WASHINGTON, D.C. — The United States has submitted figures to the World Trade Organization (WTO) that it says shows the Indian government has been over-supporting wheat and rice farmers.
Last week, U.S. Trade Representative Robert Lighthizer and USDA Secretary Sonny Perdue announced that the U.S. submitted a counter-notification in the WTO Committee on Agriculture (COA) on India’s market price support (MPS) for wheat and rice. It is the first time the U.S. has ever filed a counter-notification.
Ben Conner, vice president of Policy at U.S. Wheat Associates, Inc., said it is the highest form of notification that can be taken at the WTO before a case is filed. “When you think they’re not complying, you try to shame them into complying,” he said. “It’s not a full settlement case.”
There is a WTO Committee on Agriculture meeting scheduled in June. The counter-notification will be on the agenda, but India is not required to do anything or take any action. However, Conner thinks the move, added to the case the U.S. has against China, is more a warning for the Indian government that the U.S. is willing to take action.
When every country joins the WTO, the government agrees to meet certain guidelines. They cannot subsidize agriculture beyond a certain percentage, called MPS.
For years, India has been notifying the WTO of agriculture subsidies using the wrong figures, Conner alleged. Instead of using the figures based on what the government offers farmers, they are reporting only what the government is buying from farmers.
This means Indian government is offering inflated prices for wheat and rice – and other crops – driving up the market price across the country. The grain elevators have to offer more to get the farmers to sell, he explained.
The U.S. report claims the figures reported by the Indian government for the years 2011-14 were significantly lower than the claims should have for wheat and rice. India’s government reported less than 10 percent each year on both commodities. It reported negative numbers for wheat in several years.
The report states that India changed the reporting method in 2010. In previous reports, it appeared that Indian notifications were for total production. The nation did not explain the change in its reporting.
Conner said the United States did something similar, and tried to support the farmers, but glutted the world market in production in the 1980s. It didn’t work well for the U.S. or the world at that time. As a result, he said the U.S. is being proactive to try to stop a glut on the market from China and India.
He said if India used the total production of wheat and rice, the figures would range from 60-75 percent. With more support to farmers for those commodities, more are planting wheat and rice.
"They’re artificially incentivizing the price of wheat, it’s driving down the market because there is just so much of it,” Conner said.
As a result of the increased production in India, the overall cost of the product is decreasing per bushel.
He said he would support an actual case against India at this time, and he hopes the counter-notification will encourage its government to adjust its assistance programs.