Cheaper food
bouglas Jay
't)the people have been slow to notice the Ithaior fall in world grain prices during the last months, which has exploded the only ,uligument left to the pro-Marketeers for Briin remaining bound by the disastrous Cornfl Agricultural Policy. World grain prices, ;mtch dominate food prices generally, began h`c) all in February, when the current world "rice cycle reached its peak. ThSince then they have fallen Precipitately. e international Wheat Council's report on 2Y 1 records that "the steep decline in US ;meat export prices which started at the end .1 February 1974, has continued. In the last t weeks they fell on average by more than to their lowest levels since the end of 41Y 1973." A further fall in wheat and maize rices on May 6 was recorded on the followIN day by the Financial Times, which cePorted that "grain prices fell sharply in . ,e,hicago and London yesterday • . • In tkuleago maize and wheat futures collapsed at Opening." The fall has now extended to maize and leY, the world's principal feeding stuffs, .01ch affect in time the cost of producing '4,1eat and dairy products also. The Daily 4„elegraph agricultural correspondept summed FP the situation on May 2 very fairly as a()Ilows: "Over the past month there has been significant drop in import prices for ' Itierican wheat in Britain. In addition, world ,1?)rices for both barley and maize are now celow EEC price levels. This has made the i?rnmon Market replace the export levies it CPosed to curb sales out of the Community /r import levies to protect cereal farmers in
the Nine by keeping out imports." This remarkable turn-round, so far not generally recognised, has been due to the complete removal of acreage restrictions on grain produced in North America, the main source of world exports. This new freedom has brought another 50 million acres of land into crop production in the US alone during the past two years — a rise of 15 per cent in total US grain acreage, equal in itself to more than France's entire arable land and two and a half times Germany's (a reminder how puny is European food output compared with that of the new world). As a result, the US wheat crop this year is expected to be over 30 per cent above last year — an enormous increase from one year to the next. Latest estimates of the winter wheat crop strengthen this forecast.
Thus all the foolish propaganda talk about EEC prices being lower than world prices, and the "era of cheap food" being "gone for ever" has already proved to be the language of ignorant illusion. I can remember hardly any time since 1929 when we were not being told by those unable to see beyond their noses that either the age of high prices, or the age of low prices, had gone for ever. They always proved wrong. That is why the CAP is so disastrous for Britain. The essence of this policy is to base food prices on the costs of the internal producer, however inefficient, to exclude imports with levies and taxes, and buy up any internal surplus through an "intervention board" and hoard it to keep prices up. Such a system is above all ruinous to Britain as the world's largest food and grain importer, because it means forcing us in most years to buy at far higher prices than we need — a direct burden on our living standards as well as our balance of payments.
For a few months in 1973 a few EEC prices were temporarily below world prices — largely sugar (where the world price is artificial) and soft wheat because the EEC levied an export tax. But even in this period the import levies remained on most foods, and the Intervention Boards continued to hoard. For there is nothing in the CAP which keeps EEC prices below world prices, even when the latter are exceptionally high. The Boards are forced to buy at a minimum price to stop prices falling. But there is no maximum price at which they have to sell to stop them rising.
The story even of 1973 clearly shows that EEC membership was the main cause of the headlong rise in prices and living costs in Britain, which 'caused such industrial strife and disrupted our whole economy. During that year the three EFTA countries which joined the EEC (Britain, Denmark and Ireland) suffered a rise in food prices nearly three tunes as great as three EFTA counties which wisely did not join (Norway, Sweden and Switzerland). The actual rises that year were these: Norway 5.9 per cent; Sweden 6.6 per cent; Switzerland 6 per cent; Denmark 12 per cent; Eire 16.2 per cent; U.K. 20.1 per cent. Not merely are grain prices falling now. But even two months ago at the peak New Zealand could still supply us with food well below EEC' prices, if allowed. The NZ Trade Minister said in London on March 12: "New Zealand could still Supply the UK with butter, cheese and lamb far more cheaply than any of the Common Market countries." And the price we are now forced to pay for imported butter — rather over £400 a ton — is only half what we shall be forced three years hence (over £800).i if we stick to the ridiculous 1972 Treaty of Accession — double world prices.
Nor surprisingly, as wprid prices fall, the Brussels authorities are now being forced to build up a beef mountain. This has now reached 75,000 tons. The Wretched Brussels officials are ransacking the Continent to find more vacant storage space for beef which is too dear for mere consumers to buy! The Economist of May 4 justifiably put it this way:
"The snag with the working of the Nine's present beef system is that low-priced beef is entering the Community at the same time as large amounts of home-produced beef are disappearing into EEC stockpiles." Could absurdity in economic management go further?
Meanwhile, the artificially high cost of feeding stuffs thus caused by our EEC membership, and the abandonment of guaranteed prices and deficiency payments by the Heath Government, have produced a crisis in British beef and big production. Feeding stuff prices have been pushed up, and guaranteed prices brought to an end. Thus Common Market membership has done as much harm to the British farmer as to the consumer. It has also provoked a clash between farmers' and consumers' interests which did not exist under the pre-EEC policy of guaranteed prices and deficiency payments. The only solution for British farmers, as well as the housewife, is to return to that well-tried and successful policy.
The present fall in world prices does not necessarily mean that we shall be back in a few months to 1972 price levels. There are also some forces making the other way. But it does mean that nobody knows whether food prices will be higher or lower one year or five years hence. To stay shackled by the CAP is to gamble our national future on the more improbable hypothesis that they will be higher. The only prudent course for Britain is to be free to take advantage of either possibility, and in particular of lower prices if they emerge. That means in turn that freedom from the CAP must be the major objective of the forthcoming re-negotiation, and the minimum condition for remaining in the EEC. For the alternative course of re-joining the EFTA free trade area holds every advantage for Britain. Those countries which stayed out — Norway and the rest — now enjoy complete industrial free trade with the EEC as well as with each other. Some sections of the British press seem not even to have grasped this basic fact. We merely have to leave the EEC in order to enjoy all these advantages, and be free of the horrors of the CAP and the present infringement of our democratic independence by so-called "legislation" from Brussels. We must now negotiate in the knowledge that this is the alternative for Britain.
Douglas Jay is Labour MP for Wandsworth, Battersea North.
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