Three sides to every story

Arthur Dunkel's legacy of proposals on patent, science and investment laws continues to be perceived differently. Even in individual countries, there are differences of opinion - acceptance, moderation and strong opposition. Supporters contend scepticism of the proposals arises from misunderstanding the market process. Others say countries with a strong genetic diversity base can - and should - protect their interests. Still others argue the proposals are only a way to ensure developed countries continue their domincance

By Gail Omvedt
Last Updated: Sunday 07 June 2015 | 21:11:47 PM

Three sides to every story

-- (Credit: Rustam Vania)Fears over seed patents are exaggerated
THOUGH farmers differ widely on the effect the so-called Dunkel Draft (DD) will have on agriculture, the influential section of intellectuals seems convinced the DD and the General Agreement on Tariffs and Trade (GATT) will be overwhelmingly destructive. Unfortunately, the fact is that most farmers and most intellectuals have neither read the DD nor given much thought to the issue; instead, they voice arguments that are based on the faith they place in the integrity of their leaders. Anti-DD opinion has been built up in mostly stage-managed forums, where raising questions is looked on with suspicion.

I have read the DD and I have some familiarity with the production process in agriculture. This is why it is hard for me to understand the alarmist prediction of DD opponents that "multinational corporations (MNCs) will come and take over our seeds." The fact is that patenting will not make any difference to traditional varieties as the agricultural process makes it necessary to buy them fresh each year to maintain productivity. So, if more MNCs come in, it will simply mean more seed varieties being available and though some may be high-priced, the farmers need not buy these. The argument that MNCs can force farmers to buy patented seeds that are both high-priced and less productive than traditional varieties, is an insult to farmers and a misunderstanding of market processes.

Traditional seed varieties are vanishing, but the remedy does not lie in widening the license-permit raj or banning MNCs, for these steps have not helped to preserve biodiversity in the past. Specific and positive steps are needed to save them along with more research in India. This requires several preconditions: an economic structure that forces Indian business to compete and innovate, rather than merely copy; motivating scientists by ensuring rewards for research; perhaps enacting more patent protection; providing an alternative to the fossilised bureaucracies of government establishments, and giving more freedom and economic power to farmers. We say that farmers are the original biotechnologists (and women, the original farmers), which raises the question as to why society has not been able to provide farmers with enough income, a decent living standard and better control of their own resources, which would enable them to influence the type of research being done or even to innovate on their own.

The current fear among intellectuals about the DD is an exaggerated fear of the market process and refusal to deal with the harmful effects of state intervention.

This is the most crucial area for Marxist rethinking today. The belief that the market generates "monopoly" control is a fallacy; the truth is business interests have always required state intervention to gain control. For example, small Indian seed companies could survive, compete and bargain with MNCs if the state does not favour the latter. Today's "global" economics is forcing big corporations to diversify their command structure and give autonomy to local divisions.

If we are concerned with agriculture, we should stop talking in emotive terms only and, instead, we must understand the political economy of food. Nearly two decades ago I wrote a booklet following the World Food Conference in Rome, where the prospect of famine and the use by the US of the "food weapon" were very much in the air. Since then, many countries have attained food self-sufficiency, but others remain famine-prone and dependent on food imports.

The major lesson of this era is that it was not free trade that has ruined Third World agriculture and made these countries dependent on foodgrain imports.

There have been two types of state intervention: large subsidies for agriculture, especially agriculture exports in Europe and North America, and the policy of most Third World governments of keeping foodgrain prices low in order to pacify the urban employed and keep down industry's wage bill. This has resulted in depressed food production by Third World farmers and encouraged, through subsidies, chemical input-intensive agriculture.

Nevertheless, there is an ongoing willingness on the part of some governments, including India, to accept "dumped" food from abroad, such as the recent import of three million tons of wheat. This has nothing to do with GATT or the free market; on the contrary, the Uruguay Round and GATT would end such dumping, through maybe not as fast or as thoroughly as we might like. In the interest of Indian farmers and the country's overall economic development, the government should push to open up trade and halt subsidies that actually hamstring production and block exports.

Intellectuals who claim to be safeguarding India's economic interests should stop talking nonsense, such as GATT would force us to halt farm subsidies.GATT does not represent "recolonisation" and those who assert the opposite are not basing their assertions on a Leninist theory of imperialism. They may be borrowing ideas from people like Andre Gunder Frank and the "neo-Marxists" of the 1960s and 1970s, who talked of free trade and "free trade imperialism" and of the unchanging relations of dependence.

In the development of imperialism, monopolies divide up the market and countries, the world. The GATT process is entirely different from such a division of the market for it concerns countries that are negotiating together on the basis, "You open up your market to our companies and products and we'll open our markets to yours."

This is not monopoly; it is regulated competitive capitalism.

Gail Omvedt is a Maharashtra-based social scientist and activist.

Small increase in exports can boost income

-- PROPRIETY demands India's participation in the final round of the GATT negotiations on the Dunkel Draft (DD). A multilateral system of trade and technology transfer arrangements has its own set of advantages and India must help in the foundation of an equitable, transparent and efficient mechanism for the future.

A global effort, however, should be made to modify those rigid formulations in the present DD that will hurt the interests of Third World countries. The existing notion that subsidies for Third World agriculture have to be limited to pre-determined arbitrary limits does not take into account that the international price basis of these calculations is extremely shaky.

