Agricultural Credit Bill, 1960—Second Stage.

I move that the Bill be now read a Second Time. This Bill is an earnest of the Government's intention, as stated in the Programme for Economic Expansion, to ensure that the development of agriculture will not be hampered by lack of capital. It follows similar action already taken in the case of capital for industry.

The subject of credit for agriculture has been under close examination for some time past. This examination has been greatly assisted by the survey of agricultural credit in Ireland made by Mr. F. W. Gilmore, Deputy Governor of the U.S.A. Farm Credit Administration, which has been presented to the Dáil. At this point I wish to express the Government's appreciation and thanks to Mr. Gilmore for his very valuable contribution. His task was not an easy one but he approached it with great energy and determination and completed his report on a complex subject in a matter of a few months.

The modifications of the law which the Government consider desirable as a result of the examination of Mr. Gilmore's survey are contained in the Bill now before the House. The various changes proposed are summarised in the explanatory memorandum which has been circulated with the Bill for the convenience of Deputies.

The Government's aim is to enable the Agricultural Credit Corporation to play a leading part in financing the development of agriculture and to create conditions in which arrangements can be worked out for participation by farmers in the ownership, and ultimately in the control, of the Corporation. The Government accept that the Corporation must have adequate financial resources and be free to lend money for all agricultural purposes. While it must continue to operate as a sound commercial organisation, it should be placed in a position to undertake such lending and other investments as are clearly in the national interest, even though at times, the degree of risk may be higher than is normal in ordinary banking operations. On the other hand, all unnecessary hindrance to prudent borrowing by farmers from the Corporation must be removed.

The present authorised capital of the Corporation is £300,000 which is all issued and is held by the Minister for Finance except for a few shares held by his nominees. The Corporation has for some years past been paying a dividend at the rate of 4½ per cent. per annum. The Bill provides for an increase of the authorised capital to a maximum of £2,000,000. As the magnitude of the increase indicates, the Government have in mind a greatly increased future scale of activity for the Corporation. Such increased activity will entail heavy investment of capital. There is no doubt that increased investment by farmers in their land and buildings, in equipment and stock, is a pre-requisite for expanded production at lower unit cost. The farmer's capacity to invest depends on the grant and credit facilities available to him in addition to his savings.

The availability of funds in the form of share capital will provide greater flexibility for the Corporation in dealing with the increasing demands on it for credit. While it is expected that a very big part of these demands will come from the individual enterprising farmers who are the backbone of the agricultural industry, there will also undoubtedly be an increasing demand by co-operative and corporate enterprises undertaking investments in specialised forms of agricultural production and processing. These enterprises will not be operating against the individual farmer but can be used constructively to strengthen the individual farmer's position in production and marketing.

In countries with advanced economies, the pattern of agricultural production and distribution is undergoing profound changes involving new techniques and processes and integrated forms of development requiring the investment of large sums designed to give vast increases in production and productivity. If we are to expand, or indeed even maintain, our sales to export markets we must be in a position to meet the challenge presented by these developments. It is the Government's intention that we will not fail to do so for lack of reasonable credit facilities.

Some agricultural co-operative societies are, of course, already engaged in, or are proposing to engage in, specialised or integrated forms of agricultural production involving close co-operation with farmers in their areas. These co-operatives are setting a progressive example and I hope that it will not be long before many other co-operatives follow this example in ways best suited to local farming needs and prospects. There is a vital need for development of the co-operative movement in this way throughout the country, particularly in the interest of smaller farmers who, such is the need for heavy investment in farming under modern conditions, may find it very difficult, if not altogether impossible, to prosper without the help and guidance of the co-operatives.

For their part, the Government are now taking steps to ensure that the Agricultural Credit Corporation will have sufficient funds to enable it to consider applications from co-operatives for credit for all soundly based projects which cannot be financed from other sources. I may add that the Corporation is itself considering what special scheme or schemes it can introduce to facilitate and stimulate development by the co-operatives in the desired direction.

The Corporation will not be expected to pay a greater dividend on share capital provided from the Exchequer than it is in a position to pay when it has met its various obligations, including provisions for reserves and for the remuneration of any special credit officers who may be appointed to the staff. This will meet the recommendation made by Mr. Gilmore that the Corporation should be enabled to employ credit officers so as to improve its services to farmers. The extra resources now being provided should enable the Corporation to invest in, or lend to agricultural enterprises which, while profit earning eventually, may not prove remunerative for some time.

Under the existing legislation shares of the Corporation may be held by the Minister for Finance only, except that the directors may hold qualification shares and other nominees of the Minister may hold one share each for the purpose of complying with the requirements of the Companies Acts. The Bill empowers the Corporation to issue shares or stock to persons other than the Minister for Finance but the Minister's consent is necessary so long as he holds not less than half the issued capital. The Minister is also being given a general power to purchase and sell shares of the Corporation. These powers in addition to the increase in the authorised capital which is being provided for will enable arrangements to be made for the purchase of shares by farmers when it becomes opportune to provide for this.

However, as is proper for an institution which is primarily of a banking nature, most of the Corporation's capital will continue to be raised by borrowing. At present the borrowing powers are restricted in form as well as in amount. It is proposed to confer power to borrow money in any way the Board thinks fit and to raise the effective borrowing limit of £8.3 million to £10 million. Certain guarantee powers are available to the Minister for Finance under the existing Acts to guarantee borrowing by the Corporation but they are too limited in form. Provision is, therefore, being made to enable the Minister to guarantee the Corporation's borrowing and to make direct advances from the Central Fund to the Corporation. The total of such guarantees, advances and any other borrowings is not to exceed the figure of £10 million already mentioned. Provision is also being made for the guarantee of the Corporation in approved cases against losses on agricultural credit schemes subject to a maximum of £5 million at any one time. The new powers should facilitate greatly the financing and operation of the Corporation.

The Corporation has hitherto been somewhat hampered in its lending activities by certain restrictions which are not appropriate to present day conditions. These are being rectified in the Bill. The principal objects and powers of the Corporation are being re-enacted in more general form and are being widened in certain respects. Under the powers now proposed the Corporation will be able to lend or advance money or to guarantee credit for any purpose which the Board consider likely to increase the productivity of or be otherwise of benefit to agriculture. The definition of the expression agriculture is being widened. In addition to covering all the usual farm operations, it will also cover such activities as horticulture, tree planting, fish farming and the marketing, processing or completion for sale of any farm produce. The existing limit of £10,000 on loans other than to co-operative societies is being abolished and the Corporation is being explicitly empowered to issue and accept bills of exchange and to engage in hire-purchase arrangements.

The Corporation will also be able to take up shares and, if necessary, to sponsor special projects and companies for the benefit of agriculture. It is hoped that such activities and the further development of co-operatives will be of particular assistance and benefit to farmers in meeting the challenge of modern conditions in agricultural production and marketing and will result in increased exports of agricultural produce and goods derived from such produce. The Corporation will be able, and has indicated its intention, to draw on the specialised knowledge and experience of the Irish Agricultural Organisation Society and of the Department of Agriculture in the development of production, processing and marketing enterprises, and such consultation will ensure that these projects are in the interests of the individual farmer.

To simplify loan procedure the Corporation is being given power to make orders charging loans on land, subject to the consent of the owner, or of the occupier, if the loan is for work of permanent improvement. Loans so charged will be a personal liability of the owner or occupier of the land for the time being. Charging orders made by the Corporation may be varied with the consent of the owner or occupier. The Corporation will make no charge for its services in ordinary cases and neither stamp duty nor Land Registry fees will be payable. I am confident that this arrangement will facilitate farmers greatly in borrowing from the Corporation. It follows the system used in the administration of Gaeltacht housing loans and for the fertilisers scheme operated as part of the Land Project in which charging orders are made by the Office of Public Works and the Land Commission respectively.

As a further measure to assist in the provision of credit for farmers the system of chattel mortgages, that is mortgages on livestock, crops and agricultural equipment, is being extended to cover contractual liabilities generally. Up to now a chattel mortgage could be used as security for a direct loan only but under the new provisions it can be used, for example, to secure a guarantee given by or to the Corporation covering the supply of agricultural goods on credit to a farmer.

In the existing legislation loans charged in favour of the Corporation on registered land the title to which is marked "subject to equities" are given priority over the "equities" up to a limit of £400. There is a similar priority over the corresponding burdens in the case of unregistered land. The limit of £400 was fixed as far back as 1928 and the Gilmore Survey recommended that it be increased to £800. In view, however, of the decline in the value of money since 1928 an increase to £1,000 is justified. This figure, which is adopted in the Bill, is larger than the great majority of loans for which the Corporation is asked. The change will, therefore, simplify procedure in connection with most loan applications.

In order to enable the Board of the Corporation to be strengthened as necessary to cope with the increase in its activities, provision is being made to raise the maximum number of directors from five to seven. It will be possible to avail of this provision to give greater representation to farmer interests according as may be justified by investment by farmers in the Corporation. At present there are no effective arrangements in operation by which farmers or other members of the public can invest in the Corporation. Under its new powers the Corporation intends to launch a scheme of investment specially designed to appeal to farmers and I hope that there will be an enthusiastic response.

While it is not a matter that it is necessary to cover by legislation, I may add that the Corporation proposes to amend its Articles of Association to enable it to consider applications for loans on the security of land up to 66? per cent. of the market value of the land instead of 50 per cent. as at present. This will enable the Corporation to give larger credit than hitherto in worthwhile cases.

As regards the scale of the Corporation's activities, I may mention that the aggregate of loans issued since it commenced business in 1928 up to 1960 was £9.4 million, an average of £300,000 a year. The present level is of the order of £800,000 a year which approaches three times the average. This, however, is far from being adequate and I hope that as a result of the enactment of the Bill the Corporation will enter upon a new and expansive phase of activity, performing to the fullest extent its due function in the provision of credit for agricultural purposes.

Before I close, I should refer to the commercial banks who have, within their own province, been implementing progressive policies. They have introduced various special farm credit schemes and are improving their relations and contacts with farmers. These developments are very welcome as there is still vast scope for investment in better farming. The banks as well as the Agricultural Credit Corporation have their own role to play in making that investment possible and fruitful.

In recent years increasing attention is being paid by the agricultural advisory services to farm management problems, including the use of credit. Educational work in this sphere is also being undertaken through the agricultural classes organised by the County Committees of Agriculture and the Winter farm schools organised jointly by these Committees and the Vocational Education Committees. Increasing numbers of farmers are approaching the agricultural advisers for advice on farm management plans and are being helped to place their programmes on a sound financial basis. The farmers' organisations have also been doing good work in educating their members and farmers generally in the use of credit. It is essential that farmers should realise the importance of the wise use of credit in farming so that they will benefit from the improved arrangements which are now being provided.

I have outlined the main provisions and principles of the Bill. I am satisfied that it will provide improved, simpler and more effective machinery for the Agricultural Credit Corporation in channelling credit to farmers. I am sure that its principles and intentions will commend themselves to the House.

Before Deputy Sweetman opens the debate, I should like to point out a minor typographical error in page 9, lines 44 and 45. The lines should read as follows: "which moneys are lent or advanced, or a guarantee is given, by the Corporation is varied or amended under."

