Written question asked by John Hayes (Conservative) on Thursday, 6 November 2003, in the House of Commons. It was due for an answer on Monday, 17 November 2003. It was answered by Ben Bradshaw (Labour) on Monday, 17 November 2003 on behalf of the Department for Environment, Food and Rural Affairs.

Dept for Environment Food and Rural Affairs

Question: To ask the Secretary of State for Environment, Food and Rural Affairs, what assessment she has made of the likely effect of the current proposals for Common Agricultural Policy reform on the farm gate price of milk. - Inc figures.

Answer: Mr. Hayes: To ask the Secretary of State for Environment, Food and Rural Affairs what assessment she has made of the likely effect of the current proposals for Common Agricultural Policy reform on the farm gate price of milk. [137895] Mr. Bradshaw: When fully implemented, the reforms agreed in June in Luxembourg will reduce the support price for butter by 10 per cent. more than the 15 per cent. reduction originally agreed for both butter and skimmed milk powder under Agenda 2000 (i.e. a 25 per cent. cut in the support price for butter). If farm gate prices were to fall to the same extent, the price per litre might be reduced by a further 0.95p beyond the impact of Agenda 2000. However, we share the European Commission's assessment that farm gate prices are unlikely to settle at this level: indeed, the overall package of compensation agreed reflects this. (Producers will be compensated through an increase in the level of direct payments of a further 0.74ppl over and above the compensation originally agreed in Agenda 2000.) The figures quoted above are based on an exchange rate of 70p/euro. Our economic assessment indicates that decoupling of direct payments from production will have a beneficial effect on farm incomes; we would expect the main dairy-specific price impact to be in relation to the value of milk quota.

Secondary information