Dáil Éireann debate -
Thursday, 14 Jun 1973

Vol. 266 No. 4

Committee on Finance. - Sugar Manufacture (Amendment) Bill, 1973 : Second Stage.

Minister for Finance (Mr. R. Ryan)

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

The main purposes of this Bill are to increase the statutory limits on Exchequer participation in Comhlucht Siuicre Éireann Teoranta, to provide that the company may borrow in foreign currencies and that the Minister for Finance may guarantee such borrowings and to provide for a larger board of directors for the company. The opportunity is also being availed of to make administrative changes desirable as a consequence of the integration of the food project with the other activities of CSET and to introduce certain minor amendments to existing legislation which will give the company more flexibility in relation to its managerial structure and to the submission of its annual accounts to the Minister for Finance. A provision in relation to the position of directors and staff of the company who may become members of either House of the Oireachtas is also included.

CSET has begun work on a major programme of modernisation of sugar plant which is estimated to cost in the region of £7 million over the next four years. Primarily because of the heavy demands in recent years on available capital to support the food processing project—to which I will refer in more detail later—the renewal of plant and equipment in the sugar factories has been unduly delayed. As a consequence some of this plant and equipment is now obsolete and its replacement is an urgent priority. The programme of modernisation will bring about an improvement in conditions and create a more satisfactory working environment at all four factories. The greater part of the investment will be at Carlow and Mallow where existing handling and processing facilities are insufficient to cater adequately for the quantities of beet which they receive.

The expectation is that within the EEC the production of Irish beet sugar can be maintained at a level of 170,000 to 190,000 tons and investment in the sugar factories is essential if CSET is to be as efficient as other Community producers of sugar. The present EEC arrangements, which remain in effect until July, 1975, provide that this country may produce 150,000 tons of beet sugar for which the full EEC support price will be guaranteed and a supplementary quota of 52,000 tons. Last year CSET processed 154,000 tons of sugar from 83,000 acres of beet. The yield was disappointingly low because of the abnormally poor weather. The company has contracted for 76,000 acres of beet in the current season and, given average weather conditions, this should yield approximately 170,000 tons of sugar. CSET is confident that its growers will continue to favour the beet crop despite the enhanced attractions of other farming pursuits within the EEC.

The existing statutory provisions relating to borrowing by CSET have been interpreted as empowering the company to borrow in Irish currency only and it is now essential that the company be empowered to borrow in foreign currencies. I am pleased to be able to say that on Tuesday last the company completed negotiations with the European Investment Bank for a loan of £2.8 million to finance in part its factory modernisation programme. This, in fact, is the first loan of the European Investment Bank in the new member countries of the EEC. Further suitable opportunities for foreign borrowing by CSET are likely to arise from time to time. Provision is made in section 4 of the Bill to empower the company to borrow by means of debentures in foreign currencies. Borrowing by the company otherwise than by debentures is not governed by legislation. As a consequence of the company's intention to borrow abroad, it is necessary to extend the existing guarantee powers of the Minister for Finance. For instance, the European Investment Bank, to which I have already referred, requires a ministerial guarantee as a condition of making a loan to the company. Sections 2 and 7 of the Bill extend the Minister's powers of guarantee; section 2 relates to debenture borrowing by the company and section 7 relates to borrowing otherwise than by debenture.

At present CSET is required to submit its annual accounts, duly audited, to the Minister for Finance within 90 days after the end of each accounting year. For many years the company have been unable to comply with this requirement because its activities are too diverse to allow for proper completion of audit within the period specified. It is usually up to six months after the end of the accounting year before the accounts are ready for submission to the Minister and it is proposed, therefore, in section 3 of the Bill to extend the time limit to six months. The section also removes a requirement in the 1933 Act that all changes in the format of the CSET accounts shall be prescribed by the Minister for Finance in statutory regulations. This requirement is unnecessary and, in fact, the Minister has not at any stage issued such regulations.

The existing legislation provides that the board of CSET shall consist of seven members. It is now proposed to provide for a maximum of ten members and the necessary provision is included in section 4 of this Bill. The extension of the board to ten members is desirable because of the wide variety of operations for which they are responsible, particularly now that the food processing project has been fully integrated with the other activities of CSET. In addition to the changes relating to the number of board members and to foreign borrowing, to which I have just referred, the section removes the requirement that the company must have a managing director. This requirement is too restrictive and, in fact, the company has not had a managing director for some years.

Qualifications regarding the financial interest of the Minister for Finance in the company and the duty chargeable on sugar are also being removed as these are no longer relevant.

CSET will require assistance from the Exchequer towards the financing of its sugar factory programme and, as the company's average level of borrowing is already considerably higher than its equity, the company has made clear its preference for share capital. Shares to the existing authorised statutory limit of £5 million have already been issued—£4½ million to the Minister for Finance and £½ million of preference shares to private sector interests. Section 5 of the Bill proposes an increase in the existing authorised share capital of £10 million. It is intended that the existing £1 million Exchequer loan to the company will be converted to shares, bringing the issued share capital to £6 million, and a provision for a further £4 million should on present indications be more than adequate for a period of at least four to five years ahead.

It is also intended—in section 8— to increase from £5 million to £10 million the statutory limit on advances and guarantees from the Minister for Finance to CSET. The existing advance of £1 million is, as I have indicated, to be converted to share capital and all that is guaranteed at present by the Minister is a debenture loan of £900,000. The Minister will be called upon to guarantee borrowings by the company from the European Investment Bank and possibly from other sources in future years and in order to cater adequately for this contingency, a new limit of £10 million on advances and guarantees from the Minister is proposed.

In an effort to reduce the very serious losses on food processing this operation has been integrated with the other activities of CSET under the direct responsibility of the CSET board. The advantages to be derived from this integration are an improvement in overall efficiency and the elimination of costs arising from the operation of two separate companies. Sections 9 and 10 of the Bill arise as a consequence of this change. Section 9 enables CSET to take over the Erin Food's investments in associated companies as Erin Foods is now a dormant company. Section 10 removes the obligation on Erin Foods—which is an approved subsidiary company of CSET within the meaning of the 1962 Act— to seek the approval of the Minister for Finance for alterations in its memorandum and articles of association and to submit its accounts to the Houses of the Oireachtas.

The Bill makes certain provisions in section 11 as regards membership of the Houses of the Oireachtas by directors, officers and servants of CSET. Provisions relating to Oireachtas membership have for some time past been included in legislation pertaining to State-sponsored bodies and it is considered that the opportunity afforded by the present Bill should be taken to extend them to CSET.

The position of the food processing project is one of serious concern to the Government. Since its establishment more than 12 years ago there has been a total investment of £25 million in the project and up to £10 million of this investment has been written off as irrecoverable. The main causes of these losses have been over-production in earlier years, and the continuing inability to achieve export prices sufficient to cover production costs and overheads. The proliferation of small processing units has significantly inflated production costs. Bulk sales to major food manufacturers, particularly in Britain, have accounted for a high proportion of exports and profit margins have been entirely inadequate because of very keen competition. There are no prospects of profitable operation in the bulk export market and in the past 12 months intensive efforts have been made to find new and profitable export markets.