Excuse me, Sir, what is the number of the page?

Lines 44 and 45, page 9. The word "by" is misplaced. I am satisfied that no formal amendment is necessary and that the correction comes within the scope of Standing Order 101. The word "by" is misplaced.

It should be in line 45 instead of line 44.

I am accordingly, directing the Clerk of the Dáil to have the necessary change made in the next print.

The purpose of a Bill for the stimulation of credit for agriculture and the way in which it works out in practice can be two very different things. The Minister indicated in his opening statement a lot of what I might describe as high-sounding theory but talking of vast increases in production, having regard to some of the experience of the past, is to put it mildly a little fanciful.

My reference in that connection was to other countries.

If the Minister would not mind, he is a little hard to hear at times.

I am glad to hear that the Minister did not indulge in that fight of fancy anyway. The real trouble in relation to agricultural credit is to acclimatise, so to speak, our people to the advantages that wise use of credit can bring. It has taken a good many generations, naturally enough, to get farmers to realise that it is wise at times to avail of credit. In any country those engaged in agriculture are likely to be the most conservative in the community. Here, we have had over the years a very particular and a very special problem. Farmers know that if their grandfathers in their time used credit for the improvement of their holdings all it meant was that it brought an increase in rent. They can remember their fathers finding at the end of the first world war that those who had expanded were hit overnight by the collapse in the post-war period.

They can remember also the position that arose in the economic war when the more a man had the more he lost. Therefore, it is only in the last 20 years that the present generation of farmers have had any opportunity to consider expansion on a more rational basis. If, therefore, people who do not understand the problem are apt to criticise the Irish farmer for being too conservative they should look at history and see the reason that arose in generation after generation for that conservatism.

The whole purpose of credit for agriculture must be to increase production and to increase productivity. I am particularly shocked by the livestock enumeration for January of this year which was published the other day. The White Paper on Economic Expansion following the Grey Book on Economic Development was published in November, 1958, and on page 15 we find this paragraph:

The objective of policy will be to increase cow numbers progressively to at least 1,500,000 by 1964. The retention for breeding of an additional 50,000 heifers per annum would enable this objective to be attained without undue disturbance to the farming economy or to the export trade.

It goes on further to deal, properly so, with the difficulties that may be created from the necessity to eradicate bovine tuberculosis.

What is the position that we see? That was published in November, 1958, and the nearest figures statistically that we can get to that time are those compiled for January, 1959. As I said a moment ago, the position as it was in January this year was published about three weeks ago by the Central Statistics Office.

In January, 1959, there were 1,219,000 cows. This year there are 1,237,000—virtually no change at all. In January, 1959, there were 184,900 in-calf heifers. This year there are 190,800—virtually no change at all. The stagnation that there is in relation to our cattle population is something that must cause everyone to think very carefully.

I understand that the banks were operating a heifer scheme in the last couple of years. More credit to them for so doing but it does seem without question that the scheme did not produce much results because, in fact, in January, 1961, there were 25,900 fewer in-calf heifers than there were the year before, and the change in the year 1960 has gone entirely the wrong way. I think the Minister will agree with me when I say that I do not mind very much about the total cattle numbers in January each year; the total cattle numbers in June are the important figures to consider but in relation to milch cows and in-calf heifers they are of vital importance. Once the heifer has become a cow she is not going to be taken out of the herd except for sale, except for breeding somewhere else or to go to the cannery and unless the replacements of in-calf heifers are coming in year by year there is no hope and no prospect of building up our cattle population. Unless we can build up our cattle population in a satisfactory manner there is no hope of the attainment of a real sound basis of improvement for our agricultural economy.

What I want to ensure is that the system and the scheme of agricultural credit will really operate towards that end and will not fail, as one clearly sees there has been a failure in 1960, in that degree. The drop of some 17,000 in our breeding stock is a serious matter. It means, if the figures are correct, and I have no reason to challenge their accuracy, that we are bound to have fewer calves this year. The figure for calf mortality has, thank goodness, dropped very remarkably, largely due to the work Deputy Dillon did in the 1948 to 1951 period, to the groundwork that was laid then. However, even though it has dropped, it is self-evident to all of us, even to the person of the city, that there is no way of bringing up the cattle population except by increasing the number of cows by increasing the number of in-calf heifers.

The year 1960 was a disastrous one in that respect. The trend went violently the other way. The drop in in-calf heifers is 11.9 per cent. on previous years, according to the figures issued by the Central Statistics Office. As I have said, I do not pay a great deal of attention to the total cattle figures for January because June is a more significant month, but it is also noticeable that in this livestock enumeration that has been circulated the drop in sheep numbers has been quite substantial also. One would have thought there should have been an increase in sheep because of the unfortunate experience of farmers in relation to cattle prices last year.

No matter how advantageous may be the credit schemes or the technical arrangements the Minister may make in relation to agricultural credit, the more important thing is to convince the farmer that he will have reasonable stability of price. It is a fact many farmers who did borrow last year for livestock got a very bad burning, if they were unfortunate enough to sell their stock before Christmas. Once that happens in a parish to any one farmer, it acts as a deterrent to other farmers in the neighbourhood who are endeavouring to expand. Therefore, I would suggest to the Minister that stability in price is far more advantageous than anything that may be done by way of legal process or Acts in respect of agricultural credit.

I am glad to hear of certain changes the Minister has outlined but whether they will be successful or not depends entirely on their utilisation. It has long been a habit of certain people to provide very large figures either in Estimates or in Bills of this nature, because figures themselves sound grand, well knowing that there is little or no possibility of the theoretical permissive amounts being taken up or anywhere near taken up. I hope that the scheme which will presumably be brought out now by the Agricultural Credit Corporation in relation to hire purchase, in particular, will be one not merely that offers accommodation at a reasonable cost but that works in a comparatively simple way. The simplicity of the working of such a scheme is of even greater importance than the cost of the facilities, within reasonable limits.

I am not terribly happy that the extension of the limit up to which the Corporation can make an advance without title may not defeat itself. There is no doubt whatever that the advance that has been made by the Corporation will be of advantage but what I am afraid of is that the existence of as high a priority right of charge as £1,000 in favour of the Corporation may mean that in other cases banks who want to make accommodation available to their farmer clients will, for their own protection, have to insist on a rigorous title examination and put up the cost on persons seeking accommodation from banks.

The Minister will agree with me at once when I say that if one farmer out of five gets accommodation from the Corporation and the other four get accommodation from banks of the size of loan we are discussing, there is no benefit to the community as a whole if the one farmer who is getting accommodation from the Corporation is facilitated and pays less, while the other four have to pay more because of the necessity to protect the banks against this priority charging order to be made by the Corporation.

It is clear that a scheme or a system must be operated in such a way that there can be protection for the genuine charge that may be made in respect of the other four cases I have described, while properly providing that the Corporation can get over title difficulties in a much cheaper manner for the one borrower out of five who may approach them. I think the manner of working that is more an administrative matter than one for inscription in the Bill. I do want to stress that it is of the greatest importance that in making the job simpler and cheaper for the borrower from the Corporation, we must not, at the same time, make it dearer and more difficult for the person who prefers to get his accommodation, because it is far more temporary, from a bank or similar institution.

I do not know whether the Minister visualises, when he includes bills of exchange, that there will be any great promissory note business by the Agricultural Credit Corporation. A promissory note business depends more than anything on knowledge of the person concerned. It is very difficult to deal with that type of business by remote control from Dublin, utilising only the services of the Garda for character reports. In that type of business, there would be no question of the inspector the Corporation normally send in the larger case.

As I said at the beginning, the essential thing is to ensure that the agricultural credit that is necessary and desirable is channelled towards an increase in production and an increase in productivity. Administration is of far more value than legalistic phrases in the Bill, in the explanatory memorandum or even, with respect, in the Minister's opening statement. What we want to do is to ensure that this is not just an airy-fairy plan, or an airy-fairy announcement, but that the solid business of increasing production is made easier for the farmers as a whole. It is particularly obvious that, in relation to livestock, credit is essential if farmers are to be enabled to have more heifers in calf in their herds, and to build up their herds rather than sell them to meet their other annual commitments. It is certainly clear from the figures I quoted from the January, 1961, livestock enumeration that that has not happened up to date, but that on the contrary, the reverse has happened. I hope that in the years ahead we will see an improvement in that respect and a change from the declining trend we saw this year to a steady increase in our cattle population.

There are two or three comments I should like to make on the question of credit for the agricultural community. I subscribe to the views expressed by Deputy Sweetman that there are reasons for farmers being conservative and that those reasons belong to the past. We have now had experience of the Agricultural Credit Corporation and of the banks and since the Corporation was established many years ago, I am satisfied that there were two points lacking.

First, a large number of the farmers who sought credit from the Corporation had no plan, or did not plan exactly what they would do with the money when they had it. They were not trained and had no knowledge of what the financial transactions meant. When the interest charge was taken into account, I regret to say very often the farmers did not think of the repayment charge. When they were told they would get money at five per cent., lacking knowledge, many farmers thought that five per cent. was the sum total of what they had to pay.

When they found, as they were bound to find—but too late—that from their increased production, they had to provide for interest and sinking fund, the repayment of the loan —when that was taken over a period of five or seven years or whatever was the repayment period—they found that they had no cash for themselves. The total profit they made on the transaction was eaten up in the interest and sinking fund payments. I challenge contradiction on this: there is not a Deputy who does not know full well that many farmers who got a substantial loan were much worse off after getting the loan than they were before.

What is my object in citing that now? It is simply that I consider the Agricultural Credit Corporation must make money available at a much lower rate of interest. If they do not, there is no difference between them and the commercial banks. Farmers who could get a loan from the Agricultural Credit Corporation could get it from a bank. It is strange that a farmer who went into a bank to borrow had a keener appreciation of the responsibilities he was undertaking than had the farmer who was getting the loan from, believe it or not, the Government, not the Agricultural Credit Corporation. Many farmers took it that the Agricultural Credit Corporation was part of a Department of State.

If progress is to be made, the farmers must get credit and money must be made available at a lower rate of interest. That means a loss and I realise that, but it should be the responsibility of the Agricultural Credit Corporation, before they advance substantial sums to farmers for increased production, to make sure the farmers fully understand the responsibilities they are undertaking. The Corporation should make some calculation for the farmer, ask him what he is going to purchase, what profit he hopes to make and then, if the interest and sinking fund charges exceed the profit he calculates he will make, I think he should not get the loan because there is no provision for losses if he is dealing in livestock. If cattle die, the farmer is in a very bad position.

We all know that, owing to weather or other conditions, losses can be very substantial. I have no solution to the problem I visualise except that an advisory service should be included. A series of lectures should be given to the farmer on how to use credit to the best advantage.

I do not want to travel the ground Deputy Sweetman has travelled with regard to the fall in the number of in-calf heifers and cows. That matter is well established. It is disheartening that there is no great improvement but, on the contrary, a worsening in the situation. However, let us hope for the best. I would stress that the Government should take every step to maintain price stability. It is one of the greatest benefits to the agricultural community and one of the greatest incentives to increased production.

