The amount asked for is for the purchase of the following creameries:—The Golden Vein Dairy Company, which consists of five creameries, three being centrals and two auxiliaries; and Clonoulty creameries for which £4,000 is asked. The figure for the Golden Vein Dairy Company is £16,500. The Clonoulty creameries comprise one central and three auxiliaries. In addition, there is £3,000 for Ballymakera, which is a central creamery. That tots up to £23,500. There is a balance of £13,000. In addition to the £16,500 there is a sum of £8,000 required for the Golden Vein scheme. The company is being taken over as a going concern. It has, of course, certain credits and stock in hands, and also certain debts. There is a balance in favour of the stocks and credits of £8,000. In other words, assume that the stocks on hands plus the debts due to the company amounted to, say, £12,000, and on the other hand that there are debts due by the company amounting to £4,000, that would be a difference of £8,000 in favour of the assets of the company. That, roughly speaking, is the position of the company. I do not say that these figures are actually right, but I am using them to illustrate the situation and to explain the £8,000. There will be paid to the owners of the premises this year, Messrs. England, who hold most of the shares, £16,500 plus £8,000, and that £8,000 will be recouped afterwards by collecting the debts and selling the stocks. We are making the same arrangement here as we made in the case of the Condensed Milk Company of Ireland. The debts due are guaranteed by the company. The value of the stocks is also guaranteed by the company, and, in fact, we have a guarantee that the difference between the stocks and debts due to the company, and those due by the company is £8,000. If the figure falls short of £8,000 we have a legal guarantee which must be honoured by the company, and we also have a deposit of £5,000. That £8,000, therefore, will be recouped to the Vote, and it is not necessary to take it into account, because, in my opinion, the discussion will be sufficiently complicated without dealing with that. The £8,000 is guaranteed and will be recouped to the Vote, and consequently is certain to come in. We need only deal, therefore, with the figure of £16,500 for the Golden Vein Company. That figure represents the purchase money of three central creameries and two auxiliaries. We propose, of course, to resell the creameries, and they will be resold as auxiliaries—the three centrals and the two auxiliaries will be sold as auxiliaries to existing societies. There will, therefore, be a loss due to the fact that we purchased central creameries as such and will resell them as auxiliaries. That loss will amount to £3,500. The net price, therefore, which the purchasers will be asked to pay for these five creameries is £13,000. I will ask the Dáil, for reasons which I will give, not to ask me to apportion that price over each of the five creameries at this stage. It is quite impossible, as a matter of business to resell anything on the lines of stating the exact price you gave for it and the exact price which you must get for it when selling. Business could not be done on those lines. I may say that the Golden Vein creameries are amongst, the best in the country, and I think when they are disposed of that the last of the proprietary creameries in County Limerick will have gone, and the creamery industry in County Limerick will be entirely in the hands of the farmers. The milk gallonage of these creameries is 13,000 at the peak period, or about 2,300,000 gallons per annum.
The Clonoulty Creameries are in a slightly different position. They comprise one central and three auxiliaries. They are an old-established concern going back long pre-war, but they got into certain difficulties, due to the circumstances of the time, in the years 1918-20. Things went from bad to worse and the creameries were actually closed in the spring of last year. They are co-operative creameries. I ask Deputies to note that in this case we are buying co-operative creameries. This is the first transaction of the kind that has taken place. They were actually closed during last winter, and on the opening of this milk season the suppliers in rather a poor district were faced with the necessity of "spilling" their milk. They had no creameries to send their milk to. They were closed because their liabilities were extremely high and they were unable to get further credit. In that state of affairs we stepped in. We were able to make, in my opinion, an extremely favourable bargain with the creditors of the creameries on the lines of paying them cash down. The creditors were most unlikely to get cash for the amount of their debts—in fact, they had no chance whatever of getting cash for the full amount of their debts. We stepped in and offered the creditors a composition, cash down. I do not want to stress it, because there are two sides of the question, but, in my opinion, we made a satisfactory compromise with the Clonoulty Creameries. To make a long story short. We came to an arrangement like this: We bought the closed creameries and opened them. We bought one central and three auxiliaries for £5,000. Anybody who comes from a creamery district will be able to realise that that is quite a good bargain. Instead of paying the purchase money to the owners, namely, the Society, we paid off the debts to the extent of £5,000. We cleared off the whole debts on a composition. We were then faced with the necessity of re-selling the creameries. Before buying we got the members of the Clonoulty Society to take shares to the extent of £5,000, to pay £1,000 down and to enter into the usual agreement to pay the balance in seven or eight years. So that what happened is this: We bought the creameries for £5,000. Instead of paying the purchase money to the owners, we paid the creditors. We are now selling back the creameries to the same Society, or perhaps to that Society joined with another Society, for £5,000—the same figure. It is really a bookkeeping transaction, but the result of it has been that we were enabled to open the creameries again and to put them on their feet again on the basis of a very reasonable composition. We require, however, only £4,000, because, as I have said, the suppliers took shares to the extent of £5,000 and lodged £1,000 in cash. We have that in cash, and with the £4,000 which I am asking the Dáil to vote, we will be able to liquidate the liabilities on the basis of paying them all off for £5,000.
