Archive for the ‘sweat shops’ Category
Standards, not double standards : Bhaskar Goswami
India should take US-backed WTO attempts to thrust GM foods on us with a pinch of salt.
If things do not work your way, seek influence of a heavy weight. This is exactly what the United States is trying to do. With India not accepting genetically modified (GM) foods, the US is trying to rope in the World Trade Organisation (WTO) to exert pressure. Knowing that India has not violated any WTO norms, the US is still trying to use the Geneva route to open the Indian market to GM foods.
It is opposing India’s efforts to set standards for labeling GM products. Terming it as trade restrictive, it has threatened to invoke the WTO provisions on creating technical barriers to trade, and sanitary and phyto-sanitary measures.
Either way, India is refusing to blindly toe the American line. The government has taken two significant measures to regulate GM products. First, the ministry of commerce has issued a notification, which prohibits the import of genetically modified organisms (GMOs) for food, feed or processing, industrial processing, research and development for commercialisation or environmental release without the approval of the Genetic Engineering Approval Committee (GEAC).
Second, the health ministry has amended the Prevention of Food Adulteration (PFA) Act, and issued a similar notification which covers import, manufacture, storage, distribution or sale of GM food. Both these new rules have also made labeling of GM products compulsory.
Human safety from eating GM foods has been a matter of great concern. After GM soya was introduced in the UK, for instance, cases of allergies went up. A 2005 study found that GM pea, which is under development, caused severe immune responses in mice. Another study reported that GM maize-fed rats developed major lesions in kidneys and livers. Likewise, a number of other scientific studies have pointed out the harmful effects of GM food.
Notwithstanding GM industry claims to the contrary, the fact remains that many aspects of this technology still remain uncertain and several products are being released into the market without adequate tests and trials. In agriculture, for example, GM and non-GM crops cannot grow in isolation and can easily combine through pollination, mixing of seeds etc. Experiments to study the impact of such contamination on the environment and food have simply not been done. It is, therefore, to prevent illegal imports, and also to enable consumers to make a conscious choice that labeling norms are essential.
Since the US does not segregate GM products from non-GM ones, almost all processed food products contain traces of GMOs. This is also the main reason why they persistently oppose labeling. Ironically, while goods imported into the US have to meet the most stringent specification, whenever any US exporter is directed to follow the same procedures by the importing country, it is termed as a trade barrier. When similar tactics failed with India, the US turned to the WTO, which has legal instruments, to help it out.
Using multilateral bodies to prevent GM labeling is not new. The US has consistently blocked international legislation on labeling at various forums like the United Nations’ Food Standards Committee and Codex Committee on Food Labeling. However, this time it has challenged the sovereign right of India to decide about its food and its safety, something which is not only against democratic principles but also runs contrary to the Cartagena Protocol on Biosafety. As it is, under pressure from edible oil importers in India, the commerce ministry has exempted the import of GM soybean oil from labeling requirement till March 2007. Even the amended PFA of the health ministry is quite lax. Instead of rigorous biosafety tests before allowing the import, the ministry is merely relying on the safety information provided by the importer.
Further, the amendment is coming at a time when there is no laboratory in the country, which can test products for GM presence. Instead of protecting the health interests of the citizens by prohibiting production or import of GM food, the amendment in its present form intends to legalise its trade.
Now, through the WTO, the US wants India to lift all curbs on the import of GM products into the country.
Incidentally, major trading partners of the US, such as Canada, Japan, South Korea, European Union and Australia follow their own GM labeling protocols but the US has never brought such complaints against these countries.
It is obvious that the notifications are not only discriminatory but meant to browbeat India into submission. While the extreme reaction of the US is not surprising, the government should resist the attempt of US to dump GM food into India and concerned citizens should insist on strengthening the PFA in the interest of the consumer.
The writer is with the Forum for Biotechnology & Food Security, New Delhi
Wheat Imports : Subverting Procurement, Cheating Farmers – Bhaskar Goswami
Countercurrents.org, 16 May 2007
http://www.countercurrents.org/goswami160507.htm
For the second year in the running, India is importing wheat. Last year the government justified imports on account of lower production. This year it is being justified in the name of higher prices for farmers.
In order to meet the buffer stock requirements, the government has decided to import up to 50 lakh tonnes of wheat this year. Thanks to the government’s policies, from a wheat surplus nation, India today has been reduced to the world’s largest importer of wheat.
Alarm bells began ringing in early March when, despite predictions of a bumper wheat harvest in India, the US Wheat Associates – a trade body funded by the federal government and US wheat producers – said India will import up to 30 lakh tonnes of wheat this year. Well, not only has the government followed this diktat, but has revised this estimate by 20 lakh tonnes more as a small favour to multinational grain corporations.
