1. That a Customs duty at the rate of threepence on the pound shall be charged, levied, and paid on all margarine imported into Saorstát Eireann on or after the 22nd day of October, 1927.
2. That in this resolution the word "margarine" means any article of food, whether mixed with butter or not, which resembles butter and is not milk-blended butter.
3. It is hereby declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
The definition which is used here for margarine is the definition which is in the Butter and Margarine Act, 1907, and which is part of the Food and Drugs Act. I presume it has served its purpose satisfactorily up to the present. The proposed tariff of threepence in the pound is intended to effect the exclusion of foreign-made margarine from the Saorstát and to give the entire Saorstát market for margarine to the home manufacturers. An application was made by Messrs. W. and C. McDonnell, of Waterford, Messers James Daly and Sons, Shandon Castle Margarine Factory, and Messrs. Dowdall, O'Mahoney and Co., Ltd., of Cork. Their application was for a duty of threepence per pound. The firm of Dowdall which had been associated with the application up to the present month and had given evidence withdrew their application on 8th October on the ground that their interest in this application was to preserve Messrs. W. and C. McDonnell's factory, which was then threatened with extinction. It has since been closed. However, the closing of Messrs. McDonnell's factory took place in February last; consequently the Tariff Commission went on with the consideration of the matter in the same way as if all the applicants still were desirous of having a tariff imposed.
In addition to hearing evidence at public sittings, the Commission visited the two margarine factories in Cork and the factory in Waterford. They also visited a number of margarine factories in London and in Liverpool. The opinion of the Commissioners is that as regards one, at any rate, of the factories "the premises, modern equipment and general outlay of the factory and the competence of the technical staff are satisfactory." They are of opinion that,
"judged by their ability to put on the market a product as cheap as that of outside firms, quality for quality, the manufacturers in the Saorstát appear to be able to hold their own so long as their output is maintained and they are not the victims of a trade war carried on by foreign corporations, whether these as rivals endeavour to oust each other from the world market in margarine by cutting the prices of the cheaper grades to a figure which yields no profit, or as allies unite and, by the pooling of their resources and continued price-cutting, seek to share the market between them to the exclusion of all other manufacturers."
The industry is confined, as Deputies are aware, to the cities of Cork and Waterford, and it cannot be regarded as of general importance. The capital involved is about £65,000. The number of persons employed by the firms has varied. In the case of McDonnell and Daly it has varied from 187 in 1921 down to 104 in 1926. I will just give the figures for these years. In 1921 the number was 187; in 1922 it was 151; in 1923 it was 132; in 1924 it was 114; in 1925 it was 111; in 1926 it was 104. Of course, since then the factory of Messrs. McDonnell has closed down. So far as Messrs. Dowdall, O'Mahoney is concerned, the employees have ranged from 112 in 1918 down to 37 in 1926. The cost of production as compared with the cost in other countries is higher. That is due very largely to the fact that the factories here are not producing up to their output. It will probably be always somewhat higher here because of the extra freight on raw materials and the cost of returning empty containers.
"It should be mentioned that the large scale concerns which are the chief rivals of the home factories in the Saorstát market have oil refining plant either on their own premises or operated in the same neighbourhood by companies associated with themselves. They are usually able to obtain their liquid oils either through pipes from the refining plant or as the result of prudent selection of sites from tank barges which have been loaded at the associated factory and brought alongside the margarine factory to be unloaded by pipes. In this way the handling of individual drums of oil is avoided and costs kept low. In the opinion of the Commissioners the demand by the Saorstát factories would not justify the installation of oil refining or seed crushing plant for their own service."
Apart from that, however, the opinion of the Commissioners is that the costs of production here need be very little higher than the costs of production of competing firms outside. If the tariff results, as the Commissioners anticipate, in securing to the Saorstát manufacturers the practical monopoly of the home market, the output of the factories will be immediately increased and will approximate to full capacity. The first effect of increased output should be to bring about the general improvement which is experienced when staffs which have been working only part time at a low pressure are restored to normal hours and a high rate of output.
The Commissioners believe that the effect of the tariff will be the re-opening of the Waterford factory and the employment, at least, of the 78 workers who were employed in 1926 in addition to the office staff. It is not possible to say to what extent there will be an increase on the existing staffs in Cork. The margarine produced in Saorstát Eireann in 1926 was value for £271,868. The margarine imported was value for £168,382 making a total of £440,250. From this must be deducted the margarine exported from Saorstát Eireann, £153,458. The consumption therefore in the Saorstát is value for £286,792. The consumption in the Saorstát is not greatly in excess of the output of last year, but if the home market can be secured for the existing firms and if the export trade which they have always had can be maintained the position of the industry will be substantially improved. At first, the Commissioners were of opinion that the general effect of protection would be to raise the retail price of the article.
"They then proceeded to inquire from retailers what classes of the community are purchasers of margarine and for what purposes they purchase it, and as a result of these inquiries ascertained that it is consumed by all classes—by the wealthy for cooking only and by the middle and poorer classes chiefly for eating, but also for cooking. As the Commissioners realised that any increase in price would bear most hardly on the poor and might in some cases deprive them of fats which they would not obtain in any other element in their diet they decided that any increase whatever would cancel the advantages to be expected from a tariff on margarine. Further, they considered that unless they could secure consumers in the Saorstát the benefit of every reduction in price, quality for quality, which consumers here would enjoy in the absence of a tariff, they would not be justified in recommending a tariff at all. For this reason they requested the applicants to formulate and submit a definite undertaking in regard to the price and quality of margarine made and offered for sale in Saorstát Eireann in the event of a tariff being imposed."
The following undertaking was furnished by Messrs. W. and C. McDonnell, Ltd:—
"We undertake to guarantee that the retail prices in the Irish Free State, for all our various grades of margarine, shall not at any time be more than the contemporary prices in Great Britain, and we shall advertise the retail prices of our various brands monthly in the daily Press. We can also guarantee that in the event of a reduction in the future market prices for raw material, consumers in the Free State shall have the full benefit of any reduction that may be quoted as in Great Britain. We are prepared to give any guarantee the Government or the Tariff Commission may require as security for keeping the undertakings formulated in the request for a tariff. We have a reputation to uphold, and consider that the Government have it in their power to withdraw the tariff in the event of our breaking the contract."