SANEI: Ongoing Studies

TRIPS and Safeguard Mechanism: Impact of Mailbox Applications on Affordability and Accessibility of Essential Medicines in Post 2005 Phase

Summary of the Proposal

On January 1st 2005, countries which were yet to grant patents for pharmaceutical products, such as India, opened the mailbox, started examining the pending patent applications - together with other new patent applications filed after January 1st 2005 - to grant or reject patents in accordance with their own patentability conditions. Following the full implementation of the TRIPS Agreement in 2005 in India and the few other developing countries not yet granting pharmaceutical patents, access to new and essential drugs may be expected to become more difficult. All new drugs may be subject to at least 20 years of patent protection in all but the least developed countries and the occasional non-WTO country such as Somalia, Palestine and Macedonia. The apprehension is that 20-year monopolies will drive up the price of treatment in India and in hundreds of importing countries—the world’s source of supply of generic HIV medicines may disappear.

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Evaluation of Sanitary and Phytosanitary Measures of Uruguay Round on Supply Chain: A study on Tea sector of Nilgiri region of South India

Abstract

Sanitary and Phytosanitary Measures (SPS) introduced in Urguay round provides importing nations a choice of imposing quality standards for importing products for safe health of consumers. Maximum Residue Levels (MRL) are one of them but not uniform and can vary from nation to nation and product to product. Such flexibility could lead to disadvantageous/ cost escalation to South Asian economies and could negate inherent advantages of tropical conditions. As SPS is going to be yardstick in quality conscious world trade, it is essential for South Asia to a) oppose the indiscriminate prescription, and b) adopt suitable measures as early as possible. Existing studies (very limited) are purely doctrinal in nature and there is crucial gap with reference to the farm practices, research developments and various bottlenecks in value chain network. To have a better understanding of these gaps and if possible to bridge this, this study is proposed with focus on Tea, which is known for its labour intensive nature, livelihood for large section of Small Tea Growers. In addition, it is a significant source of foreign revenue as well. Methodology adopted would be a) farmer interactions to study present practices and gaps that would bearing on MRLs, b) Interviews with stakeholders i) Growers (different land holding categories), ii) their Association, iii) Processors, iv) Auctioneers, v) Exporters, vi) State Agencies and vii) Certifying Laboratories. Outcome of the study would assist various stakeholders to initiate proactive measures. Study area is Niligiries of South India

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A Study on Transformation of Indian Agriculture in the Post Doha Scenario and its Macro Economic Impact

Abstract

The aim of the project is to examine the process of transformation the agrarian economy of India is undergoing under the post Doha situation and secondly, to study some of the macro-economic impacts, this process is generating. Our hypothesis is that such transformation not only has serious impact on the conditions of viability and economic sustainability of the Indian agrarian economy, but it also affects the economy at large through inter-sectoral linkage effects. On one hand, we would undertake panel data analyses involving crop-diversification intensity, performance of rice and wheat cultivation, international competitiveness of India’s agricultural production and on the other, we would investigate the changing pattern of food consumption. In order to test the hypothesis of possibility of growing food insecurity due to crop-diversification, we have to conduct statistical projection of item-wise food requirements and availability at different future time points. We shall use both macro level secondary data and primary household level data. We shall also collect information on working of contract farming in order to identify the factors that stand in the way of growth and sustainability of such system and test our hypothesis that it is highly difficult for the farm sector to independently sustain under the present globalized market situation. Finally, we would try to capture the probable macroeconomic impacts of crop-diversification and exports through a macro-theoretic modelling exercise.

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The Impact of Doha Round on Indian Horticulture

Abstract

India is known to be defensive in the area of agricultural negotiations at the WTO. However, there are areas where India can be offensive as it has significant cost advantage. Horticultural sector is one such area. The proposed study intends to assess the potential impact of Doha Round on Indian horticultural trade. Study will be conducted for select horticultural products and with respect to the US and European markets. A relatively unrestricted, data determined, econometric modelling approach based on theerror correction mechanism (ECM) will be used. Though the study is to assess the impact of Doha Round, it will help India understand its negotiating position better by looking at one of the offensive interests it has in agriculture, as the conclusion of the Doha Round is unlikely to happen soon.