The first thing we should bear in mind in discussing credit for the farming community is the position of our farmer vis-á-vis his opposite number on the Continent. We find it very difficult to maintain our foothold on the British market, in competition, particularly, with Denmark. One would think the Government would be most anxious to give facilities to the farming community to enable them to compete in a reasonable manner with their opposite numbers on the Continent.

There is no possibility that the majority of our small farmers can obtain credit at a reasonable interest rate, whereas the small farmer in many European countries can get credit at from three to four per cent. to develop his land and purchase machinery,

Sometimes at less.

Yes, very often at less. The Irish farmer may have to pay interest of from 12 to 20 per cent. How can he compete with his opposite number when he is hamstrung with regard to credit?

I do not object, for instance, to hotels getting interest-free loans. That is desirable if we wish to expand our income from the tourist industry. There is no limit to the amount of money being made available to our hoteliers to reconstruct their hotels. Very often, the money is being made available free of interest for a period of five years. Surely nobody can complain if the Government make arrangements to provide credit for the farming community, especially the small farmers, at a rate of, say, two to three per cent. to enable them to compete with their opposite numbers in other countries?

The Government pay lip service to the fundamental importance of agriculture. They should prove their sincerity by providing the necessary credit for the farming community. The Agricultural Credit Corporation has been functioning for some time. It is a joke in the west of Ireland that in order to get credit from it one must have money in the bank. Because of the strict investigations into the status of the applicant for credit, it is not worth his while to look for the loan. Where, then, is the incentive to the small farmer to increase production?

We can take it that in present circumstances the farmer, in the main, goes to the commercial banks for credit. The commercial banks are not suited to that purpose. Very few men attached to the banks are skilled in agricultural science or have a knowledge of the problems of farmers. Bank managers and bank clerks are noted mostly for their achievements in sport. I do not think they know the first thing about problems on the land.

A scheme was put forward to enable farmers to expand production, to increase the number of cattle on their holdings, by looking for credit in the banks. That experiment was not successful : I disagree with Deputy MacEoin on the reasons he put forward. I think the reason was that the banks are not suitable agents for dealing with agricultural credit. The best arrangement would be for the Government to nationalise one of the commercial banks and to ensure that in it and its branches men would be available with a knowledge of agricultural problems. In conjunction with parish agents and agricultural experts, they could advise on who should receive credit and advise the farmer on the utilisation of the credit he receives. Most important of all, the credit should be available at a reasonable rate of interest.

There is no competition whatever between the commercial banks. There is no difference between the credit facilities they offer. The position is as if there were four or five post offices in a town. The only competition between them is which of them can shake hands in the most friendly manner with potential customers and, with a big smile, bring them into the bank. There is no competition with regard to credit, rates of interest, and so on.

It is all very fine to say that industrial output is going up. We admit it is going up so far as certain products are concerned—products which are mostly imported and processed in this country. That is not a healthy or safe expansion unless backed by solid achievements in the agricultural sphere which cannot take place unless credit and educational facilities are made available to the farmers.

This new attempt is a waste of time, so far as the farming community are concerned. The schemes put forward for credit were aimed solely at increasing the cattle population. There was no question of making credit available for the farmer who wished to go in for horticulture or gardening. The whole slant tended towards the store cattle trade—in other words, that we should be a ranch to supply the needs of the British farmer.

I was very surprised that the intelligent men in the N.F.A. did not realise that this alleged generous support of the banks in regard to credit for expanding the cattle population was prompted not so much in the interests of the British community. The headquarters of all the commercial banks are across the water. All the strings pulled in regard to financial matters and the control of our commercial banks are pulled from London. Any policy changes made in our banking system emanate from London. That position obtains because the commercial banks here are not under the supervision of the State in any way. That is why I suggest the necessity for an agency controlled by the State that will produce a policy and a credit system for the Irish community.

We cannot have a credit easement solely to increase the cattle population. I believe that is the wrong approach. If credit is to be made available, it should be for the purpose of processing our agricultural production. Unless we can get down to that and have intensive farming, we shall not have the output necessary to solve many of the problems facing the small farmer. All the credit in the world to enable the small farmer to purchase cattle is a waste of time. In my opinion, a small farmer is a man with a valuation of from £15 to £20. Most of the farmers are in that category. In the constituency I represent up to the moment, Roscommon, 80 per cent. of the farmers have a valuation of less than £25. The average valuation per acre is around 9/6d. You can average from that what size the holdings are. Such a small farmer can have, at most, only three or four cattle for sale in the year. The significant thing that has emerged in recent years is that when the cattle population went up in Roscommon, the pig and poultry populations fell and the number of people living on the holdings declined. Those are not my findings; they are the findings of an expert in the Statistics Branch, Dr. O'Connor, who produced an excellent paper recently on that subject.

Unless we direct credit to the small farmer, not so much for the purchase of cattle but to allow him expand in other agricultural spheres, we shall not get the development necessary. As far as this measure is concerned, therefore, it is not worth tuppence to the small farmer. I doubt if we are going to get from this Government the inspiration and lead necessary if the small farmer is to remain here. I doubt if the Taoiseach would recognise what a small farm is, but apparently it has been brought home to him at last by some of his own supporters that the situation is desperately serious in rural Ireland so far as farming stock is concerned.

In the course of his address at the exhibition on rural water supplies in the Mansion House he said the Government had under consideration further plans to improve conditions for the small farmer. I suggest to him that one of the first things to be made available to the small farmer is credit, cheap money, so that he can diversify his activities rather than have his activities channelled, as they have been for the last few years, into one line of production—store cattle. If that is allowed to continue the small farmer will disappear, and in a short time we shall find that, once again, Westmeath, Meath and elsewhere will be turned into a major ranch.

The interest rate prescribed at present by the Agricultural Credit Corporation is six and three-quarter per cent.

Six and one-quarter per cent.

I was looking at the earlier figure. It is now down to six and one-quarter per cent. At the same time, a number of schemes were operating under the Department of Agriculture by which loans were provided for the purchase of agricultural machinery, for the purchase of cattle, sheep and bulls and by which credit was made available for the purchase of fertilisers and ground limestone under a guaranteed loan scheme. In all those schemes the charge for credit is one per cent lower. I am again quoting the July figures for the rate quoted by the Agricultural Credit Corporation to its own customers. On July 29th, 1960, the rate in the Agricultural Credit Corporation was six and three-quarter per cent. and the rate prescribed for the loans to which I have referred, guaranteed by the Department of Agriculture, was five and three-quarter per cent.

One of the most urgent requirements in connection with agricultural credit is that it should be made available to farmers at a rate they can afford to pay. As far as I know, the practice in most Continental countries is to make credit available for approved projects at a rate substantially below the current bank rate. When I say the current bank rate, I mean the current rate charged by joint stock banks for loans.

It is interesting that our own practice has been that where the Department of Agriculture have stood guarantor for a loan, the money is made available to the farmers at one per cent. less than the ordinary charge of the Agricultural Credit Corporation. I understood the reason for that is that the Credit Corporation say that the element of risk is removed where the Department of Agriculture guaranteed the loan. My recollection is that our experience of loss under those guarantee schemes was virtually nil. Yet the fact that the loan is channelled through the Department of Agriculture saved one per cent. to the farmer. I have often wondered whether it would not be possible to take our courage in our hands, for a period anyway, and determine that for five or ten years a very attractive rate of interest would be offered to farmers borrowing for approved projects of expansion.

I have always believed, and I believe now more profoundly than I ever did before, that the root of this whole problem of a provident credit expansion for the farmers of this country is to be found in an adequate agricultural advisory service. I know that from my own personal experience and from the experience of living among my neighbours. Agricultural practice has been going through a revolution during the last 20 to 30 years. Many discoveries of fundamental importance have come to light and those of us who are familiar with these discoveries, owing to our contacts with sources of information, very often forget how slowly this knowledge percolates down to the men who are actually operating the land. One of the great difficulties in the Department of Agriculture when I was there was to get the farmers to know what the schemes were. You would produce a scheme which appeared to you to be immensely advantageous for the installation of water but it would be two or three years before you would get the farmer to realise that the scheme was available.

I remember coming in for considerable criticism because I used to publish advertisements on a large scale. I did it because I could not get the farmers to wake up to the fact that these schemes were available. I want to give an instance of my own personal experience with regard to this matter. The Department of Agriculture was continually exhorting the farmers to make more silage. Now all of us with any knowledge of farming realise that one of the most heartbreaking operations on an ordinary farm, particularly a small farm, is making hay. About once in every four years, you get a straight hay harvest in which you can save hay and get it into the shed without getting caught by the weather. In many years, by the time you have the hay in the shed, it is scarcely worth bringing there because it has become so weathered and battered by rain and storm and everything else. In a country with an average rainfall of 42 inches, there is a perfect set-up for the making of grass silage. How many farmers make silage? About two per cent. To those people who are fully informed on this matter that often gives rise to exasperation but the facts and the explanation of that situation are quite simple. They do not know how to make it. I recall quite distinctly when I started making it. My great difficulty was that I did not know how and for two or three years after I had come fully to realise its value in the set-up I had on the small 50-acre farm, it was not for the want of the will but for the want of the know-how.

To cut a long story short, ultimately an agricultural inspector in our area, the Lord have mercy on him—he has since died—a man named Smith, came down to my farm and showed them how to do it. Quite obviously, there was still a good deal of doubt and scepticism about it—it was a revolutionary idea to put green grass in a pit—and finally he threw off his coat and got into the pit and did it with them. He said: "Look, when you are going to open this pit, let me know and I will come back and open it with you." We made the pit of silage, covered it with one foot of clay and a good deal of our neighbours were very concerned to tell us that we would get a queer shock when we opened the pit and saw what was in it. They said they would like to be there when we opened it, like to be a fly on the wall.

Of course the time came when we did open it and even at that stage you would find a good many of our neighbours, small farmers in County Mayo, who said: "My goodness, do you get the smell of that?" It was not until they saw the cattle eagerly consuming it that it suddenly dawned upon them that this was something which they had never known before and which would work. I do assure the House it would never have been made and never have been used but for the fact that that man came with the prestige of an agricultural instructor, took off his coat, got into the pit himself and helped to make it, and was prepared to stake his reputation as an agricultural instructor that what he was there making would come out as a valuable product.

Now, of course, they make it readily in the spring or in the autumn as circumstances suggest. Now they put out nitrogen and increase the protein content. Now silage is as familiar to them as an old shoe and it would be unthinkable to save the grass on that small farm without its due proportion going through the silage pit. Every Deputy should think of his own experience, particularly amongst the farmers about whom Deputy McQuillan spoke, the small farmers west of the Shannon. In my opinion, they are the farmers who should be the first care of this House because they are the farmers who work for themselves. I heard one member of the Fianna Fáil Front Bench—I think it was the Minister for Transport and Power—recently saying that farmers west of the Shannon could not afford to pay their labourers an economic wage. He has just not wakened up to the fact that west of the Shannon there are not any agricultural labourers— they are all working for themselves. Every man is on his own farm and works it with his own family. Unless we can wake up to the fact that what is urgently necessary for these small farmers is to bring within their reach the most important modern know-how that we can bring to them, we will never get anywhere at all.