The rush to go for imports right now is questionable. With an additional 18 lakh hectares under wheat, the production has increased by forty lakh tonnes. Since the peak wheat procurement season is during the second half of May, there is ample time left for the government to meet its procurement target of 151 lakh tonnes. On 1st May, the Food Secretary said that stocks are adequate to last till January 2008. On 5th May, the Food and Agriculture Minister, Sharad Pawar announced, “Last year, the buffer stock position was only two million tonne, this time it is 4.5 million tonne. That is why I am quite comfortable about the buffer stock.”
The Minister justified the move to import wheat by adding, “However, I want to build up stock for the next year”. This, when the wheat produced is adequate to meet the country’s requirements and there is no shortage in the buffer stock. Wheat for the next season is yet to be planted but the government is apprehensive of a bad crop next year!
“If the farmer is getting a better price, as Agriculture Minister I am the happiest person. However, as a Food Minister, if I face any problem, I will import,” said Pawar. He was referring to farmers getting a better price by selling to private companies thereby leaving little for the government to pick up. This is a replay of the 2006 argument, when the Food Corporation of India (FCI) failed miserably to meet its procurement target. By offering a lower price to farmers, the government made out a case for imports, which translated to a windfall of Rs. 5,100 crores to grain corporations like the Australian Wheat Board, Glencore, Toepfer, Cargill, etc.
This year, the procurement is worse than what it was last year. By end of April, even half of the procurement target was not met, and a shortfall of 25 lakh tonnes by the end of the procurement season is possible. This is because the Minimum Support Price (MSP) of Rs. 850 per quintal offered by the government is much lower than the prevailing market rate of over Rs. 1,000. Naturally, bulk of the wheat is being cornered by the private sector. As expected, the gains to grain corporations this year will also be much higher than 2006. Lack of rainfall in Europe, Australia and South Africa has affected wheat production and depressed world wheat stocks to their lowest in the last 25 years. Wheat from Ukraine and Russia will hit markets only by August, while Pakistan is still a small exporter. Major wheat exporter, Argentina, has banned wheat export to control domestic prices.
The only players left are the US and Canada, where the price of wheat is already up by $40 per tonne over last year. Given the global supply crunch, announcement of imports by India will push the price through the roof, as it happened last year. While last year India paid around $207 per tonne of wheat (approximately Rs. 930 per quintal), the cost this year is likely to be upwards of $300 per tonne (or Rs. 1,200 per quintal at the current exchange rate), a rich bonus for corporations.
Instead of doling out Rs. 6,000 crores to corporations for importing 50 lakh tonnes of wheat, a hike in the MSP would have fetched an even higher price to farmers than what they are receiving from private companies and also helped FCI meet the procurement target. But then that never was the intent.
By paying a premium to grain corporations and denying a fair price to our farmers, the government has sent a clear message to farmers: they should no longer expect a guaranteed price for what they produce.
Notwithstanding the government’s claims, in reality it is building a case to dismantle the price support and procurement mechanism which are designed to protect farmers from price volatility and the poor from starvation. The Economic Survey 2005-06 states “Market for farm output continues to depend heavily on expensive government procurement and distribution systems. A shift from the current MSP and public procurement system and developing alternative product markets are essential for crop diversification and broad-based agricultural development”.
The government is following this dictum. By deliberately offering a lower MSP and importing at higher costs, the system is being covertly scrapped. The Agriculture Produce Marketing Committee Act has been amended to allow private agencies to directly procure food grains from farmers. The amended Essential Commodities Act allows storage and movement of food grains. Agriculture commodities can be traded in futures markets involving speculation. No wonder multinational grain firms are cornering bulk of the food grains produced across the country.
There is more. As part of the larger game plan to shut down the FCI, the government is also toying with the idea of issuing food stamps to the Below Poverty Line families, which will reduce the food subsidy bill. There is another proposal to replace the Public Distribution System (PDS) with direct cash payments to poor families.
To reduce storage costs, the government is considering playing in the futures market in the months when it needs food grains for running the PDS – there would be no need for an MSP in such a case. The warehousing system is also being privatized. Recommendations of the consultancy firm McKinsey hired by the Food Ministry are already being implemented and FCI’s capital costs have been reduced, workforce slashed, minimum buffer stock for rice lowered, and private companies engaged in procurement.
From all this, it is clear that instead of fixing the problems at FCI, the government has decided to fix the blame on FCI and close it down. That there are major problems with the functioning of the FCI is undeniable. However, dismantling it will amount to another safety net for farmers as well as the poor, who depend on the PDS, going down. This, of course, suits the government. After all, food subsidy for the poor costs the exchequer Rs 23,986 crores during 2006-07.