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IMPACT OF WTO ON OILSEED GROWERS AND PROCESSORS IN ANANTAPUR DISTRICT OF ANDHRA PRADESH IN INDIA

Abstract

Out of 310 million tones of world production of edible oilseeds, India produces about 20million tones with an area of 23 million hectors. Annual demand for oilseeds is about 25million tones. Oilseed sector in India is exposed to international trade since early 1990s. As a result of shortage of edible oils, India emerged as largest importer of edible oils in world in late 1990s and early 2000s. India’s share of world imports is about 18% in palm oil and about 7% of soyaoil. Consequently oilseed farmers/processors are exposed to international prices, which are highly volatile with declining trend in recent years. However, among all oilseeds, India has comparative advantage in production of groundnut oil, which is traditionally a major export item for India. Groundnut occupies about 28% of total area under oilseeds and 32% of production of total oilseeds in India. We have done pre-consultation with farmers and processors in Anantapur district to know specific impacts of recent liberalization policies on their major crop “Ground Nut”. Accordingly this research proposal to examine in details the problems in production,post-harvest management/processing and marketing of Ground Nut in the district.

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Title of the Project: Assessing the Trade Liberalization Impact on Cropping Pattern Change, Technological Adoption and Income Distribution in Tamil Nadu, India.

Abstract

Justification for the Study The Indian government’s reforms have provoked mixed reactions from farmers. While the large export oriented agro-based farmers seem to be reaping some rewards, the smaller ones argue that the effects of the Uruguay Round agreements is adverse. Many issues were unresolved in Doha round of negotiation and impasse is continuing even after Hong Kong negotiation. The reforms have opened up trade in agriculture and given a boost to exports, which have been growing at 20 per cent per year since 1991. At the same time, they have resulted in hardships for many small farmers. The gainers include farmers with the capital to buy new technology and inputs and those with the ability to switch to the production of cash crops that enjoyed higher prices over food crops, whose production has declined. The losers include the small farmers and landless labourers whose incomes declined. So what went wrong?

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Challenges, Opportunities and Imperatives for Techno-Economic-Institutional Reforms under Trade Liberalisation: Case Studies of Tea and Rubber Plantation Sectors in India

Abstract

The launching of economic reforms under the WTO mandated trade policy regime has seriously affected the Indian plantation sector in general and the tea and rubber production sectors in particular. One of the most explicit impacts of the trade reforms had been the emergence of market uncertainties leading to a fall in the international and domestic prices of commodities caused by the dilution in tariff and non-tariff protective barriers. Prima facie, the tea planters as well as the rubber producers had responded vehemently to the crisis in terms of adopting various measures to overcome the impasse. The coping mechanisms adopted by the tea planters and the rubber producers broadly confined to cost saving and labour displacing measures such as dilution and even discarding of scientifically recommended agro-management practices, labour retrenchment, lockouts and resistance to routine tripartite wage negotiations, etc. In the context of the impending crisis in the plantation agriculture in general and tea and rubber plantations in particular, it is important to note that there have not been any serious attempt at understanding the crisis in a proper perspective. In this backdrop, the proposed study is an attempt at understanding the interface between the various stakeholders with respect to the dynamic responses towards the crisis in tea and rubber plantations in the context of the trade reforms driven by liberalisation. It addresses the critical issues of technology, market structure, and institutions in the case of the two major sub-sectors of tea and natural rubber (NR) plantations. Whereas the first represents a classic case of export-oriented activity, the latter represents a case of import substitution strategies followed by the country. To get a holistic perspective of the impending crisis, the study would cover three major states; viz., West Bengal and Assam in North/ North Eastern India and Kerala state in southern India, which are the dominant states in tea and rubber productions respectively.

