§ Mr. MadelTo ask the Minister of Agriculture, Fisheries and Food what estimates his Department will be making of the effect of the current drought in the United States of America on British food prices, between now and 5 April 1989; and if he will make a statement.
§ Mr. Donald ThompsonMy Department monitors continuously developments in agricultural and food markets. The drought in the United States is clearly severe, and is already affecting world commodity prices. It is, however, much too soon to be certain of the full impact on product markets given the existence of substantial stocks of some commodities.
In the case of cereals, price levels under CAP regimes remain substantially above those obtaining on world markets and this will insulate the United Kingdom market from much of the impact of firmer world prices. Higher 464W soya bean prices are likely to affect the cost of feeding stuffs although the consequences for food retail prices will take time to work through the chain. Overall, the impact on the food retail prices index is likely to be modest over the next few months although for the longer term much will depend on the duration of the drought.