I want to make this clear if I can, that the changes and developments have been so great in the last twenty-five to thirty years that it is ridiculous to imagine that they can be explained unless very special measures are taken to bring them to their knowledge. Do Deputies realise that only within the past twenty to thirty years have we come to know what aphosphorosis in cattle is? When I was young and starting at home and a cow's joints began to creak, they said it was rheumatics. Finally, they began to lie down, and the better the cow, the sooner she lay down, and unfortunately had to be destroyed and buried. It was only recently that we discovered that it was due to a lack of phosphates and can be corrected by the appropriate use of phosphates. That knowledge is now gradually seeping down to the country, but only in recent times have people associated lack of phosphates with diseases in cattle.

There are large areas in Connemara in which knowledge of that does not exist. I remember going out in Connemara to try to sell the appropriate food supplement, or indeed to give it away to farmers out there, whose cattle were manifesting symptoms of aphosphorosis, in order to try to bring that knowledge to them. I want to put to the Minister for Finance, who has some knowledge of agriculture through having been Minister for Agriculture for many years, that providing access to credit, while in itself an excellent thing, is virtually useless unless, at the same time, we put within reach of the farmer the know-how to use it.

I say quite deliberately that if you make available to the farmer unlimited credit without giving him any technical assistance on how he can profitably use it, far from helping him, you are putting a noose round his neck. If you advise the small farmer to borrow all he can get for any idea that comes into his head, you will find fellows borrowing to buy tractors and elaborate outfits or equipment which lie idle for nine months of the year and which they discover too late are not earning and never can earn what will enable them to pay the half-yearly instalments due upon their debt, while, at the same time if they borrowed that amount of money, or more, and used it in accordance with a sensibly-devised plan they would find that they could lift themselves up from relative poverty into modest comfort.

In present conditions, it is eminently possible on a farm of 50 acres of very moderate quality to make a profit of £800 a year. That is not a gross profit but rather a net profit, if you allow nothing for wages. In working a farm of 50 acres, unless his family is half-grown, a small farmer may have to get some help from time to time and may have some bill for wages at time of haymaking or harvest or for hiring a contractor to cut his corn or something of that kind. But if every small farmer with 50 acres had an income out of that land of £700 or £800 a year, rural Ireland would be a very different place to live in. That is possible, I know, provided the farmer has access to unlimited capital adequately to stock and fertilise his farm in order to bring it to its full capacity and adequately to crop it. That could be done on every small farm in Ireland.

On a 50-acre farm, it is possible to carry about 38 cattle, 40 ewes and their lambs and five to seven sow pigs and at that, buy in little over and above the barley one can grow oneself. If you got a top yield of barley—which few do get—I doubt if you have to buy in anything except protein supplements when you could not get skim milk. I do not say that is going to be realised on every 50-acre farm but that is possible. The essential prerequisite is technical know-how and on exactly similar farms if you make unlimited credit available to ambitious enterprising young fellows who have not technical know-how, they can sink themselves in a morass of debt and end up on the emigrant ship.

Why can we not try to face that problem and deal with it? Every country in the world, as far as I know, has accepted the necessity of a national agricultural advisory service. If, in every rural parish in Ireland, we had a competent agricultural scientist whose function would be to provide leadership to the farmers and whose job would be to be readily available to every farmer to maximise the production of his holding and to bring him to the Agricultural Credit Corporation if he required credit or to the bank or wherever credit is available and help him as Mr. Smith—Lord have mercy on him—helped me to do the job, we could revolutionise the whole face of the country and—what is more important, I believe—we could nearly double the output of the land.

I want to differentiate clearly between the small farmer, the man who is living on 60 acres of land or less, and the big farmer with 100 acres to 500 acres. Most men farming 100 to 500 acres, if they have not know-how, have the means to get it for themselves and if they will not do that, you cannot force it on them and I do not think we should try. You will always get an odd fellow who has more land than he is able to work and just is not fit for the job. I do not belong to the school of thought which says that entitles the State to take that man by the neck and throw him out of his own home and take over the land. I think security of tenure for all of us is cheaply bought by allowing an occasional oddity to retain his land and we must suffer in patience even if the land is not being well run, in the hope and belief that whoever comes after him will do a better job. But the larger farmer usually can get technical help if he wants it. I would make it much more readily available to him under a national agricultural advisory service but I would not expect to see as dramatic a change or development on the relatively large farms as I am convinced we would see on the small farms.

It is the danger of these small holdings being abandoned that I consider to be the greatest menace confronting the country at present. To me, the deep tragedy of that situation is that it is wholly unnecessary because, if these holdings are effectively used, they can provide a decent living for the people who live upon them and an opportunity of raising a family far superior to the opportunity they will have in Britain or elsewhere. It is perfectly true that many of these small farmers might be able to go and, by labouring in a big industrial city, get a larger monetary reward but when it comes to sending their children to school, supervising the company their children keep and when it comes to a variety of other considerations infinitely more enduring in value than the actual money income, we shall find plenty of people who will have the wisdom and perspicacity to see that if they get a fair living on their own holdings at home, they will be much better off rearing a family in this country than they would be if living in two or three rooms in London, Birmingham, Manchester or elsewhere. But they will not get a fair living without technical know-how coupled with the availability of credit. I must say it is a thing that exasperates me to see, in various parts of the country, one farmer who is getting the maximum return from his land surrounded by a dozen neighbours, none of whom is getting much more than half what he could get if he knew how to go about it.

Anything which makes credit more readily available to the farmers is welcome to me but I warn the Minister that credit without know-how will achieve very little and may, instead of proving a benefit, prove a great stumbling block to the small farmers of this country. Provided that we had an adequate national advisory service, I want to make some suggestions in regard to the details of the proposals of this Bill. Heretofore, the Agricultural Credit Corporation was restricted to advancing 50 per cent. of the value of the holding. The Minister now says that that is to be raised to 66 and two-thirds per cent. I think that limit is too low if the advance is going to be properly used. I can readily see small farms where an advance of 100 per cent. of the value of the holding could be advantageously used. I would provide such an advance if I were convinced that the man knew how to use it. I suggest to the Minister that that limit is too low and I think that an arbitrary limit is probably a mistake. I think it would be better to leave it to the Corporation to determine for itself what it is prudent to advance in any particular case.

The second thing I want to say to the Minister is on the question of guarantors. I know that under some of the Department's schemes, a guarantor is stipulated for. I had a very queer experience in that regard. We had an Agricultural Advisory Council which advised the Minister for Agriculture from time to time when I was Minister. On this matter I had a long and bloody encounter with the Department of Finance but finally they said that, as I seemed to be set on it, they would be prepared to agree to a scheme on an experimental basis under which there would be no guarantor. I went in triumph to the Agricultural Advisory Council and asked them what they would think if we abolished the whole business of guarantors. Rather to my horror and amazement, there were loud cries of protest.

I accepted that advice but the more I thought about it since, the more convinced I have been that I was wrong. Small farmers simply will not go to their neighbours and ask them to guarantee them. If a neighbour came to me and asked me to guarantee him, I would not do so. I have never done it in my life. I would ask him how much he wanted and, if I would be prepared to guarantee him, I would say that I would lend it to him myself if I had it. I will not guarantee to pay £50 because when the time came, I might not have it. I think that any man who guarantees his neighbour in the bank is a foolish man and many people enter into guarantees of that kind who have not the means to meet them.

I am not sure that the system ought to be persisted in and I would be interested to hear what the Minister thinks of that. I should like the Minister to say how often does the Corporation have to have recourse to the guarantor to recover. I should also like to know if, where that recourse has to be had, the Agricultural Credit Corporation can say with a clear conscience that they have made adequate inquiries. If you are going to give a man a loan of money and if you cannot depend upon the borrower, you had better not make the loan at all. I think that if a man is worthy of credit and if he satisfies the Corporation that he is going to make good use of it, the necessity for guarantees does not exist. I would nearly go so far as to say that where a man is worthy of a loan only where a guarantee is provided, he is not worthy of a loan at all.

I suggest to the Minister that he should review that position and, if he is satisfied with my suggestion, that he should suggest to the Corporation that they drop the system of guarantees. Some of the best men in rural Ireland, particularly west of the Shannon, will not ask their neighbours to guarantee them. A chancer, who has not the slightest intention of paying the debt if he can avoid it, will not have the slightest compunction in searching the whole townland for two dupes. The man who is reluctant to ask his neighbour to guarantee him is the man who will pay his debt. I suggest to the Minister that he should consider that matter.

Perhaps I could reinforce that suggestion by drawing the Minister's attention to the anomaly that if a small farmer wants to get £100 to invest in his holding, the procedures associated with getting it are prolonged and complicated. If he takes it into his head to buy a T.V. set, all he has to do is to walk down the street to the shop, select his set and the T.V. dealer puts a form in front of him to which he signs his name and he can bring the set home with him. He can fill the kitchen with T.V. sets, radios, washing machines and cookers and involve himself in nothing more complicated than signing his name to a form. We all know that it is true, of course, that in these contracts he is paying a relatively high rate of interest. I suppose that is part of the penalty of having recourse to that method of raising credit. It seems to me we ought to be able to simplify the procedure for borrowing in the case of farmers who want to buy something to expand production. The problem is how are you to find out, with any degree of certainty, how the man will use the money that he seeks to borrow? I do not see that there is any means of doing that without an adequate national agricultural advisory service which will provide a sufficient number of what I like to call parish agents— call them what you like—to provide ultimately, in the areas where they are most needed, at least one effective agent in every parish who, over the years, will acquire both with banks and the Agricultural Credit Corporation the reputation that, if he countersigns a plan of campaign for any particular small farmer, that is a bona fide proposition and deserving of the credit requisite to support it; and the understanding will remain that he will be constantly on call in the immediate neighbourhood of that farmer's holding to help him carry the plan to completion.

Many Deputies are inclined to answer to that: "But you will get bad and you will get good agricultural instructors." That is true of us all; you will get bad Deputies and good Deputies. But there is the difference that, if you have an adequate agricultural advisory service under which each officer is responsible for his own area —a limited area like a parish—it should be possible for the control of that service to go to him and say: "Look at this parish for which you have been responsible for the last three or four years. It is worse now than when you came into it. It may be that the farmers will not co-operate with you. It may be that they do not like you or that they do not trust you. The only solution is to move you elsewhere and get in someone else who will command their confidence and support in putting into operation on their holdings the know-how and the work requisite to improve each holding and consequently the whole parish for which you are responsible."

Ultimately one could create a situation in which the appearance of the district under the control of each parish agent would be his testimonial or his condemnation. When we get that I believe these provisions in regard to agricultural credit may bear fruit but, unless and until we get that, I very much doubt that they will.

I heard the Minister in the course of his speech refer to increased credit facilites for co-operative societies. I never remember any co-operative society being refused money by the Agricultural Credit Corporation. My experience was that I could not persuade the co-operative societies to go and look for it. All the time I was there I never remember a single case of a co-operative society being refused credit by the Agricultural Credit Corporation but I remember several occasions on which I urged co-operative societies to go and borrow money from the Agricultural Credit Corporation to expand further the output of their own members, and their refusing to do so. I do not fully understand, therefore, what the Minister has in mind when he seeks to improve facilities of that character.

