Intersection of Food Security and Trade

Policy: India’s experience

Ashok GulatiChair Professor for Agriculture

Indian Council for Research on International Economic Relations (ICRIER)

Panel Discussion at the seminar on “Trade Policy Agenda: Harvesting Issues in Trade Agreement Negotiations and the Future of the World Trading System””

US Chamber of Commerce,Washington D.C., May 7, 2014

Basic tenet: Open trade policies can help improve food security

Then why is it that India does not open up food trade fully and permanently? ◦ Delicate balance between food security of poor

consumers and livelihood of small producers◦ Case study of edible oils and cereals in India.◦ What does it mean for trade negotiations?

Food Security & Trade Policy Interface in India: Outline

Rising imports of edible oils enhance food security: risen by more than 5 times in value terms, and more than 3 times in Q terms, in 10 years…equivalent to importing 30 m ha of oilseeds land

20

02

-03

20

03

-04

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

0

2

4

6

8

10

12

2

4

6

8

10

12Volume Value

US

$ B

n

Million

Ton

nes

Rising cereal exports enhance food security abroad: increased by more than 10 times in value terms and 8 times in Q terms since 2000-01 (exporting 30-50 billion cu m of water through rice alone)

2000-0

1

2001-0

2

2002-0

3

2003-0

4

2004-0

5

2005-0

6 

2006-0

7

2007-0

8 

2008-0

9

2009-1

0

2010-1

1

2011-1

2

2012-1

3

2013-1

...

0

5

10

15

20

25

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2.4

5.0

8.8 8.1 8.0

5.4 5.5

9.7

6.55.0 5.7

12.0

22.1

20.4

Rice Wheat Maize Others Value of Exports (US$ Bn)

Million T

onnes

India’s rising agri-exports and imports contribute to global food, feed and fiber security:exports hovering around $40b vis-à-vis imports of $20b in 2012-14

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

0

5

10

15

20

25

30

35

40

45 Agri-Imports Agri-Exports

US$

Bill

ion

India’s agri-trade as percent of agri-GDPrisen from 5% to almost 20% over 1990 to 2013

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

0

5

10

15

20

25Agri Imports as a % of GDP (agri) Agri Exports as a % of GDP(agri)

(%)

Falling import duties on edible oils (duty on pulses is zero)

Issue of Domestic support in trade negotiations: MSPs of wheat and rice

Thaila

nd

Phili

ppin

es

Chin

a-J

aponic

a

Chin

a-I

ndic

a

Indonesi

a

India

Vie

tnam

Chin

a

Paki

stan

India

100

200

300

400

500

600

700 691.2

593.7

495.9

446.3411.1

317.3298.0

390.1

284.8

223.8

Rice Price US$/MT Wheat Price US $/MT

(US

$)/

MT

For India, fob for wheat is US$ 275-290/MT and for rice US$ 390-420/MT

Food security is paramount concern for India, given large population (1.25 billion) and mass poverty

Trade policy will have to be subservient to this overarching goal…India will take time to be confident in opening up basic staples fully to trade…but direction is clear and moving fast

Patience and perseverance! …as there will be occasional hiccups!

Lessons for trade negotiations