Dáil Éireann debate -
Wednesday, 16 Nov 1938

Vol. 73 No. 5

Committee on Finance. - Dairy Produce (Price Stabilisation) (Amendment) Bill, 1938—Second Stage.

Minister for Agriculture (Dr. Ryan)

This Bill is very much by reference. Sections 2 and 3 first come up for mention. The experience gained in the administration of the Principal Act of 1935 showed that as far as creamery butter was concerned the Act fulfilled its purpose with little difficulty and at relatively small cost to the State. That part of the Act relating to the imposition and collection of levy on non-creamery butter proved in practice difficult to administer and so costly as to render its continuance undesirable. The collection of levy on non-creamery butter was suspended as from 1st January, 1937. The suspension of levy renders the registration of dealers in non-creamery butter unnecessary. Part II of the Principal Act makes it mandatory on the Minister to keep registers of dealers in non-creamery butter and makes it an offence for persons to carry on business unless registered. Paragraphs (d) and (e) of sub-section (1) of Section 17 of the Principal Act relate to the payment of levy by producers and distributors of non-creamery butter. The purpose of Sections 2 and 3 of the present Bill is to enable the Minister to suspend the operation of these provisions of the Principal Act as and when he considers it desirable. It will be noted that the power of suspension is made retrospective and it is the intention in due course to make suspension effective as from 1st January, 1937. The reason for that is that we have not been pressing these people to keep up registration, seeing there was no other cause for it, apart from the legal obligation under the Principal Act. We had intended to bring in this Bill sooner to do away with the obligation of keeping that register.

On Section 4, the power of the Minister to collect a levy on butter is confined to collecting such, in the case of creamery butter, from the manufacturer, and, in the case of non-creamery butter, from persons registered in the registers of butter factories or of non-manufacturing exporters kept under the Dairy Produce Acts or in the register of dealers in non-creamery butter provided for in Part II of the Principal Act. The latter register has not been kept since January 1937, and will not be kept during the period when Part II of the Act is suspended. The fact that a levy was collectible only from certain specified persons, namely creamery proprietors and registered factory owners, or non-manufacturing exporters and the dealers already referred to, has been a handicap on occasions in regulating the butter trade. Power is, therefore, being sought to recover levies, if and when necessary, in respect of butter which has left the manufacturer's hands in the case of creamery butter, or in the case of non-creamery butter, is in the possession of persons at present beyond reach. The object of the provision is to make speculation in butter unprofitable. For instance, if at any time it were found necessary to prescribe a higher minimum wholesale price for butter—distributors who had large quantities of butter in stock at the time the higher price came into operation would reap a profit to which they were not entitled. By imposing a levy equivalent approximately to the increase in value on the butter in stock when the rise takes place, the distributors would have the same margin of profit as if no increase had been effected.

On Section 5, I want to point out that Section 10 of the Principal Act enabling a registered person to obtain a certificate of registration, was not in practice available. It is proposed, therefore, to repeal it.

The objects of Section 6 are to enable the repayment of levy to persons who purchased cream, on which levy had been paid, and subsequently exported it, or who used the purchased cream for manufacture into butter on which levy was duly paid.

Section 7 gives power to amend a levy order as from a date prior to the making of the Amending Order but only by reducing the rate of levy prescribed in the original Order. For instance, if an Order were made fixing a rate of levy of 6/- from 1st May, we are taking power to make an Order, on say, 1st July, reducing the rate from 1st June, if we find it possible and desirable to do so.

Sections 8, 9 and 10 are designed to simplify procedure on occasions when butter is imported. At present levy has to be prescribed and paid prior to the issue of an import licence. It is impossible as a rule to determine the appropriate levy—i.e., levy at a rate that would producer no gain or loss on subsequent sale in the country—on imported butter accurately in advance; accordingly, it is proposed to take power to amend an import levy Order and to dispense with the necessity for prepayment of levy.