I wish the Minister well in any effort he makes to expand credit for the farmers, always providing that, hand in hand with that, he makes available to those who want it access to the know-how as to how best it may used. If we could achieve that I believe we could precipitate a substantial revolution in the livelihood of the farmers of this country but, without the know-how, credit will not serve the purpose we have in mind. We have in this country hundreds of first-class agricultural graduates who are looking for work. Many of them are emigrating to get it. I suggest to the Minister that he should suggest to his colleague, the Minister for Agriculture, that these men should be mobilised forthwith for the assistance of our own people.

I do not want to conclude without referring to the question of horticulture. I think there is probably a very fine future in front of specialised branches of horticulture. There is in this country, however, an acute shortage of competent horticultural instructors. I know that when we were expanding the apple co-operative in Dungarvan we would never have got anywhere, if we had not provided centralised services, advisory and technical, from the co-operative committees to help the farmers over the initial stages of changing their marketing methods. Even with all that help, we experienced very considerable difficulty in persuading the farmers to remain loyal to their own co-operatives and not sell their stuff elsewhere when it appeared temporarily convenient for them to do so.

If we are to have any effective expansion in the production of soft fruit, hard fruit and vegetables, it is urgently necessary that we should have an adequate horticultural advisory service. I do not believe you will ever get that under the present system because it requires very highly specialised direction. It is not ordinarily true that the local authorities' chief agricultural adviser is a horticulturist. Indeed, it ought not to be true. He ought not to be usually a horticulturist. The average agricultural instructor is not competent to direct an advisory service primarily designed for horticulture. That is an added reason for a national agricultural advisory service where the requisite technique and direction of such a service can be obtained.

Would that matter not be outside the scope of this Bill?

Horticulture does come into it.

Would it not be a matter for another Minister? This Bill deals with the expansion of credit for agriculture.

That is so but, in fact, the Minister mentioned in his opening remarks that credit could be sought for the development of horticultural enterprises and that there might be diversification. In fact, he said one of his hopes was that there would be substantial diversification from the ordinary branches of agriculture, as we know them, into a more intense development of horticultural pursuits. There is no doubt that there is scope for expansion there but there is no branch of the agricultural industry in which a man can more rapidly ruin himself than intensive horticulture, unless he has adequate technical advice as to how to go about it and how to market the product of his labour. I do not want to dwell unduly on that aspect of the situation, beyond saying that there is no branch where technical advice is more urgently necessary than horticulture. Most of us have plenty of experience of that.

The only way to provide it is under a national agricultural advisory service properly organised and in a position to maintain constant and effective contact with the Agricultural Research Institute for the purpose of bringing the fruits of its research activities to the farmers in the shortest possible time. I should like to expand on that but I do not wish to try the patience of the Leas-Cheann Comhairle.

I conclude by saying this: One of the great dangers with which we are confronted here is that we will get so wrapped up in providing credit facilities and this and that that we will allow the Agricultural Research Institute to get immured in its own ivory tower and forget that one of its principal reasons for being is that the results of its research should be communicated to the farmers at the earliest possible moment and in the most effective way possible. Credit, yes, by all means, but let it be informed credit. Let those who avail of it have the knowledge how best to use it. Give them that and I think there is great hope for the agricultural industry.

I have just a few observations to make with regard to this Bill. At the outset, I should like to say that I regard its introduction as a very important step in the efforts by the Government to improve the agricultural industry and, moreover, to bring about a state of affairs in the industry where a greater volume of employment will be available from it.

I think there have always been very mixed opinions in regard to the credit facilities that should be available for agriculture. The policy of the commercial banks in that regard has never been very flexible up to recent times. There was a period, of course, many years ago, during the first World War, when, evidently, the commercial banks lent money to agricultural interests without much difficulty. Apparently, that experience led to a rather unsatisfactory state of affairs in later years. Perhaps that was one of the reasons why the banks rather tightened within the period 1930 to 1958.

Generally speaking, however, the commercial banks have been as co-operative as one could reasonably expect in the circumstances in regard to the credit requirements of the agricultural industry at all times. Some years ago, in order to have some semi-State organisation to take care of these requirements, the Government of the time set up the Agricultural Credit Corporation and assigned to it functions with regard to agricultural credit. Here I should like to pay a compliment to the directors and management of the Corporation in general for the very efficient and helpful manner in which they handled the problems given them at the time. One is inclined to get irritated with the Corporation because of the conservative policy they seemed to adopt up to now in the lending of money. In that regard it is only fair that cognisance should be taken of the terms of reference and regulations which apply to the Corporation.

I think the Government meant well by tying up the Corporation in a way they thought it was safe to do, but in practice, the hands of the Corporation were tied altogether too much. If that was not so, then the Corporation tied their own hands. There have been complaints among agricultural interests for many years that the lending facilities of the Corporation were not satisfactory. Indeed, public representatives and others who had some experience of dealing with the Corporation on behalf of their constituents and others, found that their attitude as a whole was one of caution, but there were difficulties in which they found themselves occasionally and which made it impossible for them to facilitate applicants.

Within recent years and within the past three years in particular, the commercial banks, in my opinion, have loosened out considerably in the matter of providing agricultural credit. One particular bank led the way in that regard by introducing a scheme in the early stages of the bovine tuberculosis eradication drive for the purchase of stock which had to be replaced as a result of the tuberculosis tests at that time. That was a very praiseworthy arrangement. It was one which set a headline for the other commercial banking interests in the country and I am glad that the other interests followed. I am quite sure, however, that little would have been done at the time, were it not for the fact that one bank had the courage to come out and offer these terms to farmers on a flexible basis. I am told by people in a position to speak upon the subject with some authority that the banks' experience in that connection is satisfactory.

The time has come when most people intend to pay if they get a loan. I have never taken the view that people in general obtain loans with the idea of not paying them. I think every borrower intends to pay a loan except a very small number. What in practice prevents a borrower from repaying a loan is that he obtains it for a purpose which does not give the results that appeared possible at the time the loan was obtained.

Deputy Dillon touched on that point when he suggested that advantage should be taken more fully of the services of agricultural advisers in the matter of obtaining loans. The advice of the agricultural advisers should be taken very seriously by concerns such as the Agricultural Credit Corporation or commercial banks in the matter of loans for the general improvement of agriculture. I feel the time is at hand when agricultural instructors and advisers should be encouraged to initiate proposals for the general improvement of agriculture for individual farmers. The approval of the local advisers should be sufficient guarantee for the lending agency concerned.

The general attitude of banks towards giving credit is necessarily cautious. It is much easier to give out money than to get it in. The banks have moved pretty well with the times in recent years and it is true to say that at the present moment no worthwhile project, whether agricultural or industrial, is held up for want of financial accommodation.

Those of us who are in business know that banks can be pretty difficult in connection with certain proposals at certain times. Because of their unsatisfactory experience in one direction or another, their attitude can stiffen, sometimes for the better, sometimes for the worse, in a short time. By and large, the attitude of banking concerns and lending agencies has been generally the same so far as agriculture is concerned. Land, however, has always been considered a better security than industrial property in general. The main difficulty that the banks have had with agriculturists is that they were often careless to attend to the details involved in obtaining and renewing loans.

I think it is unlikely to happen but it would be a bad thing if any lending agency were to lend money for purposes other than those which would be likely to be highly reproductive. I am quite sure we can depend on the judgment and wisdom of the Agricultural Credit Corporation to ensure that money is not made available except for purposes which would tend to improve national productivity, as required by Government policy of the day.

It will be a good thing if this extension of agricultural credit will help to increase the employment content of the agricultural industry. There has been a decline in the number of people employed in agriculture in recent years. That tendency is beginning to worry people who have responsibility for such a state of affairs. Machinery and mechanisation have been responsible for some of the decline. There is a problem there that will have to be tackled and perhaps it should be tackled now that facilities for the extension of activity in agriculture are being afforded through the medium of this Bill.

There is quite a lot of work to be done in agriculture which has had to remain undone because money was not available to pay for the labour and material required. The attitude of farmers, particularly of those in the older age groups, has been rather conservative in that connection. A farmer usually thinks it unwise to borrow money for the purposes of his farm whereas a businessman under similar conditions would have no hesitation in obtaining a loan for the purpose of his business. The farmers' mentality in that connection can be appreciated. They have not the same possibilities of turnover as exist in business and naturally, they have to be somewhat cautious and avoid incurring liabilities which it may not be easy to discharge.

I would recommend to the Minister that schemes of agricultural development having a high labour content submitted for loan accommodation to the Agricultural Credit Corporation should have very special priority. There is a pattern of priorities in existence in some Departments of Government. There is in the Minister's Department the Employment Schemes Office which administers works in connection with minor drainage and roads. They have a very good system in that special consideration, one might say special priority, is given to schemes having high utility value and, above all, high labour content. That is a very important consideration. It has been fortunate for the workers that such a condition has applied to most schemes sanctioned by the Employment Schemes Office of the Minister's Department. Otherwise, of course, many schemes might have been sanctioned and public money spent on projects that would be of little value from the point of view of employing labour.

The point I am trying to make is that the Corporation under its new powers should get special directions from the Minister to consider as favourably as possible schemes which, on the advice of the local agricultural adviser, have a high labour content. In other words, the fact that a scheme has a high labour content should go a long way to qualify it for the accommodation that is sought.

We are told that this Bill has been introduced as a result of the Gilmore Report which was presented to the Government following a survey of agricultural credit in Ireland. Every Deputy got a copy of that report and it was a very interesting document. Generally speaking, I considered it was a fair report of the investigation of our existing agricultural credit system. I notice, however, that there was a tendency to work out calculations on the American system. In America credit is accepted as an everyday experience, both in agriculture and industry. I do not think we could ever hope to establish a credit system based entirely on the American pattern. If we had a simple system, such as we have had up to the present, whereby agricultural interests can have recourse to accommodation facilities without too much red tape and difficulty, we will have what we want.

It is a good thing that the Minister has seen fit in framing this legislation to provide that agricultural interests themselves may subscribe to the share capital of the Corporation. The fact that they are now offered an interest in the financial structure of the Corporation will encourage them to invest in the Corporation to the best of their ability and, also, will make them more favourably disposed towards obtaining accommodation from the Corporation. In other words, the farmers who want accommodation are going back to themselves for whatever money they require. The facilities provided under the new Bill will give farmers and agricultural interests generally an effective means of greater expansion in their activities and it is to be hoped they will avail of these facilities.

The last speaker mentioned the question of guarantors. In the past, the Agricultural Credit Corporation were somewhat sticky on that point. I agree with Deputy Dillon that we must get away from that idea. Most people nowadays have enough to do to guarantee themselves without guaranteeing their neighbours and they are not inclined to do it. This business of guaranteeing was introduced in bank practice many years ago and has never been changed with the times. I submit that the borrower's integrity is as important as any security he may offer. If he is not a man of integrity, security is not of much importance. Once a man's integrity is accepted, it must be decided whether he is the type of person who will settle down and get the return he should get from the money borrowed.

