Farm Prices (Hansard, 29 January 1979)

§ Mr. John Silkin

If national support prices under the CAP were aligned with common prices or with German prices United Kingdom support prices would increase by 29.7 per cent. and 45.4 per cent. respectively, at current exchange rates. Once the effects of these increases had worked through to retail level, the food prices index could be expected to increase by about 5 per cent.-6 per cent. and 8 per cent.-9 per cent. respectively. The effect on FEOGA expenditure and on the United Kingdom contribution is very difficult to assess. At current exchange rates the level of prices in the Community as a whole expressed in national currencies would increase on average by about 7 per cent. if all countries aligned with the common prices and by about 20 per cent. if all aligned with the German price. There would be a direct net saving of expenditure arising from the ending of MCAs of some 550 meua per annum but this would be more than offset by expenditure on market support measures being higher than otherwise, as production and consumption responded to higher prices. It is not possible to quantify this with any precision but if production of the main commodities expanded by 10 per cent. in response to a price incentive of 20 per cent., the net effect on expenditure on agriculture from the Community budget could be as much as 5,000 meua. The United Kingdom's gross contribution to expenditure of this order would be about £500 million. For a 7 per cent. price incentive, the effect on the same basis on the United Kingdom's gross contribution would be over £200 million. In addition, the United Kingdom's percentage contribution to the Budget would rise somewhat, as a result of the increased levies collected on agricultural imports from non-EEC countries.