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Dáil Éireann debate -
Thursday, 3 Aug 1933

Vol. 49 No. 11

In Committee on Finance. - Sugar Manufacture Bill, 1933—Final Stages.

Question—"That the Bill be received for final consideration"—put and agreed to.
Question proposed: "That the Bill do now pass."

This Bill is of course now going through and anything we here have to say on it cannot be taken as opposing the principles involved in it but merely as sounding a note of precaution. We, who introduced sugar production to this country, and who have been working on it experimentally for a few years, introduced it, not as a hobby, but to endeavour to gain experience and, after having given a fair trial to sugar production, to see how far it would be wise to proceed on the lines on which we set out, to produce all our own requirements in sugar. It was always realised by us, even by those outside the Government, who urged the Government of the day in 1924 and 1925 to experiment in sugar production and in the growing of beet, that money was never going to be made on the production of sugar. There were other considerations that we considered would compensate for any monetary loss in the production of the sugar beet crop. I hope Ministers who are sponsoring this Bill have considered every aspect of the case and have rid their minds of prejudice bias, or any ulterior motives, that they have weighed all the factors, and that they are satisfied that the loss, which must be inevitable and which has been inevitable in every country in the world where sugar has been produced from sugar beet, can be recouped by indirect benefits from the industry. I hope they are satisfied that on the whole the economic advantage of sugar production will be greater than the apparent loss in the book-keeping returns of the venture. I am sure Ministers have gone well into that aspect of the matter and that they are satisfied that the economic advantage will be greater than the book-keeping loss.

While we here, on this side, have not had perhaps the same data recently to work on as the Ministry had, we are not without certain misgivings about this plunge. We are especially apprehensive because we have fathered this project up to the present, and we would regret very much if too much haste now might spoil all that has been done up to the present. It is well, however, that the country should know the exact position, nationally speaking, with regard to this project. Some Ministers, I think all of them who had a hand in the Bill in this House, have tried to mesmerise the House and perhaps the country as to the advantages that will accrue from the production of sugar, to meet our entire requirements. All I intend to do is to put the facts on record as to the position as I see it and I shall invite Ministers to controvert them, not by any sleight-of-hand trick, but by cold argument and by solid facts. We are going to produce another 80,000 tons under this Bill, to supplement the production of the Carlow factory and to meet our entire requirements. The Carlow factory will, if it operates until the year 1936, when I think its agreement runs out, cost this State £400,000 a year. Assuming we were able to start next year with four similar factories to produce 20,000 tons each, we are going to incur another national deficit of £800,000 a year. The Minister for Industry and Commerce shakes his head in disagreement. The disagreement, I am sure, is a suggestion that my figures as regards loss are too high. Nobody in this House would be more pleased to know that the figures are too high than I myself would be. I am putting the case as I can analyse it—not from any research outside this House, but according to the figures given by the Ministers opposite. I should like, and I am sure the House would like, and it is due to the House and to the country, that the Minister for Industry and Commerce will do more to reassure the House and country than shake his head in disapproval of this particular point I am making. It is not really a point. I do not want to make a point and I hope that, if it is construed as a point, the Minister will be able to knock it down. The more success that will attach to this the better for us all and for the country, and if the figures I am giving err on the side of being too high, I shall be glad to have them proved to be too high and I hope the Minister for Industry and Commerce will prove them to be so. That £400,000 that we lose on the present factory in 1936 and the £800,000 that, as I see it, we are going to lose on the other factories if we start them, will mean a national loss of £1,200,000. We are going to lose £1,200,000 in the production of sugar, and I put it to the Ministers opposite that this year and for many years past, on the average, we could buy that same quantity of sugar for £1,000,000. So, we are going to lose £200,000 a year more than the cost of the article would be and we have to produce the article as well. That is the position as regards production. The Minister's own figures are 23/- a cwt. at which we can produce it here. The best he anticipates is 20/8 a cwt. It is not a few thousand pounds one way or another that we are concerned with, but with the principle of the way the thing works. Assuming that we can produce it at 20/- a cwt.—and that is 8d. a cwt. less than the Minister for Finance hopes, in his brightest moment, to produce sugar at other prices that he has given for raw materials and costs here and there throughout the process—20/- a cwt., or £20 a ton, for 100,000 tons is £2,000,000. The Minister for Finance stated, in his opening speech on the Second Reading of this measure, that we can buy that sugar for £10 a ton below on the quays; so, even when the large subsidy that is being given to the Carlow factory is brushed aside and we have five factories operating under this Bill producing 100,000 tons of sugar, we must look to a perpetual loss on the industry of £1,000,000 a year. These are the figures supplied by the Minister for Finance. I am not saying that, because of that, the Bill should not go on, or should not be enacted, and that the factories should not be set up. I am just putting it as I see it and the responsibility of securing, notwithstanding those figures, an economic advantage to the country will certainly rest with the Government and, I dare say, more particularly with the Minister for Industry and Commerce. I certainly pay a tribute to his courage in facing that and I hope he will be successful.