This requirement on which the Corporation has insisted of having guarantors, particularly for small loans, was very objectionable to farmers and militated considerably against agricultural credit arrangements. In the circumstances, I sincerely hope the Minister will be able to persuade the directors of the Corporation to get away from this idea of guaranteeing in all cases and substitute some other qualification which would probably give results as satisfactory, if not more satisfactory.

Hire purchase is mentioned in this Bill. It is about time the Agricultural Credit Corporation arranged hire purchase facilities in respect of equipment and machinery for agricultural purposes. We have quite a number of commercial hire purchase concerns and this Bill proposes to add another. In the ordinary course of events, there is no need for another hire purchase company if it is to follow the pattern of those already in existence for the buying of machinery etc., and for the provision of transport facilities and all the rest. I hope the Agricultural Credit Corporation in embarking on this hire purchase business will strike out on a new line altogether.

The credit arrangements already in force through the Department of Agriculture in respect of the purchase of machinery, and so on, could hardly be beaten. What impressed me most about it was that it was a simple procedure whereby a decision was given without undue delay. The merchant who handled the deal was usually familiar with the procedure and made all arrangements for the borrower and was able to supply the equipment in a short time after the application was made. It worked out very well. I had experience myself of selling equipment to farmers under that system and it was most satisfactory.

If that system is to continue, there is not a whole lot the Agricultural Credit Corporation will be called on to take on. I am assuming that the Department will gradually get clear of the existing loan facilities and that same will be taken over by the Agricultural Credit Corporation. If that is so, I hope the terms and provisions for that type of hire purchase will be as favourable under the Agricultural Credit Corporation as they have been under the Department.

The difficulty in relation to the hire purchase of farm equipment is that the rate of interest is considered by farmers to be too high. The machines and equipment they purchase are such that they do not give a very high return for a number of years and the amount the farmers can repay to a hire purchase company is, of necessity, rather limited. If there is a high rate of interest charged for the accommodation, a farmer is not inclined to avail of it. He would rather do without the article than pay as much interest as principal to have it. There should now be a new approach to this problem by the Agricultural Credit Corporation otherwise it would be as well to let the Department's agency and the commercial banks handle the farmers' requirements in that regard. Something very useful could be achieved if the procedure I suggest is followed when this Bill becomes law and the Corporation set up the hire purchase organisation.

Under the Bill, the number of directors is to be increased. I presume those who subscribe the capital will have some representation on the new board. What is important, in my opinion, is that people with specialised knowledge of agriculture and in regard to agricultural machinery and equipment should be represented on the board. If the board is to take wise decisions on applications coming before it for accommodation, it can only do so if it is manned by that type of person. There are a large number of existing interests that could give valuable assistance to the board, if they were represented on it. Now that the opportunity is presented to the Minister of increasing the personnel on the board, I hope that suggestion will be taken into consideration. It is highly desirable also that an agricultural adviser with some years of experience should be available to the board, preferably as a member, but, if there is any objection to that, certainly as the head advisory officer.

I do not know if such people are already on the staffs of the board, but if they are not, I think they should be brought in under this new arrangement. The time has come when farmers realise how important it is to accept the technical advice now available to them, and in practice they now do so. The advisers are in close touch with farmers and can give them invaluable advice on the seeking of loans for the improvement of their economy.

With regard to the rate of interest on these loans, as I said at the outset, the commercial banks have met the requirements of the farmers generally for the past few years. The Agricultural Credit Corporation has been in existence and will be in existence in the future, but unless they provide loans to farmers at a much more favourable rate of interest than the commercial banks, I do not think they will be availed of. Unless there is a change in their approach to applications for accommodation during the years to come, the Corporation will not be serving the purpose it was set up to achieve.

There is one way the Agricultural Credit Corporation could attract applications from farmers and naturally farmers would prefer to deal with them because of their particular set-up. They should reduce the rate of interest to an appreciable extent. The prevailing rate of interest of the commercial banks is high and it is, of course, related, to some extent, to the price at which money can be obtained on the market.

The Agricultural Credit Corporation will find it possible to attract their requirement in capital at a more favourable interest because they are regarded as a very secure investment. Anything agricultural is regarded as of the highest security. The Corporation can obtain their capital requirements at a reasonable rate of interest because of the gilt-edged type of business they would be conducting. They have a small expense ratio and they should be able to make loans available to their borrowers at a reasonable rate of interest and well below the commercial banks' rate. That matter should be examined because, if the loans are made available at the same rate as the commercial banks' rate, the average man, thinking of local convenience, will more or less avail of the commercial banks for his requirements.

The whole purpose of the Bill is very satisfactory indeed. The increase in Corporation borrowing potential from £8.3 millions to £10 millions is welcomed, and the increase in the share capital from £300,000 to £2,000,000 indicates that the Government realise that a greater demand will be made in future on the resources of the Corporation for the purpose of financing schemes in connection with agricultural development. I sincerely hope that the accommodation now being provided for the agricultural interests will enable them to forge ahead more successfully than in the past, and provide a greater volume of work, and employment in general, than was possible in recent years.

Any measure designed to increase agricultural output and prosperity in our main industry must be welcomed in this House. When we examine the method by which this increased credit is to be made available, we must consider where the State will look for the capital which will go into this project. It is only right to assume that quite a lot of the Post Office Savings Bank finance can be used for the purpose of expanding the credit to be made available now by the Agricultural Credit Corporation.

I mention that because of the rate of interest proposed to be charged in respect of loans made available for agricultural purposes through the Corporation. We know ourselves the low rate of interest which is being paid for hard cash in the Post Office Savings Bank. We know that the people who put their surplus money in the Post Office Savings Bank are getting a very small return by way of interest. Having got the money, apparently the State will now get the benefit of it by making it available through the Agricultural Credit Corporation at a very high interest rate. In other words, the difference between the Post Office Savings Bank interest and the interest to be charged by the Corporation will show a profit of approximately four per cent.——

Four and a half per cent.

——four and a half per cent. to the Minister for Finance, if he decides to take advantage of money put into the Post Office Savings Bank by people who are paid only two and a half per cent. It has been mentioned many times in this House and outside it that, with money values as as they are at the moment, the rate of interest payable by the Post Office Savings Bank should be increased, but that has not been done. Here we have an example of how the Minister will make a profit by using this money through the Agricultural Credit Corporation.

Considering that agriculture is our main industry, this is a very welcome measure, not only in this House but outside it. We know that huge areas of land, thousands of acres, were laid bare in the years before the war, particularly by the policy of Fianna Fáil at that time. The increased capital will enable the agricultural community to increase their stock on the land in the form of machinery, housing, livestock or any other type of investment which will result in the increased output which is so necessary. It has taken private enterprise to demonstrate to the Agricultural Credit Corporation the great possibilities which exist for the expansion of agricultural output by lending money, and by increasing credit to agriculture.

Nearly 1,000,000 acres of land are stocked by private enterprise, by companies which have set themselves up and devised a scheme whereby livestock can be purchased, produced and marketed under a lending scheme. The private companies engaged in these projects are making a very valuable contribution to agriculture because they are making available to the farming community a type of credit which previously they have been unable to get. It has been difficult for many farmers to get sufficient credit from the commercial banks which would enable them to increase their stock on the land, or their output from the land, such as seeding and harvesting all fertile land, apart from the production of livestock. The banks are business people and naturally when they look at the average earnings of the people engaged in agriculture they can see for themselves that the prospects of getting interest, or a return on loans for agricultural purposes are not very rosy. A prosperity must be created there which will enable the loans to be repaid, with interest, to the commercial banks concerned.

A State concern, the Agricultural Credit Corporation, was established and intended to be operated for the expansion of agricultural output. Between £30,000,000 and £40,000,000 is spent by the State every year in the form of capital investment. We must examine what proportion of that £30,000,000 or £40,000,000 capital investment goes into productive agricultural enterprises. A very large part of that capital investment is in the nature of a permanent investment which is not productive. Here we have an example of an organisation such as the Agricultural Credit Corporation intended to stimulate production by the issue of the necessary credits and loans.

I agree with the Deputy who mentioned that the loan ceiling of 66? per cent. is on the low side. I do not suggest that the Agricultural Credit Corporation should go into competition with the hire purchase firms who, in respect of certain articles, are prepared to give a 99 per cent. loan, because the hire purchase firms can make good their losses through that policy by charging a very high interest rate. Naturally, we could not expect the Agricultural Credit Corporation to increase the loan ceiling because the interest rate would be a burden and would prevent those engaged in agriculture from seeking the necessary finance. Therefore, while advocating a lower rate of interest and a higher ceiling to be made available through the Agricultural Credit Corporation, I do not suggest they should go up to the high percentage which is made available by various hire purchase firms for the purpose, in many cases, of consumer goods, which explains the high interest rate.

The policy of the Agricultural Credit Corporation in the past has been conservative. They could not be blamed for that. The policy of the State and the Government determined exactly what the policy of the Agricultural Credit Corporation should be. The Corporation depended on the State and the Government to provide the necessary machinery to enable them to engage in a system whereby credit and loans could be made available to those engaged in agriculture.

Travelling through the country, one can see thousands of acres of derelict land. The sod is not turned. It is producing nothing. It is not carrying cattle or sheep. The farmsteads are bare. You will not find pigs or poultry there. The reason is economic. This country has huge acres of fertile land and capacity for a vast surplus of food, be it meat or vegetables or any other type of production from the land we could expect. That fertile land is lying there waiting to be used. Its wealth is not being used because under our present system those huge surpluses could not be disposed of.

I hope we shall see the day when capital investment in agriculture, through the Agricultural Credit Corporation or any other State concern, will be geared to such an extent that we shall be able to avail of the fertility of this land to produce a huge surplus which could be marketed to 3,000,000 or 4,000,000 people in the Common Market pool. I consider that the Government have been too timid in examining the possibilities in the Common Market. There are wonderful opportunities and possibilities there for the sale of our huge surpluses from our fertile land. The Government are afraid to look at those possibilities or even to consider taking advantage of them because they feel that our participation in the Common Market might interfere with the industrial side of our economy.

We have seen demonstrated in recent times that those of our people engaged in industry are well capable of meeting and beating competition. We cannot expect our industrialists to counteract or defeat a system of dumping, but, with our manpower and the intelligence and capacity of those engaged in industry from the lowest to the highest in those factories, I feel certain our industrialists can meet and beat competition on an equal basis in any part of the world.

Therefore, when considering making more credit available for agriculture to expand our output, we should take a proper look at the possibilities in the Common Market and should not be afraid to participate in it. This fertile land of ours can produce vast quantities of food at a reasonably low price which would be available to the consumers in that Common Market. I am not afraid of our industrialists in this country in relation to that Common Market. There is provision to ensure that the industry of any country will not be destroyed or upset by unfair trading such as a policy of dumping.

When considering the making of credit available which will obviously result and should result in increased output, we must immediately consider where we shall find a market for the surplus output. With a dwindling population and with surpluses already available in various classes of food from our land, we must look to an export market. In considering extra credit and finance, we must immediately seek a place where the increased output will be marketed.

