Dáil Éireann debate -
Tuesday, 8 Feb 1927

Vol. 18 No. 4

VOTE 29. - BEET SUGAR SUBSIDY.

Mr. BLYTHE

I move:—

Go ndeontar Suim Bhreise ná raghaidh thar Sé Mhíle Ceathrachad Punt chun íoctha an Mhuirir a thiocfidh chun bheith iníoctha i rith na bliana dar críoch an 31adh lá de Mhárta, 1927, chun Congnamh Airgid d'ioc ar scór Siúicre Bhiatais (Uimh. 37 de 1925).

That a Supplementary Sum not exceeding Forty-Six Thousand Pounds be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1927, for payment of Subsidy in respect of Beet Sugar (No. 37 of 1925).

When the original estimate was being passed, the Minister for Lands and Agriculture indicated that a supplementary estimate would be required. When the original estimate was being prepared about twelve months ago it was anticipated that the area under beet would be about 7,000 acres, and that the quantity of sugar manufactured would be about 10,000 tons. The area actually planted was 9,500 acres, and the amount of sugar which will be manufactured this year will be about 13,000 tons. It does not really make any difference in the long run that the estimate has been exceeded as to the quantity of sugar manufactured. We thought that during the first two or three years a lesser quantity of sugar would have been manufactured this year than has been the case, but our arrangement with the manufacturing company was that the subsidy would be payable on 125,000 tons during the ten years period. If this year and next the quantity exceeds 125,000 tons, it means that at the end of the period a lesser quantity of sugar will qualify for subsidy.

Mr. JOHNSON

Is that the maximum possible, payment on 125,000 tons?

Mr. BLYTHE

125,000 tons is our agreement with the company. We agreed to pay a subsidy on the rate set out in the Bill on that total quantity, and on that agreement the factory was constructed.

Mr. JOHNSON

Can the Minister give us any information as to the average sugar content of the beet?

Mr. BLYTHE

This year the sugar content was worked out at about 17 per cent.

Mr. JOHNSON

Does the Minister know how that compares with the average in English factories?

Mr. BLYTHE

I am not prepared to give definite figures, but I understand that it is higher than the average content anywhere in the continent outside Holland.

Major BRYAN COOPER

Is the Minister quite correct in that? Should he not include Czecho-Slovakia? If my information is correct, and it was derived in the Carlow factory, Czecho-Slovakia has, in fact, the highest sugar content in the world—about 20 per cent. For the Saorstát the basis was on that of similar factories in the Balkans where the content was about 14 per cent. The sugar content in the Saorstát is about 17 or 18 per cent., which is so profitable for the farmers that the Farmer Deputies are not here to discuss the estimate.

Mr. JOHNSON

I am glad the Minister has told us of the terms of the contract he has entered into with the company, that is to say, that his arrangement is there should be a maximum of 125,000 tons in the ten years as to which subsidy would be paid. This is at least a little protection.

I refer Deputies to the discussion on the Second Reading, and I think it is fair to say that it was on the basis of the statements made by the Minister for Finance and by the Minister for Lands and Agriculture on the Second Reading of the Beet Sugar (Subsidy) Act, 1925, that the scheme was adopted and the subsidy, in the original, voted. Now we are told by the Minister that an agreement was made for the payment on a maximum of 125,000 tons. But in the course of the Second Reading debate the Minister said that "we are estimating for the production of 86,000 tons of sugar for a ten years period." That gave a rough figure of something under £2,000,000 as the maximum subsidy to be paid to the company. Well, at 23/- a cwt. on the sugar the difference between 86,000 tons and 125,000 tons comes to a good round sum of money.

Mr. P.J. EGAN

The subsidy is not that figure all the time. It is not 24/6 all the time.

Mr. JOHNSON

I said 23/-, and I think later on it comes down to 22/6, or round about an average of 23/- for the whole period. I will tell the Deputy what the exact figures are. They are 24/6 per cwt. for the first three years, 22/6 for the following five years, and 22/- for the last two years. The Minister told us, at the same time as he told us that they were "basing their estimate upon a total production of 86,000 tons for the period," that "a factory was being built which may ultimately be raised to a capacity to deal with 15,000 tons of sugar." It would begin with the production of 5,000 tons per annum. Then it is estimated that "the complete equipment of the factory will run to the neighbourhood of £200,000 for the ten thousand ton factory." I think it was made public that the original estimate was altered and a much bigger factory was entered upon after the Bill was passed. Consequently it is possible to work up sugar to an amount very much higher than was originally contemplated, and we have the result in this first year that, as compared with the 5,000 tons of sugar anticipated, we are to have 13,000 tons of sugar.