It would on occasions have been convenient in the past to have amended a bounty order so as to enable the payment of a bigger bounty on exports during a specified period. This course was not possible and it is now desired under Section 11 to obtain that power. Hitherto, only the seller of butter at less than the prescribed minimum price has committed an offence. It is desirable that the purchaser should also be made amenable.

Mr. Dillon

What does the Minister mean by making the purchaser amenable?

Dr. Ryan

Very often the purchaser is a more guilty party than the other. He is, perhaps, a person with very considerable means who may attempt to get butter cheaper from some hard-up creamery by offering cash down, and he may succeed in tempting the creamery to sell the butter. In that case it would be more just to sue the purchaser than the seller.

Mr. Dillon

Well, Sir, the state of frantic confusion to which the dairying industry in this country has now got as a result of the innumerable levies, counter-levies and Bills devised by the Government is such a thing as cannot be understood by anybody except somebody who devotes his entire life in following the twists and turns of the dairy produce legislation of the Minister. It amuses me very much to see that the levy on farmer's butter has now gone up the spout. At one time it was high treason to suggest that the legislation imposing such levies should be amended. Deputies Corry, Smith and some others of the Fianna Fáil Party foamed at the mouth when that was suggested. But that system of levies went on until it became politically impossible, and then the levies went up the spout. They went up the spout in the same way as the maize meal mixture. The wheat subsidy and the beet subsidy will go up the spout in God's good time, every one of them.

Mr. Davin

Not the beet or wheat subsidy.

Mr. Dillon

Oh, yes. The beet and wheat schemes have already gone up the spout. The boys who collected three barrels per acre of wheat this year are not going to grow any more wheat.

Dr. Ryan

What about the Deputy's promise last year that he would keep on growing wheat?

Mr. Dillon

I said I would keep it going until the poor goms who were trying it gave up in despair. I will keep on growing beet, too, until the poor goms have got tired of it and——

An Ceann Comhairle

What about the butter?

Mr. Dillon

The wheat has gone up the spout already, and beet is going up the spout.

Mr. Smith

What about the profiteering?

Mr. Dillon

The profiteering is up the spout.

Mr. Smith

The consumers of bread in Ballaghaderreen do not think so.

Mr. Dillon

When we reduce the price of flour from 40/- to 21/- a sack the profiteering will be gone.

Mr. Smith

Monica Duff and Company, Ballaghaderreen, will be glad to hear that declaration.

Mr. Davin

That will provoke Deputy Corry.

Mr. Dillon

Deputy Corry was never provoked—it is only the more primitive members of the Party who were provoked.

Mr. Smith

What about the poor consumers of bread in Ballaghaderreen?

Mr. Dillon

The butter levy has gone up the spout now. Peace to its ashes. It is not alone in the graveyard of the Fianna Fáil schemes, and it may rest easily in the knowledge that several companions will join it. Does the Minister remember the time when he delivered a great speech against the butter levy?

Dr. Ryan

I delivered so many of them that I do not remember.

Mr. Dillon

I do not blame the Minister. In that speech delivered in 1929, the Minister explained that he and his colleagues had carefully worked out the cost if the farmers were to get 5d. a gallon for milk. He described it as dishonest to say that they should get 5d. a gallon. In six months afterwards they were getting it without any subsidy at all for butter.

Dr. Ryan

Without any subsidy at all —the Deputy should learn something.

Mr. Dillon

What is milk fetching to-day?

Dr. Ryan

Five and two-thirds pence per gallon.

Mr. Dillon

Does the Minister remember when he said that it would cost the farmers of the country £1,000,000? What is it costing now? It is costing £3,000,000. Then the hysterics of the Minister were awful to behold. At that time the Minister for Agriculture, as an expert on the creamery business, was stumping the country, warning everybody that it would cripple the State if the farmers were to get 5d. per gallon for milk. Now they are getting five and two-thirds pence, and the Minister smiles blandly. It is not the first time the Minister was wrong. The Minister said it would cost the State £3,000,000.