The Indian State has a history of subverting procurement and price support mechanisms. Back in 2002, dairy cooperatives were on the brink of being wiped out courtesy dumping by the developed countries, which was facilitated by the State. In case of cotton, the Maharashtra government subverted the monopoly cotton procurement scheme and today the price being paid to cotton farmers is a fraction of what they received earlier. Similarly, Marketfed in Kerala, which procures pepper from farmers, is facing subversion. The cases of cardamom, coconut, cashew – in fact, almost all agri-commodities – have a common thread running through them: deliberate subversion of procurement and manipulation of support price.
The intentions of the government are quite clear – deny farmers a higher price for their produce and dismantle the price support and procurement machinery. While farmers may presently be getting a higher price by selling wheat to private players, the euphoria is unlikely to last long.
In the absence of MSP and procurement by government, there are very high chances of concentration of agri-business corporations. Once this cartel takes over, they will dictate the price to Indian farmers. With imports being made a norm, the future of wheat farmers is indeed bleak.
It is time to play a requiem for India’s wheat revolution.
Special Export Zones – SEZs : Lessons from China
In Motion Magazine, 14 Feb 2007
Countercurrents.org, 13 Feb 2007
India Together, 9 Feb, 2007 – http://www.indiatogether.org/2007/feb/opi-sezschina.htm
While single-minded pursuit of exports has helped China touch record growth figures, millions have been left behind, besides incurring huge environmental costs. And without even the limited dose of welfare that China offers its poor farmers, India must wary of copying China’s SEZ-approach, writes Bhaskar Goswami.
China’s record economic growth rate fuelled by the Special Economic Zones (SEZ) is often advocated as the reason for India to adopt this approach. Since the 1980s, China implemented a series of measures and policies with the sole purpose of achieving rapid economic growth. As evidence over the years has shown, this single-minded pursuit of growth has lowered the efficiency and effectiveness of economic policies, besides incurring huge resource and environmental costs. The Chinese experience offers a valuable lesson for India.
Cost of Export-driven Growth
China has to feed 22 percent of the world’s population on only 7 percent of land. In July 2005, China’s countryside had over 26.1 million people living in absolute poverty and was home to 18 percent of the world’s poor, according to Chinese Minister Li Xuju quoted in the People’s Daily. Every year, an additional 10 million people have to be fed.
Despite this daunting target, between 1996-2005, “development” caused diversion of more than 21 percent of arable land to non-agricultural uses, chiefly highways, industries and SEZs. Per capita land holding now stands at a meager 0.094 hectares. In just thirteen years, between 1992 and 2005, twenty million farmers were laid off agriculture due to land acquisition.
As more arable land is taken over for urbanization and industrialisation, issues related to changes in land use have become a major source of dispute between the public and the government. Protests against land acquisition and deprivation have become a common feature of rural life in China, especially in the provinces of Guangdong (south), Sichuan, Hebei (north), and Henan province. Guangdong has been worst affected. Social instability has become an issue of concern. In 2004, the government admitted to 74,000 riots in the countryside, a seven-fold jump in ten years. Whereas a few years ago, excessive and arbitrary taxation was the peasants’ foremost complaint, resentment over the loss of farmland, corruption, worsening pollution and arbitrary evictions by property developers are the main reasons for farmers’ unrest now.
While rural China is up in arms against acquisition of land, SEZs like Shenzen in Guangdong showcasing the economic miracle of China, are beset with problems. After growing at a phenomenal rate of around 28 percent for the last 25 years, Shenzen is now paying a huge cost in terms of environment destruction, soaring crime rate and exploitation of its working class, mainly migrants.
Foreign investors were lured to Shenzen by cheap land, compliant labour laws and lax or ineffective environmental rules. In 2006, the United Nations Environment Programme designated Shenzen as a ‘global environmental hotspot’, meaning a region that had suffered rapid environmental destruction.
There’s more. According to Howard French, the New York Times bureau chief, most of the year, the Shenzen sky is thick with choking smoke, while the crime rate is almost nine-fold higher than Shanghai. The working class earns US$ 80 every month in the sweatshops and the turnover rate is 10 percent – many turn to prostitution after being laid off. Further, real-estate sharks have stockpiled houses which have caused prices to spiral and have created a new generation of people French calls “mortgage slaves” in an article in the International Herald Tribune on 17 December 2006.
The mindless pursuit of growth following the mode of high input, high consumption and low output has seriously impacted the environment.
In 2004, China consumed 4.3 times as much coal and electricity as the United States and 11.5 times as much as Japan to generate each US$1 worth of GNP, according to the The Taipei Times. Some 20 per cent of the population lives in severely polluted areas (Science in Society) and 70 percent of the rivers and lakes are in a grim shape (People’s Daily). Around 60 per cent of companies that have set up industries in the country violate emission rules.