One can understand the hesitation about a second factory when the first factory seems to have enlarged its capacity after the agreement was made; that is to say, the agreement with the Dáil. So far from its maximum capacity being 86,000 tons, we have contracted to pay for 125,000 tons in the ten years. Now we are very glad, of course, to see the factory and to see that the farmers have succeeded so well in the first year. It was made known that the Ministers had in mind that a second factory which might be established would only be upon the basis of a much lower subsidy. But the owners of the first factory have got round that fear by doubling the capacity, or multiplying by 50 per cent. the proposed capacity of the first factory, and they managed to wheedle the Ministers to guarantee them a subsidy of an average of 23/- a cwt. on 125,000 tons as against an expected 86,000 tons. It is rather a serious difference in the subsidy, and, while I think it may well redound to the credit of the farmers in the end—because they will know what kind of a bargain to make after the first three years are over—it is not quite as fair to the Dáil as it is to the farmers.

I think it is very generous to the company. All credit to them, and I, for my part, must say that the factory itself is a marvel of scientific organisation and mechanical ingenuity. I do not think that the figure given by the Minister to-day is very reassuring, but I am glad that a figure is stated, because I was fearing that we had let ourselves into an unlimited subsidy, or, at least, into a subsidy only limited by the capacity of the factory. I do not know what that is. I think it is more than a 15,000 ton factory. I think it is probably a much bigger factory than that, and I think that the Carlow factory will be able to deal in the campaign period, when it comes to its utmost effectiveness, with even a larger quantity than 15,000 tons.

There is one matter that I think I might refer to, and that is the position of the factory in respect to employment and in respect to its conformity with the Factory Acts legislation. I have had an assurance that all the requirements of the Factory Acts will be complied with. It is known and appreciated that there were difficulties in the early stages and I think all those primarily concerned were prepared to overlook many faults in that respect. But we have now the assurance that, having got over the initial difficulties, those matters will be fully attended to, and all the requirements of the law— and I hope considerably more than the requirements of the law—will be observed.

I hope, too, that there will be very generous consideration given in future years to the position of the workers in the industry. There has been a fair amount of concord during this first year and I know that both sides appreciate the position. I am hopeful that that will be the beginning of a long period of amity as far as the factory and the workers in the factory are concerned. I do express the hope that it is going to be assured by recognising the existence of people responsible who are able to speak on behalf of bodies of workers, and that collective agreements can be made. Otherwise the amity of the first year might not succeed in being preserved in future years. However, I must say that the project is a hopeful one and I think it will have valuable results for the community as a whole. But I say now, as I said when the Bill was first introduced, that the company has made a very good bargain.

Mr. LYONS

Can the Minister give the House any statement concerning the wholesale price per cwt. of Carlow sugar in the city of Dublin and in other parts of the Saorstát? I and, no doubt, other Deputies have seen in the Press where the sugar that we are now subsidising to the extent of £198,000 this year is costing one halfpenny per pound more than the foreign sugar. There must be something radically wrong. The people are supplying £198,000 as a subsidy to that particular factory and the produce of that factory is costing one halfpenny a pound more than any sugar that is imported. I made inquiries at a very large establishment in the city and I was told that the price of Carlow sugar is £1 10s. 3d. per cwt. In addition to that there is sixpence per bag paid for carriage. Those figures apply to sugar taken by the ton and I am told that I can be supplied with the invoices if necessary. That is what the sugar from Carlow is costing the traders and, apart from those charges, traders have to supply paper bags and pay the man behind the counter who weighs out the sugar. The result is that they do not get one farthing profit for selling Carlow sugar.

Is that the way to run an Irish industry? Who is making all the profit? We are giving this year a subsidy of £198,000 and, notwithstanding that fact, they cannot produce the article that is purchased by the worker at the same price as is charged for foreign sugar.

Mr. P.J. EGAN

I must correct the statement made by Deputy Lyons. It is quite wrong.

