Dáil Éireann debate -
Wednesday, 20 Feb 1952

Vol. 129 No. 5

Supplementary Estimate, 1951-1952. - Vote 50—Industry and Commerce.

Minister for Industry and Commerce (Mr. Lemass)

I move:—

That a supplementary sum not exceeding £650,200 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1952, for the Salaries and Expenses of the Office of the Minister for Industry and Commerce, including certain Services administered by that Office, and for payment of certain Subsidies and sundry Grants-in-Aid.

I think the House is aware that by a transfer of functions Order the administration of food subsidies has become the responsibility of the Minister for Industry and Commerce whereas formerly it was the responsibility of the Minister for Agriculture.

When the original Estimate for the flour and bread subsidy was being prepared in the Department of Agriculture prior to the commencement of the financial year, it was calculated that a sum of £7,400,000 would be required. That Estimate of the Department of Agriculture went to the Cabinet Sub-Committee which the previous Government had set up to review Estimates and was there written down to £7,000,000. The original Estimate for £7,400,000 prepared in the Department of Agriculture assumed that the deliveries of subsidised and unsubsidised flours during the years would be much the same as in the previous year and that the cost of both native and imported wheat would remain unchanged.

The decision of the Cabinet Sub-Committee to knock £400,000 off the Estimate was partly due to a decision to take out of it certain payments due to the flour millers and to incorporate them in a Supplementary Estimate which was introduced before the beginning of the financial year and partly due apparently to a tentative decision to revise the bread rationing scheme involving a reduction of rations in some instances and consequently reduced deliveries of subsidised flours.

Whatever may have been intended in that regard, in fact, no action to put it into effect was initiated. However, as it turned out, the Estimate prepared in the Department of Agriculture was more accurate than the Estimate prepared by the Cabinet Sub-Committee. As might have been anticipated, the cost of imported wheat rose steadily during the year and, on that account alone, the original Estimate of £7,400,000 would have had to be reinstated.

As the House knows, however, it was decided, when the 1951 Wheat Order was made, to increase the guaranteed price for native wheat by 6s. 6d. a barrel and that added a further £250,000 to the cost of the flour subsidy in the present financial year.

The total cost of the flour and bread subsidy will therefore be £7,650,000 and not the £7,000,000 provided in the Book of Estimates and hence a Supplementary Estimate for £650,000 is required.

Mr. Sweetman

May I ask the Tánaiste a question? The Tánaiste has referred all along to the figure of £7,000,000, which I quite follow, but in the Supplementary Estimate that was circulated there is a figure of £1,945,000 referred to as the original Estimate.

Mr. Lemass

There is a note there which says that the sum of £7,000,000 was provided in the Vote for Agriculture for this purpose. The administration of the subsidy was transferred to the Minister for Industry and Commerce and, if I am correct, there was a supplementary vote taken to put the funds available to the Minister for Industry and Commerce. The original Estimate for the total cost of the subsidy was prepared in the Department of Agriculture and it is in the Book of Estimates as £7,000,000.

Mr. Sweetman

Is the £1,945,000 part of the £7,000,000 or in addition to the £7,000,000?

Mr. Lemass

It is the Estimate for the Department including part of the £7,000,000 which the Minister for Industry and Commerce administered after the transfer of functions.

Mr. Sweetman

If it is part of the £7,000,000, it was the residual part left after deducting the wheat and flour subsidies?

Mr. Lemass

Oh no. During the middle of the financial year this transfer of functions took place and in the meantime certain payments had been made out of the Department of Agriculture Vote. That figure includes the payments that have been made out of the Industry and Commerce Vote after the transfer of functions. A further £650,000 has to be provided. I hope I have made it clear. It arises out of the fact that there was a transfer of functions during the financial year.

Mr. Sweetman

The whole of the £7,000,000 was a subsidy for flour and wheaten meal, as I understood the position.

Mr. Lemass

Yes.

Mr. Sweetman

And £1,945,000 is what remained of the £7,000,000 Estimate after the payments had been made by Agriculture before the transfer of functions?

Mr. Lemass

No.