In the financial year ended on 30th April last, the food project had an operating loss of the order of £660,000 and there is unlikely to be a significant improvement in the current year. This level of performance is unacceptable as it involves a degree of subsidisation from the other operations of the company which they cannot support in the longer term. In addition, deliveries of raw materials for processing have fallen short of requirements. The company have had to import potatoes on a limited scale this year to meet essential requirements for the Tuam potato factory, when a large number of growers failed to honour contracts, and this situation cannot be continued as a permanent arrangement. In any event, such a development would be contrary to the basic concept of the food project which was designed to assist the development of horticulture in this country.

The board of CSET are committed to taking all steps necessary to reduce food losses short of any steps which might lead to redundancy of full-time employees. The number of production units, however, which operate well below full capacity, adds very considerably to company costs and some rationalisation of these may be inescapable. The board of the company have been asked to give special attention to this problem and the Government will be prepared to consider favourably any constructive proposals which they may submit to improve the situation.

CSET is one of our major industries both in terms of output and employment. In its latest financial year it has achieved an estimated turnover of £34 million, comprising £17½ million on sugar, £9½ million on processed foods and £7 million on associated agricultural activities. Average year-round employment by the company is almost 4,000 and in addition payments exceeding £10 million are made to more than 20,000 farmers. The bulk of the employment given by the company is in provincial centres, in some of which alternative job opportunities are few. Ireland's entry into the EEC presents a strong challenge for the company in that it no longer has a right to a monopoly position on the home market on production and sale of sugar while export opportunities for items such as agricultural machinery and food products should improve. The company must be properly geared to meet this new challenge.

The present Bill is designed to aid improvements in company efficiency and to facilitate financing arrangements. These steps are an essential part of the company's adjustment to the new EEC situation and I confidently recommend the Bill for the approval of the House.

Mr. Colley

Since this Bill was prepared by me when I was Minister for Finance the House may take it that I certainly will not be opposing it. It is important to underline the point made by the Minister towards the end of his speech when he referred to the significant role of the Sugar Company in our economy and particularly in provincial centres in the provision of employment where alternative employment is not available and is unlikely to be available for some considerable time. Therefore, the activities of the Sugar Company, and its associated activities in food processing, are of great importance to the whole economy and to everyone in the community.

So far as the Sugar Company's operations in regard to sugar are concerned, it is true to say that by and large they have been extremely successful and efficient, despite the fact, as the Minister has pointed out, that certain reinvestment in new equipment which, in the normal way would have taken place over recent years, did not take place. This was primarily due to the fact that the profits being made by the company on sugar were being ploughed into food processing to an abnormal degree.

This Bill provides for the making available of additional capital to the Sugar Company principally for the purpose of reinvestment in new equipment to make the company more efficient and to enable it to compete satisfactorily within the Common Market. There is a problem attached to this. One has to make a decision and take a particular line on it. I am quite certain the Minister knows what I am referring to here. In fact he touches on it when he says:

CSET is confident that its growers will continue to favour the beet crop despite the enhanced attractions of other farming pursuits within the EEC.

The problem is to forecast the extent to which farmers will continue to grow beet in a situation where other crops are becoming very much more attractive than they were in the past. A reasonably accurate forecast of what the farmers are likely to do is very important because if, in fact, they are likely to reduce substantially the acreage of beet which they grow, then a considerable amount of the proposed new investment would not be necessary and, indeed, might well be wasted. On the other hand, if the company are to have an opportunity to compete successfully within the Common Market, it simply is not possible to do so on the basis of existing plant and equipment. Consequently it is necessary to make an estimate, with the best information available, as to the likely level of production of beet and to provide the necessary re-equipment for that likely amount of production.

Despite the best information one can get, one ends up with what cannot be described as anything better than a "guestimate" in this connection. I am simply drawing attention to this problem because I think it is important. I am not suggesting that the answer provided in this Bill is the correct one, or that the Minister should know that it is or is not the correct answer. Nobody can know positively. There is a problem. I believe that the longer term interests of the farmers themselves lie in a continued substantial production of beet. Apart from their interest, I also believe it is in the interest of the economy that there should be a continuing substantial production of beet and sugar.

On the other hand, there have been groups who have tried to argue that the production of sugar in the future will be very substantially increased over and above recent production. There have been suggestions that our existing quota, which is due to be renegotiated fairly soon, is totally inadequate. I do not profess to be an expert in this regard, but I do not believe that is true. The nearest one can get to the likely outcome is the basis that is being operated on in this Bill. If that basis is reached, then the proposed investment here is fully justified and required. If, in fact, the level of production is much lower than is envisaged, this investment may well be wasted. I, for one, will not blame the Minister if that happens. He has no way of knowing positively what will happen, and he can only make the best decision open to him with the knowledge available at this stage.

I should also like to comment on the announcement the Minister made with regard to the completion of negotiations with the European Investment Bank. I very much welcome this development. I think the Minister for Finance is a governor of the European Investment Bank, speaking from recollection. On the occasion when I, as Minister for Finance, became a governor of the European Investment Bank, I said I regarded that bank as potentially a very important source of investment into this country. I still so regard it. In fact, and I do not wish to be invidious in this matter, I regard it as potentially far more important to us than the World Bank. I think the European Investment Bank is likely to be better geared to our requirements and more closely allied to the kind of thinking we have about our requirements for the development of this country. I welcome the conclusion of the negotiations for investment by the European Investment Bank in the Sugar Company. I am quite confident this is but the beginning of a very important flow of investment by the European Investment Bank into this country, investment which need not and, I am sure, will not be confined to the public sector only.

The whole history of the food processing operation conducted by or under the aegis of the Sugar Company and, in recent years, through Erin Foods, is a chequered one, to say the least of it. The present position is, as the Minister says, quite unsatisfactory because a substantial portion of the market available to us is an uneconomic market. The Minister said that the amount of profit available on the market is inadequate. It is true to say, I think, that in some sectors of it it is not a profit that is available but a loss. Certainly there is no future for the food processing operation in the bulk market and a great deal of effort, of money and of time will be required to make the food processing operation a viable proposition. Indeed, there is no guarantee that, with a tremendous amount of investment of money, of time and of effort, it will become viable. This is not to say that the effort should not be made because, in measuring the importance of the food processing operation, it is simply not getting a true perspective of the picture to count the investment in terms of pounds. There are other factors involved which are extremely important factors.

As far as the farming community are concerned the food processing operation of Erin Foods has been of very great importance, sometimes in areas where there was no adequate alternative crop available. This is a situation which may be changing because of our advent into the Common Market, but it has not changed substantially as yet and, even if it does change substantially, in some areas for a long time to come growing contracts available from the food processing operation will continue to be of very great importance.

The employment available in the food processing factories is also very important. As the Minister said, the board of the Sugar Company is committed to taking all steps necessary to avoid losses short of those steps which might lead to redundancy of full-time employees. This was an undertaking given by the previous Government. It was a directive to the board of the Sugar Company. I am well aware that there are considerable grounds for rationalisation of the operations of the food processing carried on by Erin Foods. Some of these would involve the closing down of certain units and, perhaps, a reduction in the size of some others, plus the switching of certain lines of production from one factory to another. I am well aware that there is a very strong case financially for carrying out this rationalisation and I think the board should be urged to do so to the greatest extent possible, subject always to the proviso that it will not result in redundancy of full-time employees of the company. This is vitally important particularly at a time when our unemployment rate is still quite unacceptably high, although it is falling, and especially where the employment involved is in areas in which there is no alternative to the Erin Foods employment. So long as that situation continues I do not think a State company is entitled simply to make people redundant in order to get the balance sheet looking right. This is important, but there are more important things than that.

