Dáil Éireann debate -
Thursday, 30 Mar 1933

Vol. 46 No. 13

Dairy Produce (Price Stabilisation) Bill, 1933—Second Stage.

Minister for Agriculture (Dr. Ryan)

This amending Bill changes the general levy under the Principal Act passed last year. Under Section 6 of the Principal Act, there was a general levy which applied to all classes of butter. If one levy were prescribed, say, for creamery butter, the same levy would apply to all classes of butter. The object of the amending Bill is to give an option to put one levy on creamery butter and another on non-creamery butter. If the rate, say, on creamery butter should require to be raised during the coming year— as we think it will—there would be no advantage, in our opinion, in raising the rate on non-creamery butter. The Principal Act, passed last year, operated from 21st April to 31st July and during that period there was a levy of 2d. per lb. In the case of creamery butter, the bounty was 4d. and in the case of non-creamery butter it was 2½d. As Deputies know, the export price of creamery butter—taking that as an example—would be the price that could be got free on rail, plus whatever bounty or subsidy would be payable. The price on the home market would be the same as the export price because, where there is an exportable surplus of any article, the home price is always ruled by the export price. The value, therefore, would be the free-on-rail price, plus bounties or subsidies. When the price of creamery butter is pushed up artificially in that way on the home market, the price of farmers' butter and factory butter for home consumption also goes up, more or less, in a corresponding way. That is to say, if people are prepared to pay 3d. per lb. more for creamery butter than for factory butter, the price of factory butter would go up automatically if the price of creamery butter went up. On the other hand, the creameries get the biggest advantage from this scheme. The factories do not get the same advantage because the proportion of factory butter exported out of the total production is much higher than in the case of creamery butter. Under present conditions, when world prices are changing so rapidly, it may be necessary during the year, if those changes go on, from time to time to change the levy and the bounty and try to maintain some sort of stability in butter prices. It is not very difficult for the Department of Agriculture to change the price of creamery butter because we are very closely in touch with the creameries all over the country and it is very easy for us, on a few days' notice, to get in touch with every creamery and explain the circumstances. It is also very easy to convince them of the advantage of changing the rates of bounty or subsidy. We are not at all in such close touch with the makers of farm butter and we are not even in as close touch with the factories as we are with the creameries. Taking everything into consideration, it would be well to have the power to fix a levy on factory butter and to try to have the same levy for the whole year on factory butter if at all possible. It may be necessary to change, but we would go as far as possible during the year without making any change in the levy on non-creamery butter.

I shall probably be asked why we put any levy on factory and non-creamery butter. The position is that, under the Principal Act, the price of creamery butter on the home market is raised artificially and, as I said already, the prices of factory and farmers' butter would be raised also, so that the suppliers to the creameries would naturally complain if they were to pay—as they have to pay by way of levy—for the whole advantage of raising the price of butter on the home markets and if the makers of factory and farmers' butter were not asked to contribute anything. We think it fair, therefore, that the makers of factory and farmers' butter should contribute something, though not as much as the creameries, towards the scheme for the coming year. To raise the levy, it will be necessary to increase the import duty. Under Section 6 of the Principal Act, it is laid down that the levy cannot be more than half the prevailing import duty. The import duty is 4d. per lb. We want to raise that and we are in the position, as it happens, of being able to announce that before doing it, as there is no possibility of forestalling. Under the Act, we have also the power to prevent the import of butter altogether. It is merely to fulfil the legal formality of Section 6 that it is necessary to raise the import duty.

I may be asked with regard to the special levy. There are Deputies interested in the creameries scheduled under the Act. The position with regard to scheduled creameries is that the special levy cannot for this year be less than 50 per cent. of the ordinary levy or more than the general levy. If we were, therefore, to raise the general levy on creamery butter to 3d. per lb. for this year, we could make the special levy 1½d. or go anywhere between 1½d. and 3d. It is our present intention to make it 1½d.

There is another matter which I should mention. Deputies may have fears that the price of butter on the home market will be raised out of all proportion this year to make up for export prices. There is also a provision in the Principal Act which safeguards the consumer. Section 30 of the Principal Act limits the price to 144/8 at the creamery. We cannot operate this Act so as to raise the price of butter at the creamery to more than 144/8. That was considered, when the Bill was going through, to be a sufficient safeguard to the consumer. I think that is all that can be said about this amending Bill. It merely amends the general levy and gives us power to prescribe one levy for creamery and another levy for non-creamery butter.

