Reports have emerged that India is on the brink of establishing an initial trade agreement with the US, with anticipations that this will evolve into an all-encompassing Free Trade Agreement. Such a deal, particularly if it sanctions duty-free access, could significantly alter the landscape for Indian farmers, threatening food security and destabilizing the rural economy.
The US’s involvement in trade disagreements with China, Mexico, and Canada, which came to light in 2018, has inflicted significant damage on the exportation of US agricultural products. Soybean exports took a significant hit, dipping to $24.5 billion in 2024 from its high of $34.4 billion in 2022.
In addition, corn exports experienced a similar decline, falling from an impressive $18.6 billion in 2021 to a more subdued $13.9 billion in 2024. Wheat exports also took a slight hit, dipping 2 percent and landing on $5.9 billion in 2024, according to data gathered by the US Census Bureau.
This turbulence has led to an alarming increase in the US trade deficit in agriculture, nearly doubling from $16.7 billion in 2023 to a whopping $31.8 billion by the end of 2024. The aforementioned trade war has had other consequences too – an excessive accumulation of wheat, corn, pork, chicken, soybeans, and dairy products became apparent post-2018.
A crucial point to note is that China was a significant receiver of US agricultural exports, absorbing 17 percent of them. In comparison, back in 2020, the cheese surplus in the US reached 600,000 tonnes, equivalent to India’s total consumption over a span of 12 years.
By December 2019, the end stocks of soybeans had escalated to a hefty 1.07 billion bushels. Crop commodity prices, particularly for the four most heavily produced in the US – corn, cotton, soybeans, and wheat – have been on a downward trajectory since 2022.
Research conducted by the USDA has shown a decline in farmers’ incomes in 2024, with further drops projected for 2025. With China’s recent measures to reduce imports from the US and the growing domestic discontent, the US is now aiming to offload its excess agriculture to India through the FTA.
The US is recognized as one of the globe’s leading purveyors of agricultural subsidies. The allocations for subsidies are massive – the 2014 Farm Bill allocated $956 billion, the 2019 edition $867 billion, and a staggering $1.5 trillion was set out in the 2024 Farm Bill.
These subsidies, while limiting agricultural imports into the US, also function as a safety net promoting American goods in export markets. Former head of the UNDP, Mark Malloch Brown, estimated that these subsidies have a considerable impact on less economically developed countries, causing them an annual loss of roughly $50 billion in stymied agricultural exports.
The influx of affordably priced, subsidized imports from the US could cause severe market disturbances in India, shaking the stability of domestic prices. For instance, religious and ethical implications arise with the prospect of importing dairy products, primarily cheese. The rennet used in most US-produced cheese originates from calf intestines, and the feed supplied to American dairy cows often includes non-vegetarian sources.
However, the Indian customs authorities currently lack the means to accurately discern these details. Compounding this issue, the US has shown significant opposition to the introduction of labeling requirements that reveal this information.
In 2024, India’s apple imports from the US were valued at an estimated $37.9 million. There was also a noticeable rise in the import of tree nuts (almonds, walnuts), from ?6,232.25 crore in 2019-2020 to ?9,482.41 crore in 2024-25. This rise indicates a potential threat to local growers in the Himalayan region if import duties continue to decrease.
During the G20 meeting, India decided to lower the import duty on pulses. US trade agreements, particularly concerning seed sovereignty, often include TRIPS-plus clauses that advocate for UPOV 1991. Agreements like the United States-Mexico-Canada agreement (USMCA) and US-Chile mandate joining the Union for the Protection of New Varieties of Plants (UPOV), which could potentially enable companies like Bayer to monopolize seed markets.
The US is strongly advocating access to all sectors of agriculture, bolstered by large subsidies and legal pressure. Should India concede to these terms, the fallout could include widespread devastation of many livelihoods, a blow to food sovereignty, and a sharp downturn in farm incomes.
The post India on Edge as U.S. Free Trade Agreement Threatens Local Agriculture appeared first on Real News Now.
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