Agricultural Credit Bill, 1969: Second Stage.

I move: "That the Bill be now read a Second Time."

The primary purpose of the Bill is to increase the authorised share capital and borrowing limits of the Agricultural Credit Corporation. The Agricultural Credit Act, 1965, authorised share capital of £6 million for the Corporation and fixed at £20 million the borrowing powers of the Corporation. It was expected at the time that these new limits would be adequate to cover the Corporation's requirements for capital to finance its activities for a period of three years. The share capital has now been fully subscribed by the State and total borrowing by the Corporation amounts to approximately £15 million. The Bill proposes to increase the authorised share capital limit to £10 million (section 2) and to extend the borrowing limit to £25 million (section 3). It is expected that the proposed new limits will suffice for at least five years ahead. As the Bill authorises an increase in the Corporation's borrowing powers it is desirable to increase to a corresponding extent the authority of the Minister for Finance to guarantee the Corporation's borrowings. This is the purpose of section 4.

The Bill also has a number of other provisions which are intended to facilitate the Agricultural Credit Corporation in its day-to-day administration. As the volume of its business grows the Corporation is finding it increasingly difficult to have the annual accounts prepared, audited and furnished to the Minister for Finance for presentation to the Houses of the Oireachtas within 90 days after the end of the accounting year as required by present legislation. It is proposed in section 5 to follow modern practice generally in this respect in relation to State-sponsored bodies by removing the specific time limit of 90 days. The Corporation will still be obliged to have the accounts ready as early as possible.

Under present legislation requests to a county registrar by the commercial banks and the ACC for information from the register of chattel mortgages must be made under seal. This procedure has at times proved to be a source of delay for the Corporation and it is proposed in section 6 of the Bill that in future requisitions to a county registrar may be made under the hand of a solicitor or law agent of the Corporation or bank. The county registrar will, of course, continue to be the only person with direct access to the register of chattel mortgages. I understand that the commercial banks do not register chattel mortgages to any extent.

Section 7 is a consequential provision to empower the ACC to make the necessary alterations in its Memorandum and Articles of Association arising out of the changes being made in the Bill. Normally the ACC may not alter its Memorandum or Articles of Association without the approval of the Minister for Finance.

During its financial year 1967-68 the ACC issued a total of 6,080 loans, including hire purchase advances, to the extent of £4.5 million and approximately 4,000 of those were for amounts of less than £500. The total amount of loans at present outstanding exceeds £20 million. Lending by the Corporation in its current financial year, which ends on 30th April next, will total more than £5 million and it is estimated that the volume of business will rise in the years immediately ahead.

While overall lending by the ACC has fallen off since 1965, due to the general suspension in the autumn of that year of loans for land purchase and the funding of bank debts because of the shortage of capital, there has been a steady increase in loans for directly productive purposes. The number of unsecured loans issued by the Corporation to farmers is rising rapidly and the maximum amount of loan which may be issued under the Corporation's scheme of unsecured loans is now £750. The Budgeted Loan Scheme, which has been in operation since the beginning of 1968, enables farmers to finance their seasonal needs as they arise by means of a book of dated cheques issued by the Corporation; no security is required for loans of up to £1,000 under this scheme. The Corporation now operates a comprehensive range of loan facilities designed to meet the productive needs of agriculture. Business with farming co-operative societies is growing steadily, and outstanding loans to these societies at present well exceed £1½ million. Over 80 per cent of all loan applications received by the Corporation are approved, and the repayments record of borrowers is excellent. Because of the continuing shortage of capital it will be necessary to continue the present restrictions on loans for land purchase and debt funding. Any significant relaxation of these restrictions would give rise to considerable extra expenditure which would have to be financed from Exchequer funds thus adding to the difficulties of financing the public capital programme. However, the Corporation continues to make loans available for the purchase of land to enlarge uneconomic holdings.

An important development in the ACC's activities has been the setting up of area officers in provincial centres. These officers provide a closer link between the ACC and the farmer and they help by their advice to ensure that credit is used to best advantage by the borrower. As the Corporation's business grows, further extensions to the area officer system are envisaged.

In recent years the ACC has raised a considerable amount of capital from the public through the issue of farm credit bonds, introduced in 1962, and the operation of a deposits scheme which was introduced in 1965 and which is at present the Corporation's main source of non-Exchequer borrowings. Both bonds and deposits are guaranteed by the State. The total of outstanding bonds and deposits at present amounts to approximately £6½ million. The Corporation's efforts to finance as much as possible of its lending operations from non-Exchequer sources were hampered considerably during the past year by the general increase in interest rates which resulted in stronger competition from other borrowing institutions for the public's savings. In order to maintain its competitive position the Corporation revised its borrowing rates in January and again in April of this year.

The interest rates on deposits now range up to 7¼ per cent subject to six months notice of withdrawal and the interest rate applicable to the latest series of bonds is 6 per cent with a tax-free capital bonus of 2 per cent where the bonds are held for five years. To offset the extra cost of paying higher borrowing rates the Corporation has found it necessary to increase its lending rates and hire purchase charges. The Corporation now charges interest at the rate of 8½per cent on new loans which compares with the present bank overdraft rate of 9 per cent. However, as a concession to the small farmer, the Corporation has maintained an interest rate of only 6½ per cent on all loans made under its scheme of unsecured loans where the borrower's aggregate indebtedness to the Corporation, including the new loan, does not exceed, £400. Loans in this category constitute approximately one-third of all loans issued by the Corporation to individual farmers and the concession should, therefore, be of significant benefit to the small farmer. The Corporation's hire purchase charges are kept at as low a level as possible in the interest of the farming community.

The primary objective of the ACC is to ensure that the development of Irish agriculture is not impeded by lack of capital. In pursuit of this objective the Corporation aims to be the most convenient and the cheapest possible source of credit for the farmer consistent with its operation as a commercial organisation. It now offers a wide range of loans for farming purposes on favourable terms as to interest and repayment and, in so far as it can, it seeks to ensure that the money borrowed by the farmer is put to the best possible use. The Bill which I now present to the House is intended to enable the good work being carried out by the ACC to be continued and expanded. I confidently recommend the Bill for the approval of the Dáil.