Mr. Bennett

Before we pass the Second Reading, there are a few things I should like to ask the Minister. The Minister told us more or less what he proposed to do about the levy, but I do not think he gave any information as to what the bounty is to be this year nor did he say whether it was to be a greatly increased bounty or not. Some of us would like some information as to the working of this Act during the last year. We know that it did operate for a period but whether it operated successfully, so far as the Minister's expectations were concerned, we have no information and I think it is due to the House that some information should be given as to whether the proposals in the original Bill, if its operation was not interrupted by other events, would have realised all the Minister's expectations and whether the levy, last year, of 2d. a lb. would, in fact, have sufficed to give the farmers the 4d. per lb. extra that was promised to them. The Minister, I think, proposes to continue the special levy to scheduled creameries. Some of us were very much opposed to that on the last occasion and we feel the same opposition still. In these days of very close trading and of difficulties in selling, I think that extra favourable consideration should not be given to any creamery. I do not know whether the Minister would accept an amendment to that effect later on, but, at any rate, I do hope that he will bring the ordinary creameries more into line with one another and that the difference in the levy per lb. will be something less than 1½d. as the Minister proposes. Three-halfpence per lb. difference in the levy would place those creameries in a much more favourable position as compared with creameries operating on the ordinary levy of 2d., or 3d., whichever the Minister proposes.

The Bill, as it is here presented to us, does not, as the Minister said, contain very much with the exception of a few amendments as to the levy and the power of the Minister to raise or lower the levy as occasion demands, but what I am particularly concerned about is what the Minister left unsaid as to what prospect there is of the levy, whatever it is, producing the amount in the way of bounty that the Minister expects. In that respect, his experience of last year's working of the measure, short as it was, ought to have given him sufficient data, and I am sure it has, and, perhaps, the Minister would pass on some of that information to the House. Most of us are in the dark in discussing this measure and most of the various creamery managers whom I questioned last year as to the working of the Act were completely in the dark as to what the eventual results to their creameries would be, and I am not quite sure, even at the present moment, that the ordinary creamery manager could tell definitely what the actual results in the way of benefits derived from this Act to an individual creamery were. Unless one goes into a criticism of the other Act, there is very little further to say by way of criticism of this Bill. I do not think there will be any great opposition to it. The Minister seeks power to vary the levy, and that is a power which I am sure the House will give him on the understanding that the bounty will be proportionate. I did not hear the Minister saying anything about the proposed bounty or whether it is to be increased or not, but, if the levy is going to be considerably increased, we shall all expect that the bounty will be proportionately increased. I think the House will give the Minister the powers he seeks, and I do not think there is any more to be said on the Bill.

Mr. Haslett

As I said before in this House, this is one of the commodities in respect of which the effect of the bounty is passed on to the producer. The creamery with which I am connected held its annual meeting on last Friday night and it was evident from the balance sheet that, in the circumstances in which we found ourselves, the bounty was useful in that the suppliers of milk got an increased price. I should like to suggest to the Minister that in the regulation of the price, he might so arrange it that there would be a greater price in the winter months. The feeling was that in last year's working of the Act there was not sufficient inducement to encourage winter dairying. As the Minister very well knows, the cost of winter dairying is out of all proportion to that of summer dairying and I would suggest that, in the arrangement of the price, he would see to it that there would be some inducement for winter dairying.

Mr. Roddy

I quite realise that it is necessary for the Minister to take somewhat greater power than that given to him in the original Act for the purpose of making regulations to cope with the situation that has arisen on account of the drop in butter prices, but, at the moment, it does not appear as if the prospects for this year are very bright. I read recently in a paper that Australia had agreed to the British suggestion to reduce exports of butter to that country by six per cent., provided as a quid pro quo that the British Government reduced imports of foreign butters by 12 per cent. That is interesting in view of recent developments in the relationship between this country and Great Britain and it will be interesting to see whether the Irish Free State might not be treated as a foreign country in view of such an arrangement coming into effect. At all events, it seems perfectly clear that, in time, there will be a curtailment of the exports of butter into the British market, probably by mutual arrangement so far as the Dominions are concerned, and it will be interesting to note how we will fare under an arrangement of that kind.