Dr. Ryan

It would that time.

Mr. Dillon

Is it costing three millions now?

Dr. Ryan

No.

Mr. Dillon

Every step the Minister takes has to be forecast for him from these benches. He has to be told every week about it. The farmers are now getting more than 5d., and it is not costing three millions——

Dr. Ryan

Butter was 68/- a cwt. that time, in the world market.

Mr. Dillon

It is no use sometimes flogging information into a child. One gets weary of it.

Dr. Ryan

I shall remember that when I am replying.

Mr. Dillon

The Minister says, with regard to a levy he is empowered to make under this Act, that in the event of its being made it will be used for the producers' benefit—that is, the levy on profits accruing to persons holding large stocks of butter when the minimum price is raised. Would he tell us how are these levies going to be used for the producers' benefit? Are they going to be paid into any existing fund which will ultimately result in the producer getting a larger price for his milk?

Dr. Ryan

Yes, they will go into a fund.

Mr. Dillon

And that will go into the general increased price of the milk?

Dr. Ryan

Yes.

Mr. Dillon

I do not think the purchaser should be made liable, and for this reason. Under Section 12 the creamery manager is continually fixed with notice of the minimum price, but the average grocer dealing in butter does not know the minimum price and is not interested in orders made from time to time fixing the minimum price. It is quite true that a creamery manager might be tempted by a cash offer to take less than he was supposed to take, and it is equally true that a shopkeeper might be tempted by an offer of butter, which looked to be good value, to take it without inquiring into the matter of minimum price and so on, but it is no part of a shopkeeper's job to give effect to this dairying code; that is the business of the creameries and of the producer. The shopkeeper's business, primarily, is to get the cheapest commodity he can for his customers, and to get it where and how he can, provided that he is within the law. I say that to increase the number of precautions he must take in order to comply with the law is to increase his burdens too much. I say that he should not be expected to make these enquiries, and I submit to the Minister that the only person that should be made liable under Section 12 is the dairy man or the creamery manager who, knowing the regulations full well, sells the butter in contravention of the law. I do not know what the end of all this levying and so forth is going to be so far as the dairying industry is concerned, but this much I am certain of: that either the whole dairying industry ought to be radically altered so as to secure an equal supply of butter both for winter and summer, or else we should chuck entirely the business of producing butter and give the milk, free if necessary, to the people of this country. Let us regard milk as a by-product of the livestock industry and let us distribute it to the urban populations of the country as being the best possible food they can get. I offer that as an alternative to a complete reorganisation of the creamery trade which would put us on an equality with Denmark. That would involve a level of production being maintained, both in winter and in summer, and adequate to supply the British demand.

There is no use in trying to build up the trade on the basis of an adequate summer supply and no supply at all in the winter. It will never get anywhere on that basis, and it will become a permanent burden on the backs of the consumers of this country. It should not be allowed to become that. If there is going to be a subsidy, and if you cannot maintain that level of production, then buy the milk, give 5d. a gallon for it, or whatever the price may be, and give the milk away to the poor people of this country, because there are thousands of people in the cities of this country who are badly in need of additional supplies of milk. If we were to do that we would get some value for our money, but at present all it means is that our people are being heavily taxed to provide the British people with cheap butter. If there is any cheap food going around it should be given to the poor of our cities and not to the poor of Birmingham, Liverpool and Manchester. Our people are paying more for butter so that the people of Birmingham, Liverpool and Manchester may get butter cheap. We must do one thing or the other. Let us concentrate on live stock and dispose of the by-product of that industry, which is milk, to our own people, or else let us concentrate on dairying with a view to providing an adequate supply for both winter and summer. Above all, however, let us stop this patching and cobbling with the dairying industry. Make up your minds to do it one way or the other, and then do it in the right way.