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Implications of Agricultural Trade Liberalization : An Analysis of the Growth Components and Contributory Factors for Agriculture across Indian States

Abstract

Global agricultural market distortions act as major impediments to Indian agricultural growth and trade distortions have negative welfare effects. It is contended that focus on exports would provide impetus to the growth of agriculture in the country. Despite the availability of safeguard instruments post Doha, protecting the livelihood and food security concerns of farmers to price volatility and import surges assumes importance. For this the necessary condition would be availability of proper mechanisms and enabling infrastructure, which would allow the cultivators to take advantage of trade liberalization. The relative importance of enabling and coping strategies varies across regions and are not the same for the country of large and varied dimensions as India. The battery of appropriate policies needs to be identified depending on the unique circumstances of each region. The proposed study attempts to analyze major components of output growth in two diverse agro-climatic situations. The contribution of various technological inputs an infrastructure factors to aggregate agricultural growth would be ascertained in the pre- and post- trade liberalization phases. Methodology would entail decomposition analysis, computation of total factor productivity indices and identification of sources of growth for output. Such an analysis can provide valuable insights into the technological / infrastructural factors which help/impede the exploitation of known possibilities while retaining the competitive edge. It would indicate weaknesses/changes required in programmes/policies which would make agriculture sector more profitable, facilitate better market access, and also provide inputs for future investment plans.

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Cost Benefit Analysis Of Buffer Zone Management In Chitwan National Park, Nepal

Abstract

This study assesses the conflict management of Buffer Zone in Chitwan district during the year 2007/08. A survey was conducted to collect information from User Groups by taking a sample of 203 members comprising 41 Rich, 67 Medium and 95 Poor family of Bachhauli VDC (Ward No. 1,2,3, and 4) of Chitwan district by using stratified random sampling technique, 20 Park staffs were selected and interviewed to gather information.

Eighty tourists were selected randomly to evaluate the
recreational value of Park. It was found that the major causes of conflict were insufficient kharkhadai collection period, ineffectiveness of animal preventive measures, inadequate compensation to human, domestic animals and crop damage, and monsoon flooding. The trend of utilization and collection of natural resources in three categories did not varied significantly but the dependency of poor was
much more than other categories. Most of the poor families were dependent on Park resources than other two categories due to illiteracy, lack of opportunities to sustain livelihood. Modern energy technologies for cooking materials were commonly used by higher caste but occupational and aboriginal ethnic groups were still heavily dependent on fire wood. This study showed that livestock was an important earning source where stall feeding was commonly started in the Park vicinity area. The negative attitude was fostered by the ineffectiveness of the adopted control measures and inadequate compensation. The tourism created employment opportunities to local people but it was unplanned and location specific. Since the programme has focused in both community development and conservation awareness activities, however, the study showed that it emphasized only public infrastructure development instead of sensitizing the members towards the conservation issues of protected areas.

To enhance conflict management efficiently, the policy recommendations are made focusing the major conflicting issues in natural resource sharing. The study examined how much Park visitors are willing to pay to visit and enjoy the Park. Annual benefits from the Park were considerable-the total annual consumer surplus or economic benefit obtained from recreation in the Park was approximately NRs. 23 million (US$ 34,21,162.7). Various factors influence the visitors -these include travel cost, household income, and the quality of the Park. Improvements in quality of the Park were likely to increase recreational benefits. The study recommends that a Park entrance fee of US$ 15 per person
be introduced, which could be utilized for Park management.

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Macroeconomic Impacts of Trade Liberalization in South Asian Agriculture.

Abstract

It is argued that a crucial impact originating from agricultural trade liberalization would be on the domestic (agricultural) terms of trade of the developing economies. This study would therefore attempt to examine the hypothesis whether the liberalization have led to changes in the agricultural terms of trade. We plan to carry out the analysis by employing data pertaining to economies in the south-Asian region, viz, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan and Srilanka. We will first construct comparable agricultural terms of trade indices in these economies over a long period of time (tentatively 1980-2006). Subsequently, we will examine the impact of trade openness on domestic terms of trade in agriculture. We will use econometric (regression and causality) analysis to gather insights on this question. This analysis is relevant because given the importance of the terms of trade variable; it can provide some useful insights about the possible impacts of agricultural trade liberalization on crucial policy indicators such as poverty or investment flows towards agriculture.

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Impact of Multilateral Agricultural Trade Liberalization on Household Welfare in Nepal

Introduction¹
Today the Doha Round of Multilateral Trade Liberalization is at a crossroad. The thorniest issue that has thus far prevented an agreement concluding the negotiations is the highly distorted agriculture sector in the United States (US) and the European Union (EU) that protects their farmers through complex array of policies in terms of export subsidies and import tariffs as well as domestic support measures. G-3 to which South Asia belongs, have to ensure their demand for special protection which they have already secured for their most sensitive agricultural products, do not extend in a way that negates the overall objective of providing access opportunities to their own markets.

