There are not many figures in it.
The products are destined mainly for export and sales to date have been effected in England, Germany, Holland, Iceland, Switzerland, Channel Islands and Africa.
Only a small proportion of total output is being retained for the home market. Two of the company's new products, however—instant potatoes, of which the company is the sole producer here, and processed peas— are already on sale on the consumer home market and are, I understand, doing well.
As the standard of living improves in the more advanced countries, public taste tends to seek a greater variety in food. When this can be offered in a form that can be prepared for the table quickly and with a minimum of labour it carries an added sales attraction. Public demand is thus shifting to processed foodstuffs and the amount of farm produce which is being marketed in processed form is increasing. There is every indication that this trend will continue. Our soil and climate and our labour force already constitute valuable initial advantages in food production so that great possibilities are open to this country of establishing itself in an expanding external market for processed foods. The Government believes that this opportunity should be seized as quickly as possible. Private firms are already engaged in this field but in order that it should be exploited as fully as possible the Government have welcomed and encouraged the plans of Cómhlucht Siúicre Éireann.
The dangers for an agricultural country such as ours of not keeping up with other countries in this method of marketing agricultural produce will be obvious. The benefits of success in this field are no less clear. Not alone will new industrial employment be provided in the processing plants but farmers—particularly the small farmers—in the area concerned, would be offered stimulating prospects of a steady and expanding market for the raw materials needed by the processing plants.
What is involved in the plan of Cómhlucht Siúicre Éireann is, in effect, organisation on a scale not previously attempted of an outlet for horticultural produce at economic guaranteed prices. The company hope, and I share their hope, that to the extent that their plants are located in, or draw upon the produce of, the less developed areas, they will foster a spirit of self-confidence and new initiative there, thus enabling those areas to make an effective contribution to rural development.
The AFD process holds possibilities, too, for our fishing industry.
These various possibilities strike one immediately but there are other advantages, too, to be had from the successful implementation of the company's plans that may not strike one at first glance. For instance, the industry would open up an outlet for high-grade technical and professional skills and should serve as a valuable training ground for educating our young people in modern industrial techniques.
Then there is the fact that developing the food processing industry encourages other native industries such as those engaged in manufacture of packing materials of various kinds — boxes, cases, cartons, jute and paper sack and polythene laminates. Finally, any move towards competitive export of our own products in processed form, rather than in their natural state, is to be welcomed.
It is now clear, however, that if Cómhlucht Siúicre Éireann's initiative in starting this industry is to be fully supported and sustained, further substantial capital investment will be necessary. Competition in this field is particularly keen so that, if we are to capture an adequate part of the market, it is of great importance that we establish our position as rapidly as possible.
As most of you will be aware, the company has financed its manifold activities up to now without any addition to the share or debenture capital raised in its earlier days. Apart from the few shares issued to subcribers to the memorandum and articles of association or as qualifying shares to directors, the capital raised consisted of the 500,000 ordinary shares of £1 each issued to the Minister for Finance, on which the company has been paying a 5 per cent. dividend for many years past, and the public issue of 500,000 6 per cent. cumulative preference shares of £1 each. A further £1m. was raised from the public by way of State guaranteed debentures.
I should add here that a bonus issue of shares was made in 1961 to bring the nominal value of the ordinary shares rather nearer their real value. This bonus issue brought the issued ordinary share capital to £1.5m. and the total issued share capital, preference and ordinary, up to the limit of £2m. permitted by the Sugar Manufacture Act, 1933. The bonus issue did not, of course, increase the money actually invested in the company.
The stage has now arrived where the company has found that further desirable expansion of food processing is likely to be beyond its available resources. Furthermore, Cómhlucht Siúicre Éireann's ordinary sugar manufacturing business itself now stands in need of certain developments involving capital outlay. This development might be hampered if the temporarily free resources which the company had applied to developing the food processing business were to remain as a continuing investment in it.
The company has therefore approached the Government with an outline of the developments it considers necessary to exploit adequately the potential of the food processing enterprise. The directors of the company are confident that, despite the keen competition which already exists in this field, the enterprise will pay its way apart altogether from the benefits it will bring to the nation's whole economy. Having carefully studied the company's proposals, the Government have concluded that Exchequer assistance should be made available for the further development of this important project. The Government feel, too, that the time has come for setting up a separate company which, while very closely associated with the sugar company, should concentrate on food processing. Cómhlucht Siúicre Éireann is already studying the question of establishing a subsidiary company for this purpose.
