I should like to add my voice in commendation of the officers of the board and the chairman of the ACC for the manner in which they have developed the company over the years. This company was early in the field. It was established by the late Paddy Hogan, God rest his soul, and when I used to go in there, not so many years ago, the man who received me at the door was a county man of my own, Lord rest his soul. He was appointed by the late Paddy Hogan and I am glad to say that the man who now receives me is his son. That shows how long the ACC has been on the road. Their journey has not been wasted. If there was a brake then that brake came from this House. As I say, the ACC were early in the field in soliciting money from outside. For many years the position was that the money came from the Capital Budget. I am right in saying, I think, that the ACC were second to the ESB in soliciting money from outside. Certainly they were before the Industrial Credit Company. Indeed, they are the envy of the Industrial Credit Company now. This is no criticism of that body. It simply means that the ACC borrowed money in a most efficient and proper way and lent it at the correct rates and for the right term.
It has been stated here that there is a huge need for agricultural credit. Of course, there is. There is a situation which was not adverted to in the Bill. Mine may be the first voice to be raised in criticism but, in the words of the song, "Po-Po, the puppet, can do anything, when somebody else pulls the string". I have always been interested in the work of the ACC and the first item I have always examined in the Capital Budget was the amount of lending to be permitted to the ACC. Even after the ACC had begun to borrow from outside they were limited in the amount of lending they could do in each financial year.
There is nothing in this Bill, as I understand it, which changes that situation. About five years ago there was a deficit of £1.7 million in the amount being made available to the ACC in relation to the money they were to lend and there was no indication of how this deficit would be met. I questioned the then Minister for Finance, the present Taoiseach, and he said it would come from the repayment of loans. Eventually, on the Adjournment, I extracted a promise from him that, if there was a short-fall, the Exchequer would make good the deficiency. During the credit squeeze in 1965 or 1966—I forget the exact year—it was estimated that a figure of £6.7 million would be reached in loans. That gave me the information on which I was able to check and prove that there was a limit. I hope that, from now on, as we are now about to enter Europe, there will be no limit because there is no limit to the amount of money required by the farmer to go into Europe fully equipped to do the job. There is, of course, good lending and bad lending. The fact is that repayments have never been less than 99 per cent. They may have been slow on occasion but there have been very, very few bad debts. This excellent company have been to some extent retarded in their expansion over the years. They should now be released from any binding of any kind by this House or the Government and in respect of moneys which they can borrow they should be allowed to lend to the Irish farmer, and if the amount they can borrow falls short of what is required as we move towards Europe, it should be supplemented as before from capital. These are the things which are not in this Bill and which must be guaranteed by the Minister for Finance or by the Parliamentary Secretary when he is replying.
I note in one section of this Bill that the power to indemnify against loss in the transfer of a foreign currency to our money is taken by the Minister for Finance but the power is also taken to take gain. That is hardly fair. There could be a situation—and it is most unlikely—that there was a sudden devaluation of currency which would mean a crippling loss to the Agricultural Credit Corporation and which would have resulted presumably from a mistaken decision on the part of the board, and boards being human will make mistaken decisions. That would be a crisis situation where the Agricultural Credit Corporation fund had been depleted by accident. At the same time, over the year's trading there are many times when an astute executive of the ACC might be in a position to make a gain on borrowing abroad and, in so doing, he should be allowed to make that gain and to keep that money in the coffers of the ACC for lending to the Irish farmer.
Let us take the situation in relation to the eradication of brucellosis. The average compensation given to people is between £120 and £130. It is of no use at all to the dairy farmer who has lost the income from the milk produced by that cow which has gone to be slaughtered because it had brucellosis. The calf is lost as well, and that could mean as much as £40.
I do not want to widen the scope of this debate, but this is something that must be considered and I want it to be considered in the light of my own story. I had 37 cows down with brucellosis. They were very good Friesian cows which were being bred by my late father for 20 to 25 years before I was ever farming. The average compensation was between £120 and £130. Having lost these 37 cows, I had to decide how I could get an income from the farm as quickly as possible. At that time young cattle about 6½ cwt happened to be cheap and I decided that the best thing I could do was to buy them. I bought 46 and they cost £64 each, but within 12 months I got £124 each for them. You might think I did well. Of course I did extremely well, but I had to sell to find out. When I went out to buy stores to replace them, I paid £124 for them also.
