Deputy Treacy has given notice that he wishes to raise the matter of the steps taken by the Department of Industry and Commerce to discourage the tendency towards monopoly, or near monopoly, in the flourmilling industry.
Adjournment Debate. - Flourmilling Industry.
This question on the Adjournment arises from some questions I was obliged to pose to the Minister yesterday. They were concerned with a tendency towards monopoly in the flourmilling industry, with a resultant closure of a number of mills in recent years and the attendant suffering endured by the displaced workers and their families. That policy is now leading to the closure of another mill, the mill of Going and Smith in Cahir in Tipperary, in my constituency. This mill is the main source of the social and business life of that town and the cessation of flourmilling there is regarded as a great local disaster.
In 1960, there were 33 flourmilling industries in this country. There were 700 commercial bakeries. Today according to the Minister's statement in reply to my questions yesterday, there are 21 mills in operation. Twelve have gone to the wall since 1960. Of the number remaining, nine are independent, and eight are controlled by one concern. Four further mills are controlled by one other concern. The mills which have gone out of existence in the past five years alone were located: three in Dublin, two in Galway, one in Bagnalstown, one in Aughrim, one in Thomastown, one in Ballina, one in Midleton, one in Cork and one in Clonakilty.
It will be seen, therefore, that a monopoly is emerging in the Irish flourmilling industry, that that monopoly has become so powerful that the small mills simply cannot survive, and that it is a battle between a pygmy and a giant. In my opinion, very shortly the nine remaining independent mills will be forced to close and to accept the cartel which now seems to be in control. The House is aware of this predicament.
I submit that the induced closure of the Cahir mill by the front organisation for the two major milling monopolies, namely the Flour Millers Association, is yet another cynical and barefaced tightening up of the already static market. This market is controlled by the Rank monopoly group, and the Odlum monopoly group, which dominate the whole industry. I should like to make it clear to the Minister and the House that I am in favour of rationalisation, provided it leads to efficient production at reduced prices to the consumer. In this instance we see developing the worst effects of duopoly whereby the Rank and Odlum organisations, supported by interlocking company corporations such as Associated Millers Ltd. and the Merchants Warehousing Company Ltd., are inextricably locked together.
The Government must now be fully aware that their activities, such as the take-over in Cahir, are far from being in the public interest. To my mind, this is a clear case for reference to the Fair Trade Commission and I am asking the Minister if he is willing to do so. To suggest that the Cahir closure is in the best interests of the consumer is absolutely false. It is manifestly untrue because the Minister will recall that his predecessor only a few months ago had to beat the self-same flour millers over the head before they graciously agreed to reduce the price of flour by 3/- per sack.
The Minister seemed to indicate also that the quota of the Cahir mill will simply vanish into thin air and that it cannot be bought in the strict sense of the word by another mill. That seems very plausible on the surface, but the Minister knows the closure is designed to bolster up the monopoly mills' quotas which otherwise might show a fractional reduction if the Cahir mill remained open.
This is a case of relatively large mills growing relatively larger by squeezing out small capacity mills. As I said, such development seems rational for many industries but in the case of the flourmilling industry, the impetus towards rationalisation is naked monopoly and self-interest. It is not in the interests of the public.
In support of my statement that the Cahir mill quota does not go up the spout or vanish into thin air, I want now to quote from the journal Management of October, 1963, a statement made by the President of the Irish Flour Millers Association, Mr. H. G. Glynn, under the heading “A Study in Rationalisation”. He said:
Finally, it was the wish of the millers that the public should not be asked to pay for the rationalisation of the mills by an increase in the price of flour but that it should be financed partly by the past savings of the industry, together with the savings in production costs, which would accrue to the mills obtaining the trade of the closing mills.
He is quite specific: " . . . savings in production costs, which would accrue to the mills obtaining the trade of the closing mills."
We are further assured that the closing of the mill at Cahir would have no adverse effect on employment there. We know to our sorrow that the overall production at Cahir was 80 per cent flour and 20 per cent offal and that the cessation of flour milling there will lead to a very serious problem of redundancy. Many of these men are of middle age and, indeed, beyond it. They cannot hope to re-adapt themselves or find alternative employment in that town or the next town. They are simply being thrown out on the unemployment scrapheap.
The kind of compensation, the pension scheme on which I questioned the Minister yesterday, is such that they will get a miserable week's wages for each year of service. They will get approximately a half-year's pay after a lifetime of service, or, alternatively, those over 60 years of age will get a very small pension approximating to the old age pension. So much for the oft-lauded man-power policy of the Government and the generosity of the Flour Millers Association.
