Mr. Jim Callaghanasked the Secretary of State for Prices and Consumer Protection whether he has received from the Price Commission its latest report on the prices and distributors' margins for potatoes and other vegetables; and if he will make a statement.
§ Mr. MaclennanI have received a report covering the period December 1976 to February 1977 and I am arranging for a copy to be placed in the Library.
The report is divided into three sections. The first deals with potato prices and distributors' margins. It finds that aggregate supplies and demand have both been lower than a year ago. Home-grown stocks are estimated to be considerably larger, but wastage is likely to be much higher. Retail prices and distributors' margins have been much the same as a year ago, although they showed some increase in the first six weeks of this year. The sharp fall in the volume of sales has, however, lowered the value of aggregate cash margins for the period September 1976 to January 1977 by about 20 per cent. from the corresponding period a year ago.
The second part of the report examines the changes in the prices and distributors' margins for five other vegetables adversely affected by the weather. The situation has, of course, differed from one vegetable to another, but, if all five are taken together, the total wetight of supplies is estimated to have been not much different from the year before, despite the difficulties caused by the weather. At the same time average retail prices of the five vegetables were nearly 50 per cent. higher this winter than last. Distributors' gross cash margins increased on average by 0.7p to 5.4p per lb. but gross percentage margins fell from about 50 per cent. to 40 per cent. The aggregate value of the cash margins is estimated to have increased by about 20 per cent. for the five vegetables but to have fallen by 172W about 8 per cent. for those vegetables and potatoes taken totgether.
The final section of this report discusses the changes in the retail prices over periods of three months and one year of 14 processed vegetables and cereal foods which may be substitutes for potatoes and other vegetables in short supply. Over the three months from November 1976 to February 1977, retail prices for all items except rice were little changed. Rice prices rose by between 10 per cent. and 20 per cent. following increased import prices. Over the full year, the prices of all items surveyed rose, pasta items rose by 5–7 per cent. reflecting fairly stable wheat prices, while packeted rice and canned peas rose by more than 20 per cent. due mainly to the increased prices of the basic commodity and packaging. There have been substantial percentage increases in consumption of instant potato, rice and foods such as pasta, but the amounts are small in comparison with the consumption of other ceraal foods and potatoes.
This has been a very instructive report. I have been particularly glad to note the signs suggesting that there is a fair chance of a significant fall in the retail prices of potatoes over the next month or two. We would thus be able to avoid the extremely high prices which prevailed last spring. The report also shows how distributors' aggregate cash margins may be carried on individual products and that a relatively sharp rise on one product does not necessarily imply an unreasonable increase overall.