Farmgate Prices

HC Deb 16 April 1981 vol 3 cc423-4

20. Mr. Spearing

asked the Minister of Agriculture, Fisheries and Food what is the percentage increase in farmgate prices for each of the main agricultural commodities consequent on the European Economic Community price review.

Mr. Peter Walker

Percentage increases in institutional prices for the main agricultural commodities are shown in the note on the settlement, which I have deposited in the Library of the House. It is not possible to determine precisely the effect on farm gate prices.

Mr. Spearing

I regret that the Minister is unable to give the figures to the House this morning. He announced a fortnight ago that £325 million would be given to farmers as a result of this package. Can he now tell us how the mathematical calculations of that award affect prices in the shops by only 1 per cent? Why has the right hon. Gentleman refused to answer questions on that subject on two occasions?

Mr. Walker

I have not refused to answer questions. It is clear that the beef premium, butter subsidy and lamb premium schemes substantially reduce prices. The hon. Gentleman will know that the price of agricultural products is only one part of food prices in general.

Mr. Colin Shepherd

Is it not true that the farming industry needed the level of farm price increases that was achieved in that way? Last year, when inflation was 15 per cent., food prices rose by 9 per cent. and farmgate prices rose by only 6 per cent. Is it not an amazing track record that the farming industry managed to survive at all?

Mr. Walker

Yes. There is no doubt that over the past three years there has been a considerable squeeze on farm prices, not only in Britain but throughout Europe. British agriculture has made a considerable contribution to the battle against inflation.

Mr. Jay

Is it correct that the increase in EEC expenditure arising from these price changes is about £500 million or £600 million?

Mr. Walker

I forget the exact figure. With regard to the increase in Britain, a combination of the EMS changes and the overall position will mean, if anything, that our contribution will be slightly lower.

Mr. Strang

Did the Minister notice that the Prime Minister's immediate reaction in the House of Commons to the settlement was to stress the need for an urgent reform of the CAP? Will the Minister reconsider his attitude to the milk prices, particularly the French increase? Does he accept that that increase, combined with French national aids, will lead to increased production and cannot be justified in view of the massive structural surplus in that commodity?

Mr. Walker

It can be argued that the increase in the input costs of the dairy industry is still greater than price increases generally. I agree with the hon. Gentleman that the French national aids will stimulate milk production in France. That is why the Commission is taking proceedings against the French Government.