A Short Note On Public Stockholding

Public stockholding (PSH) is a type of policy instrument that the government uses to meet the food security of a country. Public stockholding programs are carried out by some countries to meet the needs of the people who spend their lives below the poverty line and are constantly facing food shortages. Subsidy means providing payment by the government to individuals directly or indirectly in the form of cash.  Current rules suggest an effective subsidy of 10% for food procurement from farmers to feed the poor. Previously there was a 5% subsidy for developed countries and 10% for developing countries.

Public stockholding issues generally revolve around the procurement of stock, i.e., food and grains from the farmers at a specific fixed price. In India food grains and commodities are procured at a minimum support price which is a pre-announced price.

Grains are procured at a subsidised rate, which leads to the violation of norms established by the WTO, but the developing countries insist upon WTO, not penalise them for this violation of norms.

PSH stands for a permanent solution for a public stockholding program for food security which is demanded by the majority of developing countries.

W.T.O rules regarding public stockholding

According to W.T.O rules stockpiling and food, distribution is permitted up to

Certain limits to meet the food security of the country. But purchasing food at a certain price limit by the government as there is a limit of 10% for such procurement from the farmer to feed the needy people.

The development happening so far in different boxes regarding food subsidies is as follows- 

There is an agreement on agriculture in which WTO classifies subsidies into ‘3’ boxes-

• Green boxes- R and D training, pest control, animal vaccination in which there is no restriction on subsidy.
• Amber box subsidies are termed disruptive subsidies as it makes the product of a particular country cheaper as compared to other countries for the same product. This affects international trade as the country has cheaper products and excessive production than others. It includes fertiliser, electricity, diesel, and food stockpiling.
• Blue box subsidies are similar to amber box subsidies. It tries to limit production and is also designed to reduce distortion. Blue box subsidies are allowed in selected nations such as Iceland, Slovenia, etc. 

So, developing countries at each submission ask for some conversions in these limits from the WTO because there is a limit of 5% subsidy for developed countries and 10%  subsidy for developing countries. And that 5% amount for developed countries is much more than 10% of developing countries.  so even after more limits for developing countries, the developed countries are having more food for subsidy for their farmers.

Doha Round of negotiation in 2001

G33 countries i.e., a group of 47 countries, demanded the food security measures be enabled from amber box to green box. But that didn’t end up due to strong opposition from developed countries.

In 2013, 9th ministerial conference at the Bali meeting, India, along with other developing countries put their issue related to subsidy in front of WTO, and WTO offers the ‘peace clause’ and according to this peace clause, if any developing country gives more than 10% subsidies, no other country can show its obligation. But the developing countries did not find this a permanent solution.

Still, in the Nairobi declaration 2015, India could not succeed in this objective. A new special safeguard mechanism for developing countries was introduced. They can impose additional taxes on their agro exports from developed countries but still no permanent solution for public stockholding. Furthermore, no outcomes on public stockholding for food security purposes or other Agriculture issues happened at the 11th ministerial conference MC 11 in Bueno Aires.

Conclusion

India faces huge food-security challenges. It is home to 1/4 of all undernourished people worldwide. India demanded a broad exemption for public stockholding programs from the definition of trade-distorting support. Specifically, it wants to move these programs to the green box, even when they employ administered procurement prices that have the potential to be trade-distorting. There is a large population of developing countries that are not able to purchase food due to high poverty levels. In rural areas, the main source of income is agriculture for poor people and there is no assurance for those people that the food security will increase by the increase in imports of food. Public stockholding is a livelihood issue for most developing countries; this is a matter that needs to be debated at WTO.