With the general principle of making further moneys available for the development of agriculture through the Agricultural Credit Corporation there is no quarrel on any side of the House but I am somewhat intrigued by some of the ways in which it is proposed to deal with this and also by some of the remarks of the Minister. I am not quite clear why the arrangement for an increase in capital and the arrangement for an increase in the amount that can be borrowed are dealt with at the same time. Presumably, it is intended that the share capital will be subscribed only by the Exchequer but in that respect I think it is desirable that the Minister for Finance should be quite categoric and specific. Is there any intention, with the increase in share capital, that there should be an attempt at getting subscriptions from private sources? Certainly, that is something that should be stated by the Minister in introducing the Bill and something that preferably should be included in the actual Bill.

The borrowing limit that is being extended is for the purpose of enabling the Corporation to get funds elsewhere and to provide for these funds, as is suggested by the Minister, by varying the rate of interest offered from time to time. It appears now that all over the world we appear to be facing a prolonged period of high interest rates and that it will be necessary to pay more for the servicing of capital than was the case some years ago. I can remember the Minister's Party suggesting from time to time that it was possible to raise capital without any advertence to world-wide conditions. The Minister has been in the Department of Finance sufficiently long to realise how non-sensical were the expressions or rather perhaps, how much they were made by the members of his Party with their tongues in their cheeks. Obviously, no one country can swim against the stream in that respect although there are certain ways in which one can modify or change from time to time the general stream, divert capital, and interest rates also, for periods to cover different circumstances.

However, it seems reasonably clear that the moneys that have been obtained by the Agricultural Credit Corporation have been obtained out of the general pool of savings and as far as I can see there has been no real evidence that these savings entrusted to the Corporation have been taken from the pool of what I might describe as dead moneys. They seem merely to have resulted in a switch from one lending operation to another. The time has arrived quickly when there must be a re-assessment of saving incentives and a new designing of them to bring additional savings into the general pool. Perhaps, as the Minister is extending the period for the introduction of his Budget to, I think, one of the latest ever dates, he will use the interval profitably for the country by applying his mind to the necessity for new saving incentives. The Agricultural Credit Corporation would be one of the bodies to benefit from the addition of new savings incentives.

I do not accept that it is necessary to extend beyond three months the period for preparation of the accounts of the Corporation. Any efficient company, even of the size of the Agricultural Credit Corporation, can certainly produce its accounts within three months and the dilution of their duty by the euphemistic phrase "as soon as may be" is not something that is to be encouraged. The Corporation should be looking ahead, if not looking to the present, to the installation of appropriate computerised accounting which would mean that this matter could be dealt with without delay.

Section 6 of the Bill deals with chattel mortgages. I have some doubt as to whether the drafting of the section is adequate to provide what the Minister has in mind. A seal is something that is recognised statutorily under the Companies Act, 1963. The solicitor or law agent of the recognised lender is not a person so statutorily recognised. The county registrar has placed on him a specific statutory duty not to make the register available, except in certain specific instances and, as the section is drawn, it will mean that the county registrar who does not require a notification of the appointment of the solicitor or law agent to be statutorily recognised will be running into the danger of an action being taken against him for improper disclosure. The section should have been drafted in an entirely different way on that account.

The drafting of the second subsection of section 7 is one of the anachronisms we meet in modern drafting, that subsections so-and-so shall apply, and then if we look back to the subsections that are to apply we find that those subsections say that something else is not to apply. Surely, it would have been possible to arrive at a simpler method of drafting than to say in one section that another is to apply when that other section says that earlier sections of the Act are not to apply? Those are matters that we can raise on the Committee Stage.

The Minister also mentioned incidentally the restriction that there is on the Corporation in present circumstances at the request of the Government. It would be highly desirable, as we on this side of the House have frequently indicated, that where specific directions are given by a Minister to a State-spon-sored body such as the Agricultural Credit Corporation, those specific directions should be tabled for the information of the House and the general public. My understanding of the position is that the Agricultural Credit Corporation have received a direction from the Government that they are not to employ any funds or make any loans available for the purchase of lands by any borrower no matter what the circumstances may be except for the purpose of bringing an uneconomic holding up to an economic size.

If my understanding is correct it is very harsh in the circumstances of a farmer who wishes to settle out a son and to provide for the settlement of that son by borrowing on his own farm for the purpose of enabling the son to purchase another holding. There was, unquestionably, at one stage competition among borrowers, who artificially forced prices up, perhaps, in the belief that most of them would be financed by the Agricultural Credit Corporation and that there would be clearance from the Corporation for the financing; but the number of cases in which there would be a specific ability for a farmer to settle out a son would not be the same thing at all.

Candidly, I do not object to a productive limitation but the absolute buying restriction that there is at present is something that should not be there in its present form. If my information is correct, this restriction should be withdrawn.

The Minister also has indicated that there is a restriction on the extension of existing loans. While one can understand that in general circumstances, there are other matters to be recollected: first, the fact that all savings are coming out of one general pool of savings and, secondly, that it is very often a necessary prerequisite for a farmer getting the greatest production out of his land that he should know where he stands in relation to his accommodation. We all know that in many instances this is not feasible. There should be some restriction rather than prohibition of this lending.

I should like the Minister, when he is replying, to make it clear as to whether there is any other case or any other class of case in respect of which a specific direction or a general direction has been given by the Government to the corporation. In so far as I know, and, again, I speak subject to correction, neither the Minister nor the corporation ever stated publicly that such a direction has been given though, of course, people have been told when they applied that they could not be accommodated.

The statement was issued through the Government Information Bureau.

I must say that I missed it. Did that statement give the exact class of case?

I cannot remember the exact statement.

Can the Minister give me the date?

It was August, 1965. It set out the situation very clearly. I was in Agriculture at the time and there were quite a lot of discussions going on with the NFA.

The terms of the direction were published?

Yes. It set out the type of loan that could be given by the corporation together with the restrictions.

I thought it was indicated only by implication that certain loans could be made but that there was no publication at that time of a specific restriction on other loans. However, if the Minister tells me that my recollection is wrong I shall be quite happy to check on the matter because it is something that should be published so that people will not be led up the garden path and go to a lot of trouble when it is obvious that it will be of no use.