Recently meeting of the four WTO Members including EU, US, Brazil and India, in Germany failed to converge on these key elements. However, the multilateral negotiations have now entered into a crucial stage following the issuance of the compromise draft “modalities” on 17 July 2007 by the Chairs of the agriculture and industrial tariffs negotiating groups. The drafts are based on WTO member governments; latest positions in the negotiations and are an assessment of what might be agreed for the formulas for cutting tariffs and trade-distorting agricultural subsidies and related provisions. The Chairs have identified specific figures for subsidy and tariff cuts that they think could form the basis for an acceptable agreement, enabling a comparison between ,say, potential constraints on US farm spending and India’s future industrial tariff rates. The numbers, the Chairs suggested, indicated that divisions had narrowed and a commercially substantial compromise within reach – but not without political courage. If there is enough give and take on all sides, a more liberal multilateral agricultural trading system thus should emerge from the successful conclusion of the Doha Round.

There is considerable debate as well as confusion on the implications of multilateral agricultural trade liberalization, particularly elimination of farm subsidies, on the poor countries. There is a nearly broad based consensus among a few pressure groups and many international institutions that elimination of farm subsidies by rich countries will benefit the poorest, least developed countries (LDCs). The main arguments are as follows. Agricultural subsidies and price supports allow rich countries to sell their agricultural products on world markets at prices that are below the cost of production. Critics thus claim that these policies inflict harm on poor countries by depressing world commodity prices artificially and thus making the food produced by them uncompetitive with imports. They also argue that these subsidies increase the volatility of commodity prices since support policies that are counter-cyclical with respect to domestic prices or shocks provide incentives for increased production when world prices are low. Further, they argue that these policies are likely to hurt the poorest residents of the poor countries because poor people are often farmers. Thus, eliminating support for rich country farmers will raise world prices and the incomes of the poor. Some even argued that LDCs can become net exporters once world prices increase as a result of elimination of agricultural support in rich countries.

However, some liberal trade economists are skeptical with above arguments. According to Jagdish Bhagwati, agricultural subsidies are certainly undesirable but the claim that removing them will help the poorest counties is “dangerous nonsense” and a “pernicious fallacy”. The main argument rests on a following observation: most poor countries are net importers of agricultural goods. As net food importers, they may be hurt by higher commodity prices that would result from agricultural liberalization in rich countries (Valdes and McCalla 1999; Panagariya 2002, 2004a, 2004b). Even the possible gain that net agricultural exporters in LDCs may enjoy from agricultural liberalization in rich countries are likely to be offset by other associated changes (Panagariya 2004 a; 2004 b). The premium enjoyed by LDCs exporters (except rice, sugar and bananas) under Everything But Arms (EBA) initiative, which allows them duty – and quota – free access to the EU markets, in terms of benefiting from the higher prices prevailing in the EU would be adversely affected. Opening up the EU markets to all comers will lower EU internal prices and hurt the LDCs sellers. Likewise, LDCs exporters will find difficult to comply with less transparent regulatory policies which rich countries may eventually replace more conventional barriers such as tariffs and quota.

Because of the diversity both within and among poor countries, the extent to which rich country support policies translate into lower incomes in LDCs is an empirical question. Some countries may import cereals, such as rice, wheat and maize, but export other commercial agricultural products such as sugar. Higher prices for exports and imports will have net effects that are difficult to predict ex ante. Even within importing countries, the poorest members of society may be net sellers of food.

The proposed study aims to assess the impact that the multilateral agricultural trade liberalization, particularly removal of the farm subsidies in major food items (such as rice, maize and wheat), could have on household welfare in Nepal.

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¹The agriculture chair’s text set out two potential levels of ambition for farm subsidy cuts, linking higher cuts in relatively deeper tariff reduction. It would have the US cap over all trade-distorting support (OTDS) at $ 13 billion or $ 16.4 billion, equal to a 73 or 66 percent cut respectively. The text would have the EU lower its OTDS spending entitlement by 75 or 95 percent. The paper set out rules for the elimination of export subsidies by 2013, in accordance with agreement at the Hong Kong Ministerial Conference in December 2005. As for market access, the agricultural chair’s text would have developed countries slash farm tariffs worth 75 percent and above by between 66 and 73 percent. Developing countries would cut tariffs by two-thirds of whatever is agreed to for developed nations, but would be allowed some adjustments to keep their average reduction below 36 or 40 percent.

