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THE COMMON MARKET AND FOOD PRICES
Food prices account for one quarter of all items (on a weighted basis) of the cost of living index and sales through food shops account for more than 40% of all retail sales. Why can they not be controlled or treated in the same way as other prices?
''The decision to exempt, from the prices standstill, those goods in which raw materials or raw agricultural produce account for a high proportion of total cost was not ideal politically ... But Mr Heath had little option. Britain remains dependent on imports for some 45% of its food needs and most of the raw materials used by industry; its purchasing power is simply not big enough to dictate prices on world markets (in contrast to her ability to do so in the 19th century, NS )." (FT, 8.11.72)
Nevertheless, there is every indication that the bourgeoisie would have given strong support and pressure to a determined stand by the TUC that the Common Agricultural Policy effects which will begin to be felt on 1st January should have been stood out against by the British. The FT leader of l1.11.72 suggested that the Government should do just that: not only for our own national interest but also because it would bring considerable support (if only tacit at first) from all other EEC countries (except France which is the only EEC country to benefit from the EEC Common Agricultural Policy). [1] The clear implication being that the CAP survives because the French are the strongest and most adept politically and that Britain should counter this with asserting her own national interest and political counterweight thus benefiting the EEC as a whole.
[1] In parenthesis let me express my own opinion that the country which has maintained its agricultural production should have the right to determine agricultural policy - PB
On 4.11.72, S. Brittan wrote, "Another special factor (in working out how much prices will rise if wages are [sic. do?] not, NS) will be the CAP, which can be regarded as a heavy membership [price?] for Common Market entry. Much the most sensible aspect of the last TUC statement is the implied suggestion that we should plead the inflationary emergency as grounds for limiting the food import levies next year and for negotiating a longer-term shift from high farm prices to deficiency payments. This is the least that a French Government would have done if it had the same national interest as British Ministers."
In addition, on the 22nd November the Government decided to remove the import quota on apples. The FT commented in its leader for the 23rd:
"The argument that nothing whatsoever can be done about food prices because all of them are the product of international market forces is only partially correct. The decisions that Government make can, and do, affect the prices that are paid for various foods, at least in certain circumstances. This may require long-term planning. ... (e.g. stimulating home production) Governments can also determine the rates of taxation and the pattern of distribution. The value of this in influencing retail food prices can be deduced from a recent Common Market study that reveals wide disparities in the profit margins, distribution costs and final retail prices of various foods inside the existing EEC of the Six. Again, yesterday's Government decision to flood the British market with imported apples is further evidence of the fact that there are times when the authorities most certainly can do something effective about prices. This decision has all the hallmarks of haste and overreaction that usually indicate that a Government is feeling nervous about the trend of opinion. There should be little difficulty in understanding this: when good eating apples cost a shilling each, it becomes a political issue. ... It should therefore be plain that if a Government decides upon a cheap food policy it can go some way towards carrying out that decision. There is a proportion of all food prices that cannot be affected by the juggling of quotas, levies, subsidies, taxes, price controls, or any other devices, but this proportion is by no means the whole of the story. It is important for the Government to appreciate this, since if its search for a general understanding on wages and prices to follow the freeze is to have much chance of success it must at the very least be seen to be doing its utmost to keep the price of food down, both now, and after Britain joins the EEC (another broad hint about CAP, NS). Hiding behind generalisations about 'market forces' is not sufficient; the action taken on apples is an indication of what can sometimes be done."
The Downing Street talks in fact ended before any real discussion or negotiation had begun. The CBI were astounded when after Heath had presented the Government package deal on the 2nd the TUC were immediately as one man convinced that there was no basis for discussion. It is clear that if discussion had proceeded there would have been support from the CBI for as much control of food prices by the Government as is practicable - i.e. those prices which the Government can influence and can be held without affecting the home market rate of profit. It also seems equally clear that this would have been the case given the highly academic case of real profiteering taking place. Such profiteering results from a seller's market; the best examples being the last two wars. By the second War the bourgeoisie were paying 100% excess profits tax (a notional normal rate of profit having been agreed with the coalition Government) with nary a whimper.