The Story behind Farm Subsidies
There is significant pressure on developing countries to withdraw their farm subsidies. Major developing economies such as India, China & Indonesia have strongly opposed the US & EU and warned them against withdrawal of farm subsidies, as they have billions of mouths to feed. This blog examines the issue and the points of contention! The Contention India's Food Security Act requires its government to feed the poor. India has a well established PDS (ration shop) system through which it distributes basic food grains and kerosene to its poor. The government buys food from farmers at a pre-determined price called MSP (Minimum Support Price), stocks them in its godowns and distributes it through the 5 lac ration shops across the country. For example, the MSP for rice may be Rs.32/kg, but at PDS it is sold to the poor at Rs.5/kg. The difference of Rs.27/kg is borne by the government, which works out to an annual expense of $20bn. According to the west, the difference between