When Deputy Dillon was Minister for Agriculture in the first inter-Party Government, he took a step in the right direction towards the expansion of agriculture through the Agricultural Credit Corporation, but, even at that time, it was a conservative step. We did not at that time have the prospect of a huge market available to producers such as the Common Market now offers. There is amongst the agricultural community, particularly the progressive farmers, a great anxiety that they should be given an opportunity of participating in the benefits offered by the Common Market, with its millions of consumers. Following the expansion of credit for agriculture, we must seek an outlet for the increased production that will result.

Mention was made of the reluctance of neighbours to guarantee a farmer seeking a loan from the Agricultural Credit Corporation. Anyone familiar with conditions in the rural areas knows that a farmer hesitates when asked to guarantee a loan for a neighbour. The Agricultural Credit Corporation should insist that any farmer seeking a loan from them should open a bank account. Instead of guarantors, a quarterly account from a bank manager should be required so they can see what progress a man is making.

I am in favour of short-term loans rather than long-term loans for agriculture. In the case of long-term loans, too much money is tied up for too long and there is, if you like, a long period of taxation imposed on the output of that holding. When the Agricultural Credit Corporation make a loan, they should follow a policy of specifying the purpose for which that money will be used. For instance, I would not be in favour of making credit available for the production of some commodity which is already surplus on the home market. The Agricultural Credit Corporation can play a large part in determining output and production in agriculture in relation to goods that can be exported and marketed abroad, and I believe they should concentrate on that. However good the security may be for a loan, if the purpose for which it is required is not one with an export potential, they should be hesitant about making credit available. The Agricultural Credit Corporation can bring great advantage to this country if they can point the way in the matter of finance for production and if they can determine the purpose for which this money is to be used.

When this credit and finance is made available, it will be of great advantage to those who obtain it to have technical advice. We have committees of agriculture employing agricultural, horticultural and other instructors whose advice would certainly be a great benefit to the farming community, whether it be in connection with loans for livestock, for agriculture or even for ordinary crop production. I hope it will be possible for the Agricultural Credit Corporation to act in liaison with these committees. In these days organised effort is absolutely essential to meet and beat competition in any field. That is being demonstrated very effectively in industry at present. The farmers are ready to do their part if somebody will step in between them and the consumers to ensure that, as a result of their efforts, the increased output can be profitably marketed.

If we get good results from this proposal—and I believe it should be only the beginning of an expansion in credit for agriculture—we can be certain that a good measure of security and prosperity will be created in the rural areas. At present, emigration is mainly from the rural areas. Emigration takes place from the urban areas only when people are absolutely forced out to keep body and soul together or, perhaps, to maintain a family at home. In the rural areas, the average earnings are low. In fact, the average earnings of those engaged in agriculture are barely above subsistence level. So long as that situation exists, the enterprising and energetic members of the community will seek to improve their lot and go where they can find better conditions. They will not remain in a situation in which they have no opportunity of attaining a reasonable standard of living. That is why I feel this measure, or any other measure to provide credit for agriculture and promote greater output and better marketing, is one that should be welcomed.

A large field for the expansion of credit for agriculture still remains. I hope the Government will take another look at the possibilities offered by the Common Market. This effort to improve credit facilities will be wasted, if it is not followed up by a search for further markets to absorb increased output. If we do not get an increased average income for the people engaged in agriculture by this measure, or by any other means, we cannot expect greater prosperity in the rural areas.

I mentioned at the outset that the private enterprises which have already made millions of pounds available in the form of loans, particularly in the livestock and dairying industries, have contributed a great measure of prosperity to the people to whom those loans were available, having regard to present circumstances and the demand for meat. This Bill is, of course, going to make loans available in other fields, apart from livestock. It will make loans available to agriculture. I can envisage this scheme making loans available for the erection of glass-houses. Many people wishing to engage in horticulture, and particularly those wishing to avail of loans for glass-houses, must look to the bank manager and, as I say, the bank manager, without the necessary security, is hesitant about providing the money because the export market at the present time is not as good as it could be if we changed our attitude towards the Common Market.

With those glass-houses, many people engaged in horticulture can produce two or three crops in the space of 12 months. I have mentioned glass-houses because not all of our landowners have a large area of land. I feel that their output from a small area of land could be very great, if it were in the form of the concentrated output which we could expect from glass-houses. This scheme will also enable farmers to provide suitable farm sheds. In many farms at present, the one noticeable thing is that there are very few outbuildings or sheds. I feel that every farm should have at least one large, sound shed in which agricultural activities can be carried out, regardless of the weather. Many farms are without proper housing, but if we went on the principle that every farm should have at least one large, sound shed, it would be of great advantage. The small Land Commission holdings are provided with such sheds because the necessity for them is realised.

There are many farmsteads, however, where there are very old houses and very bad accommodation because they are very small holdings and because credit is not available to the owners which would enable them to build a good utility shed in which the various activities of the farmstead could be carried on. This measure, with the alterations it proposes to make, will afford great opportunities to those engaged in agriculture, but it is up to the Government to take immediate steps for the purpose of absorbing the increased output which is the only hope those engaged in agriculture can have. If their output is not to go up, and go up dramatically, we shall not have prosperity and emigration from rural areas will continue. When we are considering increasing our output and creating surpluses, we must immediately find a market for those surpluses. I feel the market is amongst the countries of the Common Market and we would be wasting our time if we did not, first of all, make sure there was a market for that output.

We who are farmers welcome this Bill, especially if it goes as far as we hope it will. Some of us have had experience of going to the Corporation and I know of a farmer who looked for £800 and who, although his farm was worth £8,000, was refused. It is natural to expect that such lands will not be well stocked or well financed; otherwise, such people would not be looking for a loan. Therefore, I hope that some freedom will be given in that direction. I am not advocating free credit or throwing the doors wide open and having the money "dished" out freely. We know of people who had to suffer heavily for years trying to catch up on their commitments. It is a sorry thing when we see some farmers buying machines which they could do without and, indeed, some of the money which they obtained on loan goes to purchase motor cars. That is all very fine until the day arrives when they have to pay the money back. In regard to the question of paying instalments at a certain time, I think the month of May is a bad time. It is a time when farmers are trying to get stock.

Reference was made by Deputy Sweetman to the decline in the cow population since 1st January. One could nearly see that coming because people were inclined to get rid of their stock, especially cows, because the time was coming when they would not be getting their headage grant.

In regard to heifers, I have known heifers going on the market at £70. I wonder where they are going because farmers are trying to get store heifers to keep for breeding purposes and I am surprised that there should be a decline there. As I say in-calf heifers are making £70 and perhaps more. I do not see many short-horn heifers offered for sale, but the point is that if they are failing in the test, perhaps they are being sold off.

The Leader of the Opposition spoke about agricultural advice and about having an inspector in every parish. I do not agree with him there. We in North Tipperary are very well serviced and we have two of the parish plan agents and we are fully supplied with all the service we can get, if we want to avail of it.

Many of our farmers are handicapped through lack of capital and the question was raised by Deputy McQuillan with regard to small farmers, even small farmers with 40 statute acres with a valuation of only £10 to £15, which averages at 9/6d. a statute acre. They are lucky enough in that because it comes to about 25/-or 30/- an acre in my area, with less acreage, and they are still making a living. There is a good scheme operated through the Sugar Company and the Beet Growers' Association for growing fruit and vegetables which is very advantageous to the small farmer and it would be a great help even to the cottiers.

Stability of prices is very important for farmers. I have been listening to farmers complaining for the past five or six months, even when cattle were selling for as little as £5 10s. a cwt., but if they had sold at that time and got in stock, they would have far more money now. If they go out to buy now, they will pay £6 or £7 a cwt. If they had sold and re-stocked, they could have reaped a good profit. This is similar to the case of some farmers who failed to save their crops. Deputy Rooney spoke of acres of land left idle and that is quite true. The farmers said they had no way of keeping cattle through the winter and now they say they are not able to buy them. No Government can cope with that sort of thing. Practically everybody could see the time coming when cattle prices would go up again.

It is true that farmers have increased production, but they become discouraged when they find they cannot sell their produce. Deputy Rooney spoke of farmers leaving the land and that is a big problem down in my area. These farmers find they do not make sufficient money out of their produce to pay a decent wage to the workers. They cannot compete with Bord na Móna or the Sugar Company where men can get £10 or £12 a week. If we seek increased prices for our produce, we put up the price of milk and sugar and so on and there is an outcry: "See what the Government are doing now."

I welcome this Bill in the hope that it will assist trustworthy farmers to obtain credit more readily. Surely a man seeking an £800 loan and having a farm worth £8,000 has good security? I think this Bill will help towards solving these problems. I am not surprised that the cow population has gone down because people are now inclined to get rid of them more quickly but the drop in heifer population surprises me. Heifers are a very paying proposition even if kept for the farmer's own use as milking cows. On the market a two and a half year old heifer will make £70 today.

The man who goes borrowing goes sorrowing, it is said, and we have had some experience of that. I believe that the farmers are not grousing about the interest they must pay; they are willing to pay the increased interest if they can get the money for their produce. All the borrowing in the world, however, will not make the farming community happy if it is not spent in the right way. I trust that this Bill will mean some relief to creditworthy farmers.

The aim of this Bill is to provide means for an increased output of agricultural produce. I think that is intimately bound up with the stability of the prices the farming community can get for their produce. They have had a rather unfortunate experience over the last few years in that respect. They have to face the possibility of the markets not coming up to expectations as well as the vagaries of the weather. Farmers nowadays are inclined to be sceptical about the benefits of increased production, if it does not mean more money for them, an increase in their real income and a rise in the standard of living on the land.

The small farmers west of the Shannon have been mentioned but we also have a very large number of these small farmers in the south and there we have also the immense problem lem of the eradication of bovine T.B. because the basis of the southern economy is the dairy farm. One thing that struck me in regard to the Minister's statement about the activities of the Agricultural Credit Corporation is the fact that they are able to pay a dividend of four-and-a-half per cent. It is nice to be able to say that and I am sure the Minister, holding practically the entire capital of the Corporation, is very pleased, but I would plead with him to impress on the Corporation that they can afford to make credit available more cheaply to the community for whom they are supposed to cater.

If, on State money, they can declare a dividend of four-and-a-half per cent. it might be pointed out that some of the money they obtain from small investors earns those investors only about two per cent. The State, on one hand, through some of these bodies is using that money and able to earn a dividend of four-and-a-half per cent. Therefore I think the case could be made that the Agricultural Credit Corporation should so amend their schemes as to make credit more easily available and at a cheaper rate of interest. I cannot see why the interest rate should be six-and-a-half per cent., when they are earning a dividend of four and a half per cent. at the same time.

Deputy Fanning spoke of a farmer owning a farm worth £8,000 and seeking credit of £800. We all know that we have had approaches to make on behalf of people to the Agricultural Credit Corporation and through speaking to people seeking these loans, we know that not alone have they to offer that type of security but that they have to find guarantors also. That is something that might be examined. Otherwise, the farmers would practically be in as good a position, or perhaps better, to approach a commercial bank to obtain credit, whereas the Agricultural Credit Corporation and the scheme which the Minister is now proposing are designed to enable the farming community to obtain credit more easily for the expansion of agriculture that we all hope will come about. It was mentioned previously that if a farmer is regular in the payment of his annuities over, say, a five-year period, there is no reason why, having proved his ability and his bona fides, the value of the advance should not be stepped up in his case to almost 100 per cent. of the value of the security he offers.