The efforts of the company to rationalise must be accompanied by efforts to provide alternative employment in certain areas for full-time employees rather than throw these people on the scrapheap. I am aware that the company has been making efforts in this regard. I am also aware that the Industrial Development Authority has been making special efforts in this regard too. I take it from what the Minister has said that, as far as the present Government are concerned, they are honouring the pledge given by their predecessors that there will not be redundancy of full time employees. Consequently, I would assume that the present Government will agree with the line of approach I have suggested, namely, that the board make every effort to rationalise the food processing operation and, at the same time, in conjunction with the Industrial Development Authority, make special efforts to generate alternative employment in those areas in which, in order to rationalise properly, employees will have to be laid off. This is essential if rationalisation is to be fully effective. Subject to that, the Bill does not deserve any opposition.

Since it was originally my own Bill I naturally think the concepts in it are the correct ones and the matters to which I have been referring I have been referring to because I think they are of importance but not because of any opposition to any of the proposals in the Bill which I fully support.

Mr. Hegarty

As a farmer, having a little to do with the Sugar Company and the food business, I am glad to note that there is nothing contentious in this Bill and that both sides of the House are aware that the company must be treated from a financial point of view. We must not forget the purpose for which this company was set up which was social and developmental. In so far as it was set up for that purpose I think it has fulfilled its role admirably down the years. It created jobs in small towns, it helped to put new life into the west and it helped farmers at a time when they really needed help.

For a number of years I would say sugar beet was probably the most valuable crop grown on our farms. At this stage of our development when we are making a case at the EEC for regional development concessions, we cannot have a State company retracting on its commitments in development areas. This would be a very bad headline for people who now see the State has not been able, in the context of the EEC, to overcome State company problems. It might be a good thing to remember when we compare the Sugar Company's operations with those of private enterprise that this company has operated down the years without the grant facilities normally given to private enterprise.

I have been critical in the past of one aspect of the company's operation, that was the importation of raw sugar. We were told at the time that this was to help the budgeting of the company. Maybe this was so and maybe it was necessary but it was a pity because if sugar beet contracts had been freely available in the past a lot more of it would have been grown. We would have a different picture today if this had happened. Contracts given to farmers were so small that many of them considered that they were not worthwhile and abandoned the growing of beet. Now again, however, I hope and I believe that beet growing will come back so that we can provide sufficient sugar for our own requirements not just for table consumption but for home processing and export as well.

At the moment sugar beet growing in the west of Ireland is falling back a little but there are many farmers in the west who appreciate their sugar beet contracts and it is a very important crop for those people. If we are serious about the west we should be serious about the Tuam Sugar Beet Factory, bearing in mind that this part of the country and this company will be entitled to special concessions from the EEC. This will also apply to the beet growing areas of Kerry and West Cork.

Deputy Colley expressed very legitimate doubts with regard to the future of sugar beet growing as a crop. He is quite right to have doubts especially having regard to the counter attractions, dairying, et cetera but I am a bit nearer to the fields than Deputy Colley and I believe that the growing of sugar beet will always be an important part of our farming and that in the case of beef and dairying there will be a levelling out. Now that substantial beet contracts are available to farmers, I believe they will consider it a worthwhile crop. Because of new technological developments sugar beet is now no more difficult to grow than grain. The crop can be sown and sprayed and it does not entail any manual labour. With the new varieties of seed and the new price structure in the EEC—they, too, are conscious of this crop—I see it as a very useful crop for the farmer and a very important crop for the nation because if beef and dairying are to survive and prosper we need the byproducts of sugar beet. Where there is sugar beet there is grain growing and we need all those crops for a good beef and dairy industry. I do not have to remind the House that animals have to be fed over the winter.

It would be a good thing if the company in future could plan their programme well in advance and get together with farming representatives and indicate in time what they intend to do by way of contract and price conditions and forget this foot-dragging that has been going on. Farming, like any other business, has to be planned well in advance. This, also, would be a big help. Lest we as a nation should be inclined to concede some of our programmes to developing countries, which seems to be a popular concept at the moment, we should bear in mind that our first responsibility is to our own people, the farmers, the workers and the nation as a whole.

I am very pleased to hear that this type of investment is being made at this time because in places like Mallow and Carlow there is an abnormally long processing season. This has hindered sugar beet production in both those areas. Farmers are expected to lift sugar beet from 20th September until February. It is not profitable to do this. Sugar beet production can improve by two tons per acre between mid-September and mid-October. I welcome the Minister's announcement this morning. This type of expenditure is bound to help the shortening of the campaign and to lead to a campaign of 100 to 110 days, which is normal on the Continent.

With regard to the food processing industry referred to this morning, I have been involved in setting up one of those industries. I agree that we have had tough times and a chequered career. Some people may claim that the whole concept was a bit premature. We have taken a decision to have a food processing industry and there is no good going back on that now. We have survived some very bad years from a grower's point of view. We have survived some very rough times with regard to sales and processing. It must be remembered that this was not the fault of anyone. We were just victims of circumstances as happened also with our dairy products and other things. We were compelled to sell in competition with Canadian peas, which had been dumped into the UK market, and dumped South-African products and even in competition with some products dumped from east European countries. The bulk of our product is in a frozen condition. This makes it expensive to hold. We were compelled to get rid of some of our products at bad prices. Now that we have joined the EEC I would like to look towards a new situation. The Department of Industry and Commerce should ensure that this does not happen again and that our friends in the UK and elsewhere in the EEC should toe the line with regard to dumping.

I have been on farming delegations and I believe that even in Europe some countries were not toeing the line with regard to horticultural products, and that these products are still being dumped. This position must be carefully examined. If we had got realistic prices over the years for our products we would not have so many problems today. It does not matter whether we sell by bulk or by package. It would be much better, of course, if we could go completely over to labelled products. Even selling by bulk we would have been well able to compete had it not been for the fact that we were competing against products which were being given away for very little.

With regard to potatoes, which have been mentioned specifically, we acknowledge that there are problems. The whole potato industry is chaotic. One year fantastic prices are paid for potatoes and the next year a farmer might have to give away potatoes. Some solution to the problems will have to be found. When a housewife pays high prices for potatoes she is entitled to a quality product.

An Leas-Cheann Comhairle

The Deputy will appreciate that this Bill deals with the structure of the company and would hardly allow us to debate widely the various products.

Mr. Hegarty

I am talking about the Tuam potato plant and how the problems there can be solved. It will be appreciated that the Bill, which deals with the financial structure of the factory, is important to the nation. My remarks about the potato industry are, therefore, relevant. In the future the solution for the Tuam potato plant will be to have all the potatoes in the country graded and the very large and the very small potatoes made available for processing at Tuam. The factory would then have adequate potato supplies. I am confident about the future of the company. The farming community will retain the interest which they have always had. The investment about to be made and the extension of the borrowing powers should prove helpful.

Deputy Colley pointed out that such industries are valuable situated as they are in places where employment is important. It would not be easy to replace these industries with other ones because the people involved in them have been disciplined and trained over the years to do certain jobs. It would not be easy for somebody trained in food technology to switch over to something else. We should have confidence in the industries which we have got. Everybody involved in these industries should be committed to them. In the past we have received much loyalty from the farming community and the workers in the factories in order to keep these industries operating. The onus is on us, as a Government, to do everything possible to ensure that these industries flourish and prosper in the years ahead.