The Minister says that the object of this amending Bill is to vary the amount of levy and the amount of the bounty as circumstances dictate. I hope that, in any alterations or changes that the Minister may consider it necessary to make, a proper relationship will always be preserved between the amount of the levy and the amount of the bounty. I saw it stated in a paper during the last two days that it was the intention of the Minister to increase the levy by 1d. per lb. and increase the bounty slightly also but that the same proportion between the bounty and the levy that was provided for in the parent Act was not to be maintained. I think the Minister will realise perfectly well that if the levy is to be reduced, as that paper suggests—I do not know whether that paper was speaking with the authority of the Minister or any of his officials— it will reduce the price of milk and any reduction in the price of milk at the present time, as the Minister realises perfectly well, will have a very serious effect on the creamery industry.

I think it was during the debate on the parent Act that the Minister stated the farmers required to receive at least 4¾d. a gallon in order to produce milk economically in this country. Last year the average price was less than 4d. a gallon. Any proportionate reduction in the levy which would have the effect of reducing the price of milk would have a serious reaction on the creamery industry, and it would also result in reducing the cow population.

I thought the Minister would have made some reference to the butter position since the Dairy Produce Act became law. I do not know whether I am in order in referring to this matter at the moment, but I think I am, because it bears, if not directly, certainly indirectly, on this Bill. Within recent months large quantities of butter were exported to Belgium and France. Some days ago, in the course of a reply to me, the Minister said that they realised higher prices by selling on the Continent than on the British market. I would be interested to hear if the Minister is satisfied that the export of butter to the Belgian and the French markets was a more profitable proposition than if that butter were sold in the British market. I would also like to hear to what extent it will be possible during the coming twelve months, if present prices prevail in those markets, to sell butter there. The people in the country are, I am sure, interested to know the result of the experiment, and I hope the Minister will deal with the matter in some detail.

I would also like to know from the Minister what is the amount of money that has actually been realised so far as a result of the levy. The major portion of the levy was utilised for the purpose of paying a bounty on the butter exported, but I have not seen any figures which would indicate the amount of money actually realised on the levy. I think that when he was dealing with the parent Act the Minister indicated the operation of the Act would cost the taxpayers approximately three-quarters of a million pounds. According to my calculation up to date, something slightly in excess of half a million pounds has been spent on the operation of the Act. The figure must be very much higher than that, judging by the published statistics relating to the export of butter from this country, including the exports to Belgium and France.

A further point arises if not direclty, certainly indirectly, out of the Bill. The Minister has had under consideration the reorganisation of certain creameries. The Minister is aware that many creameries are carrying on although they are not receiving anything like an economic milk supply. The Minister has been engaged on this work of reorganisation for the last twelve months, and some creamery societies were given to understand that the scheme would be in operation this year. No intimation has been given them so far in that connection, and they do not know whether the scheme will operate this year. That places many creamery societies in a very unfair position. If the Minister is not in a position to go ahead with the reorganisation scheme he might let the societies know that, because they probably would be in a position to make other arrangements in order to carry on for this season. I am sure the Minister recognises that it is necessary, in order to ensure for the creameries an economic milk supply, to reorganise many of the existing creamery areas.

When the Minister makes regulations under this Bill I assume these regulations will be placed on the Table of the Dáil so that members may be made acquainted with the nature of the regulations and thereby kept in touch with the development of the creamery industry.

Dr. Ryan

I have been asked questions regarding the bounty. As Deputies know, the principle of the Bill is that whatever is put into the pool by way of a levy is drawn out by way of a bounty. I think it was stated in some of the daily papers that the bounty would not be twice the levy this year as it was last year. I have no control over that, of course, because it all depends on the amount of production as compared with the amount exported. Last year when we were bringing in the Bill we estimated that half the butter produced would be exported. If half the butter is exported the levy would be half the bounty because for every 2 lbs. that the levy is collected upon— 2d. per lb.—there is only 1 lb. exported. If the export is down to half the production the bounty is twice the levy.

