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Threshold price


This is the minimum price under the common agricultural policy for imports into the European Economic Community of agricultural products. Levies are exacted on any goods coming in at a price lower than this minimum, which is fixed for a stated period by agreement between the member countries. The fixed threshold may vary from one trading year to another according to the state of the market. Below the threshold price there’s an intervention price at which individual surpluses are bought up by the Community through the Common Agricultural Fund (C.A.F.) or common budget to compensate farmers within the community who have been unable to dispose of all their produce because of the minimum price rule. Alternatively, these surpluses, or any produce, may be sold outside the community at a lower price; C.A.F. will then compensate the seller by paying over a ‘subsidy’ to cover the difference between the actual sale proceeds and the intervention price.

Reference: The Penguin Business Dictionary, 3rd edt.