Mr. LYONS

I will be very glad to hear your explanation.

Major COOPER

Perhaps, as Deputy Egan is an interested party, I will be permitted to speak on this matter. It was made clear that one individual trader was selling Carlow sugar at 4d. a lb., and that other traders in a much larger way of business in Dublin are selling it at the same price as imported sugar, and, in one or two instances, it is sold at one halfpenny a lb. less. If Deputy Lyons read the whole of the paper instead of part of it he might form a fuller judgment. One fact that the Deputy may have overlooked is that the Carlow factory is employing a very large number of workmen, nearly three hundred. They are working in three shifts each day, and they are paid good, substantial wages. I do not think Deputy Lyons will object to that.

AN CEANN COMHAIRLE

resumed the Chair.

Mr. LYONS

I do not object at all. I am not objecting to the Vote, but I do maintain that the article manufactured in the Carlow factory should be sold at the same price, at least, as the foreign article.

Mr. CORISH

And so it is.

Mr. P.J. EGAN

It is sold at the same price.

Mr. LYONS

Yes, but without profit. If the sugar is costing £1 10s. 3d. per cwt. and is sold at 3½d. a lb., where is the profit? How is the man behind the counter who weighs out the sugar to be paid? Where do his wages come from? There must be some give and take. I fully understand there are 300 people employed. I appreciate that, and I hope there will be a factory in every county in Ireland employing a similar number. The workmen who purchase the sugar— and perhaps they purchase more sugar than many who can well afford to pay for it—should not be charged more than what is asked for foreign sugar. Traders who can make profits on other articles that will recoup them for any loss incurred by selling the sugar can well afford to sell it.

Is the Minister in a position to say whether he has any information in regard to the price charged to the traders in Dublin for the sugar supplied wholesale from the Carlow factory? I do not at all appreciate the idea of subsidising any industry that is not capable of manufacturing an article and putting it on the market at the same price as the foreign article. There must be something wrong. The workers employed are not getting the £198,000; the farming community growing the beet-root are not paying the workers they employ any more than they had two years ago. I feel sure that the workers do not benefit much out of the subsidy.

The man who owns the land, the big farmer, is guaranteed a price of £1 3s. 6d. per ton. He is guaranteed so much a year for seven years. But has the man who is engaged by the farmer any guarantee of employment for seven years? Have the men engaged in the factory a written guarantee that they will be kept in employment while the Government is subsidising the factory? They have not. The proprietors of the factory have the guarantee, but the ordinary worker has no guarantee. If a worker goes to Carlow to-morrow and brings his family with him and builds a house, he may be dismissed when the house is built, but the company must still get the subsidy.

I was glad to hear Deputy Johnson's very encouraging words and good wishes. I was glad to hear him express the hope that good-will will continue to exist amongst the proprietors and the workers of the Carlow factory. I hope the same thing will apply to every employer and employee in the Saorstát. That will be all for the common good of the community. I was surprised, however, when I did not hear Deputy Johnson say that the people engaged in the works should have some guarantee of employment, whereby a workman could say: "I am sure of employment for at least five years. I know that in five years' time I will have no further guarantee, but at least I will have work as a manual labourer for five years to come." But we got none of these guarantees from the Government. The proprietors got a guarantee, and they are the people who have reaped the benefit, at the expense of the employees.

Mr. DALY

I congratulate the Government on the success of their enterprise in Carlow, which is, I think, the first step towards making our country self-supporting. Its success ought to be an encouragement to the Government to try other industries, to encourage the growth of wheat in this country, and, if necessary, to subsidise it. The money that is being spent in subsidising beet sugar is, in my opinion, well spent, for the reason that it is teaching the youth of Ireland a trade which they would never have heard of except for the Government. They are showing the people that they are able to produce sugar, a suggestion of which would have been laughed at twenty, or even ten years ago. I do not want to make a tariff reform speech, but I hope we will soon be wearing our own wool, and I think it is the duty of every one of us, when the Government is out to make the country self-supporting, to congratulate them on these steps. Even the Minister for Industry and Commerce is out to make our own candles and coal for us, and we must congratulate him, too. I hope that his scheme, when it is bearing fruit, will be as successful as the Carlow scheme.