There is one other creamery included —the Ballymakera. This is rather a peculiar case. The creamery is situated in mid-Cork, and is the only proprietory creamery left in that district. It was built in 1922 by a certain merchant in that district. I do not know his name, and it does not matter. It is a big, central creamery—as good a central as perhaps any of the centrals of the Golden Vein Company, and they are amongst the best in the country. It is rather an elaborate building, put up when things were at their peak, and with first class machinery and rather expensive offices. The idea of the owner at the time was to build auxiliaries to it. We bought that for £3,000. The milk supply there is rather small—it is only 1,500 gallons—but, as I said, the creamery was put up recently, and it takes some time to develop a milk supply. Moreover, a milk supply can never be properly developed until auxiliaries are erected at a convenient distance from the central creamery, and that is exactly what we want to stop. The whole aim of this policy is to transfer the dairying industry to the farmers and cut out proprietory interests. This creamery has been bought from the point of view of premises, plant, and general fixed assets, very cheaply. Three thousand pounds is not a big price for it. While I have not made any inquiries, I should say that £3,000 hardly compares with the cost of building three or four years ago. On the other hand, you have to take into consideration not only the fixed assets, but the gallonage, which is as important as the fixed assets, because we buy these as going concerns, and a big central creamery without a milk supply is not a valuable asset. When dealing with creameries you have to take into consideration the value of the premises and the plant as they stand, and also the good-will or the milk supply that the creamery is getting. In this case you have valuable premises and plant, but small good-will, but at the same time a good-will that will develop. We purchased this creamery for £3,000, but, nevertheless, in my opinion a subsidy of about £1,000 will have to be paid in respect of it. It will have to be sold as an auxiliary to a neighbouring creamery.
That is the position with regard to the creameries and the £8,000. £5,000 is for contingencies and will have to be vouched for by the auditor who is liquidating not only the Condensed Milk Company but who will have to liquidate all the purchases which we are making—contingencies such as loss from the date we purchased until the date that we dispose of them, compensation to workmen disemployed on the basis already set out, and working capital generally for the creameries.
Now that is the position with regard to this particular vote. I have subdivided, as Deputies will notice, the Vote to some extent. I have given the particulars in regard to three premises the Golden Vein, the Clonoulty and the Ballymakera creameries. As I say I shall ask the Dáil not to press for information in the case of the Golden Vein as to the price at which each particular creamery was purchased. Remember that they must be sold again and that with the best will in the world you cannot do business by revealing to the purchaser at the first shot, just exactly what you expect to obtain. Take these creameries as they stand, beginning with the Golden Vein. The whole Company can be sold for about £13,000 with a subsidy of £3,500, the subsidy being in respect of the centrals which are to be transformed into auxiliaries. There are 13,000 gallons of milk coming in at the peak period, that is 2,300,000 gallons per annum. The usual arrangement will be made for the repayment of the money. Shares at the rate of £1 per gallon will be taken out by suppliers. That was the rule we adopted in connection with the Condensed Milk Company. It worked out well and at any rate there has been very little protest against it. Shares at the rate of £1 per gallon will cover the total purchase money.
Purchasers will enter into an agreement to repay the money in the following way: Everyone who takes a share will pay for the first year one half crown and will continue to pay a half crown for eight years when the whole thing will be paid up. I would like to indicate to the Dáil just what that will amount to in the price of milk. What will happen is this: The creameries will stop from the price of the milk the amount which each supplier owes in respect of his share. One half penny a gallon on 2,300,000 gallons would amount to about £5,000. The interest at five-and-a-half per cent., on £13,000 amounts to something like £715. Assuming that these premises were sold for the price at which they were bought—I am not saying what each creamery was bought for nor the figure at which it should be sold— but assuming the creameries comprised in the Golden Vein Company were sold for £13,000, the price at which they were bought, then the interest and sinking fund must be paid by the milk suppliers who bought it. One halfpenny per gallon would repay £5,000 a year, so it is perfectly clear that less than a farthing a gallon will repay that each year.