I should like the Minister to indicate also exactly what cohesion there is between Government policy of the day and the corporation in regard to the purposes of loans. We all accept, of course, that there has been an advice, if you like, from the Government to the corporation to the effect that loans should be for productive purposes. That is not what I had in mind. How much of the loans made by the corporation has been in respect of agriculture? This is something which should be very carefully considered as apart from the financial angle. However, I am quite sure that Deputy Clinton will deal more competently with these matters than I can.

In order to get money from the Agricultural Credit Corporation is was necessary at one time to prove that the money was not needed. In other words, if one could prove that one did not need money there was a chance of obtaining some from the corporation. Otherwise, the corporation would just say they were sorry but that the money could not be made available. That situation seems to have changed drastically during the year and at the present time the Agricultural Credit Corporation seem to be doing an excellent job. We, on this side of the House, would give our full approval to the proposals in the Minister's Bill.

However, there are a couple of points which I should like to mention briefly. I agree that it was right to restrict the use of the money when it was becoming a little scarce. The idea of buying land for the purpose of bringing a farm up to an economic level is good. It was also a good idea to abolish the system which allowed the corporation to advance money to farmers for the purpose of buying expensive cars as was a practice some years ago. It was too bad to find that one farmer who wanted money to improve his farm could not get it while his neighbour who was doing quite well on his farm was able to buy one or two cars with the help of the Agricultural Credit Corporation. If people wish to buy cars under a hire-purchase system there are means of doing so other than through the corporation. It might be suggested that these loans were advanced in the interest of improving agriculture by having the necessary vehicles on the farm but I do not think that was a good idea. However, the statement issued through the Government Information Bureau changed that system.

The increase in the rates of interest has encouraged people to invest money in the corporation. I know of one person who subscribed what to him was a substantial amount of money but who subsequently required the money quickly. The Corporation were rather tough when they told him that he could not have it until the statutory period expired. It can be argued that such a clause was necessary as otherwise everybody would invest for six months and if they then did not need the money they would get the maximum amount of interest. I still think that there could be some type of——

Flexibility.

"Flexibility" is the word I have been trying to find— which would allow this thing to be done. There is one case in which the Agricultural Credit Corporation do not lend money of any sizeable amount and that is the case of the really small man who is starting a fruit farm. It is quite a common thing in my constituency at the present time for a person with a very small amount of land who cannot get credit to go into the fruit and vegetable business. I am sure the housewives who find it so difficult to get vegetables at the present time would encourage this. It is regrettable that the Agricultural Credit Corporation do not make small amounts of money available for this type of enterprise. Many of the people concerned work during their spare time at this type of production and, if they make a success of it, go into it full time. I know a number of them who have succeeded in doing that. It should be possible for the Agricultural Credit Corporation to make some money available to this type of person.

One thing I should like to say about the offices in Harcourt Street is that it should be possible to have better parking facilities there. If two or three cars are there at the same time the owners will find when they come out that those wardens whom we were talking about earlier have put stickers on the cars and, instead of getting credit, they find they have to pay £1 for parking their cars. The parking facilities there are not good and there should be some effort made to get off-street parking or to have the offices where parking space is available.

If loans are given to those who are really prepared to use them for good purposes, then there cannot be enough money found for them. The Minister will probably get down to this in some of the documents issued around Budget time but if he could dig something up before this Bill has passed through all Stages I would like to know how much of the loans is recovered. What risks are there of bad debts? What percentage losses are there? Are the losses substantial? Could we have any figures on that?

I agree with Deputy Sweetman that there should not be a longer period than 90 days for preparation of the accounts of the corporation? At the present time it is often very difficult to get accounts audited, particularly at the period shortly after the end of the financial year. It is very difficult to get auditors who are in a position to deal with accounts in a short time but a company like the Agricultural Credit Corporation should be able to have the accounts prepared within 90 days. Most of the accounts could be prepared for some months before that and it is only the last balancing of the accounts which would be required. The Minister should reconsider this question of extending the period.

All of us would be prepared to support any measure designed to make more money available to the Agricultural Credit Corporation. I have recently read through the Report and Accounts of the Agricultural Credit Corporation and it is obvious that the business is expanding and that the capital available to the corporation is now insufficient to meet the requirements of the present time. It is well recognised that agriculture is deplorably under-capitalised in this country and that if we are to secure the full potential of the industry within a reasonable period a large-scale investment programme will have to be undertaken soon. All over Europe at the present time this type of programme is being carried out and this is not confined to the six EEC countries. It is not only Mr. Mansholt who sees the great need for structural reform in agriculture. This is a matter of serious concern in every country in Europe and measures are being taken to provide capital on a large scale to ensure that viable holdings would be established. For some considerable time the money provided by way of State aid in this country has been used more as social assistance than as a means of setting up viable holdings.

The demand that is obvious now for increased capital on the part of farmers can be viewed in a number of ways. It can be taken as an indication—and I am sure it is an indication—of the enormously increased cost of production. When we refer to increased costs of production in agriculture we are not merely talking about the ordinary imports of seeds, fertilisers, lime and so on. What I have in mind is the enormous sums of money required today to stock even a medium-sized farm with cattle and sheep. I am also thinking of the very considerable sums of money that are locked up not only in livestock but in feeding stuffs before the market day arrives. Those costs have increased enormously.

I have a couple of glaring faults to find with this Bill. One fault is that it does not seem to provide sufficient capital for the immense job which should be done for agriculture and which requires to be done urgently. I believe that before very long we will be back into this House with further legislation to enable the corporation to get more capital. Another defect I find in the Bill is that there is no indication that the Government are going to provide any additional capital from the Exchequer. The Government are now enabling the corporation to borrow more money. I know the corporation have been providing money for agriculture and they have done a very good job as far as this goes. I personally believe that the Agricultural Credit Corporation, within the limits of the finance available to them, have been doing an excellent job in recent years.

All of us have the experience that when a reasonable proposal is brought to the Agricultural Credit Corporation it is carefully examined and carefully assessed and if the proposal seems worthwhile the necessary finance, as far as possible, is met by the Agricultural Credit Corporation. I have a slight criticism to make and that is that when a proposal is made to them they do not think big enough. I mentioned a case here before where somebody went in with a proposal to build a piggery with 200 fatteners and the advice given was that the project was much too big. This is in conflict with the present day thinking in agricultural development. There should be fostered a closer link between the Department of Agriculture, their policy and thinking, and the Agricultural Credit Corporation. I know there is a link between the Department of Finance and the corporation in so far as credit is concerned but there should certainly be a closer link between the Department and the corporation and money should be made available freely for directly productive purposes.