Mr. WILSON

I do not oppose this Supplementary Estimate, but I want to direct the attention of the Minister to what I consider was an oversight in the agreement made between the growers of beetroot and the factory people. The Act provided that the price for the beetroot for the first three years was to be at the rate of 54/- per ton on a sugar basis of 15.5, and that any excess of sugar content above 15.5 was to be paid for at the rate of 2/6 per unit. At 54/- to the ton of beet 15.5 is, roughly, 3/6 a unit, and if the beet contains 17.5 per cent., the factory will have, in overhead charges and in management costs, only the same amount of expense for the production of the sugar as in the case of the 15.5 ratio. Therefore, instead of paying a reduced price for the excess above the 15.5 they should give a higher price. The payment provided is only at the rate of 2/6 a unit, and I contend that it should have been, at least, on the same ratio as, if not on a higher ratio than, the 15.5, having regard to the fact that, with the overhead charges being the same, the gain to the factory is much more where the sugar content is great. That advantage should come to the grower and not to the factory.

Captain REDMOND

In view of the statement made by Deputy Lyons, I wonder if the Minister would be in a position to make a statement as to the wholesale price of imported sugar. If Deputy Lyons's figures are correct in regard to the wholesale price of sugar produced in Carlow, it would be, to say the least, interesting to have a statement from an authoritative source as to the wholesale price of imported sugar.

Mr. BLYTHE

I did not, needless to say, listen to Deputy Lyons, and I am quite unaware of what he said. I really do not know about the wholesale price of sugar. The wholesale price charged by the Carlow factory does not arise; people will not pay for it if it is not value, and there is no compulsion on them to pay for it; there is plenty of other sugar to be had. The point raised by Deputy Wilson seems to be quite a sound one, but the matter has been settled, so that there is really no use in discussing it now. I presume that the reason why what was done was simply this, that the whole arrangements about the price have to be taken together. The margin is not narrow at the present time with the subsidy, but if the factory were working on a more economic basis the margin that the factory could afford would be very narrow. Where there has been no subsidy I think sugar beet works on an extremely narrow margin. The amount that is paid to the farmer for anything above 15½ per cent. is, very frequently, something like clear gain, and a windfall to him. It is also probably a bit of a windfall to the factory, because it does save overhead expenses, and I presume what happens is that it is more or less shared. But these arrangements are in the Act, and there can be no departure from them. The whole question of price is a matter to be decided between the farmers and the factory at the end of the three years' period.

Deputy Johnson said that the company made a very good bargain. Undoubtedly they did, but we also made a good bargain. We made as good a bargain as could be made. It is a fact that for a considerable time after the Beet Subsidy Act was passed it was doubtful whether we should have a factory or not. The people who were to undertake the erection of the factory were desirous of getting Irish capital, for many reasons. They wished to have people who were connected with the country and who would be of assistance to them in dealing either with the Government or the beet growers, but in their early efforts to get Irish capital they were so unsuccessful that they were discouraged. At one point they were very much discouraged.

Captain REDMOND

Did they publish a prospectus?

Mr. BLYTHE

No. I think that undoubtedly they should make substantial profits. There is a very considerable risk in this whole enterprise. It is very difficult to induce people to come into a strange country and, moreover, a country which had, quite recently, been in the throes of a revolution, and to set up a big industry such as this. We were all along desirous of having a factory of 10,000 to 12,000 tons, which, I understand, is regarded as the most economical size. If you have a smaller factory undoubtedly the overhead expenses are greater and it is impossible to manufacture sugar as cheaply. If you already had a factory in existence and were revising your subsidy rates you would have to give a higher rate of subsidy to a 5,000 tons factory than you would have to a factory the size of that at Carlow. But in the negotiations which took place before the Beet Subsidy Act was passed Sir Maurice Lippen was hesitant about putting up a factory of the present size. Before the Belgians had gone through the country, they spoke of a 10,000 or 12,000 tons factory. When they had been through the country they were doubtful about being able to rely on sufficient supplies of beet, and they then proceeded to discuss this on the basis of setting up, in the first instance, a factory to produce 5,000 tons of sugar per annum, to be afterwards increased if they found that they could get the beet. Matters were in that stage when the Beet Sugar Subsidy Act was before the Dáil.