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Micro Finance Institution and its Rule in Alleviating Rural Poverty in Nepal: A Socio-economic Analysis

(Case Study of Hill and Terai Region)

Abstract

The Agricultural Development Bank of Nepal (ADBN) was established in 1968 under the specific Agricultural Development Bank Act of 1967 to act as a main source of institutional credit for the rural community in general and agricultural development of the country in particular. ADBN has been an initiator of micro credit in the country for lending against poverty through SFDP. Analysts identified sustainability problems of SFDP due to several reasons including high overhead cost and low repayment performance. For sustaining SFDP, it is being transformed to SFCL. The study has the relevance to the profession of Rural Development since it is a profession which deals with the problem of individuals, groups and communities of the rural areas of the country. Small farmers represent the vast majority of the population and their aggregate development will provide country’s development as a whole. Along with this, this study will also help to find out the role that the women’s groups are playing for the women’s empowerment and how the credit program is helping women in their daily life. The study will help to show how women can properly utilize the given opportunities for the betterment of the society if provided to them. The study will draw various recommendations to the NGO’s, Government and Human right activist.

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This study will be based on Terai and Hill region of Nepal. Altogether four SFCLs will be selected i.e. two SFCLs from each region. Two SFCL of women farmers and two SFCL of mixed group (both men and women) will be selected for the study. 20 percent of the member from each SFCL group will be selected for the study. From each group one respondent will be taken for the interview. The sample will be selected on the basis

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The Dairy Sector in Sri Lanka - Post Doha Adjustments and Policy Options.

Introduction The dairy sector in Sri Lanka, which is the subject of the study that is proposed presents a challenging mix of problems and opportunities relating to the possible outcomes of the Doha negotiations. This mix produces choices of a critical nature for policy makers in their task of reconciling the interests of producers and consumers that are relevant for many other import- substituting sectors in the country’s agriculture.

The dairy sector in Sri Lanka is a relatively small segment of the agricultural sector. It contributes approximately 8 % to agricultural GDP which itself is about 17.2 % of total GDP (2005).

At present, only about 20% of the demand for dairy products is supplied by the local dairy producers. The rest is met by the imports, mainly milk powder (95% of the imports) followed by butter, cheese, yoghurt and other milk by-products.

Domestic production is estimated to have increased at about 2.5% during the last decade Average levels of consumption of milk and milk products in Sri Lanka have grown steadily, rising over time and across income deciles. The market for milk products is expected to grow substantially with the rise in incomes. The government agencies in charge of the subject of livestock are basing their plans on a projected annual increase of 5.2% . The Medical Research Institute recommends a consumption level of 60–65 kg/person per year; per capita availability is only about 36 kg/person per year. The scope for import substitution and expansion of local production is therefore substantial.

Apart from the direct economic benefits through import substitution there are a number of social and economic reasons that has led to the selection of the dairy sector as a growth sector. The sector is dominated by small scale producers who are widely dispersed throughout the country. The dairy industry offers the opportunity to small scale producers engaged in crops to undertake an additional income earning activity. The government has therefore focused on its’ capacity for poverty reduction and linked it to other programmes aimed at poverty reduction. Of special relevance is the fact that much of the country’s milk production is on the hill country tea estates by an ethnic minority of political salience to governments. Incentives for, and improvements in milk production and productivity would indeed improve their income levels tha5t are relatively low. Recently a major World Bank supported Recently a major World Bank supported poverty reduction programme – Gemidiriya - entered into a collaborative programme with the government of India for the promotion of the dairy industry to draw on the technical resources of the “white revolution” in India.

