I should like to refer to the report of the committee on the Glenamoy grass meal project. Two years ago this committee were given the task of making inquiries. Their terms of reference included the following:—
Whether grass meal can be produced competitively from grass grown on reclaimed bog land without a continuing subsidy;
Whether a market over and above that catered for, or likely to be catered for, by existing grass meal producers would be available for the output of such project;
If the revival of the project is considered to be practicable on an economic basis.
I submit that, on those grounds, the project cannot possibly stand. We all subscribe to the sentiments voiced by Deputy Calleary about the necessity for providing employment in Mayo, and in many other parts of the country as well, including my own constituency; but, if we are to approach his project on the ground that it is to be an economic proposition, catering for an existing or potential market, I do not see how it can possibly succeed.
This committee, which accepted its terms of reference two years ago as including the establishment of the grass meal project on an economic basis without a continuing subsidy, finished by including in their recommendations a recommendation that an independent statutory company should be established to operate the project and that that company should be provided with a sum not exceeding £165,000 by way of a non-repayable free grant to defray capital expenses and a further sum of £30,000 in the form of share capital for working capital—that is £195,000, or almost £200,000 altogether.
The Minister, I think I am correct in saying, proposes to finance this by a somewhat different method. He is not giving the £165,000 by way of non-repayable grant. He is making up to £200,000 available by way of share capital, by taking up that amount of shares, if necessary, in the company. I think that is a difference without a distinction. It means the company will start with accommodation up to £200,000. They will not be called upon to pay a dividend or interest, I assume. Therefore, to all intents and purposes, they will have a continuing subsidy of at least £10,000 or £12,000 a year, if one accepts the normal bank interest rates for this substantial sum.
If the plan is to produce 1,000 tons of grass meal per year that will be the equivalent of a subsidy of £10 or £12 per ton. If the output is 2,000 tons that will be the equivalent of a subsidy of £5 or £6 per ton. On that basis, I think the company could possibly carry on although, for reasons which I propose to mention shortly, I think, even with that very substantial assistance, the project could not hope to succeed or establish itself on a permanent basis, with conditions as I see them.
This whole business, as the committee pointed out in their report, began by the establishment of the original grass meal board under the Grass Meal Production Act, 1953, which set up Min-Fheir Teo., and gave it a share capital of £100,000 with an opportunity to get grants, as mentioned in the report, of £165,000. As Deputy Calleary mentioned, when the inter-Party Government came into office in 1954, they set up an inter-Departmental committee which issued an interim report in October, 1954, advising the suspension of development and the continuation of bog reclamation to maintain the existing labour force.
This inter-Departmental committee issued a final report in February 1955 recommending the abandonment of the grass meal project, that part of the land at Glenamoy should be acquired by the Department of Agriculture for experimental purposes and that the remainder should be acquired by the Forestry Department of the Department of Lands for afforestation. That was the development which was proceeding and which, I presume, is still proceeding in this area.
Up to 1958, again according to the Committee's Report, some 600 acres were under various experiments such as grazing, planting of shelter belts, etc. and some 480 acres had been fenced and planted by the Department of Lands under the afforestation project, so that some work, evidently, has been done there and has given good local employment, and it appears to be the type of work that could reasonably be regarded as giving permanent employment.
There are two points on which I should like particularly to comment. One has already been mentioned by Deputy Dillon, that is, the question of the market for dried grass meal, which is covered extensively in the Committee's Report on pages 30 to 32, and certainly the Committee have given a very factual and very fair picture of the actual and potential market.
To sum up the position briefly, as I see it, the present grass meal manufacturers, of whom there are eight or ten in the country, can, without addition to their present plant, manufacture the entire current requirements and likely future requirements of the Twenty-Six Counties as regards dried grass meal. It is estimated that the requirements of the Twenty-Six Counties are in the nature of 7,000 to 8,000 tons of grass meal per year and these plants are in a position to manufacture some 11,000 tons of dried grass meal. That means, in effect, that they must of necessity depend on an export market to get rid of the current surplus production and, up to date, that market has been provided by the Six Counties, which has taken from 2,000 to 3,000 tons of dried grass meal annually over the past couple of years. If anything should happen to that market it would mean that there would be surplus production in the Twenty-Six Counties of some 3,000 tons of dried grass meal. I do not think it is impossible to visualise that something might happen to that market in the Six Counties.
At the moment there are about 1,000 tons of dried grass meal manufactured each year in the Six Counties by local manufacturers. They import about 3,000 tons, as I have stated, from the Twenty-Six Counties and the balance is made up by imports, mainly from Great Britain. The expansion that has taken place in the Twenty-Six Counties drying plant has been largely encouraged by the fact that this market existed in the Six Counties but if another producer comes into being within the next few years with a capacity, as has been suggested in this report, of 2,000 to 3,000 tons, it is sensible to visualise that a very serious situation could arise for the existing producers if a surplus of several thousand tons of dried grass meal were thrown on the market.