That gives an idea of the amount of money that is required by farmers to stock their land. The fact that there has been an appreciation in the price of stores, beef and of calves does not mean that the farmer has the money in his pocket. We must get full production and the land must be stocked to the hilt, and every heifer that can be mated must be mated in order to create an upsurge in our stock. This is the area in which there will be a huge demand for credit.
We have not gone into the dairying areas yet in the eradication of this disease and the reason we have not is exactly the same as that in relation to tuberculosis eradication, that we are leaving them to the very last, because they are the worst areas for brucellosis. When we go in there every farmer in that area will be faced with the same dilemma with which I was faced. I was lucky in the way I overcame it, but let us face the fact that, with the appreciation in the cost of stores, a farmer who gets between £120 and £130 compensation for a beast that goes down with brucellosis will not be in a position to get any income within the next 12 months. He has to get money immediately to pay, perhaps, £160, £170 or £180 for a cow to replace the cow that went down. I want to impress upon the Minister for Finance and his colleague, the Minister for Agriculture, that there will not be enough of those cows to go around.
The terms of a loan with the Agricultural Credit Corporation are infinitely superior to those that can be got anywhere else. Any bank lending money to a farmer at the moment desires repayment in a maximum period of seven years. If this is a loan for capital goods such as a farm or for anything except, perhaps, a tractor which should be depreciated over a certain number of years, then that farmer is up against it. Not only is he confronted with the difficulty that seven years is too short a term to repay from farm income but he also has to contend with the constant depreciation in the value of money, which you might think would be running for him; indeed, if he died and his estate was assessed or if he sold out, it might be proved to be running for him on the basis of what he borrowed, but as it happens, the stock, the machinery and all he requires to run a farm is also costing more, and his money is tied up in the land or in one way or another is not available to him.
Even though he is working hard, even though he is doing a good job and making a reasonable profit, the only way he can operate is on the basis of increased agricultural credit. The only place he can get it over a long term for such things as farm buildings is the Agricultural Credit Corporation. A decent farm building needs to be repaid over a minimum period of 15 years, because the capital expenditure thereon is too great to ask any farmer to pay it over a shorter period.
An interesting commentary on how successful the Agricultural Credit Corporation have been in their lending appears in the Minister's speech, in which he says that no money is being provided from the Exchequer; when the Minister talks about £20 million being injected into the economy a few months ago and mentions a sum of £8 million in relation to the Agricultural Credit Corporation, it means that the ACC have borrowed successfully £8 million and have put up £8 million of the £20 million from their own resources. I suspected that from the day the Minister for Finance said it, and the Parliamentary Secretary in his speech has now verified it as true. That is a great commendation of the ACC, and I want to see no brake on this excellent machinery. I want to see acceleration. I want to see them expanding to the limit they can borrow and lending to that limit and more if necessary. As I said, when we reach the worst areas in relation to the eradication of brucellosis and as the cost of agricultural goods and animals increases in Common Market conditions, it will be seen that more and more will be required, and that in fact this Bill is absolutely necessary and, if anything, does not quite go far enough.
Mention has been made of lending money to creameries, bacon factories and to what the Americans call agri-business. This is necessary because this country is not sophisticated enough in regard to the services provided for our farmers. In the dairying areas of the south if you are lucky enough to be near one of the first class co-operatives or near its headquarters such as perhaps Mitchelstown or Dungarvan you may get a service that is not available to your neighbour 50 miles away. If you go right across the co-operative area of the south, and what is largely 50 per cent co-operative and 50 per cent business area of Leinster and the Midlands, it is quite clear that the amount of service which should be provided for farmers is not being provided. I say this merely in appreciation of the fact that there have to be millions of pounds properly pumped into the provision of a proper service for farmers.
We do not want any great losses or failures. Therefore, the Agricultural Credit Corporation, its executive side, the expertise in its executive side and the expansion of that is absolutely vital for this country and is something we have got to face up to in the most detailed way. I mentioned on a Supplementary Estimate some time ago the question of machinery partnerships and the fact that farmers are not availing of the facilities of the ACC in this regard. The old idea was you could not have a farmer in partnership with his neighbour owning something to make hay because when the sun shone each of them wanted to make hay in his own field and they inevitably fell out. Making hay is gone and the conservation of grass in silage is in. The cost of machinery for the conservation of silage is only bearable if you have something in the order of 150 acres to cut. You need to have the most efficient machinery and to have it in good order and 150 acres is quite a lot of silage on a mixed farm.
