Vol. 426 No. 7
195 Mr. Yates asked the Minister for Agriculture, Food and Forestry the effects of the recent green pound devaluation; whether he has satisfied himself that this fully compensates for the losses experienced by farmers; and the reason the level of green pound devaluation was not at the same rate as the currency devaluation.
The green pound devaluation of 8.2 per cent secured by Ireland with effect from 3 February has effectively resulted in an increase in national currency terms of 9 per cent in agricultural support prices, which will undoubtedly result in a considerable increase in returns to Irish farmers this year which will help compensate for losses experienced in the recent years. I am happy to report that already farmers are experiencing improved trading conditions as prices paid to producers are already on the increase. During the next 12 months further benefits will accrue to producers as the various subsidies and premia payable under the Common Agricultural Policy are increased by about 9 per cent in Irish pounds. In a full year I expect that the effects of the green pound change on incomes in the agriculture, food and forestry sectors should amount to around £150 million.
It is clear that the benefit for farmers are considerable and even taking into account an increase in the cost of imported inputs, the net effect will be very positive in terms of farm incomes.
The green pound was not devalued to the full extent of the devaluation agreed within the ERM. In conformity with the Community's agri-monetary rules a 2 per cent devaluation option, which must be exercised within 12 months from 3 February was retained. I took this decision in the interests of the longer term development of the Irish food industry. It is in my view important to ensure that the new support prices do not tilt the balance too much in favour of intervention as against sales to the market. For this reason a full devaluation was not sought and it is my view that our competitive position in the market has been greatly enhanced by this decision. I have undertaken to keep the position under constant review in the months ahead.