Mr. Keyes

I am interested in Section 4, where the Minister takes power to put levies on butter. I think that the Minister said that this was to be done in the interests of the dairying community, but one has reason to fear that it might work in the other direction. How does the Minister propose to prevent this thing being passed on to the consumer and the public in general? I have a fear that this may be used to relieve the Exchequer from the expenses of paying subsidies, and I say that if there is going to be any benefit to the ordinary consumer, who paid quite sufficient for butter in the past few years, something should be done to ensure that this will not be passed on to the consumer. If this is meant to be a benefit to the consumer, there ought to be a guarantee with it, or some complementary clause, regulating the price at which the butter would be sold. From what I have heard, there seems to be a real fear that, instead of being a benefit, this will be another burden on the backs of the urban consumers. How does the Minister propose to operate this section without inflicting further hardship on the consumer?

Mr. Cogan

In my opinion Section 4 of this Bill amounts to the imposition of a tax on butter. I think that what are called levies here may be described as a form of taxation. I presume that the purpose is to pay a subsidy on butter exported. The question of whether or not a subsidy should be paid on butter exported is very big, and I will not go into it at the moment, but I think that butter is not a commodity which should be taxed in this country, no matter what may be the purpose of such a tax. I think that the State should not tax the necessities of life. There may be a lot to be said for the taxing of commodities that can be regarded more or less as luxuries, but I hold that the State should not tax foodstuffs, such as butter and so on, which are a necessity of life, and which are indispensable to the poor, and to the young children of every section of the community, but particularly to the poor. Now I think that in levying taxation for the purpose of financing any scheme, even though that scheme may be for the benefit of the dairying industry, the State should concentrate on raising the money required by some means other than taxing an essential foodstuff, and thereby raising the price of that foodstuff to the consumer in this country, because you cannot tax any commodity without raising the price of that commodity. Therefore, I think that the whole principle of this Bill is wrong inasmuch as it gives the Minister power to impose levies or indirect taxation on butter.

An Ceann Comhairle

The Minister to conclude.

Dr. Ryan

I think when Deputy Dillon talks about the frantic confusion in the butter trade he really has in mind the frantic confusion of Deputies in dealing with those laws and regulations. I quite admit that there may be something in that, because those amending Bills are very difficult for a Deputy to follow unless he goes to the trouble of getting the Acts which are already there, and studying the changes and the effects of those changes. That is one of the the great disadvantages of legislation by reference, but one cannot really codify legislation in a case of this kind, where there has practically been an annual Bill. Perhaps when we get down to a more settled system in regard to the butter question, we may be able to bring in one Bill to codify the whole thing, so that everybody will be able to follow the matter more easily.

As far as the butter trade itself is concerned, there is no such thing as frantic confusion. I do not think there is anything in this country regulated so well, and which gives an advantage to the producer and the consumer at the same time. The pro ducer knows exactly what he is going to get for his butter. There is a set price given. He knows what he is going to get. The consumer knows what he is going to pay for butter. I think the consumer who knows that he is going to pay whatever is the price for the time being—the prices are fixed for quite a long period as a rule—is in a much better position than he was formerly when butter was up a penny one week, down a penny next week, and so on. In all probability he felt that the people in the butter trade were not losing by it anyway: that they were going to take every advantage they could in putting up the price to him. As I say, the legislation may be difficult, but at least the producer and the consumer know exactly where they stand, and from their point of view I think the system is very good.

I could never accept the argument that is made by Deputies here—it was made by Deputy Dillon this evening —that we were taxing our own consumers in order to give cheap butter to Great Britain. The system which we have tried to adopt here as far as possible is to charge the consumer here what we regard as a fair price for butter. I do not think anybody can find fault with the present price of 1/5, nor could even find fault if it were dearer still. The stories that are told about the price of butter in Great Britain are entirely wrong. I happened to be in London lately and I went into a grocer's shop. They had no Irish butter, but the New Zealand butter which sells at the same price was marked 1/8. That was within the last month. Anybody listening to Deputies here in the Dáil would imagine that the English people were getting our butter at 10d. or 11d. It is obvious that they cannot get it at any such price. When you look at the price they are paying for our butter imports to Great Britain, it is quite obvious that at least they cannot get it any cheaper than our consumers get it here. It does appear that the people who are handling the butter in Great Britain have more out of it than the people who are handling it here.