Of course Clonoulty is in a different position entirely. There we bought as a book-keeping transaction one central creamery and three auxiliaries for £5,000. That of course was excellent value and it is really a book-keeping transaction. Ballymakera is, taking everything into account, worth the money but at the same time it is the dearest of the three. It is, probably, from the point of view of the vendor, the worst bargain of the lot because it was built three years ago, but having regard to the milk supply at the present it is the most expensive of the three and it will be sold to another society.
At this stage I cannot hide the fact that it is necessary, to some extent, to go back to the purchase of the Condensed Milk Company in order to show the genesis of this transaction and to justify it. The Condensed Milk Company was purchased last March. It was some time in the middle of March that the Dáil voted about £500,000 in respect of the purchase of that Company. Now Deputies need not bother about the figure of £500,000 the price of the Condensed Milk Company. The price that has to be paid is £365,000, and the balance is in respect of debts and stocks which are also guaranteed by the biggest wholesale grocers in England and for which we must get cash.
The real price, as explained on that occasion, was £365,000. The Condensed Milk Company is a Company that comprises three different kinds of assets, there are (1) Creameries, (2) the Condensers, and (3) what I called on that occasion "other assets"—"other assets" being factories, houses, lands, etc. As I said in introducing the Estimate, last March, the price paid to the vendors for the creameries was about £210,000 and I suggest that, for the purpose of discussing this Estimate and discussing if you like the genesis of this Estimate, we should not complicate the discussion by dealing either with the Condensers—a very big transaction in itself—or with what I called the "other assets," which are neither creameries nor condensers. Deputies will find their intelligence will be sufficiently taxed if they keep to the creamery side and come, on another occasion, to the condensers and to the "other assets." I do not think that this huge transaction can be discussed as a whole with any real value. We shall discuss it in three different parts. I propose to deal with the creamery side of it.
The creameries cost, as I stated, about £210,000. I gave certain figures on the last occasion and I am sure Deputies are very anxious to know whether these figures have been verified in actual practice. I said that there would be subsidies, roughly speaking, in respect of redundant creameries and in respect of centrals to be transformed into auxiliaries, of something like £60,000, between £50,000 and £60,000, so that for re-sale purposes the price of the creameries was not £210,000 but between £160,000 and £170,000. Do not let us complicate it again by going into this question of the subsidy. The subsidy is in respect of assets which we bought but which we are not selling. The principle we go on, so far as we are selling any asset which we have bought, is that we must get the price for that at which we bought it. That is the principle we go on but so far as we have bought something which we are not selling, that is subsidy and the State supplies that. The subsidy arises because we have bought certain assets such as creameries, auxiliary or central creameries, that are closed, that are redundant and we are selling only the milk supplies of these. Consequently, we could not charge for the milk supplies the exact figure which we paid plus the buildings. The figure as I have stated was about £150,000 or £160,000. Let us keep to that figure; leave out condensers. This Dáil will meet to-morrow and on succeeding days and the question of the condensers may be brought up at any time. So may the question of the other assets which we have bought but let us stick to this question of the price paid to the creameries.
The figure which I gave in connection with the creameries was £160,000 or between £160,000 and £170,000. Deputies will remember that I declined to give a very definite figure because I declined to put myself into the position of vis-a-vis with purchasers so that they would know exactly the figure I would get from them, but it is round about £160,000. That is the price of 115 creameries. We have closed about 50 of these creameries and we have re-sold about 30 to existing societies. That brings us to 80. So far as 80 of the 115 creameries are concerned the transaction is finished and there are 30 or 35 creameries to be dealt with. These are creameries for which new societies must be formed. Where you close the creameries you sell the milk supply to existing creameries. That is the first step. There are other creameries you also sell to existing creameries; you sell them as auxiliaries to existing creameries. About 70 of the creameries came within these two categories. There are 30 of those cases, where you have to sell the existing creamery to new societies to be formed for the purpose, in areas where no co-operative society existed before.