I am a member of a machinery partnership with my two neighbours. We have a simple partnership in a solicitor's office. I do not own a tractor, plough or silage harvester. I do not own any piece of machinery and neither do my neighbours. We have agreed on the basis of our average acreage of silage that we will take shares in the partnership, we will use Cork as a repository of funds and this will be a bank none of us deals with. We fine ourselves per acre for every acre we cut with this machinery for which we borrowed the money from the ACC, a sum which will not only pay the ACC's half yearly repayment but also have a figure for depreciation. After three or four years we can sell our machinery on the second-hand market and have enough money to go back to the ACC and say: "There is a deposit. Lend us money again." We always have new machinery and as well as doing our own three farms we now have two adjoining farmers who are not members of the partnership but who have agreed that they will come in and pay us the ordinary contractor's fee for doing their silage as well. This is something which is not being availed of. It is a service which the ACC are eager to provide. Farmers are inclined to be hesitant because of their old experience of binders, combine harvesters and hay-making machinery. It is even possible in the making of silage to arrange in November or December or before that that you will have one farmer's grass ready at an earlier stage than the others by earlier application of fertiliser or an earlier withdrawal of cattle. It is possible to give every farmer in his turn the first cutting. I hope this Bill will allow more of this to take place.
The ACC over the years have scored on the institution of area managers and area offices. They have one man who is a specialist in one particular type of lending. It does not matter what salary this man has because his costs are very much lower than the cost of the bank up the street. The bank is doing many things but this man is merely accepting deposits and lending money for agriculture. This man is somebody who for one salary can report on the spot on whether or not farmers should get loans. He can keep contact with the farmers in the area, he can collect deposits and he is not costing the ACC a lot of money. The ACC head office can mechanise to a greater degree, can departmentalise to a greater degree not only in areas but in various types of lending and so provide their specialists who know all about a particular field in which they are in rather than the position with the banks.
It is possible for the ACC to borrow money at higher rates of interest and to lend money out at lower rates of interest. I am aware that they are seeking less profits and, in fact, any profit remains in. The Minister for Finance is the only beneficiary. I hope he will not be a beneficiary, that all profits will remain in and that the expansion which should go on will go on indefinitely as we approach Europe.
I should like the Parliamentary Secretary, when replying, to tell us whether or not there is any hope in relation to the EEC, when we go in, of the difference between the economic lending rate which is charged by the ACC being reduced to a much smaller lending rate by any fund within the EEC. Would that apply to the whole country or would it apply to depressed areas? If you have, for instance, drainage in west Limerick and reseeding and development of the land afterwards, when a loan is required from the ACC would a farmer in that area, which is not the best land in Ireland, be entitled if he was borrowing at 8½ per cent to get any subsidy from EEC funds to reduce the interest rate to 2 per cent or 3 per cent? If there is such a hope I would like to know whether or not a farmer in Meath, who is on the best land in Ireland, could also get this help.
I am delighted to see an expansion of this semi-State company. We have, as usual, the extension from £25 million to £70 million and this is in keeping with the fall in the value of money and the expansion we hope to have. I disagree with the provision that any gain accruing from changes in the rate of exchange should go to the State. I think the proper thing would be that all gains should accrue to the benefit of the Agricultural Credit Corporation and if there was the occasional loss because of devaluation of currency or something like that it should be borne by the Minister for Finance. I agree with section 8 that it should be lawful for the corporation to make such alterations in the memorandum and articles of association as are necessary because there is no point in coming back to this House for such a thing. The memorandum and articles of association of a company are usually all-enveloping and allow the company to do anything and if perchance there are changes needed in the articles or the memorandum the board should have the power like any ordinary company to make those changes.
I should like to close by commending the chairman, the officers and the work of the Agricultural Credit Corporation over the years. The men who have done that work have contributed greatly to the prosperity of Ireland. I hope the men who are there now will have as much success, and, indeed, greater success and that the expansion in personnel that will occur because of this Bill will result in men just as good coming into the employment of the board, men who will be able to keep the good lending rate expanding day by day, the good repayment rate at its high level and let this company remain as the shining example for all other semi-State companies within the country.