a. According to the Environmental Working Group Farm Subsidy Database, top 20% of recipients accounted for 78% of commodity subsidies in 2012. The glaring inequality in farm payments is reflected in the fact that while a recipient in the top 1% category received USD 84,200 as farm subsidy, a recipient in the below 80% category received USD 1,555 in the year 2012. One of the top beneficiaries of a farm subsidy- namely DNRC Trust Land Management- Exem got USD 703,805 in 2012 alone. India requests the United States to explain the reasons for the high concentration of farm payments in favour of big farmers and the steps taken by the US Government in Farm Act 2014 to reduce this inequality.
b. The Environmental Working Group Farm Subsidy Database also shows the top ten States of USA accounted for 58% of commodity subsidy in 2012. For example, Iowa State accounted for 9.1% of total farm subsidy payment in 2012. India requests the United States to also explain this inter-state disparity in farm payments.
In light of the GSM 102 programme continued by the United States, India wishes to raise the following questions:
c. What are the products covered by this programme and what is the current outlay made by the United States towards this programme?
d. What is the method of repayment prescribed under the programme?
e. What is the basis for defining the rate of interest under the programme and could the United States confirm that in each case the rate of interest under the programme is greater than the commercially available rate of interest?
Price Loss Coverage programme (PLC)
f. Under the PLC, farmers will be given direct payments if the national average price of their crop falls below the statutorily defined "reference price" of that crop. Section 1113 (d) of the Agriculture Act of 2014 offers farmers a one-time option to update their yield that can be used as the base for making PLC payments. Updating the yield is "[a]t the sole discretion of the owner of a farm, the owner of a farm shall have a 1- time opportunity to update, on a covered commodity-by-covered-commodity basis, the payment yield that would otherwise be used in calculating any price loss coverage payment for each covered commodity on the farm for which the election is made."
To the extent that the PLC programme provides the flexibility to re-allocate their base across covered crops on annual basis, could the United States confirm that PLC payments will be treated as coupled payments and subject to AMS calculation?
g. The "reference price" (Section 1116, PL 113-79) serves as a trigger to make deficiency payments under the PLC programme. Considering that individual prices are statutorily set for each covered crop, could the United States confirm that payments made under the PLC programme will be notified as product-specific support under Amber Box?
h. Considering that the reference price for each covered crop is set at a level well above the extant average farm prices in the United States and is also markedly above the trigger prices under the CCP programme (which the PLC replaces) could the United States show why such a programme will not distort global agricultural markets and how it is consistent with the reform process provided for in Article 20 of the Agreement on Agriculture?
Supplemental Coverage Option (SCO) programme
i. Under the SCO programme (Section 11003 (b) of the U.S Agriculture Act 2014), while formulating the "level of coverage" it is provided that the said coverage will be triggered if the "losses in the area exceed 14 per cent of normal levels (as determined by the Corporation". However, that WTO Agreement on Agriculture (Annex 2, Para 7(a) provides that: "eligibility for such payments shall be determined by an income loss, taking into account only income derived from agriculture, which exceeds 30 per cent of average gross income or the equivalent in net income terms (excluding any payments from the same or similar schemes) in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and the lowest entry.") (emphasis added). In light of this could the United States confirm that the Supplemental Coverage Option would be notified under the Amber Box?
"WTO circuit breaker provision"
j. The Agriculture Act of 2014 contains a "WTO circuit breaker provision" that, in the unlikely scenario that payments are expected to exceed commitment levels, gives the secretary of agriculture the authority to ensure the United States does not exceed those commitments. Section 1601 (d)(1) states that: “If the Secretary determines that expenditures under this title that are subject to the total allowable domestic support levels under the Uruguay Round Agreements (as defined in section 2 of the Uruguay Round Agreements Act (19 U.S.C. 3501)) will exceed such allowable levels for any applicable reporting period, the Secretary shall, to the maximum extent practicable, make adjustments in the amount of such expenditures during that period to ensure that such expenditures do not exceed the allowable levels" (emphasis added).
Should there be significant world market price falls for certain agricultural commodities, given the highly price-contingent model of the Agriculture Act of 2014, the United States could potentially be at risk of exceeding its allowable levels. As opposed to ensuring that the Secretary makes adjustments to the full extent necessary, the Agriculture Act of 2014 states that the Secretary shall, "to the maximum extent practicable", make adjustments in the amount of such expenditures. Could the United States clarify what conditions could limit the Secretary to only making adjustment to “to the maximum extent practicable” given that exceeding such allowable levels of domestic support would place the United States in violation of its obligations to the WTO?