Mr. Sweetman

Therefore, did Agriculture pay out £5,055,000?

Mr. Lemass

When I explained the position to the Deputy I omitted one fact, that is, that the bread subsidy was always administered by the Minister for Industry and Commerce. So that, of the total provision for flour and bread, a part would have appeared in the Estimate for the Department of Industry and Commerce in any event.

Mr. Sweetman

I see.

Mr. Cogan

Would the Minister say what is the present price of imported wheat?

Mr. Lemass

I could not answer that but I can tell the Deputy that the Estimate was prepared upon the basis of a payment of £34 a ton during the financial year.

Mr. Sweetman

At what percentage of moisture?

Mr. Lemass

That would vary but it would on the whole be a higher percentage than the milling percentage. In other words, in making any comparison between the price of imported wheat and the price of native wheat one must add drying cost in the case of native wheat and make allowance for the moisture that would be added in the case of the imported wheat.

Mr. Sweetman

The milling percentage is about 16 per cent. I think.

Mr. Lemass

The £34 per ton would be the comparable price of dried native wheat.

Mr. Sweetman

There is another point which I want to raise with the Minister. The Minister is aware that it is not a new thing. There has been considerable dissatisfaction for some time amongst provincial bakeries. The provincial bakeries find themselves in the position that Dublin bakeries are able to go down and muscle in, so to speak, on their territory and sell bread in these districts because of the arrangements that exist in regard to the sale of bread in Dublin. It does appear somewhat unfair to the provincial bakeries concerned that they are in the position of having the whole of their ration taken up in the ordinary way in the rural areas while in Dublin the ration is not used up with the result that the Dublin bakeries are able to send out the surplus bread from the city to country areas.

I am not so innocent as to suggest that this is a problem which can be easily solved—I quite see the difficulties involved in it—but it might be possible to strike a ration in the cities commensurate with the demand and similarly to strike a ration in the rural areas commensurate with the demand there. It is common knowledge that people in the country use much more bread than people living in Dublin. Probably it is the effect of fresh air, country life and so forth. In the case of the city bakeries, however, there seems to be always a surplus which they can sell in rural areas at the subsidised price and at the expense of provincial bakeries. I am not suggesting for one moment that the country people should have that additional supply taken away from them. I think that the supply should be there but that it should be made available through the country bakeries. As I say, I realise that it is a problem which cannot be easily solved but the situation at present is such that many provincial bakeries are in grave danger of having to close down and I do not think that would be a result that the Minister would like to see brought about.

Mr. Hickey

Is the Minister going to take any action about the recommendations of the inquiry which was presided over by Mr. Justice Lavery in connection with the flour milling industry?

Mr. Lemass

What particular recommendation has the Deputy in mind?

Mr. Hickey

There were several recommendations. Has anything been done to carry any of them into effect? I know that in one of the recommendations, they pointed out that £150,000 was allowed to the milling industry for depreciation while only about £90,000 was shown in their reports. Is the Government going to do anything at all in the matter?

Mr. Corry

I should like to bring the position of bakeries in rural towns and villages before the Minister. The proprietors of these concerns have made repeated complaints to me that their business has been very adversely affected by the present regulations in regard to the distribution of flour. The city bakeries, in the City of Cork in particular, find that the full quantity of flour issued to them is not being used within the cities. As a matter of fact I understand the bakers in the cities are running a blackmarket in the sale of flour on some occasions to rural bakeries as it would appear that rural bakers have not sufficient flour. There is a wide difference between the appetite of a man who goes out ploughing the soil of a field in the early morning and that of the city joker who dodges around for a few hours pretending to work. One result of that is that the city bakers are pushing further and further into the rural districts to find a market for their spare bread. One finds if one is dealing with a rural baker, that one is confined to one's ration but if one is dealing with a city baker, one gets all one wants because they have always a quantity of spare bread on hands. I mentioned this matter last year but no change has been made since. I would suggest to the Minister that the matter should be looked into now with a view to having a different ration for rural bakers as distinct from bakers baking purely for city consumption.

