§ Mr. Sillarsasked the Minister of Agriculture, Fisheries and Food by what amount the green pound would now require to be devalued to bring it into line with the value placed on £ sterling in all other transactions; and by how much such a devaluation would increase the total food bill of the British consumer.
§ Mr. BishopThe green pound is the conversion rate between the pound and the unit of account for agricultural purposes. Monetary compensatory amounts are at present fixed on the basis of the differential between the green pound conversion rate and the market rate of exchange for sterling against the European monetary unit of account. To bring the present green rate into line with that market rate would require a green rate devaluation of 28 per cent.
Any prediction of the effect of a green pound devaluation on food prices depends upon assumptions about the extent to which market prices would be affected by the change in institutional arrangements and about related but separate Government decisions on matters such as the guaranteed and retail prices of milk. As the assumed devaluation becomes greater, the necessary assumptions become more uncertain and no precise estimate can be made of the effect of a 28 per cent. green pound devaluation. It has, however, been estimated that a 10 per cent. devaluation of the green pound might, given certain assumptions and after a time lag, increase average retail food prices by about 2½ per cent.