What is remarkable is that even the commitment to agricultural policy reform in the form of reduced support and lower trade barriers is being given up. Between 1991 and 1997, the OECD Secretariat reports, as part of the run up to and the aftermath of the Uruguay Round, producer support fell from just above 40 per cent of farm receipts to 30 per cent. But over 1998 and 1999 when farm prices worldwide have been on the decline to just above half the 1995 peak in the case of oilseeds and wheat, the extent of support has risen sharply from 30 to 40 per cent, that is, to levels before the adjustment to a likely post-Uruguay world began. OECD governments clearly rate the need to protect their richest farmers from the adverse consequences of world-price volatility, way above their 'commitment' to a freer trade regime and a 'distortion-free' environment.
 
Even the OECD Secretariat admits that all of this does not bode well for the emerging and transition economies (ETEs), defined to include the transition economies in Central and Eastern Europe as well as large emerging economies such China, India, Brazil and Indonesia. In its view, "agricultural trade barriers, export subsidies, and domestic support in OECD countries have limited the potential benefits of free trade in agriculture for ETEs," where "agriculture is much more important in income and employment terms." Given this, even the most committed among those belonging to the free trade faith need to consider whether protection for their farmers through means that are either WTO compatible or incompatible, should be sacrificed at the altar of their beliefs, at a time when policies being pursued by their trading partners substantially curtail their access to potential markets.
 
The problem is that given the adoption of IMF-inspired fiscal regimes, developing country governments, such as in India, are voluntarily forsaking policies aimed at providing direct producer support or measures that indirectly sustain such policies by absorbing surpluses to feed an extensive public distribution system issuing food at subsidised prices to the consumer. This puts them in a self-imposed double bind. To begin with, they are not willing to imitate, rather than listen to, developed country governments when it comes to blatantly violating WTO commitments, and find heir markets flooded with surpluses from abroad. Secondly, they are not sharp-witted enough to drop their obsession with the size of the fiscal deficit at the expense of all else, even while the IMF itself praises the Southeast Asian governments currently engaged in pump-priming themselves out of the recession induced by the financial crises of 1997. This limits their ability to offer WTO-compatible support to their agricultural sectors.
 
In the event, developing-country governments end up opening doors to their own markets at a time when their access to developed country markets are being reduced, and denying their much-poorer farmers much-needed support even while the developed countries back their rich agriculturists. This can only be because the elite which currently governs in these contexts has much to gain by submitting to the duplicity of western governments, and is willing to sacrifice its farming community as part of the bargain.
 
One indicator of this attitude in the Indian context is the incompetent manner in which the present government is dealing with the mounting stocks of wheat which have accumulated because issue prices of food supplied through the PDS have more than doubled over the last two years and the spread and coverage of the PDS has not expanded enough. The result has been that instead of the food subsidy declining with the higher issue prices, they are showing signs of rising sharply because of increasing stockholding costs. This simple message, which somehow seems to have eluded the Finance Minister when he refused to roll back PDS price hikes, has now seemed to have struck home. The recent decision to resort to open market sales of wheat stocks in Punjab at a price linked to the economic cost of wheat procured from that state is in effect an effort to roll-back the prices at which the government will offload its stocks, although not to PDS consumers but only to traders and millers. Yet, the latter are reportedly not too willing to lift stocks even at prices substantially below PDS prices, unless export opportunities are opened up through export subsidies. The whole system appears to be geared to trying to run down stocks and incur subsidies but without benefit to domestic consumers. This is strange because while an expanded PDS would be perfectly WTO-compatible, export subsidies in any form would not. It would not be unexpected therefore, if soon after exports were allowed directly or indirectly from FCI stocks, the US or Europe would call for restrictions on the FCI's functioning or even demand that it dismantled. If so, not only would the PDS atrophy but so would the current system of minimum support prices. The gainers, while including domestic traders and millers close to the party currently in power, would be international trading giants like Cargill. The losers inevitably would be consumers and farmers. The war would have been lost by a series of own goals based on the fallacy that somehow all that is needed to reduce subsidies is to make things more expensive for the poor.