With regard to the farmers' levy, I did advocate the farmers' levy, but I did it at a time when butter was very much lower. The world price of butter at that time was as low as 68/-. I would remind Deputy Dillon that in 1934-5 we actually paid out, in subsidies and bounties, over £2,000,000— £2,500,000—and if we had at that time brought the price of milk to the farmer up to 5d. per gallon it would at least have cost another £1,000,000, which makes the £3,000,000 he spoke of. It would not cost that now because the world price is very much better. The world price will average this year possibly 112/- or 114/-. At that time the average was under 70/-, which is a very big difference. At that time if we had not got the farmers' butter levy, we could not put a levy, or much of a levy, anyway, on the creameries. You might put a small levy, but if the levy on the creameries were to exceed, say, 9/- per cwt., that is about 1d. per lb., the creameries would be at a serious disadvantage as against the producers of farmers' butter if there was no levy on farmers' butter at the same time. That is one thing about it, but apart from that altogether there was a separate pool created for farmers' butter, and by levying farmers' butter that was being consumed at home it was possible to pay a good levy on the export of non-creamery butter, and in that way to raise the general price of farmers' butter all round and confer an advantage on the farmer. I never considered that a difficult thing to see.

Mr. Dillon

Not interrupting you, Sir, do you want this Bill to-night?

Dr. Ryan

But Deputies opposite did consider it a hard thing to see, or at least they pretended to, but I think they should have seen that that system was at least in the interests of the farmer. I am just as much entitled to say that as Deputy Dillon is to say it was not. I hold honestly, and I am convinced as much of that as of anything that was every done, that the farmers' levy was in the interests of the farmer. I know that any Deputy in this House who every took the trouble to understand the system would agree with me, but there are Deputies of course who do not want to take the trouble to understand it, because it suits them better to argue against it. The point was raised by Deputy Dillon that we should not inflict a penalty on the purchaser. The instance given by the Deputy is that the ordinary grocer is not so interested in the fixed price, and so on, and may not know what the fixed price is. This, I think, never does apply to the ordinary grocer. The ordinary grocer usually has to pay the minimum price, if he does not pay a little more, and he may have to buy at retail terms, which would be more than the wholesale price; but the sort of person that I have in mind is the big wholesaler who has ready cash and who can offer a creamery cash down for a consignment. It is very tempting to the creamery to give him a slight cut in order to get the money, of which it is sorely in need.

There was one rather big point raised by Deputy Dillon, and that is in regard to the even supply all the year round. It is a very big question, but I should like to say that there are people both on this and on the other side who do not consider that that would be any great advantage to this country. I must say that I have always been inclined to agree with the Deputy on that point, but I have heard a rather convincing argument against it from people both here and on the other side, and there may be something in the contention that we might be able to do as well in the ordinary seasonal trade that we do at the moment, our trade being replaced by the New Zealand and Australian trade in their flush season and our slack season. There may be something in that. Deputy Keyes, I think, is wrong in believing that under Section 4 the Exchequer would make any saving. As a matter of fact, what happens is that the Dáil votes a certain amount for subsidies to the creamery industry. That amount is spent always, by keeping the price of butter as high as possible with the money at our disposal. Section 4 deals principally with people who may have butter on hands at a time of change in prices. For instance, if a dealer in butter has a big lot on hands, and we come along and say we are putting the price up 9/- a cwt., that dealer will get the benefit of the 9/- unless, at the time, we say we are taking a levy of 9/- for butter on hands.

Question put and agreed to.

Committee Stage ordered for Wednesday, 23rd November.