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NEW DELHI, May 17

THE Federation of Indian Chambers of Commerce & Industry (FICCI) has expressed concern over the US new Farm Act signed by the President, Mr George W. Bush, earlier this week.

This has raised federal farm payments by a whopping $83 billion and poses serious question on the US commitment to agriculture trade reform, FICCI said.

A real disturbing element, FICCI pointed out, is the resurrected system of countercyclical payments aimed at guaranteeing a minimum per unit price for commodities through paying producers the difference between market price and a target price as set out in the legislation. Preliminary estimates have put the cost of countercyclical programme over the next six years at close to $30 billion.

FICCI is of the view that the Act through extending production linked and trade distorting support for US farmers, will hurt the interests of countries such as India. This is because, as analysts suggest, price linked payments would lead to overproduction regardless of market signals and developments, result in an artificially created surplus, push prices further down, and shut out imports into the US. Moreover, since US exports a significant part of its crop produce (ranging from 35 per cent for soybean to 53 per cent of wheat), such heavy dose of subsidisation would also make it harder for developing countries to sell farm products in the third country markets.

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