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Food Prices

Volume 974: debated on Monday 19 November 1979

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asked the Minister of Agriculture, Fisheries and Food (1) whether the increase of £600 million in United Kingdom food prices in 1978 which he estimates has resulted from British membership of the EEC is based on the retail price; and if so, what is the difference in the case of farm-gate or import prices;(2) whether he will circulate a table in the

Official Report showing the quantities

of foodstuffs and the difference between United Kingdom and world prices in each case used to build up his estimate that membership of the EEC has cost the United Kingdom an additional £600 million in 1978;

(3) whether, in calculating that membership of the EEC has led to an increase of £600 million in United Kingdom food prices in 1978, he took account of the effect of higher common agricultural policy prices on other agricultural products; and if so, how much of the total was accounted for by this factor;

(4) what was the level of the green pound assumed in his recent calculation that membership of the EEC had led to an increase of £600 million in United Kingdom food prices in 1978; and what was the consequential difference between United Kingdom and world prices for the principal agricultural products underlying the calculation.

I estimate that in relation to commodities subject to variable import levies under the CAP the extra balance of payments costs of United Kingdom imports from other member States in 1978 was about £110 million

CommodityImports from other member States (thousand tonnes)Exports to other member States (thousand tonnes)Average rate on levy on imports from third countries net of United Kingdom MCA £/tonne
Other cereals1002444
Other dairy products34125266
1. The tonnages include the estimated quantities of the commodities concerned contained in composite food products. Beef includes live cattle.
2. Sugar has been omitted from the calculation since no levy is applicable under the CAP to United Kingdom imports under special arrangements from CAP countries.
3. For beef and bacon, reduced rates of levy have been employed to take account of the fact that the greater part of beef imports takes place at concessional rates of levy under special arrangements, and because it is felt that the full levy on bacon overstates the difference between EEC and world prices.
4. For butter, the levy is the special rate applicable to imports of butter from New Zealand, and for cheese an estimated levy has been used based on that for imports from New Zealand during 1977.
A similar calculation for commodities such as fruit and vegetables which are subject to tariffs when imported from third countries indicates that a further

after taking account of monetary compensatory amounts and extra revenue on our exports to the other member States. With certain exceptions the average rate of import levy in force in 1978 was used as a measure of the difference between the EEC price and the world price of each commodity.

The rates of levy employed were the average rates net of monetary compensatory amounts, as determined by the rates for the green pound in force during the year. In calculating the extra revenue from exports, however, the sum thus obtained was increased by the total of the MCA's collected on the exports. The reason for this difference in treatment is that MCA's on our imports are paid in the member State of exportation and the goods arrive here at the MCA-paid price; whereas the MCA's charged on exports are collected in the United Kingdom and, since they serve to reduce our receipts from the EEC budget, they enter into the calculation of the United Kingdom's net contribution to the budget. To regard them also as reducing export revenue would thus involve double counting.

The tonnages and rates of levy used in the calculation were as follows.

additional net cost arises on these items, which may be in the region of £100 million.