According to the World Bank, environmental problems are the cause of some 300,000 people dying each year. The Chinese government has admitted that pollution costs the country a staggering $200 billion a year – about 10 per cent of its GDP.
While export-driven policy for economic growth has helped China touch record growth figures, the income gap is widening and rapidly approaching the levels of some Latin American countries. Going by a recent report by the Chinese Academy of Social Sciences, China’s Gini coefficient – a measure of income distribution where zero means perfect equality and 1 is maximum inequality – touched 0.496 in the year 2006. In comparison, income inequality figures are 0.33 in India, 0.41 in the US and 0.54 in Brazil. Further, the rural-urban income divide is staggering – annual income of city dwellers in China is around US $1,000 which is more than three times that of their rural counterparts.
It is in this backdrop that India’s SEZ thrust must be seen. Following China, India is replicating a similar model where vast tracts of agricultural land are being acquired for creating SEZs and other industries.
The September 2005 notification on Environment Impact Assessment is lax for industrial estates, including SEZs, and apprehensions of dirty industries coming up in these zones are quite real. Further, with drastic changes in labour laws favouring industry being considered, the plight of workers in these SEZs will be similar to those in China. Such a mode of development is environmentally unsustainable and socially undesirable.
Further, it is now widely acknowledged that Chinese exports have also been boosted by its undervalued currency, something which Ben Bernanke, chairman of the US Federal Reserve, terms as an “effective subsidy”. This is a luxury that Indian exporters do not enjoy. The argument for setting up SEZs to emulate China’s export-led growth is therefore questionable.
Is export-driven growth through SEZs desirable for India ?
There is no doubt that exports play a significant role in boosting GDP. However in the case of a country with a sizeable domestic market, the choice lies with the producer to either export or supply to the domestic market. Ila Patnaik of the National Institute for Public Finance and Policy wrote in the The Indian Express in December 2006 that household consumption in India at 68 percent of the GDP is much higher that that of China at 38 percent, Europe at 58 percent and Japan at 55 percent. This is an important source of strength for the domestic manufacturing industry of India.
Given the high level of consumption of Indian households, it is quite possible that this rush is fuelled not by the desire to export out of the country but by the possibility of exporting from SEZs into the Domestic Tariff Area (DTA). The SEZ Act is also designed to facilitate this. Any unit within the SEZ can export to the DTA, after paying the prevailing duty, as long as it is a net foreign exchange earner for three years.
It is therefore a win-win situation for these units.
The sops in a SEZ will reduce the cost of capital while labour reforms will ensure trouble-free operations. Further, given the considerable international pressure to reduce industrial tariffs, SEZs will be able to export to the DTA at highly competitive prices. This does not augur well for units outside the SEZs who will now face unfair competition. As cheaper imports have already played havoc with the livelihoods of artisan sector of the economy, cheaper imports into DTA from SEZs will also adversely affect the domestic industry. No wonder many of them now want to migrate into SEZs.
In a country with 65 percent of the population depending on agriculture as a means of livelihood, industry ought to be complementary to agriculture. Through SEZs however, industry is being promoted at the cost of agriculture. Valuable resources spent to create SEZs will be at the cost of building better infrastructure for the rest of the country, something that will affect both the domestic industry as well as agriculture.
Other lessons India could learn from China : Welfare
While the Chinese experience with export-driven economic growth definitely offers many sobering lessons, there are many other areas where India can learn from China. China has initiated a series of measures to arrest social tensions and rising inequality in rural areas. In April 2004, the State Council, China’s cabinet, halted the ratification of farmland for other uses and started to rectify the national land market. The Minister of Agriculture, Du Quinglin, promised “not to reduce acreage of basic farmland, change its purpose or downgrade its quality”.
China also abolished agricultural tax in 2006 and increased subsidy for food grain production by 10 percent. To boost rural income, the selling price of grain was increased by 60 percent in 2005. In 2004, out of a total 900 million farmers in China, 600 million received US$ 1.5 billion (Rs.6,630 crores approximately) as direct subsidies. 52 million of the Chinese farmers have joined in the rural old-age insurance system and 2.2 million received pensions in 2005.
More than 80 million farmers had participated in the rural cooperative medical service system by the end of 2004, and 12.57 million rural needy people had drawn allowances guaranteeing the minimum living standard by the end of 2005.
India, on the other hand, either does not have any of these safety nets or is in the process of dismantling the few that exist.
There is much to learn as well as unlearn from the Chinese experience.
Until that is done, millions of poor across the country will be made to pay an even higher price than the Chinese did for following this flawed approach.
Bhaskar Goswami 