As regards prices of beet, the Minister fixed 35/- a ton as the highwater mark to pay for beet. He said that if the farmers will not accept that price then the whole scheme falls. I think I am quoting him substantially correctly when I say that. I mentioned here before the working of a German factory at which a guinea, or a decimal over 21/- a ton, was given for beet, and sugar was produced in that factory at an all-in-cost of 8/6 a cwt. I should like the Minister to justify the allotment of prices he is making to the producer of beet and to the refinery in the light of those German figures. In Germany, at a guinea a ton for beet, it meant that the producer of beet got at the rate, roughly, of 3/6 per cwt. of sugar, and it meant that the refinery got 5/- a cwt. to produce the sugar. So that, the cost was 8/6 a cwt.

I should like to see the factory. Could the Deputy say where is this factory?

I have not the particulars with me but the Minister can take my word. I did not see the factory but I saw this recorded by an authority that I would accept and if, through curiosity or otherwise, the Minister thinks it would be of any advantage to him, I will send him the reference.

I should like to hear it. You say, producing sugar at an all-in-cost of 8/6 a cwt?

That is the figure as I read it. Taking it on that basis, I do not know how the Minister can justify a highwater mark figure of 35/- a ton for beet here with the threat that that must be accepted or there will be no factory, and, of course, the natural corollary of that would mean that the present factory in 1936, when it arrives, would shut down also. At 35/- a ton the price, roughly, that the grower gets here is 6/- per cwt. of sugar produced. The Minister will accept that I think, as a rough calculation. In his first expectation, according to the Minister for Finance, the cost of sugar will be 23/- per cwt., so that the allocation of prices that is made in this Bill would work out this way—6/- per cwt. of sugar to the grower and 17/- per cwt. of sugar to the manufacturer. In the German factory it is 3/6 per cwt. of sugar to the grower and 5/- to the manufacturer.

Does the Deputy say that they are selling sugar at 8/6 per cwt.?

The Minister did not say that he was going to sell it at 23/-.

The price of sugar in Germany is 5d. per lb.

