I move the Second Reading of this Bill. It will be necessary to explain some of the objects and provisions of the Bill in detail although much of the discussion which would have taken place on the Second Reading has already taken place on the Financial Resolution.
The object of the Bill is to try, as far as possible, to give the producer the cost of his production, and also to give butter and milk products to the consumer at the lowest possible price. As the House is aware, a tariff on imported butter was passed by the Oireachtas over two years ago, and if the producers of butter had been absolutely united in their efforts in marketing, if they had only allowed the requisite amount of butter to go on to the home market and put their prices up to the world price plus the tariff, they could, if they were sufficiently well combined, have got the same benefits under that tariff as we propose to give them under this Bill. But they had not the organisation or the combination required to do that. There was the possibility however that such a thing would be done when a tariff was introduced here in November, 1930. Though that possibility was there: that the producers of butter might combine to keep the price of butter both winter and summer at the world price, plus 4d. per pound, there was no far-seeing Minister and no far-seeing Deputy in the House at the time to point out that possibility and there was no objection made on that score to the tariff then.
Now, however, when we bring in this Bill to give the producers the benefit that they might have had under that tariff there is great concern shown for the poor man. We mean, while endeavouring to give the producer as fair a price as possible towards the cost of his production, also to protect in every way that we possibly can the consumers of butter in this country. In the first place, I might mention that while the consumer gets butter comparatively cheap during the summer months under the present system, he has to pay much more for butter during the winter months. We intend under this Bill to make the price of butter level the whole year round. Whereas for the last two years the consumer got butter as low as 1s. 3d. per lb. during certain months in the summer and had to pay as high as 1s 7d. a lb. during certain months in the winter, we mean under this Bill to have butter sold at 1s. 5d. per pound maximum the whole year round.
It is admitted, I believe, by every Party in this House that the industry must be saved. We could, as is suggested in some quarters, save the industry by giving a direct subsidy out of taxation or we could save it as is proposed in this Bill by asking the consumer to pay what is a reasonable price, taking account of production costs and so on, or we could do so by a combination of both methods. Now, as I pointed out on the occasion of the introduction of the Financial Resolution neither I nor any member of the Executive Council can see any hope of raising money by direct taxation to finance this scheme, and I think every member of the House will see that as clearly as we see it on this day week when the Budget comes to be made known. We therefore had to fall back on the only other alternative, and that was the alternative of asking the consumer to pay what was a fair price for butter.
We are told, of course, by many sympathetic Deputies that the poor man will have to pay. Now, if we take the example that was given by Deputy Alfred Byrne, the Lord Mayor, of people who are getting 10/- a week out of which they have to pay anything from 2s. 6d. to 3s. 6d. in rent, leaving a sum of 6s 6d. or 7s. 6d. per week to buy food for the father, mother and seven or eight children that the Deputy spoke of, I think that whether butter is 1s. 1d. per lb. or 1s. 5d. per lb. it will not concern the very poor spoken of in this House who are living on home assistance. If, however, we consider amongst the poor the ordinary working man—the man who is at work— then I say that it is a case for serious consideration. We believe that when a person is earning wages in this country that the wage should be, whether it is or not, of a sufficient level to enable him to buy the necessaries of life, those necessaries being produced at the ordinary cost of production. If we have to subsidise butter producers in order that the working man may get butter at a price that he can afford, we may also have to subsidise the production of boots, clothing and everything else in order that he may also be able to get these at a cost that he can afford.
We think that the only safe test to apply is that if we have goods to sell, they should be sold at least at the ordinary cost of production. We hear serious complaints now that we are going to mulct the consumer by putting a price of 1s. 5d. per lb. on butter. That is a rather extraordinary line for people to take. Deputies whose memories must at least go back to 1929 and from 1929 back to 1915— that is, over a period of fourteen years—must be well aware that over that period butter was never sold under 1s. 8d. per lb. We never had a complaint I believe that the price of that butter should have been reduced somewhere below 1s. 5d. per lb. or a proposal in this House or elsewhere that butter producers should be subsidised in such a way that they would be enabled to sell butter at that time at anything under 1s. 5d. per lb. to the working man. Somebody also I think raised a question that under this scheme we are going to supply food to the consumers in Great Britain at a cheap rate.
Now, whether we bring in this scheme or not, the price that we can get for our butter on the British market will have relation to the world price, and it does not matter whether we make it possible for the producer to charge 1s. 1d. or 1s. 3d. or 1s. 5d. per lb. to the home consumer, the butter will be sold in Great Britain, or to any other foreign buyer, at the price that we can get on the world market. We cannot influence that in any way by anything that we may do here.
The price is usually in or about the price of other Colonial butter, such as New Zealand and Australian, although we would perhaps be nearer the New Zealand price than the Australian price. The latest quotation for New Zealand butter on the British market is 102/-. If our creameries were asked to take a price of 102/- on the British market, and if freight and selling costs were deducted, Deputies will see that the future for our dairying industry would show very poor prospects.
With regard to some of the special features of the Bill, we find that the production of creamery butter in the country is somewhere about 640,000 cwts. per year, and that about half that amount is exported and the other half consumed at home, so that the creamery butter pool will enable us to work it, as outlined in the Bill, for some time, at least, by putting a levy of 2d. per lb. on creamery butter and by paying 4d. per lb. bounty on exports. If we export exactly half our production, the 2d. and 4d. will work out correctly. We may find, however, that our production has gone down this year, and that our exports will be less than 50 per cent. of the production. In that case, the levy can be decreased after some time, the bounty remaining as it is, because it cannot exceed the tariff.
