§ 3.43 p.m.
EARL FERRERSMy Lords, with the leave of the House I should like to repeat a Statement which is being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food on the meeting of the Council of Agricultural Ministers in Brussels this week. The Statement is as follows:
§ "The House will recall that agreement was reached last month that we should apply the Common Agricultural Policy on the basis of a representative rate for sterling rather than our official parity. This rate was based on the average of market rates for sterling in the first two weeks of January. Since then, following the devaluation of the dollar, sterling has fallen below this representative rate in terms of the Community unit of account and the result has been an increase in import prices. However, the Council has now agreed on an amendment to the existing Community regulation which will provide for the introduction of monetary compensatory amounts for the United Kingdom—and for Italy whose currency is also now floating. In effect, these monetary compensatory amounts will take the form of additional refunds on exports from other Community countries to the United Kingdom and reductions on import levies on imports into the 149 United Kingdom from third countries. The precise levels will now be worked out urgently by the Commission and the Management Committees. The calculations involved are complex but once established the rates will be subject to automatic adjustment if there are further movements of 1 per cent or more in the value of currencies. The immediate application of these additional compensatory amounts will ensure that, so far as the main basic foods to which compensatory amounts and third country levies at present apply, there will be no increases in prices in the United Kingdom as a result of the latest currency developments.
§ "Apart from this important decision, the Council had a further discussion on direct incentives for beef production. The Commission will be making further proposals which will take account of the experience which we and other Member States have had in this field. We also secured agreement that our growers will benefit in full from the Community subsidy on herbage seeds from the 1972 crop.
§ "At the request of the Commission the Council decided to defer consideration and implementation of Community farm price levels for one month. These will now be considered at the end of March and implementation would begin from April 30th."
§ My Lords, that concludes the Statement.
§ 3.45 p.m.
§ LORD HOYMy Lords, we are grateful to the noble Earl, Lord Ferrers, for repeating that Statement. Obviously there must be some questions that arise from it. Is it not a fact that all the Statement does is to indicate what is being done because of changes in the currency values to compensate for the fall in the value of the pound at present compared with when it was fixed in the first fortnight in January? May I therefore ask the noble Earl whether, when he says that the immediate application of this agreement will ensure that there is no increase in the price of foodstuffs as a result of the latest currency developments, what he is in fact saying is that because of any devaluation or any other fall in the value of currency, food prices will not rise? That 150 of course does not mean that food prices will be controlled outside that fall in the currency.
May I ask the noble Earl when it is intended that the discussion is to take place on direct incentives for beef production in this country and in the Community as a whole? Obviously, that is very important to our farming community and it must link up with the Price Review. I am certain your Lordships would be grateful if the Minister could make an assessment of the value of the subsidy on herbage seeds from the 1972 crop and what it will mean in cash. My Lords, as I understood the Minister, he did not say, but it is reported, that the Commissioner for Agriculture warned the Minister against any hasty decision on farm price levels which, he said, were the basis of the C.A.P. Perhaps the Minister could confirm that this statement was made by the Commissioner and also his reason for making it. Did he feel that prices might be fixed at too high a level and become intolerable for the people in the Community?
The Commissioner also is reported in the Press this morning to have said that the series of currency adjustments since the French devaluation of 1969 made it difficult to talk any longer of common prices throughout the Community. If the Commissioner did not make that statement during these discussions perhaps the Minister can tell us the facts. Does that mean that each country will be entitled to fix its own price?
There is one last question which has to be put. This decision to postpone the agricultural year inside the Community is bound to have repercussions so far as our agricultural industry is concerned. At present the Annual Price Review takes place between the farmers and the Government, and it seems to me to be nonsense to think that one could carry out any meaningful negotiations in this respect until the other decision is made. I should like to know what are the Government's intentions inasmuch as the prices to the consumer cannot be guaranteed until what the Statement says will happen, that
precise levels will now be worked out urgently by the Commission and the Management Committees.Until these things have been worked out there can be no protection from the 151 consumer point of view. I should like to know from the noble Earl when he thinks this is going to be achieved.
§ VISCOUNT THURSOMy Lords, this is indeed a complicated and technical subject. I should therefore like to ask the noble Earl whether for the moment we are returning to a status quo but that it is envisaged that we should move out of this compensatory situation at some other date. For instance, it would seem rather absurd that agriculture should operate on one rate of exchange and all other industries in the country on another. I should like to know for how long a period this situation is likely to operate, and whether it is envisaged as a permanent change in the method of computing these matters.
§ 3.51 p.m.