There have been many excellent schemes introduced and carried out by the Agricultural Credit Corporation. I am thinking of the fertiliser credit scheme and the loan scheme for livestock which enables farmers to carry cattle over the winter, feeding them on silage, so as to avoid selling them at the wrong time. This is a wonderful facility. This is the ideal type of operation that the corporation should engage in. I spoke about the need for more money for the Agricultural Credit Corporation and referred to at least some of the increased costs of production. I did not speak at all about the increase in the cost of machinery and equipment and in the maintenance of fencing, gates and other things of that kind, or of increased labour costs in agriculture today. One always refrains from referring to increased labour costs because of the very low wages paid to farm workers.

The Deputy will appreciate that this would enlarge the scope of the debate on this Bill.

The purpose of this money is for agricultural development.

It provides credit for the Agricultural Credit Corporation.

It enables them to extend their borrowing for investment in agriculture and it is relevant to refer to the various needs of agriculture for this type of investment and to the way the corporation operate. That is really what I propose to do. It is wellknown also that investment in farming gives a very low return and that it is imperative that money should be available for agricultural investment at the lowest possible rates of interest. Otherwise it will not be possible to achieve the full potential of the industry, in which case farmers will not be able to meet their commitments and pay off interest on loans as required. People outside of agriculture have no idea at all of the low return there is for investment in agriculture. They have no idea of what land means and what investment in agriculture means. Such people have no idea of the very low return which people on the land get from their investment. I hope the Agricultural Credit Corporation will always have sufficient money available to help the people on the land and that there will always be enough people on the land.

Their forefathers fought for it.

The financial return on agriculture is very low and people should recognise this fact and appreciate why it is necessary that money should be provided as cheaply as possible for farmers. Another factor which we should bear in mind, and which I have mentioned already, is the need for structural reform.

This is a job the Agricultural Credit Corporation must be involved in because if we are to keep the maximum number of people on the land—and I think this is the wish of most people in this country—and provide them with an acceptable standard of living, we must have a considerable increase, mainly in farmyard enterprises, and farmyard enterprises today are a costly business. This is the ideal kind of job where the Agricultural Credit Corporation can come in and assist. A much closer link will have to be forged between the ACC, the advisory services and the Agricultural Institute if we are to ensure the success of their endeavour and investment. The corporation must work as a team with other services to ensure that when money is made available it will give a reasonable return for the investment made.

Reference was made earlier to the fact that there had been restrictions on money for debt funding and for land purchase. I do not wholly agree with my colleague, Deputy Sweetman, in relation to making money freely available for land purchase. I do not think he advocated that: the point he made was that there were cases where it was obvious money should be provided for a farmer's son who was able to demonstrate he was in a position to make the best use of his land. That type of purchase should be accommodated, but we should be looking for opportunities to enlarge uneconomic holdings, and money should be made freely available, and should be known to be freely available, by the ACC for this type of purchase. The aim should be viable holdings by whichever means possible.

The short-term loans for fertilisers and lime and that type of thing have been a tremendous success. We should continue to expand also the short-term unsecured loans for the purchase of livestock and the retention of livestock over the winter months. This is extremely worthwhile.

Hire purchase is another operation engaged in by the ACC. This is an immense advantage to farmers who were forced into high interest rate hire purchase schemes in the past. People are inclined to get into machinery too easily and too readily without counting the cost and without appreciating the fact that this machinery is lying up for a very considerable portion of the year. It is a great relief to people who have to buy machinery under hire purchase that they can now be accommodated by the ACC at a much lower rate of interest.

I was not objecting to machinery. I was objecting to motor cars.

I know that well. That is a situation that has existed for a considerable time. On the whole, within the limits of the capital available to the ACC they have been doing an excellent job. My personal belief is that there is an enormous job to be done and a large-scale capital investment programme must be undertaken. This is being done all over Europe and it is the principal concern in the agricultural sector on the Continent. This is a job for a team, and the Agricultural Credit Corporation will have to be a very important part of that team. Now that they have expanded their business and appointed agents in various parts of the country they have gained an immense amount of experience in recent years and have set about farm expansion operations in a businesslike way.

I should like on this occasion not only to pay tribute to the ACC as a whole but to the man who is now retiring, or who has retired, Mr. Pearse, who has given a very valuable service to the corporation during the years since their foundation. There is nothing more I wish to add except to say I am supporting the Bill because it is making it possible for the ACC to get more finance. This Bill does not mean that the State is putting more money into the ACC: it simply means that we are enabling the corporation to borrow more money—money which is badly needed for agriculture.

(Cavan): My remarks on this Bill will be very brief. In 1966, I found it necessary to complain bitterly regarding the action of the Agricultural Credit Corporation, due admittedly to circumstances over which they had no control, in cancelling loans to the tune of nearly £¾ million. In that way they put borrowers in a very embarrassing position. I am satisfied that it was not the fault of the Agricultural Credit Corporation that they were forced to take this rather drastic action and avail of technicalities to cancel these loans. I am satisfied they were acting at that time under Government direction. I subscribe to the remarks that have been made to the effect that the attitude of the corporation towards borrowing has improved very considerably. It is now considerably easier to obtain money for worthwhile projects.

Much of the borrowing done in County Cavan is to finance the purchase of small farms to bring existing small farms up to an economic standard. That is a policy I support very strongly. In counties with small farms it is essential that the size of the farms be increased if they are to become economic units. In this respect there has been quite an improvement. I would be inclined to agree with Deputy Clinton that to lend money indiscriminately for the purchase of farms by people who do not own land would lead to an artificial increase in the market value of farms but I think the point that Deputy Sweetman was making is worthy of very careful consideration. State bodies and Departments of State sometimes make mistakes by adopting a broad blanket policy and allowing of no exceptions to it. There must be exceptions and I say that the Minister and the Board of Directors of the Agricultural Credit Corporation should review this policy. Where a farmer has two or three sons and where the second and third sons are prepared to enter agriculture as a profession and to stay on the land they should get every encouragement. In such a case, as Deputy Sweetman suggests, a substantial portion of the capital required to purchase a viable holding for a second or third son should be made available. I would not say the entire capital should be made available but a substantial portion of it should be made available. When a man proposes to purchase a viable unit and if he is otherwise acceptable to the corporation it is good business to lend that sort of person money and it is wrong of the corporation to adopt a hard and fast policy because if you have a hard and fast policy and are not prepared to be flexible you are bound to make decisions that are unreasonable.

