5 5.9 2.4 16.4

1995 to 1998 48.6 4.4 15.3 8.1 95.6 2.9 6.8 11.7

1999 to 2002 62.4 4.0 33.0 25.0 120.5 3.8 8.6 18.3

7/29/2019 Ramesh 10

8/28

DEPENDENCE ON IMPORT FOR FOOD: AGGREGATE

Country 1991 to1994 1995 to1998 1999 to 2002

India 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

7/29/2019 Ramesh 10

9/28

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 reliance

If dX

7/29/2019 Ramesh 10

10/28

Country 1991 to 1994 1995-1998 1999-2002

Million $ Before WTO Start of WTO After WTO

High prices Low prices

Bangladesh

Export 128 139 105

Import 663 1248 1623

Net Trade -535 -1109 -1518

India

Export 3085 5557 5087

Import 1336 2711 3699

Net Trade 1749 2846 1388

Nepal

Export 49 48 58

Import 141 217 194

Net Trade -92 -169 -136

Pakistan

Export 956 1101 1067Import 1405 2135 1814

Net Trade -448 -1034 -747

Sri Lanka

Export 528 923 969

Import 500 779 766

Net Trade 29 144 202

AGRI. TRADE OF SAC BEFORE AND AFTER WTO

7/29/2019 Ramesh 10

11/28

exports required to finance import

Country Aspect 1991 to 1994 1995 to 1998 1999 to 2002

India 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 -12.5

Import/Export % 518.0 900.6 1547.6

Nepal Net trade/GDP % -6.0 -9.9 -7.1

Import/Export % 288.2 452.8 332.7

Pakistan Net trade/GDP % -4.4 -7.7 -5.0

Import/Export % 146.9 193.9 170.1

Sri Lanka Net trade/GDP % 1.4 5.4 7.0

Import/Export % 94.6 84.4 79.1

Self reliance in agri revealed by ratio of net trade to GDP and ratio of

7/29/2019 Ramesh 10

12/28

IMPACT OF TRADE LIBERALISATION ON SELF RELIANCE FOR FOO

International Price PhaseCountry High Low

Bangladesh Deteriorate Deteriorate

India Improve Deteriorate

Nepal Deteriorate Deteriorate

Pakistan Deteriorate Deteriorate

Sri Lanka Improve Improve

Adverse impact would have been far greater if trade was free

7/29/2019 Ramesh 10

13/28

IMPORTANT LESSONS

Trade liberalisation reduced self reliance onfood for all countries except Sri Lanka

If SACs had not taken protective measuresand allowed free trade then self reliance onfood would have gone very low

Need to keep check on import if liberalisationdoes not improve export to pay for import

7/29/2019 Ramesh 10

14/28

TRADE ORIENTATION OF AGRICULTURE: TRADE/GDP RATIO

Country Trade 1991-1994 1995 to 1998 1999 to 2002

India 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 12.9

Export 1.5 1.5 0.8

Total trade 9.3 14.6 13.7

Nepal Import 9.1 12.7 8.8

Export 3.2 2.8 2.9

Total trade 12.3 15.5 11.7

Pakistan Import 13.7 15.9 10.8

Export 9.3 8.2 7.1Total trade 23.1 24.0 17.9

Sri Lanka Import 25.1 29.5 26.8

Export 26.5 34.9 30.3

Total trade 51.6 64.4 57.1

7/29/2019 Ramesh 10

15/28

INFERENCE

o Share of export in GDP declined for allcountries except India in post WTO period

compared with pre WTO years

o Reason: Market access in developed

countries did not improve

7/29/2019 Ramesh 10

16/28

Instability in domestic and international prices during 1991 to 2002

Bangla- 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

7/29/2019 Ramesh 10

17/28

7/29/2019 Ramesh 10

18/28

7/29/2019 Ramesh 10

19/28

7/29/2019 Ramesh 10

20/28

7/29/2019 Ramesh 10

21/28

7/29/2019 Ramesh 10

22/28

7/29/2019 Ramesh 10

23/28

Fig 1: Grow th 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

7/29/2019 Ramesh 10

24/28

Fig 3:Growth rate in GDP agri in Nepal 1992to 2003

-8

-6

-4

-2

0

2

4

6

8

1 2 3 4 5 6 7 8 9 10 11

7/29/2019 Ramesh 10

25/28

FOOD SECURITY ISSUES AND

TRADE LIBERALISATION

Should food security be based on self reliancerather than self sufficiency:

Yes, at country level

At household level: Yes, if volatility in internationalprices can be absorbed by consumers

Food share in expenditure and magnitude of volatility

Prospects of diversification and trade-off withexports

7/29/2019 Ramesh 10

26/28

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 volatilitySACs need either very high bound tariff or special safeguards to

regulate imports of sensitive products

In exports:Seek better market accessSSG in developed countriesSome have variable tariffSPS measures

7/29/2019 Ramesh 10

27/28

FUTURE STRASTEGY OF SAC

Seek phasing out of measures that distortinternational prices

Reasonable protection for their market.

Seek more market access in developedcountriesmarkets

Weigh special product gains against

sensitive product to othersExamine the cost of delay in concluding new

round

7/29/2019 Ramesh 10

28/28

ThankYou