I am convinced that there is a very good future for the industry if it is given a break. This break, I believe, is about to come because more people are going in for the more sophisticated type of foods and easily prepared meals. It might well be that when we get down to considering our position in the EEC we will only have one food exporting corporation and that all aspects of food exports will come under the one brand.

An Leas-Cheann Comhairle

The Deputy is moving too widely away from the Bill before the House.

Mr. Hegarty

In conclusion, I should like to express the hope that, with the confidence that the farming community have, the dedication of the workers in the industry, and the help of the Government, sugar and food will not only survive but prosper in the years ahead.

Mr. B. Desmond

I welcome this Bill in so far as it goes. With that qualification I have a number of substantial reservations. The company have received authorisations now to borrow foreign currencies and the Minister for Finance is now in a position to guarantee such borrowings and to provide for a larger board of directors for the company. This is a move which is welcomed on all sides of the House. I have no doubt that there will be no reservations on the part of any Member of the House to that proposition.

I should like to inquire in relation to the negotiations referred to by the Minister, which the company completed with the European Investment Bank for a loan of £2.8 million to finance, in part, the modernisation programme, the cost of such a loan. I have a view about loans, not merely foreign loans or those from any of the investment banks, and I think that where State-sponsored activities are involved the full cost should be stated. I should like to know the interest rates involved.

I welcome the announcement that the Sugar Company have begun work on a major programme of modernisation of the sugar plant. I am a little perturbed that this particular renewal of plant and equipment in the sugar factories has been so contingent on the work done and the capital made available to support the food processing project. One would have hardly thought that the integration which has been talked of and which seems to have been in operation over the past four years was in operation. It appears from the Minister's statement that the renewal of essential equipment on the sugar side of the operation has been somewhat rundown, somewhat retarded, and held back because of the need to divert.

I am aware that the Minister has no direct responsibility for this but the implications of the Minister's statement should be carefully thought out, particularly by those engaged in the food processing arguments on the food processing side. Nevertheless, I welcome the decision to invest £7 million over the next four years to build up a modern sugar complex in the sugar plants throughout the country.

I share Deputy Colley's concern in relation to the statement made by the Minister that the Sugar Company are confident that their growers will continue to favour the beet crop despite the enhanced attractions of other farming pursuits within the EEC. In the context of my own projections, those made by the Department of Agriculture and Fisheries and agricultural economists, that particular statement, in the years ahead, may be regarded as a serious understatement. There is no assurance that, if beef production continues to hold its attractions with the less labour intensive involvement in the area of beef production, looking at European trends growers in Ireland are going to favour the beet crop in the future.

We need considerably more information in that field. It is a problem which is going to beset future operations of the company and will, inevitably, reflect on the Exchequer in the years ahead. I must confess that I have some misgivings looking at the whole problem of beet-growing and the processing and the change of farm structures.

Regarding the legislation providing that the board shall consist of seven members, the existing legislation and the current proposals to provide a maximum of ten members, I should like to suggest to the Minister, if he intends to fill all ten positions in due course, to keep open some of these positions for an expanded worker representation on the board of the Sugar Company.

I welcome the current trade union representation and congratulate the past representation on the board. It is fair to record the tremendous contribution made over the years by a former member, Mr. Ruairí Roberts, who resigned in order to contest the Seanad Election, and the current representative on the board, Mr. Stephen McGonagle. This member, I feel sure, will make a very good contribution.

I should like to see representation made to the Minister, on the staff side, to expand the role of elected worker representatives on to the board of State-sponsored companies, l should like to see this initiated on a broad scale, in the Sugar Company itself.

During the past 20 years there has been, at consultative level, a fair degree of elected worker representation of a consultative nature. I must confess that I never liked the type of paternalistic aroma on the part of some former general managers which surrounded that particular exercise but it was a necessary exercise in democracy and one which had great potential. No doubt, that local structure could have been expanded considering that in the past half decade the company have become more open and more responsive locally in the democratic sense. If I might say so, they have experienced less fear during that time, and I speak as a trade union official who has travelled widely throughout the country, who has met many members of the Sugar Company's staff and who is a member of a union that organise the Sugar Company factories around the country and my knowledge is not speculative but is based on the direct experience that I have had since 1957. Therefore, I urge the Minister to consider this question of worker participation.

It was with much concern that I read the section of the Minister's statement relating to the company's food projects. The very serious ramifications of the past and current positions of this State-sponsored body in relation to food processing have not dawned yet on the electorate. I am reluctant to accuse former Ministers for Finance of having failed to face up to the problems involved in this regard but it is my opinion that because of the employment implications concerned, the former Minister for Finance, Deputy Colley, vacillated a good deal in relation to the food processing side of the company. That was obvious from statements he made in this House. I do not blame him particularly for that because the problem is a major one for any Minister. Indeed, I allocate the blame in the context of the expectations, the diversifications and the tremendous dispersal of production units that were created during the past six to eight years. For example, while I do not claim any particular competence in the field of accountancy, I have reservations regarding the authorisation of the purchase of Matterson's. Those reservations were shared by many other people also.

As a trade union official my duties included attending meetings of the Committee on Industrial Organisation and of prices advisory bodies, et cetera, and it has always been my opinion that the Sugar Company should have bought Batchelors. Such a move would have been logical at the time. I am not anxious to name persons here but some of the earlier optimism of the former general manager of the company, laudable though that optimism was in a regional context——

An Leas-Cheann Comhairle

The Deputy will appreciate that people who can be identified should not be referred to in the House.

Mr. B. Desmond

It is difficult to talk about this State-sponsored body when down through the years two or three personalities have been running the show—as has been the position in respect of a number of other State-sponsored bodies that I could mention. The personalities, policies and attitudes of these people emerged in company policy and these were very obvious at national level, as any glance at a newspaper will show.

I would question seriously the wisdom of some of the policy decisions taken by former chief executives of the company. I shall leave it at that. I do not wish to delay the House but this morning I obtained from the Library the annual reports of the company from 1969 onwards. The report of 1969 tells us that the company find it gratifying to report that food processing is continuing to make progress, that losses have been reduced to £249,000 as against a forecast of £250,000 and that turnover was up £6 million, which was double that for the previous year. Nevertheless, the losses were substantial. The difficulties were becoming obvious at that stage and even then I had reservations regarding the magnitude of the scale of production and the overcapacity that was being laid on.

I am afraid the birds are coming home to roost now and that they will do so again in the years ahead if the trends that are obvious in the 1969 to 1973 reports continue. The report for 1970 tells us that food turnover increased by approximately 1.7 per cent to 7.7 per cent but that a loss of £296,000 was little change from the previous year. That report tells us, too, that export sales increased from 2.82 per cent to 4.04 per cent. The 1971 report says that although a record turnover of £8 million was achieved, the food project losses for the previous three years which had been contained at about £300,000 increased to £777,000 and that this forced the company to re-appraise the direction they had been following in attempting to enable the project to break even.

In the April, 1971, report there is reference to the confirmation by the consultants, A. D. Little of Cork, that in the short term little could be done with existing products that would make an appreciable contribution to reduction of losses. They emphasised that competitive pressures were severe in all markets particularly in regard to bulk products as distinct from dehydrated vegetables.