I can see a considerable improvement in the part of the country that I have experience of in so far as the Agricultural Credit Corporation is concerned and part of that improvement is due to the establishment of district offices. I welcome the establishment of a district office in Cavan town. I agree that it tends to bring the corporation into closer touch with the farmers and to expedite dealings. Cases can be investigated on the spot. The borrowers can come in and consult the Agricultural Credit Corporation officer in the first instance and get a lot of the work done through him. Admittedly, much of this work was done in the past by solicitors for little or no charge——

They lent the money themselves.

(Cavan):——but it is less formal when a person can go in and get his forms to fill up and give the information himself.

From a legal point of view there is another suggestion I have to make. The corporation have a policy whereby they grant a loan subject to a first charge on the fee simple interest in the existing holding and the holding that is being purchased. Of course, if that sort of direction is given to the law agent for the corporation he will naturally insist that he gets first charge and, secondly, that it is first charge on the fee simple interest in the land strictly speaking. In rural Ireland there are many cases which would require this rule to be more flexibly operated. In many places there are titles which are technically defective and which a bank law agent would not pass and indeed which a counsel for the High Court would not accept but which, nevertheless, are reasonably good titles. You could have a case where the only outstanding interest might be a person who has been a patient in a mental institution for many years. It is a moral certainty that the unfortunate person will remain there for the rest of his days and that no claim will be made either by him or by the mental institution on his behalf but yet it is impossible for the corporation to get a first charge on the fee simple of that holding, that is the existing holding—I am not speaking about the holding that is being bought but the holding which it is desired to bring up to an economic standard. I would suggest that even if an Act of Parliament or a section of an Act is necessary to enable the corporation to accept such a title it should be done. With the local knowledge that the local officer of the corporation would have he should be in a position to say that the corporation are not taking any serious risk and they should be prepared to make the loan on that security.

When things are satisfactory one likes to give credit where credit is due. In County Cavan the demands on the corporation are not in the higher realms of finance but in so far as demands are being made they are being reasonably met. The only two suggestions I have to make are that substantial loans should be given to set up the second or third son in agriculture and that there should be this improvement to get over the difficulty of technically defective title.

Reference has been made by previous speakers to the situation in 1965 when, for the first time, the Government—I agree with the Minister's recollection—publicly instructed the Agricultural Credit Corporation to discontinue loans for the purchase of land and for the defraying of bank debts. I am fully aware of the thinking at the time in relation to bank debts because there was a credit squeeze situation and bank managers all over the country, where they thought a farmer when purchasing land would get a loan from the Agricultural Credit Corporation, were pushing him on to the then Agricultural Credit Corporation and so keeping their total overdraft within their branch to the level which would please the directors of their bank. I am similarly aware that in the buying of land there was this question of competition between people who had got a promise of a loan from the Agricultural Credit Corporation and people who had got a promise of a loan from a bank. However, I think that on balance it was a mistake to remove completely the right to give loans for this purpose.

Deputy Fitzpatrick has adverted to the situation where the second and third sons wished to enter agriculture and the only way to get them on to a viable holding was to buy more land. Surely this was one of the objects of the Agricultural Credit Corporation that was set up by the late Paddy Hogan? The time has now arrived, even though we might be in this period of high interest rates mentioned by Deputy Sweetman, when we should go back on the mistake we made in 1965.

I have the clearest recollection of everything that happened in 1965, because it was one of the occasions when I felt I had got something done in this House. That was the occasion when the Agricultural Credit Corporation was heading the following financial year for the lending of about £7 million and when the removal of the loans to buy land and loans to defray bank debts brought that figure down something of the order of £5.3 million. However, when we were issued with the Budget tables, the amount to be provided from the Exchequer, having taken into account the repayments of loans that would come into the coffers of the Agricultural Credit Corporation left, as far as I remember, a deficit of £1.7 million. At the time I had a Parliamentary Question down to the Minister for Finance, the present Taoiseach, and when I raised this Question on the Adjournment the Minister, after a hard struggle in the half hour eventually guaranteed that whatever did not come forward from an improvement in the ACC's finances to make up that £1.7 million during the year, the Exchequer would provide. However, it must be remembered that it was a big drop from the figure which they had intended to lend during the year, and it was quite correct to say that where loans had been granted the usual proviso in the letter in granting the loan that the loan be taken up within a certain period of months was strictly adhered to.

I myself had the experience of bringing a Deed from the Registry of Deeds to the ACC on behalf of a constituent, and if the unfortunate man had waited till the following morning he would not have got his loan. This would have placed him in Queer Street having regard to the credit squeeze situation. The political pressure that was put by the Government on the directors of the ACC reminded one of the action of a welching bookmaker. There were many unfortunate people who did not get their loans, notwithstanding the fact that every country solicitor knew that for the previous ten or 20 years the letter from him taking up the loan and indicating that the title would be available was always sufficient to enable the loan to proceed even though the period specified in the letter had elapsed. In fact the practice all over the country was to bring that letter to the commercial banks and to get bridging finance during this period.

However, there is no point, when discussing this Bill today, in adverting to the sins of the past. Not one of those sins was a sin of the Agricultural Credit Corporation, which is clearly the best semi-State institution we have. There is no doubt that given the necessary money they can do more for agriculture than the Minister for Agriculture and Fisheries or anybody else, because they can follow a practical policy which can be shown by experience to have succeeded in the improvement and expansion of agriculture.

This is an institution the efficiency of which has been clearly demonstrated. Up to some years ago there was a staff merely in Dublin. Then there was the appointment of area officers and in some cases the establishment of district offices in which these officers sat and were available. That was a good step forward. When one sees one large office in Dublin and that a number of area officers are sufficient to cover the entire country, one is inclined to compare that with the duplication one sees at the present moment in the commercial banks many of which have now amalgamated with one another and are still running offices in different towns competing one with another, paying these enormous staffs and incurring the enormous expenses necessarily involved and competing in the offering of interest rates for deposits.