I submit to the Minister that he call a halt to the closure at Cahir and to the similar closures pending elsewhere by referring the activities of the grain distributing and importing companies, the grain storage companies, in fact the whole industry, to the Fair Trade Commission for an impartial hearing. I hope the Minister accepts my statement and my estimate that almost 75 per cent of the total national quota of flourmilling in this country goes to the Rank and Odlum organisations.
It is not in the interests of the consuming public that this sorry state of affairs should continue. The policy of the Labour Party is well known on this issue but it needs reiteration, having regard to the sorry events we have to contend with. We would wish that the functions of An Bórd Gráin were extended in the fields of intake and storage so that no cartel or monopoly could control the entire machinery of wheat, both home-grown and imported, of storage facilities, of brokerage, of flourmilling and provender milling. The tentacles of this monopoly have now extended far beyond all these things. They control most of the bakeries in the country.
The chances of a small-town bakery surviving in these circumstances are very slim indeed. It is not good. We are not merely talking about "isms" in this matter; we are not merely asking that the State intervene now, directly, in this essential service of the supply of the staff of life to our people. Bread is the main diet of our people and I do not accept the Minister's statement that this whole problem has arisen because of the fall in consumption of bread. Bread is still the main diet of our people. I submit that the 60,000 people at present unemployed cannot provide themselves, their wives and families, with anything more than "bread and spread" and tea three times a day. The same applies to the aged, the sick and infirm, with the paltry allowances offered to them.
The Minister would wish us to believe we have an era of prosperity and an opulent society, but we must not forget that we have, too, a large section of our people who are extremely badly off. In this country, the poor are still with us in large numbers. To them, bread is necessary and a Government who allow the industry that supplies that bread to perpetrate this because they form a monopoly is guilty of dereliction of duty.
In recent years several Deputies recorded in Dáil Debates, many of whom might be regarded as conservative, have said that the monopoly in the flourmilling industry has taken on such serious dimensions that there is a duty on the State to intervene and take over the industry in the public interest. Such statements have come not merely from the Labour but from other benches. The former Leader of the Fine Gael Party is on record as advocating the taking over of the flourmilling industry by the Government because of the trend of events at that time.
Pending decisions of policy, the Minister ought to make up his mind soon to put the industry under the closest possible scrutiny by the Fair Trade Commission, conscious all the time that the record of the millers is by no means a clean one. The Minister has indicated his helplessness and has stated that he cannot compel a miller to continue in operation if he does not want to do so. His advice and guidance would be important in these matters. If he advised these people it was not in the interests of a community such as Cahir that this mill should be closed down, it might have some effect. The whole economic and cultural life of Cahir depends on this industry. If the industry goes to the wall, the town becomes a virtual ghost town in a very short time.
We hear about a man-power policy, re-training, re-absorption of redundant operatives and recommendations from adaptation councils. The Minister should now indicate the policy of his Government by protecting those people in Cahir. Until those people can be retrained and reabsorbed in alternative employment, there is a moral social duty on the Minister and the Government to prevail on the Flour Millers Association to desist in their attempts to secure the flour milling quota from Cahir mills. Indeed the management of Cahir mills should also be asked to desist in the transaction. I advocate this course not merely in the best interests of the workers and people of Cahir but in the best interests of the industry at large. This is an unwholesome situation we are contending with. This interlocking company, this virtual cartel, controls not merely the future of the operatives dependent on the industry for their livelihood but also the supply and the price we have to pay for the very staff of life itself.
The cessation of milling at Cahir will also have an adverse effect on the farmers in Tipperary and adjoining areas. They are farmers who have been advised by the Government during the years to grow wheat and who have been supplying this mill with wheat over a long number of years. What is to happen to them? I do not think the National Farmers Association will welcome this closure because their members have a definite interest in it. Many of them, for years, have supplied wheat in great abundance to this mill.
Whatever the Minister can do will be very welcome but I do not accept his attitude of helplessness and hopelessness in this matter. He now has sufficient facts to indicate that he is dealing with a dangerous monopoly. An integral part of that monopoly is not of Irish origin, it is alien and it has no roots in this country, no regard for the ramifications or repercussions of its decisions and its only purpose is to exploit the profit motive that prevails here. That is why we have this sorry spectacle——
The Deputy has now taken up his time.
——of 12 mills closing in recent years and now we have the mills in Cahir, in one of the most picturesque towns in the country, where we have men and women today sad of heart——
I must ask the Deputy to allow the Minister to reply.
I have no intention of taking up more time than that allotted to me.