In England, the State encouraged the manufacture of dried grass meal and when the slump came some few years ago, when the demand for dried grass meal dropped from about 250,000 tons a year to about half that amount, the State-owned dried grass meal factories dumped their production on the market, causing considerable distress to the privately-owned plants and putting some of them out of production.
The fact that the English manufacturer has not taken a more active interest in the Six County market is due to several reasons, again mentioned in the Report. One is the fact that, generally, the demand for dried grass meal from the manufacturers of feeding stuffs has fallen substantially but a further consideration, also mentioned in the Report, is that for the past two or three years the seasons for growing grass for the dried grass meal plants have been unsatisfactory. It is reasonable to assume that they will not continue to have unsatisfactory weather in England and that, sooner or later, a substantial crop of grass for drying will be produced and that manufacturers in the Twenty-Six Counties can anticipate active competition with manufacturers in Great Britain for the Six Counties market.
In saying that, let me make my position quite clear. I am not afraid of competition and I am quite satisfied that the manufacturers down here, provided they are given a fair opportunity, can compete with their counterparts in Great Britain but the trouble is that they may not be given a fair opportunity and there may be restrictions put on them with regard to the export of their dried grass meal into the Six Counties.
Now I should like to consider some of the economics of this grass meal production, particularly with regard to the question of costs. Costs are referred to in the Committee's Report, again in great detail, which are certainly very interesting, on pages 22 to 28. The Committee refer to several costings which they received, some which they got from the previous inter-Departmental report, some they acquired from manufacturers both inside and outside the country, and some which they got from the Department of Agriculture.
The interesting thing about these figures is the variation between the different sets of costings. The costings given by the original company, Min-Fheir Teoranta, in 1954-55, were about £22 per ton. These have gone up until we get the figure of about £28 per ton, not including freight. I do not know what reason the members of the Committee had for stating so categorically that the drying of the grass meal grown at Glenamoy would approximate closely to that grown elsewhere. The existing dried grass meal producers had considerable experience in the early days of their operation and lost considerable sums of money before getting their plants on an economic basis. I think it is only fair to assume that any new plants starting off now will go through the same teething troubles. The project on Gowla Bog by the Irish Sugar Company also ran into considerable difficulties. We have proof that this grass meal project is a very difficult and highly technical business that only experience over a number of years can solve.
I wonder does anybody know whether the grass grown at Glenamoy can be dried and made into satisfactory dried grass meal. Grass grown on good mineral soils can be manufactured into high and medium grade dry grass meal but the Government now proposes to jump into a new project to manufacture dried grass from a raw material on which no previous tests have been made, as far as I am aware. Any manufacturer who wants to start a new type of industry will first of all make some experiments to find out if he is tackling a practical proposition. No suggestion appears to have been made, however, that this should be tackled on other than a substantial scale. Before proceeding to that degree of expenditure some tests should be made either by a pilot plant, some of which already exist in the country, or with the co-operation of some of the existing grass meal driers. Their co-operation should be sought to test the grass but not in a plant costing £25,000.
I cannot help feeling that before embarking on this project some experiments should be conducted at a smaller initial cost to the taxpayer. Why not try making the grass into silage for use for feeding in the winter? Considerable employment could be given if the present activities were extended. There would be much useful employment for farmers and others living in the area.
The question of the social value of this whole project cannot be overlooked. Although this was not one of the terms of reference of the Committee I notice that they have referred to it in their report. I do feel that a more permanent type of employment could be given by concentrating on existing projects for the growing of grass, for the drainage and maintenance of the bogs and that the question of going into the business of dried grass should be done in very slow stages. As I have already said, it is a highly technical industry and one in which we ought to go very slowly. Otherwise we will find that we shall spend a considerable amount of money, give employment to quite a number of men and then, in a few years, find that the Minister has to come back to the House to look for more money to keep the industry going because so many men are employed there.
That is an appeal that no Dáil could refuse but in the general interests of the taxpayer it would be far better if the whole project were considered at much greater length and in much greater detail. Personally, I do not feel that it will be an economic project. I feel that ultimately we shall be faced with a surplus on the market and that the existing privately-owned plants would either have to go out of business or not be able to pay their way. The Minister will agree that we do owe it to men who have put capital into an undertaking that we should leave them in business and not compete unfairly with them.
I am sorry to be critical of this project because I sympathise with the sentiments of Deputy Calleary which are my own sentiments as far as Limerick is concerned. Having regard to the sentiments expressed by the Taoiseach with regard to the necessity to become more efficient, to produce more and to set one another an example of hard work, I think it would be better if the Minister thought again about the whole project. I think it would be bad policy to start something that may not show a substantial return and that may not be permanent. It would be better not to start it at all.
