Dáil Éireann debate -
Thursday, 18 Feb 1954

Vol. 144 No. 6

Committee on Finance. - Adjournment Debate — Price of Malting Barley.

Mr. Corry

To-day I asked the Minister for Industry and Commerce if he would state whether, in view of the reduction in the price of malting barley from 84/- per barrel to 63/9 per barrel, which represents 1d. per pint of stout the consumers of stout and porter may expect to receive the benefit of this reduction. The Minister replied:—

"I am informed that the price paid for malting barley of the 1953 crop was 66/9 per barrel delivered. The price of barley is only one of the factors concerned and there is no prospect of a reduction in the price of intoxicating liquor by reason only of the reduction in the price of barley."

We farmers have been accustomed for a long time to be told by all Governments to use up-to-date methods; to till the land more efficiently, to increase production and to reduce the cost of production so as to reduce prices. If we succeed in reducing the cost of production, we expect that that reduction will be passed on to the consumer. The history of this barley question goes back a considerable number of years. I do not intend to go back very far in reviewing it but I would say that in 1950-51, owing to the fact that the representatives of barley growers put a clause in their agreement binding the brewers to pay them 2/6 per barrel over the average price paid for malting barley in Britain, we got a pretty considerable increase. In 1950 the price of barley went up from 57/6 to 84/-, being an increase of 26/6 per barrel. In December, 1951, the brewers went to the Advisory Body, which they were entitled to do, and got permission to increase the price of stout by 1d. per pint to pay them for the increase in the price of barley.

Changes have taken place since then. The price of barley fell gradually. It fell to 70/-, from that, not to 66/9, but to 55/6, and for the coming year it is down to 62/6, on the same basis as the 84/-.

Taking an average of 1,000,000 barrels of barley, which is the amount bought for malting purposes in this country, the brewers received, after getting their price on the basis of 84/-, £700,000. In the year before last, on the price paid to farmers, they got £925,000 more and in the coming year they will get £1,775,000 extra. That represents over £2,500,000 which in my opinion should be passed on to the consumer. That is only just. There is no use in the producer reducing the cost of production if that reduction is not passed on to the consumer. There is no use in our giving a present to the manufacturer of a couple of million pounds.

In 1952 the profits of one brewer were £5,142,000. In 1953 that profit went up to £5,681,000—an increase of close on £500,000. Should that £500,000 go back to the man who drinks the pint or should it not? I consider that we are entitled to demand that it should.

I suggest that the Minister should get the same prices control gentlemen who gave the brewers the penny to take it back again and let that penny be passed on to the consumer. We would probably gain from that reduction because there would be an increased market for barley. It is evident that in the coming year there will be an increase in demand of 15 to 18 per cent. Farmers have received some pretty hard knocks from those gentlemen, the users of malting and distilling barley in this country. We had nobody to help us. In the case of distillers, the barley that they buy this year will not be sold for at least seven years, in the form of seven-year-old whiskey. Last year those gentlemen, out of what I call vindictiveness, reduced the contract acreage by close on 50 per cent. That was in respect of barley that they would not be selling for seven or eight years. That is the sort of treatment farmers receive from big business in this country. I suggest to the Minister that the case should be put before the Prices Advisory Body. They are the people to judge on the figures I have given here. The figures show that in 1952 the reduction in the price of barley meant that the growers and maltsters got £700,000 extra which was not passed on to the consumer; that last year they had £925,000 extra which was not passed on to the consumer either. Those two alone, put together — we cannot count what they are going to get this year—come to £1,500,000. One cwt. of barley produces a standard barrel of beer, which is 36 gallons. On the agreement made this year for 52/6 as compared with 84/- there is just a clear 1d. a pint. I suggest that should be passed on. They passed on nothing for the past two years. They have got two years' profit. Let them give it to the consumer of beer and relieve the burden. If we farmers see that the State is doing its duty in passing on to the consumer any reduction we can give in the cost of raw materials, it will encourage farmers to produce more on those grounds.

That is the case. It is with reluctance I come in to raise anything on an Adjournment debate, but this case is so clear that it deserves the Minister's attention. On the advice of his Prices Advisory Body, he allowed these people to increase the price of beer, but now when the price of barley on which they made their case, is reduced, the price of beer should be reduced also. If we find, on the other hand, that every reduction we succeed in giving on the price of the raw materials is not going to be passed on but is going to be used in some other manner, we farmers will know where we stand.

Minister for Industry and Commerce (Mr. Lemass)

I do not propose to say very much about this, because any information I have on the production cost of beer or on the way it is influenced by the price of barley, has been given to me in my official capacity in confidence and I am not at liberty to disclose it. When the brewers applied for an increase in the price of beer in 1951, I decided that the Prices Advisory Body should be asked to hold a public inquiry into the application. The Prices Advisory Body declined to do so, for good reasons, including the reasons why I am not at liberty to discuss the matter in any detail here. I may say, however, that, from the information available to me, the conclusions reached by Deputy Corry as to the effect of variations in the price of barley upon manufacturing costs of beer are completely inaccurate. It is well known that other costs are involved. Materials other than barley are used in the production of beer. There are manufacturing costs, which vary from time to time, as do also distribution costs, and all these have to be taken into account in determining what a reasonable price is.

Deputy Corry quoted here profit figures for Messrs. Guinness. I do not know whether he himself thinks, or whether he merely wants the Dáil to believe, that the figures he quoted represent the profits made by Messrs. Guinness by the sale of beer in this country. They do not. The figures he quoted represent the profits earned by Messrs. Guinness in trade all over the world, including their trade in Britain, America and everywhere else. They give no indication whatever of the results of their activities in this country.

There is another factor, and it is an important one. Even though, upon the basis of published profits, it might conceivably be possible for that firm to reduce the price of beer, it is certain that if they did so every other brewery in the country would close down. It would not be possible to have the price of one class of beer reduced and the prices of other beers maintained at their present level. They would not be sold. Everyone knows that the position of other breweries is quite precarious — so precarious that the Government in 1952 had to make special tax concessions to keep them in existence. I do not know if Deputy Corry would regard it as in the interest of Irish farmers that all other sources of supply of beer, and consequently those other outlets for barley, should be eliminated, but that would be the result of altering the present price. These other breweries are small in relation to Messrs. Guinness, but nevertheless they are important industries in various parts of the country. There are two breweries in Cork, of which Deputy Corry is aware, there is an important brewery in Kilkenny and another in Drogheda, and several smaller ones throughout the country. The Government decided it was good policy that these should be kept in existence, to the extent even of granting tax concessions for the purpose. It would be foolish now to force a reduction in the price of beer — which an alteration in cost would not justify — if the only effect we got were to close down every brewery in the country except one.

The Deputy may be quite certain of this, that when there are reductions in total manufacturing and distribution costs which would justify a reduction in the price of beer, that reduction will be effected. The information available to me satisfies me completely that these reductions have not yet taken place.

The Dáil adjourned at 10.50 p.m. until 3 p.m. on Wednesday, 24th February, 1954.