In view of the Minister's statement that £34 per ton is being paid for foreign wheat now, and in view of the absolute necessity of getting wheat grown in this country, I would point out that £34 a ton represents 85/- a barrel. I think he should bear that in mind in regard to the price at present being paid to the Irish farmer. We do not know what the price of foreign wheat will be next harvest. Unless a bigger move is made within the next month, I am afraid the acreage under wheat will be down next harvest instead of being up. I would urge on the Minister, therefore, that the price paid to the Irish farmer should be somewhere in or around the price paid for wheat which has to be imported. It is £34 a ton to-day—that is, I take it, for wheat got from inside the wheat pool—but if our production of wheat goes down further, that can easily be £45 per ton if we have to buy it in the open market. I would, therefore, urge on the Minister before it is too late to endeavour to see that the price paid to the Irish farmer is increased and that our Irish farmers will get the same opportunity as foreigners of supplying the market for an essential product in this country, namely, bread for our people.

Mr. O'Hara

I do not wish to detain the House but I want to make just one or two observations in connection with this Estimate. I think that there is one aspect of flour distribution with which the Minister should seriously concern himself. There is, first of all, the question of the jute bags in which flour is distributed, at least throughout rural Ireland. In the first instance, I submit that there is a considerable waste in these sacks because if a sack becomes damp the flour is inclined to adhere to the sack. In that way alone there is a considerable amount of waste. A still worse feature is that the jute sack, as Deputies all know, is inclined to collect dust and dirt and naturally the flour emptied out of such sacks cannot be clean. Any person who is engaged in business must realise that flour is transported in lorries and railway wagons and that, sometimes, there is turf mould and other dirt on the bodies of these lorries and wagons with the result that sometimes a considerable amount of dirt accumulates on the sacks. There is the further point that, generally, merchants do not take the precaution of cleaning these sacks. Therefore, even with the best of intentions, it can happen that there can be a considerable amount of dirt in the flour. I think, too, that it should be compulsory on bakers to wrap every loaf of bread. It is a shame to see bread handled in the way it is handled in this year of 1952. I hope the Minister will look into these matters from the point of view of the public health and the well-being of our people.

Mr. Cogan

In view of the enormous amount of money involved in this Estimate, I think that a most searching inquiry should be made into the profits of all the people who are engaged in the handling of wheat, from the time it is brought ashore in this country or from the time it leaves the farmer's haggard until it reaches the consumer. Rightly or wrongly, there is a widespread feeling that those who are engaged in the milling business and in the large-scale bakery business are making fairly substantial profits. Deputy Corry spoke about the Cork bakeries. The Dublin bakeries supply bread in most of the provincial towns in Leinster and I fear that they compete unfairly with the local bakers.

I think that there should, perhaps, be some adjustment in the rationing system. It is generally accepted that the consumption of bread per head in rural areas is greater than that in the cities. The number of hotels and restaurants, and so forth, which operate in the city may help somewhat to explain the difference together with the reason which Deputy Corry has suggested, namely, that the appetites of manual workers in the fields are greater than the appetites of city people who lead sedentary lives.

There is a need to inquire into the price which it is likely that this country will have to pay for imported wheat during the coming 12 months. The Minister has mentioned a figure of £34 per ton but we may have to pay a higher figure than that. At present, the Irish farmer is getting £30 per ton for his wheat. I am aware that the Minister will point out that the imported wheat has a lower moisture content than the home-grown wheat. As against that, however, I would stress the point that before the end of the year it may be that we shall have to pay much more for our imported wheat. The price may be very substantially increased or the supply may not be available. For that reason, I think there is need to consider the desirability of stepping-up the price somewhat of home-grown wheat so as to compare at least with the price that is paid at present for imported wheat. I think that that is a very urgent and important matter and that the Government should devote their immediate and concentrated attention to it.