So much for the background. As to the Bill itself, its main provisions may be summarised as follows:
(1) it provides for the increase of the authorised capital of Cómhlucht Siúicre Éireann from £2m. to £5m.;
(2) it empowers the Minister for Finance to acquire, by subscription or by purchase, shares to the total amount of £3.5m. in Cómhlucht Siúicre Éireann, Teo., and/or in an "approved subsidiary company", that is, the proposed new food processing company. The 1933 Act. limited to £500,000, nominal value, the amount of shares the Minister might acquire by subscription in Cómhlucht Siúicre Éireann Teo. This limit did not, of course, attach to the subsequent bonus shares which he obtained without subscription;
(3) it empowers the Minister for Finance to make repayable advances to the parent company or to an approved subsidiary company;
(4) it enables him also to guarantee borrowings by either body, provided the aggregate of the principal guaranteed and of the advances made does not at any time exceed £5m.
(5) it will relax the provision of the Industrial and Provident Societies Act, 1893, in favour of an approved subsidiary company so as to facilitate association with co-operative societies engaged in food production or food processing where this might be economically justifiable and in the national interest.
There are also some consequential provisions and modifications of existing law.
Deputies will notice that the additional resources which the Exchequer may furnish under the Bill can be made available either directly to the new food company or channelled to it through Cómhlucht Siúicre Éireann, or through a combination of these methods. This provision will provide flexibility. The exact method of financing has not yet been determined. The method may, in fact, vary from time to time. The Bill has been so drawn that Cómhlucht Siúicre Éireann can be put in funds to finance expansion and improvement of the sugar factories, should further examination show this to be necessary.
At the present stage, it would be very difficult to frame precise estimates of ultimate financial requirements either as to amounts or the times they would likely fall due or to give a firm and detailed outline of the Company's eventual programme. As of now, the company envisages expanding the processing plants already named and the AFD installation. Mushroom production is to be increased and the packing station will need enlargement. Other important projects outside these centres are under consideration.
Even the plans I have just outlined should not, however, be regarded as rigid. The lessons learned as the company probes and breaks into external markets; the way in which farmers in particular areas grasp the opportunities of supplying the requisite volume, variety and quality of produce; changes in consumer tastes; Common Market developments — all these factors, and many more besides, may affect objectives. Some lines of development may be given greater emphasis than is now contemplated. As Minister for Finance, it would be my responsibility to be reasonably satisfied of the general economic soundness of the various projects as and when Exchequer assistance is sought.
By and large, I would expect that share capital would be used to cover the acquisition of fixed assets and that repayable advances and guaranteed borrowings would be used to meet working capital requirements. These latter requirements are particularly difficult to gauge in advance of adequate experience. Regarding the guaranteeing of borrowings, I would expect that this provision would facilitate the company in obtaining funds from the banks and other financial institutions so that the Exchequer should not have to supply all the finance required.
If present forecasts are fulfilled, the food company's capital requirements, whether in respect of share or loan capital, will prove eventually to be significantly more than is provided for in this Bill. It has become established practice in this type of legislation to make such provision as might cover needs for two or three years ahead so as to afford the Oireachtas a further opportunity of reviewing the matter when the new project has taken shape. At the present stage of development of this project, I should not feel justified in asking the Dáil to authorise commitments greater than those I am now proposing to the House. I would expect the present Bill, however, to cover requirements for some years ahead. As soon as the provision of further funds from the Exchequer is necessary the case would, of course, again be brought before the Oireachtas. I can promise on behalf of the Government and myself, and I would venture to say also on behalf of the Dáil, that the company can make its plans for expansion in the full confidence that a further request for finance will be sympathetically received and welcomed.
While the outlook for the processed food industry is promising, I must emphasise that the new food company to be formed will face no easy task in establishing and holding a footing in the world's highly competitive export markets. However, the qualities which Cómhlucht Siúicre Éireann has displayed in bringing the project to its present stage of development inspire confidence in the ultimate success of the venture, even in the face of severe competition from well established concerns. And here I should like to add my tribute to the foresight, enthusiasm, drive and skill which the board of the company and its managerial, administrative and technical staffs have applied to their task. The Government fully appreciate all this and the important national project which the food processing enterprise constitutes has the Government's full support.
I am sure every Deputy will wish the company and its new subsidiary the merited success in the enterprises which we trust will be of great significance in the economic life of this country.
I recommend this Bill for the approval of the House.