The 1972 report tells us that under difficult trading conditions, turnover increased from £8.17 million to £8.92 million but that for the reasons indicated in the previous year's statement, the company were unable to make a substantial reduction in the level of losses which, after providing £491,000 for depreciation, amounted to £756,000, compared with £777,000 in 1970-71.

I could not in any way hold the Minister responsible for the situation in the company during the past ten years because responsibility in this regard must be shared. In the Minister's statement we are told that since the company's establishment there has been a total investment of more than £25 million in the project and that up to £10 million of this investment has been written off as irrecoverable.

The main cause of these losses was over-production in the earlier years but who authorised that production? Who authorised a wide dispersal of plants in earlier years? One hardly needs to be particularly erudite in the economic field or to be well-informed in terms of cost and production to appreciate the effect of the proliferation of small processing units, with an integrated national set-up at head office level, dealing with products which are inevitably very expensive to process even in the context of interest charges or even in terms of storage. One needs to be rather bland to accept that position.

Therefore, the Government has a very serious situation facing it, and the magnitude of the problem facing the Government and the Minister for Finance, Deputy Ryan, has not been made any less by the vaccilation of the previous Government who did not face up to the problems. The Minister makes the proposition in his speech :

The Government would be prepared to consider favourably any constructive proposals which they may submit to improve the situation.

May I suggest to the Minister and his advisors that this is a rather difficult way of going about it? It is rather like saying to a couple in a broken marriage: "If you have second thoughts about reuniting, come along and we will see you, and if you want to look after the children we will give you every help." In other words, the buck is being passed back. As far as I know, since the days of the former Secretary of the Department of Finance successive Ministers for Finance have been saying to General Costelloe and to Mr. Tony O'Reilly : "If you have any constructive proposals bring them forward." There is need for a mandate from the Government to the company, to say to them: "Go out and diversify. Get involved, if necessary, in pig breeding; get involved in the expansion of the agricultural machinery side of your business. Do not keep coming back to us every six months with a project," which, with respect to the Department of Finance, will lie on the desk of the Department of Finance for perhaps another six months until it is studied by consultants brought in by the Department who will assess the viability of the project and, of course, there will be another six months delay, and the merry-go-round will get merrier.

One ought to say to the managing director of the Sugar Company : "Maybe we are losing a fortune on the food side. You should rationalise, and while this may mean some redundancy we should cut back rationally rather than have major surgery in four or five years' time." Having read many of the published reports in relation to food processing, I think this country may have over-stretched itself in earlier proposals put up to the Government, proposals which the Government accepted at that time. According to the Minister's speech, in its latest financial year the Sugar Company has achieved an estimated turnover of £34 million, comprising £17½ million on sugar—nobody here will question the expertise of the Irish Sugar Company in handling their own affairs at sugar level—£9½ million on processed foods and £7 million on associated agricultural activities. What is the point in having a turnover of £9½ million on processed foods if you are going to lose £750,000 on them? That might be all right for an exceptional year but if that trend were to continue I am afraid one would finish up next year, for the sake of argument, adding 10 per cent, with a turnover of £10,500,000, and a loss of over £1 million, and so on. Looking at the inflationary trend and the wage levels involved I submit, with respect to any company accountant in Ireland that things are not going to be that much different in two years' time, in terms of production costs, as against this year. I do not entirely share the view of Deputy Hegarty in this regard that it is not anybody's fault that we find ourselves in that situation. Whether we like it or not, it is our fault in the sense that we are responsible. We may not be responsible for one or two years——

Mr. Hegarty

There will be a new situation in the EEC.

Mr. B. Desmond

I would not say it will be that much different with the EEC. I would suggest strongly to the Minister that he should personally ensure that the board be given more direction from the Government. Having regard to the fact that the food side of the business is generating disturbing losses which look like continuing, they should be told to engage in viable diversification. I would see nothing wrong with substantial joint venture projects being developed. There is a statement in the 1972 report that a number of interesting projects are being examined. I think it is the function of this Government to say: "If they are interesting and if you are not going to lose as much as you lost on food processins, go ahead and keep up employment in the regional towns." It may be difficult to diversify in some of the areas because food processing plant is virtually the sole employment there. Anyway, where possible, they should get involved in agricultural machinery, the export side of which should be a major growth area, and perhaps they could get involved in the beef side. Let us be quite open about a State sponsored company; let us not limit its mandate.

In conclusion, I would make a small point on section 11 as regards membership of the Houses of the Oireachtas by directors, officers and servants of CSET. I have always believed that there Should be some differentiation between Deputies and Senators in this regard.

Section II (1) states :

Where a director of the Company is nominated either as a candidate for election to either House of the Oireachtas or as a member of Seanad Éireann, he shall thereupon cease to be a director of the Company.

Senators earn £1,860 per year. I wonder if it is necessary that a Senator should cease to be a director of a company? I agree that Deputies should be bound by this restriction but I have some reservations as far as Senators are concerned.

I welcome the statement from the Minister. I do not want to be regarded by Fianna Fáil as an advocate of redundancy or of the closure of factories in the food processing industry. The record of Fianna Fáil in relation to the advice they have given to the Sugar Company is a bad one and they should not start on this now because they will not get far with it. They will get cold comfort from the annual reports of the Sugar Company. I have tried to be helpful in this debate and have endeavoured to give the warnings that are necessary in this operation. I should like to thank the Minister for introducing the Bill and would urge him to consider the points I have raised.

Mr. Governey

I welcome the Bill before the House. In Carlow we are concerned with the sugar factory and the food processing plant of Erin Foods. I welcome the statement of the Minister that the greater part of the £7 million investment in the next four years will be spent at Carlow and Mallow. This is necessary because the existing processing facilities are not sufficient.

We have heard a lot about the processing industry. I have been closely associated with this industry for a number of years, and I can assure the House that the help of the Department of Finance is necessary. The position of the food processing plant in Carlow in the last few years has not been good and there is widespread uncertainty and dissatisfaction among the workers.

With some of my colleagues in the House, we have discussed the matter with the Ministers for Industry and Commerce and Finance and with farmers in Carlow. The Ministers undertook to meet the people in Carlow before the end of the summer and I know they will honour that arrangement.

There has been comment on the heavy losses incurred in food processing. I should like to make it clear that, to all intents and purposes, Erin Foods in Carlow have been closed for the past two years. This year they will process peas which, in effect, means they will have a campaign of only four to five weeks. There has been diversification at other plants throughout the country in the last few years. Formerly the Erin Food plant at Carlow processed beans also. It is a mystery to me how any company or processing plant can remain viable if it is processing only one kind of vegetable. It is no wonder heavy losses have been incurred in the food processing industry.

During the term of office of the last Government, workers and representatives from Carlow, together with some of my colleagues here, met the then Ministers for Industry and Commerce and Finance. It was on the evening the House went into summer recess. At that meeting we were given an undertaking that Erin Foods in Carlow would not close until an alternative industry was obtained to replace it. In the meantime we heard various firms were interested, but nothing came from the negotiations. In passing I might add that the former Ministers did not have any further consultations about the matter. However, the present Ministers for Finance and Industry and Commerce met us shortly after the new Government came into office, and they gave an undertaking to have a further meeting in Carlow before the end of the summer. It would be a fruitful exercise for the Ministers to see the situation for themselves. I pass the factory every day and I am despondent when I see the lack of activity. I doubt if it is due to the fact that the factory find it difficult to get the farmers to grow the crops. Some members of the workers' committee in their spare time called on the farmers in the area and, from the feedback I got, the results were favourable.