Mr. D.J. O'Sullivan

It would appear that Deputies on all sides of the House are unanimous in expressing the desire that the Minister should apply himself particularly to the problem of the city bakeries which have the advantage that their city customers do not consume their entire ration and that they can, therefore, compete unfairly with the small town bakery by selling the surplus bread in these small towns. The reasons why country folk consume more bread than city dwellers are quite apparent to all Deputies in the House. We appreciate the administrative difficulties with which the Minister will have to contend in dealing with this problem. Nevertheless, the existence of such unfair competition in the business life of the community is surely deserving of the very best application of the Minister and his Department towards finding a solution of the problem. I hope he will be successful in overcoming that difficulty.

I join with other Deputies of the House in appealing to the Minister to extend to the farmers a price which will induce them to grow the wheat which is so badly needed in present circumstances. I appeal to him also to bear in mind the fact that the farmers of this country, and particularly the southern farmers, suffered greatly last year from the wheat midge with the result that the return per acre was much lower than it should have been and that, consequently, they will need a price inducement this year to produce the food which is so urgently required.

Mr. Lemass

The difficulties and complaints of the provincial bakers have recently been brought to my attention by deputations which expressed them to officers of my Department. The complaints of these provincial bakers are more apparent than real. The provincial baker can get all the flour he requires to sell all the bread for which he can get customers within the rationing scheme. If a baker is losing trade, it is because his customers prefer some other bread to his.

Mr. Sweetman

No.

Mr. Lemass

Yes—and there is no doubt that if rationing were abolished, and Government control of flour deliveries removed so that normal prewar competition could develop amongst bakeries again, the position of the provincial baker would be worse than it is now. He is protected, to some extent; by the existence of rationing— by the obligation on all bakers to conform to the requirements of the rationing scheme. If that ended, and if the competition were restored, the position of the small provincial baker, vis-à-vis the better-equipped and larger city bakery, would be much weaker. If he is losing trade now, it is because his customers prefer to buy bread from the city baker rather than his bread. His complaint is that the city baker is in a position to supply bread because of the operation of the rationing scheme in the city area. Nevertheless, remember that I said if controls are removed the city baker can deliver more bread than he is selling now in the provincial baker's area, and it has to be assumed, having regard to the transfer of trade which has taken place, that he would get sale for it.

I do not think we should operate the rationing scheme solely to preserve the provincial baker from competition. That is, in fact, what they have in mind—that this scheme should be so administered that nobody could sell bread in their area so long as they are producing less than their maximum. Certainly the rationing scheme does not operate with absolute fairness; it never could. One of the arguments for getting rid of bread rationing is that very fact. I do not think we can remedy the situation, however, by cutting down the ration in Dublin and increasing it in the country. It may be that some people in Dublin can buy more bread under the rationing scheme than they require. But it is also true that there are many people in Dublin who are buying up to the full amount of the ration and would buy more if they were permitted to do so.

I am concerned primarily with meeting the needs of the rural consumer rather than with the effect of the regulation upon traders. May I remind the House that the operation of the harvest rationing scheme was considerably extended by my Order last year; the additional rations being made available over a longer period? I would not like to hold out any immediate prospect of relieving the position of the provincial bakers by increasing the ration generally. As the House is learning now, the subsidy upon flour and bread is costing the taxpayer £7,650,000. Any increase in the ration will increase the cost of the subsidy and an increase would not be worth while making unless it was a substantial one in which case the increased cost to the Exchequer would be substantial also.

Mr. Davin

Is the Minister deliberately saying, and can the provincial bakers be told, that they can get whatever flour they require to supply the local needs?

Mr. Lemass

All the flour they require to supply the full ration of every customer they can get.

Mr. Sweetman

Is the Minister not aware that what is really happening is that the rural bakery can get the flour to fulfil its rationed customers' requirements but the baker that goes down from the city not merely has that amount of flour to sell in the country but he has more than that; that he can sell more bread from the ration and that the reason these customers are leaving the provincial bakery and going to the city bakery is because the provincial bakery is tied to the ration and the city bakeries are not—they can get an excess?

Mr. Lemass

If any Deputy can produce evidence of persistent default with regard to rationing requirements by any baker, he will be prosecuted. I have no evidence that city bakers are selling bread except against rationed documents. The complaint of the provincial bakers is that the city bakers have bread to sell because of reduced sales in the city area, but they cannot legally sell bread to anybody except that person prefers to take their bread as against the local bread.