We have all been at some disadvantage in dealing with this because the discussions on the closing of this mill have arisen from rumours and perhaps leakages and premature assumptions. As far as I know officially and as far as the owner of the mill referred to by Deputy Treacy is concerned there has been no announcement of the closing. While I do not use this to deny the possibility of its happening I want to use it as an explanation of the fact that up to now we have been dealing with this on the general problem facing millers throughout the country and assuming, rightly, that this is a continuation of what has been going on for some time. I will have to ask Deputy Treacy to accept that there is a drop, a continuous annual drop, in the consumption of flour. I was asked how much this was and at the time I did not know but I have now found out that it is three per cent or four per cent per annum. In other words it is a calculable drop from the point of view of the miller. I already told the House that in spite of the closures that have already taken place we still have 50 per cent more milling capacity than our requirements.
Up to now mills have closed because the capacity was not there but at this stage we are coming to the end of the voluntary rationalisation scheme and closures that take place are done so on the private decision of the owner of a mill who assesses his prospects in the future market, assuming a continuation in the drop in consumption. When I say there is a drop in the consumption of flour and that this has been associated in other countries as well with an increase in general prosperity, this is not to deny that bread is important to certain sections and certain weak sections of the community. In fact it is an argument in favour of producing the highest level of efficiency within the industry to say that the weak sections depend a great deal on bread because the greater the efficiency in the milling industry the greater prospects we have of maintaining a reasonable price for bread and of limiting the costs.
I should like to say that there is an understandable concern on the part of Deputies in regard to the employment in their own areas and ever since Deputy Davern put down the question and the persistent pursuit of it since, I have tried to let them know that I am deeply concerned when there is a loss of employment. However, the alternative offered to millers and their workers up to now was to "close now and be compensated under a scheme of adaptation or stay open, face the competition in the market and find out how you get on ". As I say, this alternative has caused a number of owners to say: " My prospects are such that I will close now and be compensated." The rationalisation scheme that was in operation had finished and it was at the request of the small millers that it was revived. It is now coming to a close again and men have to take decisions.
I would say that if the closing of a mill in any place were to depend on a prior decision of mine, I would give very close scrutiny and take a long, hard look at the issue on which I was asked to decide, before coming to a decision. The possibility of a monopoly developing because of rationalisation exists, I am sure, but the confusion in the situation now is artificial. A monopoly does not exist. There are two big groups and there is a third section represented up to now by nine mills and possibly, if this rumour is true, will be represented later on by seven, so you could not regard a situation as being a monopoly where you have two big groups and seven small ones.
A report is being made by a survey team to the Minister for Agriculture on the trends in the milling industry and a decision on policy will be made by the Government, when that report has been studied. There is not a monopoly, nor is there a duopoly but an oligopoly. I would like to say now that from the information which I have received since I spoke last it is clear that any benefit which would accrue from the closing of these mills, subject to the rumours, would, be to the small mills because I understand the big owners have indicated their willingness and desire to make legal undertakings not to share in this benefit. However, as I say, I have not made any decision which would give rise to a benefit accruing to anybody by the closing of a mill and I would give long and careful consideration before making any such decision.
I have said several times in the House that I cannot require a mill to continue in operation, any more than I could require Deputy Treacy to be a Deputy, if he did not want to be. We cannot require people to continue in operation if they make a voluntary decision not to continue. There was some doubt raised in this House as to the voluntary nature of their opting out and I did go to the trouble of having inquiries made and I have been reassured that no pressure was put on them and no pressure is being put on them to participate in this rationalisation scheme now and to close down. It is a voluntary decision. The Deputy asked me to call a halt in Cahir but it is a matter for a man to decide his future prospects and if he does not decide to opt out now he faces the highly competitive situation which is ahead of all industry. I do not know any way in which you can guarantee that everybody will survive in this keen competition. If you want to have efficient milling, cheaper prices for flour and food I do not think the answer which the Deputy suggests, keeping the mills open, as a social service, is the correct one.
Neither is a monopoly.
It is not a monopoly; at the worst, it could be a duopoly, and I do not see why there should not be more than that. There are seven or nine mills, depending on the rumours, as well as the two large groups. I do not think there is anything I can add to what I have said. I am not in a position to require them to stay open but there will be no prior decision made by me without a long and careful look at the position. There will be no decision of mine which would be——
But the Minister could create the climate in which it would be possible for them to continue.
I would want to eat an awful lot of bread. Unless an awful lot of people consume more bread, the market will not be there. It is not quite natural to say that this can be solved by an Act of a Minister. This is a shrinking market. The Adaptation Council have put forward a scheme of compensation to help those who decide they would be better to go out with compensation for themselves and their workers than to remain for the stormy days when they might not survive. I do not think the Deputy, if he considers the situation fully, could consider a situation where all industry was guaranteed survival for all time is feasible.
The Dáil adjourned at 5.30 p.m. until 3 p.m. on Wednesday, 9th June, 1965.