THE PROBLEM OF AGRICULTURE IN A EUROPEAN ECONOMIC UNION

A revaluation of the German Mark has been hindered by the effects that this would have on German farm prices, given the E.E.C. agricultural policy. The article therefore examines the implications of (a) a common agricultural price level, and (b) fixed or adjustable exchange rates within a customs union such as the E.E.C. It concludes that a change in relative price levels between countries couldbe tackled by means of exchange rate changes, while retaining a common agricultural price level; but even with adjustable exchange rates, a common price level may give rise to diBculties unless agricultural productivity in the member countries grows in a particular way. It finally suggests that a wider European economic union would require niorejexible arrangements than those at present in force in the E. E.C.