We are just undertaking that section of the work at the moment but at present so far as the creameries are concerned three-fourths of the work has been done and we are now in a position to check as to whether the figures which I gave in respect of these creameries last March in the Dáil have worked out in practice. So far as we have completed sales, we have obtained about £100,000 for the creameries sold—that is to say for about 70 creameries. We have yet to sell about 35 and we have to obtain—I could give the exact figure but I will not—between £60,000 and £70,000 for those. Deputies can take it that the creameries we have on hands at present for sale are considerably a better proposition than the creameries we have sold and are a far more saleable asset, so that on those figures if they are correct, and I vouch for their accuracy, there is no doubt that the estimates which I gave in March last in connection with the creameries are working out well and favourably.
There is another question besides this question of price but before I leave that may I say that the question of price— as to whether we gave too much for the creameries—is really the same question as whether we sold them too dear because the price at which we bought them is the price at which we sold them. There are things which we have bought but which we have not sold but that comes in in subsidy. So far as we have bought anything and sold it we have sold it at the price at which we bought it so that when Deputies are asking did we buy too dear they are asking the same question as did we sell too dear. It would save a lot of confusion if they realised that. If these creameries are being bought or sold too dear, there is a very simple method of verifying the facts. About 70 have been sold. We have got practically no complaints from societies as to the price of the creameries. I have no doubt that societies would like to buy them cheaper but there have been no substantial complaints as to the price of the creameries. However, I would ask Deputies to realise that the best judges of the price of the creameries are the societies buying them. The farmers of the country are not fools—the farmers of counties like Tipperary, Limerick and Cork. They know all that is to be known about creameries and the fact that these were voluntarily purchased by these farmers is the best proof you could have that the creameries have been sold to them at something like their value. If there is any doubt about it, there is only one way of dealing with the matter, to raise the question of a specific creamery after due notice. A general discussion and denunciation about tin sheds being bought for huge sums leaves us nowhere.
The dairy farmers are like shopkeepers, labourers and the rest of us in the country. If they have any grievance, they become vocal very quickly and I am percfectly certain that if there is any question of a creamery being sold grossly over value, the dairy farmers are not without a way of getting into touch with their T.D.s. If there is any such case to be raised here and Deputies wish to have it gone into in detail, let it be dealt with singly and after due notice. I can only deal with it on notice. I do not know what each creamery costs from memory. A discussion like that, moreover, is no good. A discussion like that will get us nowhere. There are other Deputies who are not from dairy counties and they would like to be judges of the merits of the case. In case a dispute arises, we must have notice. The case must be made; the facts in respect of one group of creameries must be made, and let it be debated here in the Dáil. If there is a case to be made it can be answered in the Dáil and Deputies can judge whether a creamery is worth the money that has been paid for it. We will never deal with a tremendously complicated question of this kind by generalities where you have one Deputy referring to one group, about which nobody else knows anything. We will not get business done in that way. If Deputies want any proof as to whether these creameries which have been bought are worth the money, other than the fact that the farmers of the district have purchased them voluntarily, I must ask them to raise these questions in the Dáil specifically and I will deal with them specifically.
The second question is: Have creameries been closed that ought to have remained open? I am willing to admit that there are more complaints on that score. We have closed at least fifty creameries. We would not have closed a single creamery up to date if we had been debating about it, and every business man knows that. The situation was put before the Dáil at great length and in great detail last March. I made a statement that lasted about two and a half hours, and I went in great detail into the whole thing. The agreement for sale was before the Dáil. That is a document that, I think, will delight the heart of anyone who likes figures and complicated transactions. On that occasion I asked the Dáil to give me a certain amount of free hand. I asked it to realise that you cannot do business by placing all your cards on the table at the beginning. When you are dealing with a commercial transaction, and this was one, you have to get a certain amount of latitude. The State is in an extraordinarily difficult position here. It is a unique position, and I hope that no Government Department will ever find itself in exactly the same position again. We had to act as brokers in a big transaction; we had actually to buy and sell on a commercial basis the assets of a huge company with huge interests in the South of Ireland. We had to do that, because there was no other organisation in the country capable of doing it or of putting up the money.
I went to some trouble to explain to the Dáil on the last occasion that this was a commercial transaction, and I admitted that it was unusual for the State to go into a commercial transaction. I asked the Dáil, however, to agree that there were good reasons for doing it in this case. The Dáil agreed, and I asked the Dáil to realise the implications of that, namely, that if I were to carry on the transaction in a commercial way, the only way in which it could be carried out, that I would have to get a certain amount of free hand, and the Dáil agreed. If we had been debating this question of redundant creameries here every day during the last six months, and if the Dáil had not co-operated, and moreover, if the farmers had not co-operated—I am very glad to say that they have met us, 99 per cent. of them, fair and square—I do not believe that there would be half a dozen closed this minute, and yet there are fifty closed. Every redundant auxiliary costs the farmers of a parish £600 a year. There are fifty closed, and putting it at the very outside, there are not more than half a dozen complaints.