For all these reasons government has given high priority to the development of the livestock and dairy sector and expects local production to supply a rapidly

increasing share of the market. However the past trends indicate that investment and growth in this sector has been slow. Planners have identified a number of problems among which the prevailing price level with low tariffs (5 % - 28 %) biased in favour of the consumers and the low margin of profit and rates of return on investments are the most important constraints. Increase in world dairy prices, everything else held constant, would certainly benefit the producer and expand domestic production. But being an importer of dairy products Sri Lanka will with equal certainty incur losses which are likely to be substantial given the fact that the country is still heavily dependent on imports. The consumers by far outnumber the producers. The loss in consumer welfare will not be compensated by the gain in producer welfare. However the concentration of milk producers in the hill country and their representation in cabinet is a factor that would weigh in favour of producer interests.

The proposed study is designed to address these two sets of issues, one arising from possible producer gains the other from possible consumer losses and to evaluate and identify the policy options that are available to the political decision makers. The study therefore includes the political economy dimension by examining the options in the context of the relative political weight of the constituencies involved and the stakeholder pressures that are likely to arise. The rationale for this part of the study is based on the assumption that the best options could be more successfully negotiated if the stakeholders are fully informed of the short-term and long-term gains that can be anticipated. The quantitative analytical parts of the study are expected to provide this information base. The long term objective would be to design a policy framework that reconciles the interests of producers and consumers to develop a dairy industry that would be globally competitive in the emerging free market conditions which would then maximize the welfare of both producers and consumers. A Pareto optimal resolution of the issues through comprehensive policy options would be explored in the study.

The study is undertaken in two parts. The first, which is the main part of the study examines the responses of the producers to the price changes and its capacity for increasing production and productivity. The second analyses the impact on consumers and examines the policy options available. In doing so it places the options in the political economy of policy formulation as it has occurred in the past and attempts to identify the best options that would be acceptable to all stakeholders.

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Making Agriculture Trade Liberalization Work for the Poor: Evidences from South Asia

Abstract

This paper examines the impact of trade liberalization in agriculture sector among five south Asian countries (Nepal, India, Pakistan, Bangladesh and Sri lanka) using CGE model and GTAP data set. Since Nepal is still not included in GTAP dataset, the IO table and SAM so far developed will be utilized and efforts will be made to complete the data required . However, the time and data constraints will limit us to project only six simulation scenarios, rather than carrying out a complete simulation scenario.

The six simulation policy scenarios are- enforcement of SAFTA in next few years; Nepal's reduction of all trade barriers with SAARC countries; India's granting most-favoured status to all SAARC countries and thereby unilaterally eliminating all import tariffs; reciprocation of the same to India by all the developing SAARC countries; eliminating all import tariffs for developing SAARC countries by EU, Japan and US; and establishment of FTA by SAARC developing countries to all SAARC countries.

One of the important contributions of this paper is to understand what happens in food price, rural poverty and food security once successful completion of agriculture trade liberalization is achieved. These findings are expected to contribute to make the next round of MTNs successful.

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¹Organizations like IPRAD, and CGE modeler like Prakash Sapkota of Himalayan Insitute for Development have done considerable work in this direction. Their progress reports of the preparation of I-O table are available in IIIS, which will be further complemented during the study period.

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Impact of Post Doha Agricultural Liberalization on Efficiency and Comparative Advantage of Rice and Potato Sectors in Sri Lanka: A Policy Analysis Matrix Approach

Abstract

Specific policies on agriculture included provision of input subsidies, guaranteed product prices and state owned marketing services. With the implementation of open economic policies starting from 1977, Sri Lanka liberalized some of the activities relating to agriculture and on a “second wave of liberalization” in 1990, and the trade policy was further simplified. However, some of the policies of the inward looking extend even in to post liberalization period and imports of major sensitive agricultural commodities including rice, potato, chili and onions are still controlled through tariffs, non tariff measures and quantitative restrictions. Thus the present policy is neither liberal nor protective. To complicate matters further, Doha Development Agenda demands a substantial improvement in market access, reduction and ultimate phasing out of export subsidies and domestic support. Consequently nobody is clear about the real effects of present day policy and don’t know how to continue with further policy reforms.

Fragmented research conducted so far does not shed enough light on the impacts of the existing agricultural policies and no analytical framework exists for the evaluation of the future policy impacts. On this background, PAM offers a repeated usable, simple static general equilibrium simulation model which provides a simple means of producing coherent sets of multiple efficiency indicators under different policy scenarios, which can be compared with level of liberalization.

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