There has been a tendency to increase butter production. We assume that the home consumption will remain the same. It has been rather constant for the last six or seven years. Production is tending to increase. It is estimated that production will increase during the coming year, while home consumption will remain the same. Exports, therefore, will be up; they will represent more than half the production and then the bounty will not be twice the levy. If the levy is 3d. the bounty may not be 6d.; it may be down as low as 5d. It all depends on the amount of export. We would probably start off with a bounty of 5d. and a levy of 3d. If we found our estimate was wrong with regard to production, then the bounty would be increased. It may be taken, however, that whatever the creameries put into the pool they will get back from the pool. That is as far as the working of the Stabilisation Act is concerned. There may have been some confusion by reason of the subsidies out of public funds that were afterwards introduced.

I was asked by Deputy Bennett if the scheme was successful last year. We had a test only from 1st April until 31st July. Working on the basis of a 2d. levy and a 4d. bounty we found after three months working that we had a deficit of only £400, so that we did estimate the thing fairly well on the whole. If the scheme had been carried on for a period of twelve months it is possible it would have worked out rather accurately. Of course, there were no tariffs, no Government subsidies or Government interference on the other side. There was no interference on the British side by way of tariffs or on this side by way of subsidies. When the scheme was working on its own the price of butter was artificially raised by 2d. a lb. and the creameries got the advantage.

Deputy Bennett objects to favourable treatment for the central creameries. It does not amount to very much. I can quite appreciate all Deputy Bennett says—that the other creameries cannot afford to carry anybody on their backs this year as they have enough to do to look after themselves. The amount involved is very small. It would not amount to more than one per cent. of the contributions made by the stronger creameries. In fact it would be less than one per cent.

The production of the large creameries is going up; production in the others is not going up. We had several of these last year and we had to put them in a schedule. There were two or three of them that have turned the corner since and are fairly safe now. The remainder are still in low water. Deputy Haslett asked could we not have more advantage given to the producers during the winter. There is an advantage under this Bill. We did not collect the levy during the winter. The pool is there for twelve months and whatever money is put in up to 1st December must carry the costs by way of bounty for the whole twelve months. The districts that go on producing milk from 1st December to 31st March have had an advantage that they need not pay any levy during those months so that they have a definite advantage of 2d. in the lb. during those four months. They are in that position in the future schemes.

I do not say that it was due to the Stabilisation Act that butter production was up last year. It was up by practically 50 per cent. in the winter months. That was due more to the tendency to increase in general in the butter industry. It was due also perhaps to the favourable weather conditions, not only favourable conditions during the winter months but also favourable weather conditions during the summer when the hay crop was being saved.

With regard to the point raised by Deputy Roddy as to getting a proper relationship between the levy and the bounty, that depends altogether on the production and export. Of course if the production remains as it was last year there will be the same relationship remaining this year. It looks as if there would be more butter this coming year. I do not agree with Deputy Roddy that the average price at the creameries last year was 4d. As far as I remember, the Department figures showed that it averaged 4.5 pence during the year. We had an important conference of creameries yesterday and the representative of one creamery stated that a large creamery in Limerick, I think, paid 4.75d. That was certainly high and much above the average all round. With regard to the other point raised by Deputy Roddy that I stated here it might cost £750,000 to the taxpayer——

Mr. Roddy

No, to the consumer.

Dr. Ryan

Yes, to the consumer. There was the question of the taxpayer afterwards, because on 31st July we took the burden off the consumer and put it on the taxpayer. From 31st July onwards the cost was £500,000. That is what it will cost the taxpayer on subsidies on butter during the 12 months.

Mr. Cosgrave

Would it not be eight months?

Dr. Ryan

Yes, eight months. In these eight months we paid roughly £500,000. With regard to the regulations, of course, these will be laid on the Table as arranged under the Act. Now in reference to the reorganisation scheme to which Deputy Roddy refers, we did get the creameries to reorganise in the area in which I am afraid we are going to fail. I think we will have to proceed with a little bit of persuasion amongst those creameries. I think, however, that Deputy Roddy will find that there will be some progress shown in the coming week.