There are, however, other considerations that must be taken into account. For instance, there is the question of cream and other milk products, and there is the question of butter being produced during the winter, on which no levy is paid. Roughly speaking, however, if the exports are half the total production, the levy will remain at half the bounty. In the case of factory butter, we have no very reliable figures of production since 1929. In that year, according to the census of production, the output of factory butter was about 167,000 cwts. and we only exported somewhere between 10 and 15 per cent. of that. The factory pool will, therefore, be in a different position. In the factory pool under the Bill we propose to start with a levy of 2d. and a bounty of 2½d., and it will remain to be seen whether after some time this proportion can be maintained or whether it must be altered and the bounty perhaps changed to 2¼d. or 2¾d., as the case may be.
It will be seen also from the Bill that there are certain safeguards for the consumer. Amongst them I might mention that the bounty cannot exceed the tariff. The Minister is given certain powers under the Bill, but he has no power to exceed the tariff by the bounty, so that if there was any desire on the part of the Minister, or the Executive Council, to increase the bounty under the Bill, the matter could necessarily be raised in the Dáil, because, first of all, an increase in the tariff rate would have to be sought. There is also a provision in the Bill enabling the Minister to fix the maximum price at which butter can be sold from the creameries. That, of course, does not go to the retailer or to the consumer, but it is hoped that the Minister for Industry and Commerce will be able to deal with the retail price, so long as we keep the wholesale price below a certain figure. We are convinced and we have been assured by certain traders, and by certain people in the creamery business, but especially by the wholesalers and the retailers, who are more concerned with this question than the creameries, that if the f.o.b. price of creamery butter does not exceed 142/- there is no necessity for the retail price to exceed 1/5 per lb.
There is another thing to be learned from the Bill, and that is that the f.o.b. price from the creamery can only reach 142/- so long as the export price is at 105/-. If the export price exceeds 105/- or goes below 105/-, the f.o.b. price, internally, will go below 142/-. If the export price goes below 105/-, we cannot give a greater bounty than 37/4, so that if the export price goes down to, say, 100/-, the internal price will be 137/4. We must follow the price internally if it goes below 105/-, and if it goes above 105/-, we regulate the bounty in such a way that the internal price means the external price. There was a fear expressed here by some Deputy on the occasion of the discussion on the financial resolution that if the export price were to go up, say, to 115/- we would still keep adding the 37/4 to the internal price, making it 152/-. That is not the case. As a matter of fact, if the export price went up to 115/-, the internal price would come from 142/- down to 132/-. If the export price goes up 10/-, the internal price comes down 10/- to meet it, to 132/-, so that the mean price will remain the same to the creameries. It is, therefore, fairly obvious that an internal price of 142/- f.o.b. at the creamery is only possible when the export price is exactly 105/-. If it goes above, or below, 105/-, the internal price comes down.
It will also be observed that we have to deal with the milk products. Naturally, of course, if we are to give a bounty on butter, and if we were not to deal with bulk cream, tinned cream, tinned whole milk, dried milk, and so on, the inducement would be held out to the present producers of these milk products to go into butter, in order to get a better price. So that we considered that the trade in tinned cream, tinned milk and bulk cream was one not to be neglected and we, therefore, extended the bounty to those products also.
Another provision of this Bill is one that schedules certain creameries from which we are empowered to get a smaller levy than the ordinary levy, and the reason for that was that there are certain creameries which are not in a position to withstand the ordinary competition. The number scheduled is very small. As a matter of fact out of the registered creameries there are only seven scheduled out of a total of 200, and in the case of the separating stations, there are only seven scheduled out of a total of 356, so that as far as the finances of the scheme go the number scheduled will have very little influence. Those scheduled premises must fulfil certain conditions. They do fulfil certain conditions, such as that the premises were erected and equipped during recent years when the cost of construction and equipment was abnormally high, and they had not a sufficient time, while good prices ruled, to pay off some of that large debt which was contracted in the building and equipment. All those creameries are also in districts where the competition from home butter making is very marked and the benefits to be derived by farmers making their own butter under this Bill would have a serious effect on those creameries if we compelled them to pay a 2d. levy and get a 4d. bounty, thereby giving them a net 2d. per pound, whereas farmers making their own butter in the district might have a greater advantage in competition with them. They also fulfil the condition that they are not in competition with other creameries. They are isolated creameries, every one of them.
There are also provisions in this Bill with regard to the restriction of imports and exports. A restriction of imports will be necessary under certain circumstances. For instance, we might use a certain amount of pressure on butter producers to store that butter for winter consumption, and it would be very unfair if, having stored the butter for the winter time, we found that during the winter, owing to a collapse, say, in world prices, butter could come in here having paid the tariff and be sold at an abnormally low price. In that way the power to restrict imports is necessary for the smooth working of the Bill.
There is also power to restrict exports. That is necessary in order to ensure that we have sufficient supplies of our own butter kept here for winter use. There are certain creameries, dealing with the creameries in this instance especially, who do a home trade and keep that connection the whole year round. They store sufficient butter to supply their own customers in the winter as well as in the summer. There are other creameries, however, who do not make the same provision for a winter supply. They are quite prepared to supply the home needs during the summer months, but they make no provision for the winter, and we mean to take power to use pressure on some of the creameries who may not be doing their part in storing butter for the winter time. There are certain financial provisions which make it easy for these creameries to keep butter over much later, also included in the Bill.
On a Second Reading Stage such as this, I do not think that it is necessary to go any more into detail. I think the big principle underlying the Bill is to help the producer to try to get as far as possible the cost of production for his article. Certain other principles which may arise will come up for discussion during this stage rather than the details that are embodied in the Bill. I move the Second Reading.