An efficient organisation like the ACC should be encouraged, not to have grandiose offices all over the country but to appoint for the benefit of farmers area officers who know the type of agriculture carried on in the area, who know the type of land a man has, who can judge the viability of the project and who can then report to his directors. This is an institution for which we should be very thankful. We can allow it expand with confidence and know we shall get for every expansion a return not only for the farmers and for all the people who depend upon the exports of the farming industry but to keep our balance of payments right and to employ people in industry.

I do not want to disagree with a colleague but I find nothing abhorrent in a change in the chattel mortgage situation. The issue of loans on chattel mortgage by the Agricultural Credit Corporation seems to me to be an avenue of opportunity. A man may require accommodation for a certain period for machinery or other things and the issue of a chattel mortgage could be the saving of him; it could make his holding viable and make him an efficient producer. However, chattels are chattels and the trouble is that chattels can walk off the land. There is the danger that if a man is, in the old phrase, "going bad" perhaps when he sells his cattle there are other pressures upon him. If these ten cattle were the subject of a chattel mortgage he would not repay the moneys derived from the sale of the cattle to the Agricultural Credit Corporation and keep only the profit but would, in fact, use that money for some other purpose. The funds on chattel mortgage should be freely available to the Agricultural Credit Corporation and the change whereby the law agent can just get the information, rather than under seal, seems to me to be a good provision. There are many ways in which chattel mortgages can be and are used.

My friend and colleague, Deputy Tully, shot down the motor cars. It is a grand thing to have an argument against something that looks like a mistake at first sight, but the normal farm today could not operate without a motor car. If the Agricultural Credit Corporation is supplying the liquid finance for the running of a farm, and if needs include a motor car, I see no objection at all to that car being provided at the interest rate charged by the corporation rather than have the unfortunate farmer going to a hire purchase company and paying two-and-a-half times the rate of interest charged by the corporation, the result being that his profits become more deflated. Everybody knows you cannot exist on a modern farm without a motor car. The farmer cannot walk out into the street and buy whatever he wants. Business has to be done. That is why I do not agree with this global condemnation of the issue of loans for motor cars.

The "agri-business", to use an American expression, has benefited most spectacularly from the activities of the Agricultural Credit Corporation. Co-operative societies and others who provide credit for farmers have been facilitated in very large amounts and this has helped the development of agriculture. This is a field in which the Agricultural Credit Corporation can go on expanding. The commercial banks are more interested in the short-term overdraft. The old practice whereby overdraft accommodation was used as permanent liquid capital is fast disappearing. Anyone who has listened to the lectures given in the Irish Management Institute is aware that the commercial banks are tending more and more towards producing counterparts which will provide money longterm for either industry or agriculture, very often trying to get in the process a slice off the business. In that situation the provision of money for agri-busiter ness is something the Agricultural Credit Corporation can safely undertake and it could properly extend its activities in that direction. I am aware that it has extended these activities over the last few years.

Communal machinery pools have not been availed of to any great extent, because, if the weather is fine, more than one farmer in the pool will want the machinery on the same day. I and some of my neighbours got together and decided we would have a pool. We wanted a completely efficient system of forage and silage harvesters. We decided what the depreciation would be and we then went to the Agricultural Credit Corporation and borrowed the capital to provide ourselves with the machinery we needed. We charged ourselves a certain figure per acre, a figure considerably less than the cost of hiring from a contractor, but one we were quite certain would be sufficient to permit us to replace all the machinery after three years and, at the same time, permit of repayments to the Agricultural Credit Corporation. This will mean that over ten years we will have a much more valuable holding in machinery and we will reap considerable benefits simultaneously. I believe our system will work because we have even gone so far as to organise our grass so that one man's grass will be fit today and another man's grass tomorrow. This is a relatively unexplored avenue and, with a little attention to detail, the Agricultural Credit Corporation could help to a great extent here.

I appeal to the Minister to remove the strictures on loans to buy land where a farmer's son wants to break out on his own. I also appeal to him to remove the stricture on the giving of a loan to defray a bank debt. There are people who, because they appear to be progressive and energetic, can go into a bank and raise money without any difficulty. I know of a case, not in my own neck of the woods, in which a very small bank debt, with a huge security behind it, was recalled. The father was old and the son had another interest. This is a case in which the Agricultural Credit Corporation could, with the help of its adviser, go in and set up a project, and give a much larger loan with more than adequate security behind it. Some years ago the National Bank, the Munster and Leinster Bank and the Bank of Ireland appointed an agricultural adviser, but the scheme is only in its initial stages. As I say, the commercial banks are more interested in short-term loans. The refusal to lend money to buy land or to defray bank debts is a mistake and I appeal to the Minister to remove these strictures.

It is generally agreed that the provision of adequate credit facilities is vitally essential to the future of Irish agriculture. For that reason I welcome this Bill in so far as it makes additional capital available for the Agricultural Credit Corporation. As others have said, the Agricultural Credit Corporation is doing a good job. Nevertheless, I am not satisfied with the facilities available. The Minister stated that the corporation charges interest at the rate of 8½ per cent on new loans. In no other country in Western Europe are farmers asked to pay such a high rate of interest. As Deputy Clinton said, agricultural credit is a necessary prerequisite for an expanding agricultural economy. In Denmark, loans are made available to farmers at two to three per cent. As far as I am aware, agricultural credit is dearer in this country than in any other Western European country. I want the Minister, if possible, to confirm or refute that statement when replying to this debate.

I honestly believe that, with increasing costs and a declining return, it just is not possible for most farmers to gear their farms to the extent that the amount borrowed from ACC will provide a better return for the farmer and, at the same time, enable repayment of this exorbitant rate of interest. As far as I am aware, ACC has had a considerable number of cases of difficulty in the matter of repayments. Only ten days ago, I had to intervene with ACC to prevent them from selling out a farmer in my constituency. In any such case, I have always found the officials of ACC most kind and most understanding.