Deputy Roddy and Deputy Bennett thought that I should make a general statement on the butter situation. In the first place, I do not know whether on this Bill I would be in order in doing so, and in the second place that matter is more or less sub judice at present. Yesterday there was a conference of all interested in the butter industry held in the Department of Agriculture. After long deliberation they appointed a sub-committee which will confer again with me on the matter. Our deliberations did not conclude yesterday and therefore, I could not give any details as to what might be expected during the coming year.

Every Deputy knows that the world prices of butter, again leaving out the tariffs and subsidies, is very low compared with the prices last year. The world price now would be about 74/-for Colonial butter. Our butter would be about the same price as Australian or New Zealand butter, that is 74/-When I was bringing in the Principal Act last year I remember saying that the Bill was necessary owing to the appalling price to which butter had come down. The price then was 110/-Now the comparative price is 74/-

This Act will go some way towards dealing with the position, but a Government subsidy will be necessary also in order to make the position right in the coming year. The thing is being considered between this committee appointed by the interests concerned and the Department of Agriculture and we may be able to announce next week what, possibly, may be done for the butter industry next year. Even with a bounty or Government subsidy, prices will not be as good to the creameries as they were last year. With regard to the markets, we did get a fairly substantial footing for a few months during the winter on the French market but it is about this time of the year, as in Ireland, that the French produce sufficient for their own requirements, so that there is no market in France now until we come to October again. In Belgium there is a market to be got the whole year round. It should be possible to maintain the quota that we have got in Belgium during the whole twelve months,

Mr. Dillon

What is the quota?

Dr. Ryan

I could not tell you offhand. I promised Deputy Roddy here some days ago that I would send him the particulars. I do not know if he has got them yet.

Mr. Roddy

Yes, I got them.

Dr. Ryan

I will supply those particulars to Deputy Dillon; there is no reason why they should be kept from any Deputy. We have done our best to establish ourselves in these markets. We have got a certain quota. In the Belgian market it is not a Government quota. It is a merchant gets the quota, not the country. A merchant is not bound to take his whole quota from the Free State, but he has taken fairly large quantities from us up to this. I can supply particulars of the quantity to Belgium.

Mr. Dillon

Does the note circulated to Deputy Roddy include any of the particulars with regard to the quota?

Dr. Ryan

Yes, it does. The prices, of course, realised under present conditions, as I said in reply to Deputy Roddy, were much more favourable in France and Belgium than in the British market——

Mr. McMenamin

The present prices?

Dr. Ryan

Yes.

Mr. Cosgrave

It is really exchange prices.

Mr. McMenamin

Is the price in France and Belgium due to the exchange?

Dr. Ryan

No; the exchange is against us.

Mr. Cosgrave

It is favourable to us if they are paying this money.

Dr. Ryan

That is true. I think I have answered all the questions raised. I had hoped to be in a position to announce definitely to the Dáil, in introducing this amending Bill, what the prospects were for the coming year, but, as I explained, as a result of our conference yesterday I was asked to consider the matter further before making the announcement, because the people in the butter industry were not satisfied with the scheme put up. They thought a little more might be done and perhaps it can.

Mr. Cosgrave

What is the quantity of butter in cold storage this year compared with last year?

Dr. Ryan

I think the amount in cold storage on to-morrow, 31st March, which is regarded as the end of the season, will be somewhere between 15,000 and 20,000 cwts. I could not say definitely, but it will not be more than that. I think it was 5,000 cwts. last year.

Mr. Dillon

Does the Minister propose to take the later stages of the Bill after he is in a position to make a statement consequent upon this conference which is proceeding?

Dr. Ryan

I am not sure. Properly speaking, this Bill should be through by to-morrow, but as that is impossible, we will have more or less to work the scheme from 1st April in a retrospective manner. I should like, however, to have the remaining stages next week at the latest, so that we can get the Bill through the Seanad before Easter.

Mr. Dillon

Does the Minister think he will be in a position to communicate to the House the result of the conference before next week?

Dr. Ryan

I hope I will, but I could not say definitely.

Mr. Cosgrave

Will the Minister endeavour to keep the quantity in cold storage down, because on a falling market it looks very bad business to see stocks increasing?

Dr. Ryan

It may be, but unfortunately it was due to the fact that there was an increased production of 50 per cent. over last winter. If it had not been for that, we would have just worked out with a few pounds of butter in cold storage to-morrow night.