There is, and will continue to be, great need for these facilities and in the area I represent, where reactors have to be taken out of herds and where farmers will be involved in large capital expenditure, I think the State, through the operation of the Agricultural Credit Corporation, should be able to come more readily and more easily to the assistance of those farmers. If the scheme which the Minister now envisages and the regulations to be made under it will provide for a more ready and easier availability of capital to the farming interests, I gladly welcome the scheme.

Other points have been covered by previous speakers and I do not believe in repeating them. However, I hope the Minister will consider the point of cheaper credit.

First of all I want to say that we have had a very interesting and helpful debate on this Bill. The points raised by speakers from all sides of the House are mostly points that we have had under consideration ourselves. While I, too, would like to find a solution for many of these problems, it is not easy to find one. Take the points raised by Deputy Sweetman. He spoke about the reduction in the numbers of heifers and cows. I admit that that is a disappointing feature of the statistics and I know that the Minister for Agriculture is also concerned about it. He is trying to find the cause of it; if one knows the cause one may have some hope of finding a remedy. One point we must bear in mind, however, is that a considerable number of cows and heifers disappeared from the herds under the Bovine Tuberculosis Eradication Scheme. That would not account for all of the reduction, however, so that farmers who breed heifers for sale must not be finding it remunerative. Deputy Fanning said that he found it very remunerative but surely, if it were, very many more people would go in for it.

I am not troubled too much about the slight drop in the number of sheep mainly because there was an artificially high number of sheep on the hands of farmers in January, 1960. At that time we had more cattle and sheep on hands than we would ordinarily have because farmers were unable to find a free market for their products. The fact that there has been a slight reduction in the number in January of this year as compared with January of 1960 does not cause me any worry.

The next point raised by Deputy Sweetman was the question of raising the limit that can be put on a holding free of equity charges from £400 to £1,000. He said that might do harm because it would interfere with a man's credit otherwise. I just want to tell the House that these charges on equities apply to unknown claims that may be made such as in the case of relatives where an estate has not been administered. This charge will come in spite of them even though some unknown or lost brother or sister may appear and make a claim on the holding. However, these charges do not take precedence over any charge made by a bank or any loan of that kind and it does not interfere very much with bank credit. Deputy Sweetman also asked about bills of exchange which are referred to in the Bill but we shall leave that over to the Committee Stage.

One thing we must bear in mind is that the Agricultural Credit Corporation are only lending to the farmers a small proportion of the total amount lent during the year. The amount of increased lending by the commercial banks between October, 1958 and October, 1960 was £12,000,000. That is a huge sum compared with what the Corporation was able to do and we must keep that fact in mind in dealing with the points raised in the debate. Another point I want to make before leaving that is that this money was not all lent for cattle raising as Deputy McQuillan has stated. I know that loans were made, not for cattle raising, but for other branches of agriculture.

If we take the question of interest raised by Deputy Dillon and other speakers, it is true to say that on the Continent farmers in some countries borrow at a lower rate of interest than farmers here but that is usually from their own co-operative societies. Governments may make it possible for cheap credit to be given, but that is usually done through co-operative societies. In Great Britain farmers are paying ordinary commercial rates and they are doing that here also.

It is not so easy to deal with the question of interest as only a small proportion of the money is lent by the Government. If we said that the Government were prepared to give out money at 3½ or 4 per cent. every farmer in the country who is borrowing from a commercial bank would be inclined to change over and the Agricultural Credit Corporation could not deal with them. On the other hand, we may be giving advantages to farmers which farmers are not getting in other countries. I do not think that other countries are giving advantages as favourable as we do in the way of particular grants for drainage, fertilisers, farm buildings and so on. If the farmer here is worse off in the way of credit he may be better off in other ways. It is more convenient for us to do better for him in these things, like drainage, fertilisers, and housing because it would not be possible administratively to do very much in the way of cutting down the interest rate for credit.

It is true, as many speakers pointed out, that a farmer would be in a worse position by getting a loan if he did not use it properly. That is so obvious that we all accept it. I think you may take it that that is one of the things the Agricultural Credit Corporation would bear in mind. Most Deputies have had the experience of going to the Corporation concerning a loan and asking why it was not granted. I have found from my own experience that in many cases the reason given was that they did not believe that the man would be able to make proper use of it and that he would be able to repay it. That means that they go into the matter very carefully, discuss it with the applicant and sometimes come to the conclusion that the loan would not improve the man's position and would not be good from the Corporation's point of view because it would probably not be repaid. Therefore, the loan is not made.

On the other hand, I have known farmers who got loans from the Agricultural Credit Corporation, and they were the making of them. They gave them the opportunity of re-stocking their lands and, perhaps, buying a few extra machines and getting into a full programme of production which enabled them to make the necessary profits to repay the loan and make a decent living on the land. Eventually, when they were free of the loans, they were much better off.

As I said, the Agricultural Credit Corporation go very deeply into the circumstances of anyone who applies for a loan. They calculate, in their own way, what benefit the loan will bring to the prospective borrower, whether he is likely to be in a position to pay the interest and repay the capital in the stipulated time. Deputy MacEoin need have no fear that this body would hand out loans without making full inquiries. As far as I am concerned, the only fault I ever had to find with them was that they were too conservative and were not, if you like, optimistic enough about the possibilities of farming paying. I think we need have no fears they will hand out money irresponsibly.

A question was raised about the two-thirds. At the moment the rules laid down for the guidance of the Agricultural Credit Corporation in its Articles of Association stipulate that they must not lend more than half the value of the holding to any particular applicant unless he has additional security. I mentioned in my opening speech that the Corporation have told me they intend to amend their Articles of Association to enable them to give two-thirds of the value in future. I think Deputy Dillon asked why not remove it altogether? Of course, the Corporation will decide in every case how much they should give. There is, however, a good deal to be said for Deputy Dillon's suggestion and I will convey it to the Corporation. But I would not seek to influence them. If they think the limit should remain at two-thirds, well and good.

There was a good deal of discussion about guarantors. As far as my experience goes, they do not ask for guarantors very frequently. Up to this, their practice has been to take a mortgage where they can get land for security. Where it is impossible to get a mortgage, or where there is some other reason in the nature of certain exceptional circumstances, they ask for personal guarantees. In this Bill, we are making it easier for them to lend without the necessity for a mortgage or guarantors, because we are giving them power now, first of all, to enter into hire purchase, which will make it easier for them to lend on new machines, and so forth, and we are also giving them power to charge the land. Charging the land will be a very simple procedure. They will merely get the consent of the borrower to charge the land and that charge will be registered. That will normally obviate the necessity for guarantors.

Deputy Dillon said that he took it from my introductory remarks that the Corporation would lend to co-operative societies. He said—I know this to be quite true because it was my own experience also—that co-operative societies had not borrowed to any great extent from the Agricultural Credit Corporation. I recollect in my time as Minister for Agriculture one very large transaction, however, between a co-operative society and the Corporation. I was not actually referring in my opening speech to co-operatives as we know them. I was not referring, for example, to co-operative creameries. I was referring to an expected development in co-operatives for the processing of farm produce. Every Deputy is aware that a great deal of thought is being devoted at the moment to the processing of fruit and vegetables. There is a very big market available for all the fruit and vegetables that can be processed here.

The first step is, of course, to produce them and that is something which cannot be done by the farmer, unless he is a very big farmer. It is something, rather, which must be done through a combination of farmers, and the obvious combination is a co-operative society. That is the type of society I had in mind when I spoke of advances to co-operative societies. I hope there will be a development in that direction.

Deputy Jones mentioned interest charges and asked what dividends were being paid. The Agricultural Credit Corporation has a share capital of only £300,000. On that, they are paying 4½ per cent. to the Minister for Finance. In addition, they have nearly £3,000,000 borrowed money. I cannot say at the moment what that money is costing, but I think we may take it that some of it is costing 5½ per cent. anyway. Some was borrowed a considerable time ago and some more recently. If we find that they are charging 6¼ per cent. for loans at the moment, there is not much more than a margin of ¾ per cent. as between 5½ per cent. and 6¼ per cent. Not much could be done to reduce the rate of interest because the margin is so small.

Deputy Dillon said he understood there was an element of risk attaching to this rate of interest. Every bank in calculating interest rates always takes the question of risk into consideration. Now and again, a borrower does not pay up and that default must be covered. A small part of the interest, therefore, must be devoted to covering such risks. The same principle applies in the case of the Agricultural Credit Corporation. They have no more bad debts than the ordinary commercial banks, but there are some and they must cover them.

I said in my speech that I thought the Corporation would have to take more risks in the future if the intention is to expand. I inferred—I may not have put it too plainly—that if they take the risks I am encouraging them to take and if they lose a certain amount of money, I, in turn, will be prepared to take a little less interest. I shall be putting up to £2,000,000 into it now. Deputy Jones can make the necessary calculation himself. If they take these risks and fail to get the money back, we will say they took the risks and failed. That is all right. I will meet them by saying I will take a little less interest. If they take the risk, it does not mean they will have to charge an increased interest on their loans.

Deputy Rooney said he preferred short-term loans to long-term loans. It depends on what you lend the money for. If the Agricultural Credit Corporation lend money to a man to build a hayshed, we all know that is a long-term loan, because a hayshed will last for a very long time. Usually, we give 15 years and, perhaps, a little longer to pay off that loan. If a man says: "I want to buy half a dozen heifers in calf. I am going into the dairy business," they will get that money back in five or six years. That is fair enough. If a man says: "I have a very big tillage farm and I am short of money to buy seeds", they could give him only a year because the seeds will mature into a crop in a year. Therefore, they should get the money back in a year. The determination of what is to be a long-term or short-term loan depends on what the loan is for. We can leave the practice as it has been in that respect. I never heard anybody complain about a loan being too long or too short.

Deputy Fanning mentioned a point which, indeed, I heard from some other quarter quite recently, that is, the date appointed each year for repayment. He made the point that they may appoint the month of May and the month of October and they may not be convenient months. I think the Corporation would be reasonable in that regard. If a man gets a loan and everything is fixed up and says: "The months of May and October are not suitable for me; I would much prefer July and January", I am quite sure that is a matter that can be arranged. I certainly would not put it into the legislation. It is a matter for administration. I am sure they would be very reasonable about it. It is a matter that could be arranged between them.

I said in the beginning that we had a very interesting debate on this problem. There were points raised such as the rate of interest, the time of repayment and the amount that should be lent in relation to the value of the property. These are all interesting matters which can be debated at another stage, but, on the whole, the Bill appears to be acceptable. If there are details, we can discuss them on the next Stage.

With regard to the £2,000,000 which the Minister mentioned, I take it that that money was also advanced by the State and not by private investors?

Some of it was from the bank.

Was some of it from the State?

Question put and agreed to.
Committee Stage ordered for Wednesday, 26th April, 1961.