If we are to expand our agriculture then credit facilities must be made available at a lower rate of interest and ACC must regionalise to a much greater extent. I welcome the appointment of area officers. A big snag in the past has been that, from one office in Dublin, the officials there and the board have had to assess the numerous applications from various parts of the country for projects of various kinds. I believe it was not possible for these officials or for the board to examine and properly assess these various applications. I know of cases where agricultural instructors drew up detailed plans for farmers in support of applications but these applications were turned down by ACC despite the training and expertise of the agricultural instructors. Furthermore, unless the area officer co-operates with the local agricultural instructor, who, in the final analysis, is the professional adviser in agriculture, and unless there is closer co-operation between ACC and the agricultural advisory services then our agricultural industry cannot make the progress it should make. Such cooperation between ACC and the agricultural advisory services has hitherto been absent. Surely the person most competent to assess the credit-worthiness of a project submitted by a farmer is his own local agricultural adviser?

Since 1965, ACC has not been giving loans for the purchase of land except for the buying of an adjoining holding to make an existing holding more viable. I appeal for the expansion of these services to enable farmers to purchase farms for their sons. Take a farmer who has two sons on the land, only one of whom can hope to inherit the family holding. There should be special facilities to enable that man to buy another farm for the second son.

There are examples in practically every parish in Ireland of two sons staying on the land and, when the parents get older or die one son succeeds to the farm and the other unfortunate son gets nothing or maybe a few hundred pounds, and, with no training other than in agriculture, he has to take the emigrant ship to seek a living for himself in another country. I am not satisfied that the facilities at present provided are adequate.

There will have to be a far greater expansion in the whole organisation of ACC. Now that we have reached the stage of appointing area officers, I believe that regional offices, strategically situated, are the next step, which is vital, and that they should, to a large extent, be autonomous bodies capable of assessing applications for loans from their particular area. In other words, we must have such offices strategically situated within the dairying regions and within other agricultural regions in our country. Specialist facilities should be available there.

Let me give the House an example of how serious the present position is in regard to credit for our agricultural community at present. There is one commercial concern operating in this country which is providing loans for the purchase of livestock and particularly for dairy stock and that company is charging far higher rates of interest than the bank rate. It is a fact—I have definite knowledge of this—that that company is doing a substantial amount of business, particularly in our dairying areas. If ACC were providing a proper service, it would not be necessary for our dairy farmers to avail of the facilities of this commercial firm and be compelled to pay such a high rate of interest.

I feel there is need not merely to provide more capital for ACC but for a critical appraisal of its whole structure and for a greater expansion of these services.

I am glad to note that there is a general welcome for the Bill and a fairly general approval from all sides of the House of the way in which ACC is doing its business and of the expansion of activities in which it has been engaged in recent years. May I first deal with the point made by Deputy O'Donnell about the cost of agricultural credit in different countries? One gets a bit tired of hearing these types of phrases, that something in this country is the highest or lowest in Western Europe. These isolated comparisons are very rarely valid and we have to look at the whole picture. For instance, in taking into account the rate of interest at which the Agricultural Credit Corporation lends a farmer the money with which to put up an outhouse, for example, you have to take into account that the State gives that farmer a grant of portion of the cost. The total cost of the operation to the farmer does not attract interest.

One country in Europe of which I had some experience at one time is Belgium and as far as I remember all their aid to agriculture was exclusively in the form of cheap capital, interestfree loans, loans at low rates of interest and so on. But that was the only aid agriculture got. It would therefore be invalid to compare the rates of interest charged in Belgium, in that sort of situation, with the rates of interest charged to farmers here where there are also capital grants made available.

That is all by the way, but Deputy O'Donnell asked me specifically if agricultural credit here was the dearest in Europe. I suggest that he has only to go to Great Britain today where he will find that the Agricultural Mortgage Corporation charges 9¼ per cent. I would implore Deputy O'Donnell not to be using silly sorts of phrases of that type and to discuss the activities of the Agricultural Credit Corporation on a proper, valid basis. The situation is that the Government and the corporation do endeavour to see that agricultural credit is made available to farmers at the lowest possible rates of interest, taking all the circumstances into account. I do not think that there is any level at which we permit the full economic rate to be charged to farmers and there are a number of special concessionary areas. That brings me to the point made by Deputy Sweetman about the manner in which we are making capital available to the corporation.

We make capital available to the corporation in two ways, first of all, by taking up share capital in the corporation and secondly by making repayable advances to the corporation. This mix is a good thing because it gives a certain amount of flexibility in our approach. The share capital is remunerated at a low rate whereas the interest charged on the repayable advances is somewhere near the going rate so that we can ensure that the corporation gets the capital it requires from the State at a rate of interest which is a mix of two different things. One is a very low rate of return on the share capital taken up by the State and the more or less economic rate charged on repayable advances.

The restrictions which were imposed in 1965 were necessary and in fact I remember at that time that they had the agreement of the farmers' organisations. They very sensibly took the view that if capital was scarce—I suppose capital will always be scarce to some extent—then it would be better to have it devoted to agricultural and productive purposes rather than have it deflected into less desirable areas like buying land, funding debts, buying motor cars and so on. There has been a very remarkable change since 1965 in the directions in which the capital lent by the corporation has been going, a far higher percentage of the total amount is now going to productive purposes of one sort or another. To permit the Agricultural Credit Corporation to advance money for the purchase of land on a broad basis has a number of dangers. It could mean that the price of farms would be forced up to artificial levels in certain areas. I think that the present restriction is a sensible one. The corporation will only lend to help farmers to make uneconomic holdings economic by the purchase of additional land. I would go some of the way with Deputy Donegan in what he said about motor cars. The corporation were perhaps going too far in 1965 in the amount of money they were advancing for that purpose but I do recognise——

(Cavan): They certainly slowed up very quickly.

I do recognise that a motor car is perhaps in many ways an essential item of equipment on a farm.

Would the Minister not agree that motor cars could be obtained outside without any difficulty whereas other items could not be?

As I said, I find it difficult to make up my mind on this matter. I do not agree with those people who say "look at all those farmers going to Mass in their motor cars". The first section of the community which should have motor cars are the farmers.

(Interruptions.)

Everybody should have a motor car.

Please God they will and under the Fianna Fáil policy it will not be long.

It used to be a chicken in every pot now it is a motor car in every garage.