Question put and agreed to.

Dr. Ryan

I should like to get all the remaining stages of the Bill next Tuesday.

Mr. Cosgrave

We shall give them to you now if you want them.

Dr. Ryan

If there is no objection. Before the Dáil adjourns I will not have any objection to making a statement.

Mr. Dillon

Will an opportunity be afforded for a general discussion on the butter position?

Mr. Cosgrave

The Minister said the price mentioned in the Bill is 144/8. The price I saw on some placard to-day is 1/1 per lb. That is much less. Will due regard be paid to the consumers? The price is 76/-in England and it is 121/- here. That is a fairly big gap for the consumer.

Dr. Ryan

The Bill has a safeguard that we cannot go beyond 144/-

Mr. Dillon

I do not want to rock the ship while there are negotiations going on between the Department of Agriculture and the industry by discussing it now when the Minister says he is in the middle of discussions and negotiations, as I would do nothing but harm. I think, however, before we put the Bill through its Final Stages we ought to be given an opportunity of discussing the butter position exhaustively with a view to considering the claims of the consumers and the claims of the producers, and what they are entitled to. I do not want to embark on that now, because it might do more harm than good, but if the Minister will say that he will give an opportunity for discussion of that, then I do not object to taking all stages now, if the Leader of the Opposition does not object.

Mr. Cosgrave

If and when he has any proposals to bring before the House, the holding up of this will not interfere with or hasten or delay these proposals.

Dr. Ryan

I have, for instance, to prescribe the new levy. That must be laid on the Table and that will be an opportunity for discussion, if you wish.

Mr. Dillon

We know these oppor-tunities—they never do arise. They are supposed to arise, but they are never taken. If we had any stage of this Bill remaining over we could open a general discussion on, say, the Fifth Stage of the Bill. This is one of these pieces of legislation by reference which is difficult to understand. If the Minister will say that a full opportunity will be given to discuss the whole butter question between this and the Recess I have no objection to passing all the stages now. Otherwise he should reserve one stage for Tuesday.

Dr. Ryan

I do not know that I would be in a position on Tuesday to give any more information. We may not have actually concluded our negotiations.

Mr. Davin

If the Minister gets this Bill through now it should be possible by arrangement between the Whips and the different Party leaders to have a discussion on an adjournment motion on a suitable day, when so many hours could be set aside for a discussion on the Minister's statement.

Mr. Cosgrave

The Minister will have to come to the Dáil with something more than a statement if he is going to deal with it.

Dr. Ryan

That we might have to bring in an Estimate?

Mr. Cosgrave

Yes.

Dr. Ryan

That will probably come later—not next week.

Mr. Cosgrave

It must come sooner or later. It is part of the procedure.

Dr. Ryan

Yes, it must come.

Mr. Cosgrave

There will be an opportunity on that before we are committed to anything.

Mr. Davin

In case the Estimate will not be brought forward for some time, for some departmental reason, it is desirable that a statement should be made by the Minister as soon as possible.

Dr. Ryan

If there is any great desire for it, I am sure we could give a couple of hours for a discussion next Thursday or Friday, when I think there will be time for it.

Mr. Dillon

If the Minister says there will be an Estimate introduced prior to any new departure with regard to the whole question I have no objection.

Dr. Ryan

I do not say prior. It may be actually operating by the time the Estimate is discussed.

Mr. Cosgrave

It cannot. You must get the money before you operate, unless you take it out of the Contingency Fund.

Mr. Curran

As a matter of fact, is not what is in the Bill operating at present?

Dr. Ryan

No.

Mr. Curran

It did last year from 31st March to 31st July?

Dr. Ryan

Yes.

Mr. Curran

That is the way in which the matter will be settled again this year. Last year, of course it was changed altogether after the 31st July. Am I right in that?

Dr. Ryan

That is right.

Mr. Curran

I understand now that it is a case of levy and bounty just as happened early last year.

Dr. Ryan

That is right.

Mr. Curran

As far as the creameries are concerned it has got to operate right away. It did last year. I do not know whether it was passed by the Dáil or not at the time, but I know that at an early date the creamery societies did comply with the Bill or with the intentions of the Bill, and I presume it will be so again.