I should like to impress on the House and the Minister that this industry must be kept going. Its doors must never be allowed to close unless there is some alternative industry available to absorb its employment content. I am not referring to its present employment content. A few years ago the campaign ran from eight to nine months each year and now it lasts only four or five weeks. Something must be done about it. I cannot stress the point too heavily for the Minister that this is an urgent matter which needs immediate attention from him and the Government.

One matter which struck me is that the legislation provides for seven directors. I understand that 12 months ago there was a complete change in the board and now only two of the original board remain. The Minister mentioned legislation to provide for seven directors and not more than ten. I understand that at the moment there are nine. Is there some error here? Are there more directors on the board than the legislation provides for, or has the legislation been passed? I welcome the Bill and I hope everything will be done by the Minister and his colleagues to ensure that this is a viable industry which will continue to give full employment at the processing end.

Mr. Hussey

I do not wish to delay the House unduly on a Bill which I welcome because it provides for an extra £7 million in the next four years to modernise and develop the sugar industry, to provide new machinery to replace present obsolete plant. Although I am pleased to see this injection of money into an industry which needs it, I am disappointed that the greater part of the investment will be at Carlow and Mallow. I had hoped that the Government would inject more capital into the Tuam factory. In the past few years we have had certain difficulties there trying to achieve an acreage of beet growth which would keep the plant going as a viable unit. During the years efforts have been made by various organisations, farmers and others, to try to get farmers in the contiguous areas to grow more beet. The farmers cannot be blamed for turning to more lucrative methods of farming. Milk and beef have become very attractive in recent years. However, I am satisfied that if the right price is paid for beet and potatoes our farmers will grow them, as they would have in the past if the proper inducements had been offered.

In the Tuam factory the machinery is not as modern as it should be arid it has therefore lagged behind in the modernisation drive. This should not be permitted because the West of Ireland is a small farming area and beet has provided an amount of cash during the years. It has always been regarded by small farmers as a good cash crop and they grew it when times were worse than now and when they had not the benefits of mechanised farming. If farmers were given a fair deal they would continue to grow this crop. As well as the beet itself, there are the by-products—pulp and beet tops—which farmers can use as feed for their stock.

Present EEC arrangements until 1975 provide that this country may produce 150,000 tons of beet sugar at the full EEC price and there is a supplementary quota of 52,000 tons. Our farmers are capable of achieving this target and I hope the Sugar Company will provide the right incentives. As I have said, my main concern is for the Tuam factory. That is why I am dissapointed that Carlow and Mallow are to get the bulk of the £7 million. The Tuam factory is one of the main industries in the town, providing not only work for a number of people in the town but also for farmers in the outlying areas who go in to help during the campaign, thereby supplementing their farming incomes.

Last year we had serious trouble in the food processing plant in Tuam because of a shortage of potatoes brought about by the high prices obtaining on the open market. It was very hard to expect farmers to sell their potatoes for £13, £14 or £15 a ton when they can get £45 a ton and, as at the present time, £75 a ton for certain varieties on the open market. The company therefore should make every effort to ensure that higher prices will be paid for those products. Farmers are at a great disadvantage if they are to honour their contracts and it is hard for them to do so when they see such high prices prevailing on the open market. That is why we had to import potatoes from England last year. I understand that is only a temporary arrangement, that we will not continue to import potatoes. If farmers in the West of Ireland are offered a few pounds per ton more they will provide potatoes. It would be a pity to have a repetition of last year's situation because the West is particularly suited to the growing of such crops. I do not think it should be necessary for us to import potatoes from England. The employees in this factory are very worried. Over the past 12 months they were working under a threat because they did not know what week the factory was likely to close down. If potatoes had not been imported from England, it is quite possible that many of these workers would be out of work now.

I understand from the Minister's speech that the number on the board of directors of the Sugar Company will be increased from seven to ten. This is a good idea because it will bring new thinking into the board of the Sugar Company. However, I recommend that, in appointing those new members, we have three members from the West of Ireland because they will be able to put forward the viewpoint of that area to the company. They will ensure that Tuam will be maintained as a viable unit and that that area will get its fair share of any benefits deriving from the Sugar Company.

Last year the food project had an operating loss of £660,000, which is a tremendous loss in one year and could not be allowed to continue. I hope in the years ahead, particularly for the sake of those interested in the farming community, that this company will prosper and that further developments will take place, particularly in the Tuam plant. All Deputies from the West of Ireland are very interested in this and I hope the Minister will consider developing this plant in whatever way he thinks fit. I am sure there are many other things could be carried on there and all these avenues should be explored so that this factory can be maintained as a viable unit.

Mr. Bermingham

I wish to welcome this Bill and to congratulate the Minister on introducing it. I am very glad of the extra investment being put into this company because it is very necessary, particularly in the area I know, the Carlow sugar factory area.

In regard to Erin Foods, during the first few years of the effort by this company it was apparent to people working in the process industry that contracts for crops were given but no research was made into whether there was any sale for those crops after they were processed. There were cases where farmers had to be compensated for their crops and, at the same time, they were told to keep them. In such circumstances the company simply could not pay. I agree an industry should be given some time to get off the ground, but there should have been some survey of the market available before the company rushed into contracting for the growing of crops. It is necessary for the company to have some idea of the sales potential of those crops.

Erin Foods should be a viable industry in the areas where vegetables grow well, where a reasonable price is paid for them and where a reasonable price can be obtained on the market. The harvesting of some crops by Erin Foods needs to be looked into. It should have been realised earlier that it is not a practical proposition to operate over an area of 15 miles radius with Erin Foods doing all the harvesting themselves. The farmers should be allowed harvest those crops and bring them into the factory. I am very glad that the machinery in Carlow and Mallow is to be improved so that the intake of beet will be speeded up in this area. The Erin Foods plants in this area should be kept going as it is a source of employment.

It must be apparent that we will not be able to increase the acreage of beet under the EEC arrangements. We will probably be producing less acreage of beet. Farmers as well as the workers in those areas must have an alternative means of providing the rotation of crops that is necessary. The growing of vegetables will be a very necessary part of our farming programme in those areas. I believe, that with proper organisation and perhaps for some time limiting the output of Erin Foods, we will be able to produce good vegetables in competition with anybody. Our vegetables are good and our land is capable of growing good vegetables. It would be a retrograde step if we thought of curtailing or closing down any section of the Erin Foods vegetable activity.

The appointment of a board of ten members is very welcome. If people from all sections of the community, such as farmers and those who know the problems of the growers, were appointed on the board it would improve the board very much. The growing of beet down through the years was of great advantage to hauliers and if some of their representatives were appointed to the board I am sure they would be able to produce a plan, in co-operation with the farmers and the company, which would be of great advantage to everybody. The Minister should take great care when he is appointing new people to the board and he should consult locally before he decides to appoint them. He needs people with knowledge of the agricultural side of the industry as well as the hauling and processing sides of the industry. He needs also the views of the workers in the industry, who know things that the management are not in a position to see, or are not let know. It would be a big advantage if those types of people were put on the board.