We should make it an aim of our social policy to ensure that every family will have a motor car of some sort. Perhaps before very long we will ensure that.

Why not two?

Just as some of the people about whom Deputy Tully often talks—the building worker who has to come in from County Meath or County Kildare to Dublin to work—just as it is essential for him——

And he needs a remission of income tax on it but the Minister will not give it to him.

——in the same way for most farmers today the motor car is to a greater or lesser extent an essential requirement and therefore there might be something to be said for reviewing this restriction at a later date. It would have to be very carefully supervised and policed by the corporation. The restrictions at the moment in the circumstances in which we find ourselves are reasonable and there is continuing expansion all the time in the amount of money being made available for productive purposes.

Deputy Clinton spoke about the need for considerable expansion of investment in agriculture. That is really what this legislation is all about—to make more resources available to the corporation so that they can lend them to farmers. The corporation do envisage that our annual lending will go up by something in the region of half-a-million pounds a year so that there will be a continual expansion year by year of the amount which will be made available.

A number of Deputies mentioned farm structures. This is a matter, which only indirectly comes within the ambit of the corporation. It is primarily a matter for the Land Commission but the corporation have been playing a significant part. Last year they lent about £150,000 to farmers to enable them to enlarge uneconomic holdings. In that way I think they will make a reasonable contribution towards the solution of that particular problem. That was £150,000, approximately, out of a total of £5 million altogether. A very interesting thing about farm credit is that farmers are creditworthy people and the experience of the corporation in this regard is very satisfactory. The amount of loss to the corporation could be described as negligible.

The percentage.

I do not think it would even justify a percentage figure.

The reason is that the security is so good.

This is the point to which I was coming. In recent years as Deputies know, the corporation have been going more and more into the unsecured type of loans, loans to buy stock and so on. The fact that they have been doing that does not seem to have affected in any way the excellent repayment reputation or performance of the farming community.

Deputy Fitzpatrick discussed the type of security. I do not want to say a great deal on that because it is very much a matter for the corporation themselves. We should not attempt to be too specific in our directions to the corporation on something which concerns their day to day administration. I understand however that they are becoming more and more flexible in their approach to this problem of security. Deputies have generally welcomed the new policy of having area offices. I think that has been a great success. I know it is the intention of the corporation to expand until the whole country is adequately covered by a structure of area offices.

Deputy Tully asked about loans for fruit farming. Again, that is a matter of detailed day-to-day administration but at present by far the greatest proportion of loans—something around two-thirds of all the loans made—are of small amounts, £400 or £500.

Is there a limit, a bottom limit, on the size of farm on which a loan can be made?

I do not think so. I understand the problem the Deputy has in mind is that a man might have only an acre or two and might want to go in for very intensive farming. As far as I know, there is no prohibition by the corporation on giving that man support by way of a loan, but this is a point I shall mention to the corporation since it has been raised here.

I do not think there were any other points of particular significance raised by Deputies. By and large, I think Deputies agree that the corporation, in recent years at any rate, are doing a good job. We hope they will continue their work in a flexible, sensible way and provide farmers with the capital they need to expand their production and activities. The Government intend, from year to year, to make available to the corporation whatever money is necessary within the restrictions that have been placed on the corporation's activities. In other words, subject only to the restrictions placed on the corporation's activities there will be no other restriction and whatever money is needed to meet the types of purposes that are permitted, so to speak, will be made available.

I might avail of this opportunity very briefly to dispel any idea which some of our commentators seem to have that there is a credit squeeze in operation in this country at present. There is no such thing. It would be very wrong if any general impression got abroad that there is a credit squeeze. The Central Bank have not yet given their annual advice to the commercial banks as to the level of bank credit which should prevail during the current year.

When is that due?

As far as I remember, last year it was in May. Presumably it will be at the same time this year. We have a balance of payments problem and it is something on which we must keep a watchful eye but, on the other hand, there are no grounds for undue alarm about it. Subject to that, I would not anticipate that the advice of the Central Bank would necessarily be in any way unduly restrictive. I do not, for a moment, wish to anticipate what advice the Central Bank will give but from my own knowledge of affairs, I do not anticipate——

The Minister will appreciate that it was his own appearance on television that started all this?

Perhaps I should amplify that soon. I went on television to point out dangers and I did not say at any time that there is an economic or financial crisis or even that there need be one. All I wanted to get across to the public was that if there were unreal expectations of income increases which the economy could not sustain then we would have difficulties and perhaps a major crisis. But at present there is no economic crisis. The economy is going ahead. There is every reason to believe that we should do as well in national growth this year as we did last year unless something happens to upset the situation. The one thing that could upset the situation would be an excessive increase in money incomes.

Is that not always so?

Yes, an excessive increase in money incomes causes price increases and inflation.

And so it has always been.

I said that is one of the things that could bring us trouble this year and something that we must watch, and something about which I regard it as my duty to warn the whole community. I certainly would not like anybody to think that at this moment there is an economic crisis or a credit squeeze or anything of that sort.

The Minister is blowing hot and cold.

(Cavan): Have the late introduction of the Budget and the Minister's apparent change of views about the economic situation any relation to each other and have both any relation to the forthcoming general election?

I do not know what exactly is the point the Deputy is trying to establish. At the beginning of this year the Government issued a statement indicating what the economic probabilities and prospects were and warning that the economy could not take increases in income of the level that some people seemed to be expecting. Subsequent to that we had the development of the maintenance men's strike and the settlement which came as a result of that strike. We wanted to indicate that there was a danger of excessive increases in money incomes spreading throughout the economy. The Government and I believed it was our duty and that we had an obligation to point out to everybody concerned what would happen if there were excessive increases in money incomes widespread throughout the economy. We did that and that is all we did.

(Cavan): Surely the Minister would not regard it as an exaggeration for us to say that he went on television a short time ago and stated that we were virtually in an economic crisis and that we could expect a tough Budget?

I did not say any such thing.

(Cavan): That was the impression created by the Minister.

Deputy Fitzpatrick is regarded as an intelligent Member of this House and his duty should be to inform rather than to mislead the public.

(Cavan): The Minister gave the impression that there would be a tough Budget and that is the public opinion at the present time.

The Deputy should tell the public exactly what I did say.

Question put and agreed to.
Agreed to take remaining Stages today.