I am not talking of that, but I am talking of the costs of production. I hope the Minister will be able to controvert the statements I have made. I would be glad to find that I was in the wrong. According to the price of beet in Germany, and the allocation of prices, the farmer here should be getting about £3 a ton for his beet. The Minister said that he cannot exceed in this Bill 35/- a ton for beet. If the figures that I have quoted are found to be substantially correct, then I think that a lot could be clipped off the manufacturer here before we would be anywhere near the allocations in the case of the German factory. Now, supposing that the Minister when increasing the production costs here could clip 1/- per cwt. off the manufacturer of sugar and add it to the price of beet—after all 1/- in 17/- is not very much considering the other allocations that I have given—it would be adding 6/- a ton to the raw sugar beet, and it would be increasing rather than reducing the price of beet at present. I have no connection with the Beet Growers' Association, and I do not know how they arrived at this figure, but I read in the newspapers a statement it published that the proposal of 35/- a ton here, with other considerations, meant a reduction in price of 9/-, that is to say, that they were really going to get 30/- a ton. I do not know how they arrived at that figure, but I would ask the Minister to comment on it. It is just a warning on the road in this very big undertaking that he is proceeding with, and a dangerous one. I did not notice anything in the Bill allowing for an extra price for beet of over 17½ per cent. sugar content. In the case of the Carlow factory, I understand the present arrangement is that it gives 2/6 for every 1 per cent. over 17½ per cent. I think that 2/6 per 1 per cent. is hardly sufficient, but even if the Minister could not see his way to give more than 35/- per ton over the standard 17½ per cent., perhaps he could see his way to give 3/- or 4/- per 1 per cent. over the 17½ per cent. so as to encourage the production of a high-grade beet. I hope that the Minister will deal with these points. For the sake of a better word, I hope that he will be able to knock down the points I have made, because it is in the national interest that he would be right and I would be wrong on the points I have mentioned.

I am sure Deputy Belton will be glad to hear that the national interests are going to be served by this proposal and that the points he made, so far as he made any points in the course of his speech, are ones that can be easily knocked down. He talked about a compensating loss. He referred to some entity, whatever it may have been, as a compensating loss. I know of no loss that carries compensation. Then the Deputy went on to say that the company can recoup this national loss of £1,200,000. I gather that he wished the House and the country to assume from that that the net effect of the beet scheme in the national economy will be that the community is going to lose £1,200,000.

On a point of correction. What I said was that in book-keeping it will be a loss to the country of £1,200,000, but I recognise that there are economic compensating advantages, and it is for the Ministers who have sources of information that people outside the Ministry have not to weigh up whether the compensating advantages are worth the losses shown in the book-keeping loss.

Is the Deputy so dull of apprehension that he does not see that he is now after abandoning, in the statement he made in his interruption, the ground which he took up in the opening part of his speech? He now admits that there is not going to be any loss, and there is not going to be any loss to the community as a result of the extension of the sugar beet industry in this country. The Deputy said that in the endeavour to bolster up a case for this proposal, there was going to be a national loss of £1,200,000, and he went on to say that we were going to buy the same quantity of sugar as we proposed to make in the new factory for the sum of £1,000,000, and that it was going to cost us, he said, something between 20/- and 23/- to manufacture that sugar. Since the Deputy has mentioned the figure of 23/-——

I quoted the Minister.

The Minister did not use that figure. The figure of 21/3 was used, and not 23/-.

It does not matter very much for the purpose of argument whether it is 20/- or 23/-. For the purpose of making a calculation it would be more convenient if we took 20/- a ton. At the present moment the cost of producing 80,000 tons of sugar at £20 a ton would be £1,600,000. That is what it will cost the factories to produce 80,000 tons. At present we import 80,000 tons of sugar which the Deputy says we could buy for £1,000,000. The first question that arises is, who would we buy it from? From an outsider. In buying from an outsider we are to give him £1,000,000 either in goods or in cash, which is taken out of the pockets of the community.

The point is, can we buy it for £1,000,000?

The point is that the Minister is in possession and cannot be interrupted.

We listened to the Deputy with great patience.

I want to get the exact points.

Some Deputies seem to have an idea that a Minister should not be allowed to make his case without interruption. The Deputy got an opportunity of giving his views, and the Minister has certainly a right to state his position.

I do not want to interrupt, but to clear up some points.

