HC Deb 21 November 1972 vol 846 cc1074-6
6. Mr. Strang

asked the Minister of Agriculture, Fisheries and Food what is his estimate of the additional increase in cereal prices which will take place in 1973 as a result of devaluation.

Mr. Godber

After 1st February, 1973, the prices of cereals in the United Kingdom will be determined by the transitional mechanisms agreed with the Community, in particular the compensatory amounts. It is the intention that the compensatory amounts will be adjusted to take account of any change in the parity of any of the member States concerned in order to maintain the objectives of these mechanisms, but no precise estimate can be given at this stage.

Mr. Strang

Surely the Minister realises that devaluation is only one of a number of reasons why food prices will rocket during the so-called freeze? Is he aware that not only will the freeze have no significant effect on food prices but that the most important effect on the food industry is that farmers are required by law to pocket all the extra money they are obtaining from increased beef prices and are prevented from paying a penny of it to the farm workers?

Mr. Godber

This Question relates to cereal prices. There are Questions on other agricultural commodities later on the Order Paper, when I shall be happy to deal with this point. However, there will be no change in cereal prices before 1st August at the earliest. Therefore the freeze does not enter into this.

Mr. Scott-Hopkins

I am sure that my right hon. Friend understands the enormous significance of compensatory payments on cereals. Will he say what progress has been made on coming to an agreement on these? What will happen if world prices rise during the transitional period? Will the compensatory payments be adjusted?

Mr. Godber

The problem is that since provisional figures were agreed, world prices have changed dramatically. This situation may call for some revision. This is at present under discussion with the Community.

Mr. Peart

The right hon. Gentleman will soon be involved in review discussions. If we are to have a proper freeze, these could be a factor since cereal prices may be affected.

Mr. Godber

Obviously there can be effects and certainly world prices of cereals, which have risen, have affected end prices. I was dealing with the compen- satory payments which will not become effective until later. The price review is another matter that we shall have to discuss in due course—

Mr. Peart

It is very important.

Mr. Godber

Certainly it is very important. It was because the right hon. Gentleman did not give sufficiently good price reviews that we are short of food now.