asked the Minister for Industry and Commerce whether it is correct that flour millers have been directed to cease supplying 80 per cent. extraction flour to biscuit manufacturers and that such manufacturers have been notified that flour supplied to them for export and home use will be of 72 per cent. extraction; and, if so, if he will state (a) the reason for these directions, (b) the increase in the price of flour consequent on the reduction of the extraction rate, and (c) the anticipated effect on export sales.
Ceisteanna—Questions. Oral Answers. - Flour Supplies to Biscuit Manufacturers.
Mr. Lemass
As was stated in an announcement issued in the public Press on Saturday last, an Order has been made under the Supplies and Services Act, which prohibits the use of subsidised flour in the manufacture of biscuits or flour confectionery.
Biscuit and flour confectionery manufacturers have been advised that for the manufacture of biscuits and confectionery for home and foreign markets a flour made at an extraction rate of 72 per cent. will be provided.
The purpose behind this Order is to give some relief to the general taxpayer from the heavy burden thrown on him by the subsidisation of flour prices.
The reduction in the extraction rate from 80 per cent. to 72 per cent. and other factors will add about 9/8 a sack to the price of biscuit flour.
I do not expect that the new Order will have any effect on export sales as arrangements are being made to ensure, by means of a system of rebates, that exporters will obtain their requirements of flour on terms of equality with their competitors abroad.
Mr. Lemass
Will the Minister state how the reduction in the rate of extraction from 80 per cent. to 72 per cent. relieves the taxpayers?
A scheme of this kind must be made effective and if you permit a bakery or a mill to deal in two or three varieties of flour at the one time, there are obvious difficulties in enforcing compliance with the decision which has now been arrived at. It is to ensure that there is no possibility of an irregular admixture of flours or a substitution of one grade of flour for another that the 72 per cent. extraction has been decided upon.
Mr. Lemass
The reduction in the extraction is for the purpose of enforcing the withdrawal of subsidy rather than providing a benefit for the taxpayer?
It is all part of the one problem. Having decided to relieve the taxpayer of a subsidy of £450,000, the scheme has then to be made effective. It cannot be made effective if a person producing biscuits or confectionery is permitted to have a few varieties of flour in the premises at the one time. It is necessary to confine the biscuit and confectionery manufacturers to the use of 72 per cent. flour so as to be able to enforce the decision which has now been arrived at and, frankly, to avoid the possibility of an admixture of flour to the disadvantage of the taxpayer.
Mr. Lemass
There are two further questions which the Minister might perhaps answer. Can he say how much of the increase in the price of flour to confectionery manufacturers is attributable to the withdrawal of subsidy and how much to the reduction of the extraction rate? Secondly, can he say to what extent the manufacturers of confectionery and biscuits for export will get flour at the same price as that at which they got it before the Budget?
The removal of the subsidy from biscuit flour will increase the cost of the sack of flour by 54/1 and the reduction in the rate of extraction from 80 per cent. to 72 per cent. will increase the price of the sack of that new type of 72 per cent. extraction flour by 9/8. So far as the exporters of biscuits and confectionery are concerned, we will undertake to make available to them flour of 72 per cent. extraction at the rate at which that flour is being made available in the bakeries or mills of their competitors elsewhere.
Mr. Lemass
I understand then that the price of flour to manufacturers of confectionery and biscuits for export will be higher than it was by 9/8 per sack.
If the Deputy understands that, he is wrong. Let me take an example. If there is a person getting flour for the manufacture of biscuits or confectionery for export, he will get that flour made available to him at the same price, while he bakes cakes or biscuits, as the person with whom he is competing in the country to which the biscuits or cakes are exported.
Mr. Lemass
Will the Minister say how much more he will have to pay for it than he would have had to pay for it a month ago?
He is dealing in a different class of flour now.
Mr. Lemass
Might I remind the Minister that he stated during the Budget debate that, so far as exporters are concerned, they would continue to get flour at the same price? I gather that there has been a change of mind and that they are going to be charged more for flour—admittedly, of different extraction. How much more will they have to pay?
When that matter was discussed on the Budget, the Minister for Finance said that a scheme was being worked out. The scheme that has been worked out will enable the Irish exporter of biscuits and confectionery to get his flour at the same price as his competitor in another country gets that flour and that puts him in precisely the same position as the person producing biscuits or confectionery for sale on the export market.
Mr. Lemass
Am I correct in my assumption that he will still have to pay more for the flour and, if so, how much?
I have explained that he is going to use 72 per cent. extraction flour in future, instead of 80 per cent. flour.
Mr. Lemass
Assuming that he wanted 80 per cent. flour, could he get it?
I have already answered that question in replying to the Deputy's earlier supplementary.
Mr. Lemass
Would the Minister reply to that part of my question in which I asked if he will state his expectation of the effect of this decision on the export trade? Is it not likely that the export trade in these commodities will be very seriously affected?
No, I do not think so, because the Irish biscuit or cake exporter is now going to get his flour as cheap as the manufacturer of cakes or biscuits competing in the market in which the Irish exporter hopes to sell his products.
Mr. Lemass
He got it at a lesser price before and he built up the trade on that basis.
For a different flour.