For the purpose of argument, I am not going to contest Deputy Belton's statement that we could buy 80,000 tons of sugar for £1,000,000. For the purpose of argument, I am not going to contest the Deputy's statement, that it would cost us approximately 20/- a cwt., or £1,600,000, to produce that sugar in the factories. But that is the cost to the factories; not the cost to the community, which is quite a different thing. The Deputy will see that it is a different thing, if he considers where the £1,600,000 would go. About 59 per cent. will go to the farmers and growers, representing £930,000, almost as much as would go out of the pockets of Irish farmers if they were to continue to buy beet sugar made very largely from beet grown in other countries. About 21 per cent. of the balance, £330,000 would go to the factory workers and the suppliers of raw materials, such as lime, bags and possibly coal. With the exception of about £80,000, which would go out of this country for coal, the whole of the £330,000, or a net sum of £250,000 would be distributed amongst Irish workers in one form or another, either amongst those employed directly in the factories, or indirectly, in providing bags, sacking and the limestone necessary for manufacturing purposes. There would be expended on rates and insurance approximately 5 per cent., or £80,000, every penny of which will remain in this country. Of the balance there is left about £260,000 for depreciation, capital charges, contingency and other expenses. That makes up £1,600,000.

When dealing with this aspect of the question in my speech on the Second Reading, I pointed out that if we assumed our additional imports of sugar could be bought for £800,000, and if we assumed that in the construction of the factories we shall have to spend £1,000,000 on foreign-made machinery, and have to continue to buy all the coal required for the purposes of the factories, our total export of capital or cash for these purposes would be £200,000. Subtracting that £200,000, and the £800,000 which we should have to pay if we were to continue to import sugar from abroad, we get a net sum of £600,000, which represents the real, true economic advantage to this country of expenditure on the sugar beet industry.

I know that what I say does not carry conviction with the Deputy. The Deputy has no convictions. His political career shows that.

Will you deal with sugar beet?

I do not intend to occupy the time of the Dáil any longer. I have dealt with any points of substance that the Deputy made in his speech. As to the terms on which beet can be purchased, that is a matter for negotiation between the factories and the growers. The factories are there and I am sure they will get beet at prices which will be satisfactory to the growers. In that connection, I would like the Deputy to remember that the principal argument on which the Opposition, in the earlier stages of the Bill, founded their criticism of the Government's proposals, was that it was going to increase the price of sugar to the consumers.

So it will.

And the more the company has to pay for beet the greater was the increase going to be to the consumer.

Why give us so little about beet sugar?

The Deputy attempted to quote figures in the House, but he could not give the source. He said they were taken from publications that satisfied him.

That is not true. I said that I had not the reference with me. I told the Minister for Industry and Commerce that I would communicate the reference to him if he was interested in it. I was in no way aggressive when speaking. I wanted information. I want it still. It is unfair to say that I made a wild statement and could not support it. I do not want any antagonism in this. I would be glad if the Minister was able to refute the figures I put up.

All I say in regard to the statement Deputy Belton made is this, that we have in Ireland possibly the most efficient sugar factory in Europe.

A white elephant.

A white elephant if it is going to cost £400,000 yearly, after having spent £3,000,000 upon it. We were told by Deputy Hogan, Deputy Belton's leader, the former Minister for Agriculture in the Cumann na nGaedheal Government—the Minister for Grass, as Deputy Belton used to refer to him—that we were paying too much. The Carlow sugar beet factory would certainly be a white elephant if, after spending £3,000,000 on it, the only result was to prove conclusively that it was impracticable and folly to extend the sugar beet industry here. Then it would have been a white elephant. We are trying to convert that factory from being a luxury, a hobby and a toy into being something useful. The elephant under our control has become piebald, and when this Bill becomes law, when the new company comes into being, and the sugar beet industry is extending, then that elephant will be paying for its keep, and justifying its existence, which it has not done up to the present.

At a cost of £1,000,000 a year to this country.

