Food Aid, Trade and WTO

It is a strange world.

There is enough farmland producing more than enough surplus food to feed each and every child and adult in every country in the world, year after year. And yet, what is actually happening is that many countries that produce surpluses actively seek to undermine local farming systems, and to turn entire countries dependent on hand-outs.

It is called the Law of Comparative Advantage. On the face of it this law, based on a theory David Ricardo published in 1817, makes perfect sense. However, in the real world of natural and man-made disasters, it plays out rather differently. Consider these cases -

• Malawi: In the early 2000s, Malawi faced severe food shortages. Enthusiastic food aid donors over-reacted to a projected 600,000-tonne food deficit, and sent close to 600,000 tonnes of food in aid. However, commercial and informal importers brought in an additional 350,000–500,000 tonnes. Malawi was flooded and had very large carry-over stocks. Maize prices dropped from $250 per tonne to $100 per tonne in the course of a year. Local production of maize, cassava, and rice fell markedly, and in a larger disaster that played out subsequently, estimated losses to the Malawian economy were approximately $15m.
• The Philippines: US PL 480 food aid was used to finance the purchase of US exports. Ten years later, the Philippines was the largest market for US high-protein soybean meal, with US exporters accounting for 90 per cent of total imports.
• India: In India the same PL480 scheme resulted in the creation of one of its finest engineering schools. India was required to pay for the food aid in Rupees (plus 50% of ocean freight cost) which was deposited to the account of the US Technical Cooperation Mission in India. These funds were to be spent on programmes approved by Government of India. One of these schemes, guided by PK Kelkar, was used to obtain US expertise in building IIT Kanpur.

According to a study by the OECD, shipping food from donor countries is 33 per cent more expensive than buying it from a third-party country (usually closer to the destination) and 46 per cent more expensive than buying it locally in the destination country. And yet this is exactly what happens on a fairly regular basis.

The WTO has been trying to do its bit but the opposition is formidable. The Doha Round negotiations took this up in light of evidence that the USA sometimes uses food aid to dump agricultural surpluses and to attempt to create new markets for its exports. Nothing came of it - successful  manoeuvring ensured the removal of the clause prohibiting surplus disposal via food aid.

While food aid continues to save millions of people in Sudan, Syria and Afghanistan from starvation, preventing such aid from destroying local production systems, and creating dependencies continues to be a challenge..

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LINKS & REFERENCES

* Narayanan (1960): India-US Food Agreement and State Trading in Food Grains, EPW -https://www.epw.in/system/files/pdf/1960_12/39/indous_food_agreementand_state_trading_in_foodgrains.pdf

* The Kanpur Indi-American Program (1962-72) - https://www.iitk.ac.in/doaa/convocation/data/KIAP_Report.pdf

#OccupyUGC - A Protest

Last week, while walking down the ITO crossing, I was dismayed to see a newly constructed Delhi Metro station defaced with spray paint.

Cryptic messages lined the freshly painted and polished walls - "Human Killing" said the first one with four bulls stencilled alongside. Further down the sidewalk things got worse - "Thrash Caste! Thrash Brahmanism!" and a slogan against WTO. Then came the first clue on what this outrage was all about - a twitter hashtag: #OccupyUGC .

I vaguely remembered reading something about students protesting against the withdrawal of a scholarship scheme. But why on earth did they have to deface a beautiful new station to vent their anger against the University Grants Commission?

Next to the station I noticed some mats spread on the road, a few police barricades and a bunch of students sitting on the footpath. "Did you guys really have to do this?", I asked them, "Will scrawling on public property restore your scholarships? Who will clean up this mess if your demands are met?"

They looked at each other and smirked. One of them said, "You find the graffiti ugly? We actually think they are beautiful!"

And so, a long discussion was set in motion. I told them that as a taxpayer who footed the bill for the scholarships as well as the railway infra, if this was the best way in which they -- "accomplished scholars" - could express themselves, it only convinced me that government money was being wasted on them.

ITO station, 13 Nov., 2015

The arguments went back on forth on how the students could make the public take notice of their greivances, their not being able to afford the cost of large hoardings, on the government "sell-out" to the WTO, and on how poor students would be deprived of higher education if they did not get the scholarships...

What were the numbers involved? I was told that about 35,000 students would be affected by this UGC decision. At ₹8000/month this comes to about ₹ 336 Crores (~ $ 500 million). Not really not a big amount when the union budget for education (2015) was about ₹ 69,000 Crores.

What had been achieved by the scholarships so far? Has there been any ground-breaking research that has transformed our thinking? Has it made life any easier for the millions who do not have access to a previleged education? The students murmured something about Gayatri Spivak and "Subaltern Studies". Their arguments seemed immature, disjointed and unconvincing.

Perhaps this protest is a reflection of the sad state of our primary and secondary education . If the protestors had been better grounded we may have seen more convincing forms of protest and argument in our public spaces. Instead, the juvenile defacement of a new metro station seems like a public acknowledgement that money was being wasted on these scholars.

Will the money saved on these UGC scholarships be diverted to primary and secondary education - especially teachers-training and incentives? I certainly hope so.

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LINKS

* Education as a commodity -- http://www.frontline.in/the-nation/education-as-commodity/article7866099.ece

* Kafila article -- http://kafila.org/2015/10/23/students-occupy-ugc-to-defend-the-right-to-research-in-universities-across-india-sucheta-de/