The argument that India's net agricultural subsidies are less than 10 per cent reflects a mindset that will not be able to protect its interests. As Indian agriculture diversifies itself, particularly in dry land areas, and its soil and water problems in rain-fed areas are resolved, the farmers will switch from low-yielding, mono-crop millet to wider, cropping patterns, including high-yielding cereals, oil seeds, cotton, tobacco and dry land horticulture and forestry. For crops like cotton, tobacco and groundnut, the subsidy given in many areas to the Indian farmer, as measured by the current DD, can be higher than 40 per cent. If the diversification of Indian agriculture to a more sustainable pattern of development is to be maintained, India will have to protect this interest.

The contention that the DD permits small farmers to get special agricultural subsidies is incorrect. The draft only provides for targeted income subsidies to poor farmers not through the commodity route, via price support (check). Also, a large part of the subsidies given, for example, to capital formation in Indian agriculture, for watershed development, tank irrigation, percolation dams and so on, would become a target for scrutiny. In most cases, 25-50 per cent of capital costs are subsidised from plan schemes and this has not been taken into account by those who talk glibly of only irrigation, power, and fertiliser subsidies. India will have to negotiate its freedom to "subsidise" such development, even through the banking system.

In the whole area of genetic diversity and germplasm, we have great strengths, including an elaborate research system and the National Bureau for Plant Genetic Material. Our effort should be to negotiate our interests from a position of strength.

It needs to be noted that the quantities involved in possible agricultural exports, after the GATT round is completed, will be small in relation to Indian production, but the additional income and employment will have substantial effects in some regions and is certainly worth bargaining. Some calculations that are being currently shown around do not take into account that when all countries liberalise, aggregate demand becomes a constraint. A well-known FAO study of a global agricultural system took this aspect into account and came up with the finding that world trade in agricultural commodities would expand by only about 10 per cent quantitatively, while income consequences would be higher. For commodities like rice, oil-seeds and cotton, the present level of world trade involves only a small part of Indian production and DD additions would be limited. The income consequences, however, would be beneficial for some regions, especially the dry zones, and are worth negotiating.

Y K Alagh is vice chancellor of Jawaharlal Nehru University.

North gets soft options on subsidy cuts

-- (Credit: Rustam Vania)THERE are some in India who believe that the Dunkel Draft (DD) would lead to a reduction of subsidies paid by developed countries to their farmers and this would help agricultural produce exports from India and other developing countries. They are the victims of an illusion created by the DD that it aims to reduce agricultural subsidies. What DD aims to do is to change direct subsidies to indirect, but provide enough room for developed countries to continue to subsidise their agriculture.

The loopholes available to the developed countries are subsidies that are exempt from the calculations of the aggregate measurement of support prices, such as payments to farmers that are unrelated to production levels. This so-called "de-coupled income support" involves environment-related subsidies and subsidies for backward regions. That these indirect subsidies can totally neutralise the effect of any reduction of direct subsidies is shown by the case of "de-coupled income support" in the European community.

In June 1992, the European Economic Community adopted a regulation dealing with the support to be given to some arable crops. According to this regulation, beginning 1995, cereal growers will be paid ECU (European currency unit) 207 per ha (Rs 8,000 per ha) and oilseed growers will be paid ECU 359 per ha (Rs 15,000 per ha) beginning this year. Clearly, with this kind of subsidy, European farmers will be able to compete effectively in the international market even if their export subsidies are withdrawn. It is another matter that the DD is not demanding elimination of export subsidies given by these countries, but only ensuring limited reduction. The point is that even the limited benefit from these reductions is going to be taken away by such subsidies as "decoupled income support".

This change in the form of subsidy allowed by the DD means, in effect, that European farmers will continue to be competitive even when their production cost is higher. Indeed, the texts on European agricultural reform make it clear the aim is to make exports competitive while protecting living standards of farmers. It is no one's position that European farmers should not be compensated for loss of income. The problem is that the indirect subsidies are also applicable to exports and this will mean international agricultural markets remain as distorted as they are now. Developing countries would be sadly mistaken if they expect the DD to level the playing field for them. Criticism of the DD's indirect subsidies should not be construed as a brief for free trade or support for the policy of exporting agricultural products from hungry developing countries. It is made to show people willing to accept the DD's unpalatable aspects in the hope of gaining dollars by exporting agricultural products, have not thoroughly analysed the Dunkel proposals. The lure of earning foreign exchange has made the Indian government accept in principle the opening up of Indian markets to import of agricultural commodities, the application of international discipline on domestic agricultural policies and the introduction of plant breeders' rights (PBR).

Of these, PBR has gained the most attention, as a form of monopoly rights similar to patents and applicable plants. The government has been trying to make PBR acceptable to Indian people by insisting that the right of farmers to their seed stock will not be compromised. While the DD does not demand a regime immediately that would take away the farmer's seed rights, this might happen after the policy is reviewed in four years.

What will happen immediately is that the new seeds that come into the market and are covered by PBR can be commercially multiplied only with the breeder's permission. This legalised monopoly will result in an increase in seed prices. In the US, such monopolies have doubled the price of soya bean seed. In situations where competition is lacking with publicly bred varieties, seed prices could increase higher.

Today, farmer-to-farmer sale of seed plays an important role in the spread of new varieties in India and the stress should be on improving these sales. But PBR will wipe out such farmer-to-farmer sales and severely affect small seed companies, of which there are hundreds in India, supplying seed that is healthy, uncontaminated and productive.

Supply of good-quality seeds plays a crucial role in agricultural development, but an obsession for new seed varieties should not blind us to the enormous need for the services provided by the small seed companies. Under a PBR regime, these seed companies would be forced to close or be taken over by big companies, especially multinationals. The fact is that instead of seeing PBR as an instrument to promote innovativeness, it should be seen as an instrument to establish the hegemony of multinationals over the Indian seed industry.

Usha Menon is a member of the National Working Group on Patent Laws.

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