Some of the world’s agricultural powerhouses accused India on Thursday of violating world trade rules through exorbitant subsidies for its wheat and rice farmers. India was the ninth-largest farm exporter in the world in 2020, but its success was built on subsidized production, said Australia, Canada, Paraguay, Thailand, Ukraine, and the United States in a WTO filing.
Although India had agreed to limit its market price supports to 10% of the value of the crops, the subsidies were 81% for wheat and 94% for rice in 2020/21, said the “counter-notification.” It was the latest in years of complaints against India’s farm subsidies. Exporter nations said at a WTO committee meeting on March 27 that India was dodging their questions about food grain subsidies.
“This is a far cry from the level playing field our farmers were promised and deserve,” said Sen. John Boozman of Arkansas, the No. 1 rice state. “This is further evidence that we need to pursue a formal complaint against India’s blatant violations with the WTO.”
The six complaining countries said they had used publicly available data to calculate financial support for India’s wheat and rice growers. “Some aspects were necessarily based on partial information,” said the counter-notification.
“India appears to be providing significant market price support, both in terms of absolute value and as a percentage of production for rice and wheat,” said the document, which looked at a seven-year period. For the most part, subsidy levels rose steadily from the 2014/15 marketing year through 2020/21. In the final year, rice subsidies totaled 3.18 trillion rupees and wheat support was 1.7 trillion rupees. A rupee is worth 1.2 U.S. cents.
The United States submitted the first WTO counter-notification on agriculture in 2018 to dispute India’s report on rice and wheat subsidy outlays.
Lavish subsidies unfairly encouraged large rice crops in India and hurt farmers throughout the world by driving down prices, said the trade group USA Rice. “The artificially low-priced Indian rice impacts every continent, and India is projected to break their own export record again this year,” said the group, which said the White House should file a WTO challenge to the subsidies.
U.S. wheat groups also called for action. “We urge [the administration] to take all necessary steps to ensure India brings these subsidies into compliance with their WTO commitments,” said Vince Peterson, president of U.S. Wheat Associates.
India is the world’s largest rice exporter by far and is second only to China in rice and wheat production. India is a relatively small wheat exporter. It gained attention last year as an alternative source of wheat after the Russian invasion of Ukraine disrupted trading channels.
In 2020, India’s ag exports were worth $39 billion, said the WTO counter-notification. “India’s agricultural export growth of 65% from 2010-2020 has been supported by India’s rice exports, which increased by 244% over the same period, accounting for 24% of all Indian agricultural exports,” said the document. It said input subsidies and market support prices were the primary forms of assistance to farmers. “This support appears to have contributed to expanding production and government stocks, coinciding with increased exports.”
To read the counter-notification, click here.