To any ordinary layman it was obvious that the losses on the vegetables were due to the methods used. It would have been a miracle if that section had made money with the methods used by Erin Foods. The sugar industry was always efficient. It was a pity that investment in machinery had to be let run down, according to the Minister's statement, because of the losses in the vegetable processing section of the industry. That may have been inevitable, but we did make mistakes and they are apparent. We should see our mistakes and admit them. The vegetable processing industry must be viable. It is not practical to say that a vegetable processing industry is not viable in this country, especially in the area about which I am talking. There must be a replacement for what I see as a reduction in the beet acreage next year if we are to keep a proper rotation of crops.

I would ask the Minister to be careful about the kind of people he appoints to the board. They must be people who know the different sides of the industry. I am not saying that anyone will know all the angles, but the agricultural industry, the workers, and those who haul the produce from the farms to the factories should be represented. The method used to bring the produce from a radius of 15 to 20 miles into the factory is very important. It must be dealt with quickly and at the right time by arrangement with CIE or private hauliers.

The farmers in the different areas will grow vegetables if they can have continuity and if they know that they can arrange a proper rotation of crops. Farmers are not backward people any more. They want to plan their farming over a number of years. We would also need on the board people with an interest in the sales organisation not only here but in Britain and in Europe, so that we would know what we were doing and that, if we contracted for a certain amount of cabbages or swedes, they would be taken. It is important that all these people be represented on the board even if the Minister has to make more than three extra appointments.

The farmers want to be sure that there will be continuity and that they will not be asked to grow so many thousand acres of swedes this year and then told to keep them. That kind of thing has done great damage to Erin Foods. We must be sensible and work out a method by which the farmers will have a regular income. We must be able to tell them what will be required next year and the year after. That will entail having a proper sales organisation throughout this country and Europe. I am sorry if I delayed the Minister too long but the points I have made are valid.

Mr. J. Gibbons

I should like to welcome the extension proposed in this amending Bill in the borrowing powers of the Sugar Company. Everybody in the House is aware of the difficulty which has arisen for Erin Foods and the Sugar Company, mainly because of the partial failure of the Erin Foods project. Deputy Governey spoke of the length of the campaign season. The original concept behind the setting up of the Erin Foods project was a desire on the part of the people interested in the production of sugar beet to extend the campaign season by the introduction of other vegetables. As we all know, the Erin Foods project, after a very ambitious start— probably too ambitious—began to run down and run into difficulties.

It will be the business of the new board to determine the reasons for the poor performance of the Erin Foods products on the market. It is fair to say that it is not the fault of the producers of the vegetables. It is accurate to say that the people who undertook to grow carrots, or peas, or beans, or whatever, for Erin Foods knew their job and produced the commodities at the contracted price in an efficient manner. It is also true to say that the workers in the factories were efficient. I know this because I have a particular interest in the Erin Food plant in Carlow. One must search in the area of marketing to determine the reasons for the poor performance of Erin Foods. It is not part of my intention to try to affix blame or responsibility on the shoulders of any person or group. I am merely pointing to the self-evident fact that the performance was poor and that the reasons for this poorness of performance must be determined by the new board and put right. I believe it can be put right.

As other speakers said, we can be pretty certain of our competence over a large area of the production field, whether in actually growing or processing vegetables. One of the undesirable results of the Erin Foods standard of performance was the retarding effect it had on the sugar beet wing of the industry. The situation in the sugar factory in Carlow is, as far as I know, that there is extensive retooling to be done and it will be very expensive. It could not be undertaken to any great extent in the recent past, because of the drain of the Erin Foods project. I am glad it will be possible to undertake it under the provisions of this Bill.

The reason for our anxiety about the whole project is, of course, the commitment that the Government have, and that the Sugar Company has, to the people in the industry, both growers and workers. There is considerable anxiety in Carlow concerning the future of those who, in a sense, committed their lives some years ago to what appeared to be a promising and growing Erin foods industry. We must accept that we have a responsibility to these workers and we must ensure, if there is a running down of the Erin Foods part of the enterprise, the provision out of resources available to the Government of alternative employment.

Earlier on I mentioned the length of the campaign. I believe the Erin Foods vegetable processing project could be made successful and it will be made successful if the reasons for its failure are determined and corrected. If this is done, the seasonal nature of sugar manufacture will be levelled out to a great extent. By processing different varieties of vegetables it should be possible to provide virtually continuous employment, first of all, in the handling of sugar beet and then during the remainder of the season in the handling of crops like peas, carrots, celery and so forth. These have been very successfully handled so far in the Carlow plant. This would ensure continuity of work—indeed, almost a full year's employment—for those involved in the industry. This is the idea that was originally aimed at and it is regrettable that it has not yet been achieved. We ought not, however, to despair of our ability to compete with the vegetable processing giants of Britain and the Continent. We have the land. It is fertile. We have a congenial climate. We have the people to do the work. Without being flamboyant we can, I think, say that the assets are there for the using if they are properly harnessed.

I welcome the Bill. I ask the Minister and the Government to take note of the widespread anxiety that reasonably exists about employment prospects in this industry in Carlow and elsewhere and to remember that, if it is necessary to have retrenchment, special measures must be taken to provide alternative employment for those involved.

Mr. Power

I, too, welcome the Bill and the greater borrowing capacity it gives to Comhlucht Siúicre Éireann Teoranta. Increasing board membership will, I hope, prove fruitful. I should like to compliment the board on their success, particularly in the production of sugar, with consequential benefit to the farmers by providing them with a lucrative crop, though possibly not as lucrative now as other farming operations in which the farmer can now invest. At the same time, this is something concrete to which the farmer can look forward from year to year. I note that £7 million is earmarked over the next four years for the improvement of the sugar plant. I have no doubt the farmers will continue to grow beet. Many of them are anxious to get these contracts. Some failed to get them recently unfortunately. Farmers in South Kildare are very anxious, I know, to continue these beet contracts.

We should not write off food processing because of the lack of success Erin Foods have had. The employment position in Carlow and South Kildare is, I know, adversely affected. Perhaps our initial plans were too ambitious but I think we should still pursue this particular facet of our economy. Carlow has much to offer in the line of expertise and in the line of crops that can be grown successfully. Even if food processing continues on a smaller scale we could eventually build up to something very considerable later. In the beginning Erin Foods were going quite well in Carlow and South Kildare. The diversity of crops was a tremendous benefit and an asset from the point of view of rotation. I am told it is not the producers who are to blame. The crops were as good as could be got anywhere and I am a little disappointed that the venture has not proved a success. I do not know the reason for failure. Perhaps the new board will discover that. We really ought to be able to grow food well because we have many advantages as compared with other countries successfully operating in this field. We have a market on our doorstep, a market we did not have before, and it is vitally important that we should not put all our eggs in one basket. If we do so, we will be in a very vulnerable position. If we can successfully branch out into growing suitable vegetables that will give a longer season and ensure continuity of employment and the factory should be in a position to keep going from practicaly one end of the year to the other.

