India will stockpile and distribute grains to the poor, despite WTO/Reuters

In the news today is the story of how India has refused to agree with a World Trade Organization (WTO) demand that it scale back its stockpiling of grains.  I recall when the IMF/World Bank demanded something similar of African governments decades ago.  The governments sold off their stockpiles in exchange for IMF loans. Soon there was a bad year, crops failed, and there were no stockpiles.  Famine and many deaths resulted.  In times past, government stockpiles of food were referred to as “food security” programs.  Where is that concept in the WTO today?


The WTO claims that large government purchases and guarantees to farmers could lead to flooding the markets and a drop in price of grains in future. Some might say that is a small risk to take, compared to the risk of millions of deaths from starvation.


From Reuters:

“India refuses to bow to foreign calls to scale back a scheme to buy wheat and rice that it distributes to 850 million people. In a recent disclosure to the WTO, India said those purchases cost $13.8 billion in 2010-11 – part of the $56.1 billion it spent in total on farm support.”

UPDATE from the NY Times of Nov 13:

“… The Indian government buys food, including grain, from its farmers and stockpiles it for a public distribution system, where it is sold at government-run stores at subsidized prices. The food subsidy program, which has often been criticized as ineffective, is available to 75 percent of India’s rural population and 50 percent of the urban population, according the National Food Security Act introduced last year.
W.T.O. rules say that subsidizing more than 10 percent of the grain produced for food in a country distorts the market for trade. But India wants to do away with that cap. Countries including the United States and Pakistan have expressed fears that India was accumulating too much grain and that it might eventually release the surplus on the world market, lowering prices for other producers…”

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