Mr. Sweetman

Is the city bakeries' obligation under the Supplies and Services Order not a global obligation?

Mr. Lemass

He cannot sell bread except against ration documents.

Mr. Sweetman

He gives in a global surrender and that enables him to sell more bread in the country than the provincial bakeries.

Mr. Davin

He is a miller baker.

Mr. Lemass

He can buy flour against the number of registered customers some of whom will not take the full ration. Therefore he can extend his trade but only if public support enables him to extend his trade. My point is that the complaint of the provincial baker is that he is losing trade to competitors whose bread the public seem to prefer.

Mr. Davin

No.

Mr. Lemass

If anybody shows me that some baker persistently sells bread outside the ration regulations, giving people more than the rations, then that baker is committing an offence and will be prosecuted. May I ask that that statement will not be applied too literally? There was always under the rationing scheme a certain amount of elasticity and, in fact, no bread rationing scheme could be operated unless you recognise the need for it. But the position of the provincial baker cannot be improved by anything I can do. The only way for him to get more sale for his bread is to produce the kind of bread that the public in his area wants to buy.

Mr. Sweetman

If the provincial baker was able to sell the same amount of bread to customers in his provincial area as the city baker can sell in that area because the city baker can bring it out of the city when it is not required, then there would be no question of quality in that area.

Mr. Lemass

He can extend his trade without limit provided he does not sell to any customer more than the rationed quantity of bread.

Mr. Sweetman

He has not any more than the rationed quantity.

Mr. Lemass

He could increase the number of his customers.

Mr. Sweetman

I do not think the Minister is as innocent as he pretends.

Mr. Lemass

Going around the country I have received representations from provincial bakers, not only directed against the city bakers, but against other provincial bakers who are invading other areas and drawing customers away from existing bakers. Might I again remind Deputies that, so far as the provincial baker is concerned, he is to some extent protected by the existence of the rationing regulations, a protection which would be withdrawn if rationing ceased? A number of provincial bakers admitted that they realised they would be up against more intense competition if rationing ended.

Mr. McQuillan

Does the Minister say that the city bakers produce a superior type of bread to that produced by the country bakers?

Mr. Lemass

I am not saying that. I say that some customers in the country think they do.

Mr. D.J. O'Sullivan

They do not.

Mr. Lemass

There is no reason why a single individual in the country should take his ration document away from the local baker and give it to a city baker except that he prefers the city baker's bread.

Mr. Hickey

That raises a very important question. It means that the country bakers are not getting the same quality of flour.

Mr. Lemass

That is not true of all provincial bakers. Some of the best bakers in Ireland are provincial bakers and they are also extending their trade. We could not deal with the situation, as has been suggested, by cutting down the city ration. That might be all right for me and persons in sedentary occupations but it would be a real hardship on dock workers and other heavy mannual workers who want to buy all the bread they can get.

Mr. D.J. O'Sullivan

I should like to know if the imported wheat and the home-grown wheat is distributed evenly in the country as a whole or whether there is a concentration of either of them in Dublin?

Mr. Lemass

So far as I know, there is a standard grist prepared by Grain Importers and every miller gets the same quality and can produce the same quality of flour. As far as the baker is concerned, he can buy flour from any miller who will supply him.

Mr. Davin

Do you deny that it is the policy to give a monopoly to the miller-baker?

Mr. Lemass

I do deny that. Deputy Hickey referred to the Lavery Committee on the flour-milling industry. He will remember that when that report was published it was accompanied by a mimeographed document from the Minister for Agriculture indicating that the Government of the day had accepted and put into effect some recommendations, had rejected other recommendations and had some few under consideration. The Deputy referred particularly to the question of depreciation. One of the observations made by the Lavery Committee was that in the arrangements for the remuneration of the milling industry there is allowed depreciation at a higher rate than the Revenue Commissioners allow them for tax purposes. I do not think there is much in that. It is true that in every business at the present time the tax-free allowance for depreciation under the Revenue Commissioners' administration is less than any prudent business management would regard as necessary to set aside for that purpose. In so far as the cost of the replacement of equipment now is much greater than its original cost, any firm would find it prudent to make an appropriation from profits for the purpose of depreciation considerably above what the Revenue Commissioners would allow for tax purposes.