The total additional cost to the Exchequer of this country, or to the community, of the extensions which are contemplated under the Bill will be very much less than the Deputy has suggested. He said that the Carlow sugar beet factory had cost £400,000 yearly. The Deputy is not far wrong in his figures. It is not £400,000, but it is quite close to that. If we were to extend, as is contemplated in this Bill, and if the extension was going to cost £400,000 per factory, the Deputy would be quite right if he said that these three new factories are going to cost £1,200,000 and that adding that to the £400,000 the Carlow factory is costing, the total cost to the community would be £1,600,000. But the proposals are not going to cost the community anything like that.

It has already been indicated to the Deputy and the House that when the Bill becomes law and the company is formed the protective duty which sugar will bear will be from ½d. to ¾d. a pound. It may not. If things go well, and if Deputies only support the Government in its external policy and we win through this year or next year, there may not be any increase in the present price of sugar and, therefore, as compared with the present position, the extension of this factory will not cost the consumers that additional ½d. or ¾d. per pound. If that additional sum is necessary the additional cost to the consumer for the three factories, plus the Carlow factory, will be less than twice what the Carlow factory is at present costing. For that expenditure, instead of supplying only one-fifth of our needs in sugar, we shall be supplying the whole of our requirements.

Thanks to the experience we have got in the Carlow factory.

Not at all—thanks to the business acumen of the present Government. I would like to deal with the Deputy's statement that the manufacturers are going to get too much out of this. At the present time the Carlow factory is the most efficient in Europe. The factory costs, in this most efficient factory, are very much higher indeed than the figure of 5/- per cwt. which the Deputy mentioned. I am sure if I put that to any experienced sugar manufacturer, or any authority that the Deputy can produce, and if I were to ask him: "Could you make sugar from ordinary farm grown beet at 5/- a cwt?" he would say that the proper place for the person who would put that question to him was Bedlam. As a matter of fact, in most countries the cost of manufacture is almost four times that.

Supposing we are giving the manufacturers too much, as the Deputy says, how does he want us to reduce production costs? The efficiency of the machine is not determined by us; the efficiency of the management may, to some extent, be determined by us. We will get the most efficient manager procurable and we may assume that so far as the factory processes are concerned there will be no avoidable waste. Having the most efficient management and machines, the next head under which we may look for some reduction in the cost of production is under the head of wages and salary. Is it the Deputy's contention that the wages paid to the factory workers must be reduced in order that we may pay more for the beet? The Deputy cannot have it both ways. His Party has criticised this Bill on the ground that when it goes through we are going to increase the price of sugar. Does the Deputy want that?

The Deputy says "No, but we want you to reduce the amount paid to the manufacturers." That is what he said and, therefore, since we cannot get more efficient machinery, or more efficient management, the only way in which we can reduce the price paid to the manufacturers—and that includes every hand skilled, or unskilled, employed there— is by reducing wages. At last we are putting the Deputy where he properly belongs.

I would like to have some information from the Minister with regard to freights? The various growers in the neighbourhood of the factories that are to be established would have a certain advantage by reason of their nearness to the factories. I think they should not have all the advantages in the matter of freight to the detriment of the growers who might be living at a distance and who might contract to supply the factories. I hope I have made myself clear. I just wanted, if I am in order, to ask the Minister that question. I should like to know if there is anything in connection with this question of freights in the Bill?

There is nothing in this Bill which provides for the equalisation of freights. The question of freights is a matter for determination between the sugar company, the growers and the railway company.

But the Minister sees my point?

Yes, but at the same time, we cannot, as it were, relieve everybody in this country of the disadvantages of the situation. The factories have got to be placed in some one area or other. The areas in which each will be placed will be selected with due regard to the possibilities of having equal freights paid by all the growers supplying that particular factory.

It cannot happen that all will have equal freights.

We will have one in the middle of your constituency.

There is no necessity for an interruption of that kind at all.

There is substance in what Deputy Curran says, but we cannot deal with the question of freights in this Bill.

It is a matter for negotiation between the sugar company and the railway company.

Question—"That the Bill do now pass"—put and agreed to.
The Dáil adjourned at 8.20 p.m. until 3 o'clock on Tuesday, 8th August.
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