If you want to test the general question as to whether we have closed redundant creameries that we should have left open there is no use approaching it on the lines of a Deputy from any Party standing up and saying that he knows an unfortunate dairy farmer who has now to go six miles with his milk. There is no use in a Deputy saying that because I do not know whether it is the case or not. I must get a chance of verifying statements of that sort, and there is no use in general denunciations about the terrible loss it is to a man to have to go a mile with his milk instead of half a mile. One would never imagine from seeing people in the County Limerick taking milk to the creameries that time was so important as it has become since some of these creameries were closed. Instead of indulging in denunciations of a general character let specific cases be brought to the notice of the Dáil. When notice is given, the facts in regard to a particular case can be ascertained and we can then see whether there is a genuine grievance there or not. If there is it can be remedied.
The two questions that I have indicated are those that should be discussed now. I leave out of account the condensers and the other assets. I do not think Deputies would get anywhere if they tried to discuss the whole transaction at any one time. This is a purely Creamery Estimate. It is for the purpose of the creameries and nothing else. I dealt with creameries and nothing else. I admit that there are two points that arise on this transaction: (1) Whether the creameries that were bought and sold were worth the money; and (2) whether the redundant creameries that were closed should have been left open. I suggest that both questions can be dealt with in respect of the transactions which are already completed. I see no other way of doing it. You cannot do it by a general discussion. I have stated that there are creameries yet to be sold and have indicated that they are worth from £60,000 to £70,000. I have indicated also that in my opinion they are as saleable as the creameries which we have already sold. They are at least as good value. I may be asked for information as to the value of each creamery. I cannot give it. I cannot go before a committee and say that I must have £3,000 for a particular creamery. You cannot do business on that basis and I never sold anything on that basis. You cannot sell if you have to reveal all your cards to the purchaser. It would be really asking farmers too much to ask them to refrain from taking the obvious advantages that they could take if they had all the information.
It may be said that we are not in a position to discuss the details of this transaction except in so far as it is completed, but what is happening? This company is being gradually liquidated. The liquidation is unfolding itself every day. As the liquidation proceeds Deputies may raise any point they wish. If it is found that scandals occurred in connection with something that has been completed, if it is found that any lack of judgment was shown or that the public money has been wasted, then a Deputy can come to the Dáil and raise that. The Dáil has its own way of dealing with the situation and of transferring this work to other hands. I cannot reveal the details of properties which we have yet to sell. That applies not only to the creameries but much more to the condensers and to other assets. Some of these condensers are amongst the biggest in the world. There is any amount of information which rivals in other countries would be very glad to have, and which they should not get, in regard to these condensers. I would therefore ask Deputies to defer the question of the condensers for the present. I assure Deputies that we are satisfied that the figure at which we bought them, so far as they were redundant, and the figure which we propose to sell at appears to be working out well. That applies more to the other assets we bought, such as houses, lands and factories, etc.
As I pointed out on the last occasion, I could not possibly tell the Dáil what we propose to pay for such a factory and what we must sell it for. All I can say is that they are being sold at the present moment and sold satisfactorily, and that the sales come well within the estimate I gave to the Dáil. I would just ask Deputies to realise a few things in connection with the valuation of creameries. I may be told that we paid so much for a certain creamery. Someone may say: "I could put up a new creamery for the same amount." Talk of that kind shows an absolute ignorance of the creamery industry, because in buying a creamery you buy not only the fixed assets but also the good-will. Take two creameries put up in the same year, both equally well equipped. One has a supply of 1,300 gallons of milk and the other a supply of 3,000 gallons. One is worth far and away more than the other. There is no comparison between them. The price which the purchaser or the owner pays for a new creamery can never be measured by the cost of putting up a creamery. There is always a loss for the first year or two, not so much a loss as the fact that there are always profits that are made later on and that cannot be made for four or five years, and all that has to be added to the price. There is no use discussing this on the basis that a new creamery could be put up for so much. We are prepared to give far more for a creamery with 5,000 or 6,000 gallons of milk, even a middling one, than for a tip-top one with 3,000 gallons. That should be remembered when debating this question of creameries. I reserve anything further I have to say to the end of the debate.
