India seeks permanent resolution of row over public stockholding

India seeks permanent resolution of row over public stockholding

Subject :Economy

Section: External Sector

Context: India will stick to its demand of prioritising a permanent solution for the issue of public stockholding (PSH) or buffer stocks of foodgrains at the World Trade Organisation (WTO).

Key Points:

• India is set to continue with its position of arriving at a permanent solution for public stockholding of food grains, without getting into the debate over whether it is the only way to ensure food security as the model has worked well for the country.
• WTO’s 12th Ministerial Conference (MC12) in Geneva in June 2022 failed to deliver a permanent solution to public stockholding.
• India and China, among 80 members, have sought text-based negotiations at the World Trade Organization (WTO) to find a permanent solution on public stockholding (PSH) for food security at the ministerial-level meeting of the global trade body in February 2024.
• Developing countries and the African Group are pushing for a food security package at the 2024 conference.
• What is the public stockholding issue:
  • Although there is a peace clause in place that stops members from taking action against developing countries in case the present cap of 10 per cent of production value is breached, it is subject to numerous conditions including onerous notification requirements.
• Importance of public stockholding for India:
  • Allows the use of Minimum Support Price (MSP) programmes for food items without worrying about breaching caps and inviting legal action from members.
  • India has rejected any alternative food security solutions beyond PSH and special safeguard mechanism (SSM), SSM being key to check sudden import surges and price drops.
• Why is it important to resolve ?
  • Several developing countries including India maintain that till all the pending matters flowing from the earlier rounds, including finding a permanent solution to PSH, are sorted out, progress in other areas of the agriculture negotiations would be difficult.
  • India’s PSH programme has helped ensure food security for 1.4 billion people, even during the pandemic period.
  • Some countries are now trying to dilute the situation by urging India to hold discussions on the technicalities of PSH.
• At the Bali Ministerial Conference in 2013 it was decided that a permanent solution would be reached by 2017-end, but no concrete progress yet.
• Cairns Group members including Canada and Australia have been pushing for the need to address food security within the context of overall agriculture reform and reduction of trade-distorting domestic subsidies.
• Discussions are expected on various elements of public stockholding issue, such as external reference price, product coverage, transparency requirements, anti-circumvention, safeguard provisions, and the importance of preserving access to dispute settlement.