EARL FERRERSMy Lords, I am grateful for the welcome which the noble Lord, Lord Hoy, and the noble Viscount, Lord Thurso, have given to this Statement. As the noble Viscount rightly said, this is a complicated and technical situation. If I may reply first to the point he made as to when we are going to move out of this situation, I think he will realise when I expand a little on what the noble Lord, Lord Hoy, said, that it is not one out of which we will quickly move. The noble Lord, Lord Hoy, was, if I may say so, a trifle confused over one point which I should like to make clear. This alteration has come about not because of the floating of the pound and the alterations which that has caused. It is an internal problem relating to the member countries of the E.E.C. because of the floating of the dollar. The result of this has been that the dollar has floated downwards 10 per cent. or thereabouts, and that imports into the Common Market countries will be affected by that amount; but as the dollar went down, so also did the pound, relatively speaking, go down, and that puts the pound out of parity with the European Community's other currencies. If that is what the noble Lord, Lord Hoy, said, then I misunderstood him, and I apologise.
It is in order to readjust this situation and to put the pound back in relation to the original parities that these arrangements have been made. This is being done in order that the imports into this country will remain at a similar level 152 to that at which they would have remained had the dollar not been devalued. The way in which that will help the consumer is simply that food which is imported into this country will not go up as it would have done had these arrangements not come about. These additional monetary compensatory amounts are a new undertaking designed to look after currencies when they float downwards, whereas previously there have only been arrangements for currencies when they float upwards.
My Lords, the noble Lord, Lord Hoy, asked when discussions are to take place about beef and the increase of supplies of beef. These are going on now. I cannot say when the conclusions will be arrived at, but the member countries of the European Community are trying to pool their knowledge and experience of beef in order to try to find some equitable way of increasing the production of this commodity.
The noble Lord, Lord Hoy, referred also to questions of price levels within the Community. I should not wish to be drawn on that particular issue on this Statement, because the Statement refers only to bringing back to the original system of parity the relationship between United Kingdom sterling and the European unit of account which existed before. Then the noble Lord asked what is the value of the 1972 herbage crop to the United Kingdom growers. That is about £1 million. I hope that I have answered most of the noble Lord's questions.
§ LORD HOYMy Lords, I am grateful to the noble Earl, but there are these two questions: First, what effect is this going to have on the Annual Price Review being carried out in this country at present between the farmers and the Ministry of Agriculture, Fisheries and Food? Secondly, when the noble Earl spoke about the holding down of prices, the effect of this agreement is not to hold down what would be the normal trading price, but to compensate for that loss in price between the January figure and what happened as a result of the devaluation of the dollar. I only hope that this is clearly understood. If I am wrong, I should be delighted if the noble Earl would correct me, but as I read the Statement, I think that is correct. While I would not ask the noble Earl to confirm or deny that part, I should like to 153 know, and I am certain the farmers of the country would like to know, what effect it will have on the present Price Review in this country.
EARL FERRERSMy Lords, with regard to the effect of this decision on prices, it is not holding prices down; it is preventing the prices going up by a disproportionate amount as a result of the revaluation by which our currency altered vis-à-vis the Common Market. With regard to the Price Review, discussions are going on at the moment, and, as the noble Lord will know, there will be two stages; namely, the annual review of the conditions of the industry, and the determination of the guaranteed prices. This particular Statement will not affect those discussions or their outcome.
§ VISCOUNT THURSOMy Lords, may I ask the noble Earl whether this Statement has any connection with the fact that at least one, if not two, large chain stores have reduced the price of imported lamb considerably in recent days?
§ VISCOUNT THURSOMy Lords, does the statement that this decision will keep food prices from going up apply whether these foods come from outside or inside the Community, from British farms or whatever?
EARL FERRERSMy Lords, it means that food coming into the Common Market countries, because of the devaluation of the dollar, will be subject to a different import levy from that which they would have had before the devaluation of the dollar. In addition to that, our currency has altered in relation to the deutschmark and the French franc. Therefore when we import food or wheat or any commodity from the Common Market countries they would also have been affected and this would have resulted in higher import prices. In order to retain the prices at the level they were at before, it will be necessary for F.E.O.G.A. to allow greater compensatory amounts.
§ VISCOUNT THURSOMy Lords, is the noble Earl saying that if we imported wheat from Canada the price would have gone up, and if we had imported wheat from France it would also have gone up?
EARL FERRERSYes, my Lords: because now that we are members of the European Community, although we are in the transitional state, any food which comes in from other countries is liable to the Community regulations. Admittedly, we are only in the transitional state and therefore the effect on wheat coming to us from Canada may not be as great as on wheat coming from Canada to other members of the Community.