§ Mr. CousinsTo ask the Minister of Agriculture, Fisheries and Food when he expects the common agricultural policy pound to be devalued in line with the open market traded pound; and what effect he expects the transition to have on the price of butter measured from current levels.
§ Mr. CurryNew agrimonetary arrangements compatible with the single market are due to be put in place on 1 January 1993. Under the new system, the green exchange rates used to convert CAP support prices into sterling will 895W be kept in line with market exchange rates. If the present exchange rate for sterling continues until the end of the year, a further green pound devaluation will be necessary, in addition to the 7 per cent. devaluation agreed at the Agriculture Council and the automatic devaluation of 2 per cent. resulting from the realignment within the exchange rate mechanism of 22 November. While the support price for butter will rise in line with these devaluations, the effect on the retail price for butter is likely to be much smaller. This is because retail prices will ultimately be determined by supply and demand conditions in the market and these will depend on the use of intervention, the relatively high level of commercial stocks and the fact that packaging and handling costs will not be directly affected by the devaluations.