§ Mr. Teddy TaylorTo ask the Minister of Agriculture, Fisheries and Food if he will make a statement explaining 25W the origin of the clauses relating to intervention for beef under which some member states maintained a buying in price 2.5 per cent. above the market price; whether this procedure was followed in the United Kingdom, and what has been the effect on this procedure of the recent farm price review.
§ Mr. Donald ThompsonThe buying-in price for any category or quality of beef fixed by the Commission is the same in all member states in which intervention in that category and quality of beef is open. Prices are fixed in European currency units on the basis of rules agreed by the Council of Agriculture Ministers in December 1986 at part of the package of measures to reform the support regime for beef.
These rules provide for the calculation of buying-in prices on the basis of a weighted average of the market prices prevailing in those member states for Which intervention is open, excluding prices above the intervention trigger-point. However, in the discussions which led to the December 1986 agreement, concern was expressed that in gearing intervention prices to market prices at a time when market prices were expected to be weak in the face of cuts in milk quotas, the system might encourage a downward spiral of prices. Two safeguards were therefore introduced. The first of these is a flat-rate additon of 8.6 ecus/100g (£61.11 tonne), equivalent to 2.5 per cent. Of the institutional intervention price for beef of R3 quality. The second provides that if the weighted average plus the flat-rate addition is less than any of the market prices which have been taken into account in calculating the average, the highest of those prices shall be the buying-in price applied.
Modifications to the system of calculating buying-in prices were established on the basis of a consensus reached at the Council of Agriculture Ministers at its meeting in Luxembourg on 13–17 June. In the absence of the adoption of the 1988–89 price-fixing regulations by the Council, the Commission, acting under its own powers, has adopted a measure on these lines which allows it to suspend or restrict the application of one or both of the two safeguards in certain market conditions. The exact effect of this measure depends on the level of market price, as compared with the institutional intervention prices set. For the week beginning 11 July, the new rules have resulted in buying-in prices being fixed about 3 per cent. lower than they would have been under the unmodified system.