Later on, they got sufficient encouragement and took sufficient courage in their hands to decide on proceeding with a larger factory. We agreed to that because we wanted the most economical type of factory. This thing is, in part, an experiment. The effects and prospects of sugar beet in this country are only to be determined by trial. If we have further factories and if we are subsidising them, we will decide upon the rate of subsidy to be paid from the facts which we learn as the result of the operations of the Carlow factory. As that factory is of a size to work on the most economical basis, we will have the facts which will enable us to fix a lower rate of subsidy than could be fixed for future factories if we had a smaller concern in Carlow which could not be worked economically. We want to know what is the best that can be done with sugar beet and what is the very lowest subsidy on which that industry can carry on. These are the reasons which we felt justified us in agreeing to the erection of a factory of this size. With regard to inspection and compliance with the Factory Acts, I understand that an inspection has either been arranged or has taken place, and I know that the company are quite willing to comply with all the requirements. If anything is lacking it is, as Deputy Johnson has indicated, simply due to the haste with which the factory was erected, and the necessity also for getting to work, as the beet was beginning to arrive.

Mr. JOHNSON

I do not think that the Minister quite appreciated the point I made with regard to the size of the factory and the agreement regarding the 125,000 tons over a ten-year period. The Dáil was led to believe that the project was based on an estimate of 86,000 tons over the period, and it passed a Bill with that in mind, not stating any maximum sum or tonnage, but indicating certain figures in regard to the subsidy per cwt., having in mind 86,000 tons and a possible subsidy of £2,000,000 over a period of ten years. These were the figures that we discussed. That was the impression created by the Minister's statement in the House, and it was in the good faith of a maximum of £2,000,000 and 86,000 tons over ten years that the Bill was passed and the last Vote secured. When the original vote for this year's subsidy was made we had no intimation of the 125,000 tons agreement which involves us in another £1,000,000 subsidy— practically £3,000,000 over a ten-year period instead of a maximum of £2,000,000. That is a very serious state of things. I do not think it is fair for the Minister to come with a Bill, get a Vote based on certain figures, and then for us to learn later that an agreement has been entered into involving the Dáil in a 50 per cent. increase. That, as I say, is a serious state of affairs, and one which I do not think the Minister has met. We ought to have been consulted before such an agreement was made with the company. We are bound now. We cannot refuse to vote this subsidy annually. You might say that for ten years the Dáil is bound hand and foot. There is no possibility of questioning such payment once the Minister entered into that agreement. He entered into that agreement despite the statement made to the Dáil that it involved a £2,000,000 maximum payment, whereas it really involves a £3,000,000 maximum.

Mr. SHAW

I wish to put a question to the Minister as regards the growing of beet in other counties besides those which adjoin the present factory. In Westmeath a large number of farmers grew crops of beet in 1926 which, I understand, at least equal, if they do not excel, those grown in other counties. These farmers are anxious to know their position. Will they get any guarantee that beet sown this year will be purchased by the Carlow factory? I have seen samples of the beet grown by them and it certainly seemed to be superfine. It would be a pity if Westmeath, Longford and counties other than those which are adjacent to the Carlow factory were excluded because they could not get a guarantee, or promise, that the beet would be purchased from them. I am sure that each county will be vieing with the other for the next factory. We want to see, if we are going to grow sufficient beet, that we shall have a fair chance of getting the second factory. I congratulate the Government in the most sincere manner on the great success of this venture, especially as they have so many enemies at present. If this did not turn out to be a success there would be a good many people sneering and jeering at them for having had the pluck to adventure in this matter, which was, of course, very speculative. I believe that this is only a commencement of the many schemes they will have the pluck to introduce—schemes such as this and the Shannon scheme—which will make Ireland a magnificent country, a country which will be second to none although we have so many people now who think that they could do much better.

Mr. BLYTHE

Only a certain amount of beet can be used in the factory. Nobody should grow beet unless he has a contract with the factory or a guarantee from the factory that it will be bought. I understand that the factory is allowing people who grew beet last year to increase their area by, I think, one-fifth, but because the people who did grow beet in the first year are so anxious, as a general rule, to extend their area, there is not going to be any general acceptance of beet from new growers. People who did not grow beet in the first year, and people who are outside the area of the factory, will simply have to hope that the results of the experiment will be so successful that it will be a justifiable proposition to allow in the course of two or three years, when the results are clear, the erection of additional factories.

Vote put and agreed to.