Vol. 424 No. 9
139 Mr. Yates asked the Minister for Agriculture and Food the macro-economic position, as he has assessed it, in relation to the Common Agricultural Policy reform; whether the total price cuts for each sector exceed the levels of compensation; and if he will make a statement on the matter.
At the conclusion of the Common Agricultural Policy reform negotiations, my Department conducted an analysis of the economic implications of the outcome. It concluded that combining the effect of reduced value of output, savings in input costs and increased subsidies due to compensation measures, the net effect of the Common Agricultural Policy reform agreement — in the first year of its full implementation following the transition period as compared to 1991 — would be an increase in aggregate farm income, in nominal terms, of £97 million.
This result was based on a static analysis, which did not take account of changes in efficiency levels or adjustments which farmers might undertake in response to the Common Agricultural Policy reform agreement.
The analysis showed that the combined effect of price cuts, additional compensation and savings on inputs meant that the dairy and beef sectors showed a substantial net gain, whereas for cereals, sheep, pigmeat and poultry the net effect of the various factors was about neutral.