Mr. Hickey

They make a certain allowance for that in their report.

Mr. Lemass

Therefore, the only difference between the present arrangement and that suggested by the Lavery Commission would be to alter the division of the total amount allowed to the milling industry between gross profits and depreciation. That, in my opinion, would not alter the total amount at all, so that if we were to cut the depreciation allowance, as calculated by the Revenue Commissioners, we would then have to increase the total remuneration of the industry, thereby enabling it to appropriate to depreciation reserves what would be regarded as a reasonable allowance.

Mr. Hickey

I think it requires deeper thought than that.

Mr. Lemass

I do not think that Deputy Cogan need have any anxiety about the investigation of the costs and profits arising out of the handling of wheat and flour because, in effect, these costs are met and these profits are provided by the taxpayer out of the Exchequer. The Deputy can be quite certain of this, that they are being continuously investigated, and that any variations in cost, which appear to justify a revision of the present arrangement for the remuneration of the industry, are immediately seized upon, generally with the idea of saving the Exchequer unnecessary expenditure.

On the question of wheat prices, I hope I have not misled the Dáil. The present price fixed for Irish wheat is higher than world price. It certainly is far higher than that received by the farmers whose wheat we import. The price guaranteed to the Irish farmer on the farm should not be compared with the price of foreign wheat delivered to the mills here. It is quite obvious, when one has regard to transport and handling charges, that the present price received by the Irish farmer for wheat is much above the price received by the Canadian or Australian farmer.

Mr. Sweetman

Do not embarrass your colleague.

Minister for Agriculture (Mr. Walsh)

I told you that before.

Mr. Lemass

What the price of imported wheat this year is going to be I do not know. A new wheat agreement will have to be negotiated when the present agreement expires, and it is anybody's guess whether that agreement will involve us in a higher price for wheat or not. Against that, there is evidence that shipping freights are going to fall, and that, consequently, the landed price of wheat may be reduced on that account. I think we have got to watch the position carefully. The problem relating to wheat is that the total world supply this year looks like being down very much, and if we are unable to expand our own production we may not be able to get more wheat from abroad. We may, in fact, find ourselves in the position in which we will not get as much wheat from abroad as we are getting at present. Not merely is the total supply this year being contracted by reduced production in Australia and a severe drought in the Argentine, but, of course, there are far more people looking for wheat now than there were when the original agreement was made. Therefore, the position looks very much like this, that if we do not get an increase in the acreage under wheat here this year we may have to cut the ration, and that would be a very undesirable situation to have to face.

Mr. Davin

Wheat versus barley is the real problem here.

Mr. Sweetman

Give the price and you will get it.

Mr. Lemass

That is a matter of opinion on which I would not like to comment now. I forgot to mention that this Supplementary Estimate provides not merely the additional sum required for flour and bread subsidies, but that it also contains a token Vote for An Foras Tionscal to cover its immediate expenses.

Mr. Davin

Will the Minister say why the flour-milling section was taken from his colleague the Minister for Agriculture and brought under his own umbrella?

Mr. Lemass

Because, for some amazing reason, it was transferred from the Department of Industry and Commerce to the Department of Agriculture in part only. When I took office again as Minister there was a bakery strike in Limerick. Certain suggestions came to me from Limerick that more flour to certain bakeries would ease the situation. Not even my officials could tell me, as regards questions which arose for decision, whether they were the concern of my Department or the Department of Agriculture. The whole thing was so higgledy-piggledy that it was obvious that the administration of the flour and bread subsidies, and their distribution, should be under one Department. I said to my colleague, the Minister for Agriculture, "you take it all", and he said to me, "no, you should take it all", and he won.

Mr. Davin

Is it a fact that the Department of Agriculture favours nationalising the flour-milling industry and that your Department does not?

Question put and agreed to.

Supplementary Estimates reported and agreed to.