§ Earl Russellasked Her Majesty's Government:
What would be the likely effect of the abolition of monetary compensation amounts on British food prices, and what would be the effect on the Rossi index for social security benefits.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)Monetary compensatory amounts are due to be abolished when new agrimonetary arrangements compatible with the single market are put in place on 1st January 1993. Under the new system, the green exchange rates used to convert EC prices into sterling will be kept in line with market exchange rates. If the present market exchange rate for sterling continues until the end of the year, a substantial devaluation of the green pound will he necessary. While this will increase farm support prices, food prices will not increase proportionately. EC price support arrange-ments only affect a limited range of commodities, and the cost of raw materials is only a small proportion of the cost of many foods.