It is important to point out that the life of our bogs has been set at another 20 years. There has been a big capital commitment in housing the workers on these bogs and some alternative employment will have to be found for them in due time. Experiments carried out in Lullymore expenmental farm have proved conclusively that vegetables, particularly celery and carrots, can be grown very successfully, indeed, on worked out bogs. An effort will have to be made to cultivate suitable vegetables on areas of bog which can be dealt with mechanically. There is no reason why we should be afraid to compete with producers in other countries from both the food growing and processing points of view. I feel strongly about this and I hope the new board will give the matter consideration. I hope they will not decide that all their activities must be devoted to one particular process confined to Cork or the southern part of the country.

I hope Carlow will not be written off. In the immediate vicinity there is a vast potential. There are people with the expertise to grow the crops I have mentioned, people who have grown them successfully and who would still grow them if they had a market for them. In a short time there will be cutaway bog there and this has been proved to be an ideal ground for the growing the best, taking on the great social problem if we make an effort to ensure that we will have a ready market for them. We will have employment for our workers who will become redundant in 15 to 20 years' time and we will prove to the world that we in Ireland are capable of growing the best and taking on the best and selling our goods in competition with anyone else as we told the people we were prepared to do on our entry to the EEC.

Minister for Finance (Mr. R. Ryan)

I am grateful to Members on all sides of the House for the generous and responsible way in which they approached this Bill. I detected a note of grave concern on the part of all Deputies, indeed of serious disappointment, that the great hopes of the food processing industry are not being realised. We all share the hope that Ireland's special position as one of the best producers of high quality food in the world will present us with an opportunity of generating a profitable and viable food processing industry.

There are a combination of reasons for the lack of success. The principal one is that to which Deputy J. Gibbons referred, that is, the question of marketing. We can produce goods at a price and we can sell the goods at a price but the price we can charge for the goods we produce depends on the price which the market is prepared to pay for our goods. The tragedy is that these prices have not kept in line. I think it would be very wrong to proceed to apportion blame either on the agricultural sector for failing to produce goods at a price which they found unattractive or to blame management for failing to sell the goods in foreign markets when in fact they could not sell them except at a loss because of the prices which they had to pay to producers to produce the food in the first instance.

We are on the horns of a dilemma. I can assure Deputy Desmond and others that the Government have said very clearly to the board that they expect the board to take realistic and businesslike decisions, but we would also expect the board to have regard to the obligation to do no injury or injustice to any people who were recruited into the labour force and who have not readily available to them alternative opportunity of employment in their own location. I think it is possible over a period to match these two very serious and substantial obligations and we will certainly render every assistance we can to the Board to help them to meet their responsibilities. I think they are meeting them. The fact that they have such a wide spread of factories, about 10 in all, some of them in undeveloped areas, is an indication, first of all, that the industry was geared to try to provide outlets for agricultural and horticultural production. It is, of course, a great disappointment to the board and to us all that, although these outlets were provided, the prices available in the market are not sufficient to encourage people to avail of the industrial outlets which are now available for their agricultural produce.

Deputy Hussey was naturally concerned about the position of the Tuam factory. It must be emphasised that the main difficulties in Tuam today are not related to the plant, which is quite capable of coping with all the beet offered to it. Even if it is an old plant it is still capable of coping with everything that is offered to it. The difficulty which faces Tuam today is not one over which the board has any direct control.

It might be useful if I gave a breakdown of the proposed expenditure towards which the loan of £2.8 million is being obtained from the European Investment Bank. In reply specifically to Deputy Desmond, I will mention that the rate of interest on the loan is £7? per cent, which is unusually attractive and, even allowing for whatever disadvantage may attach to a loan beyond our shores, when you get it at that price today it is very worth while taking up. We should congratulate all concerned that Ireland, of the new members of the EEC, should be the first to negotiate a loan with the European Investment Bank. It is a great tribute to the Sugar Company and to OUT producers that the EEC and the European Investment Bank should have sufficient confidence in them in this time of change and difficulty to give them this very substantial loan.

Perhaps all this money might not have been required if Comhlucht Siúicre Éireann had not lost so much on the food processing industry over the last decade but there is no use crying over spilled milk. What was tried was well worth trying. Some of the mistakes will teach us some lessons but so will some of the successes teach us lessons for the future. It would be wrong to think that the day of food processing here is over. I think it is only beginning. It is worthwhile keeping the plant and the organisation ticking over if only to be in a take-off position as soon as opportunity should present itself to the full.

The breakdown of investment is : Carlow £3.699 million, Mallow £2.8 million, Thurles £.29 million and Tuam £.72 million. One should not accept that either Thurles or Tuam are in a position inferior to Carlow or Mallow. There is a very substantial need to improve equipment in both Carlow and Mallow. The Thurles plant is in a much better condition. It is more upto-date than either Carlow or Mallow. The Tuam plant is capable at the moment of coping with what is on offer to it and the money which will now be expended will simply help to maintain the equipment and improve it where it needs improvement and replacement. Carlow and Mallow are operating very well indeed at present, not only in relation to the plant itself but also in respect of the supply of beet to the plant. The same cannot be said of Tuam. I hope it will be possible to arrange the market in a way which will ensure that Tuam will have sufficient produced in its own catchment area without necessitating what has occurred in the past, that is, taking beet from the catchment area of the other factories.

Deputy Governey made a very strong appeal for Carlow and I think he is quite right to be concerned with Carlow. His remarks were supported by Deputies J. Gibbons and Power. In the Carlow area the farmers are producing sufficient on the beet side to meet all the requirements of the Carlow plant. Unfortunately they are not finding present prices attractive enough to produce sufficient peas for the Carlow plant. Even though that is so, because of the performance of growers in other parts of the country some of the beet has been taken from the Carlow catchment area. One does not wish to set up any chain of rivalry between Carlow, Mallow, Thurles and Tuam. That is wholly undesirable and the objective should be to stimulate each catchment area to develop sufficient for its own requirements.

Deputy Governey mentioned the construction of the present board which stands at nine members. It was at ten members until the tragic death of Mr. Naughton. Quite frankly, I am not pleased with the present position. I think it is wrong that any State company should assume that it may go beyond its legal powers. The present legal position entitles the board of the Sugar Company to be composed of seven people. That does not entitle them to go to nine or 10 people. I know that the decision to expand was taken in anticipation of legislation but I would prefer that steps of that kind should not be taken until the legislation was put through. Therefore, I would hope to have this position rectified as quickly as possible. I accept the need to expand the board. I will bear in mind what Deputy Desmond said about worker representation. I have already indicated to the workers that we accept this in principle and propose to apply it in practice.

As the Members of the House probably know, the Minister for Labour is at present preparing a scheme which will probably be applicable to all State bodies to ensure that there is adequate worker representation on the board of management. I would like to point out that it is not necessary to make any provision in this Bill to give effect to the application of that principle. It is one which we will bear in mind when the board of the company is under consideration by me.

Also I will endeavour to bear in mind the remarks of Deputy Bermingham, who spoke, very properly, of the importance of having adequate representation for the transport element involved in the collection and distribution of beet and the other products. We all know that one of the difficulties of sugar production is that it is for a very limited period of the year. In fact, disadvantages can arise if the period is extended because the quality and value of the crop can be considerably diminished if the production period is extended over too lengthy a period of the year.

We are endeavouring to produce a balanced industry. There is the prospect of doing much better in the future than in the past. We can have every confidence in the management and workers of Comhlucht Siúicre Éireann. They will endeavour to keep this, one of our greatest industries, at full output. They have worked well in the past. They ran into a period of temporary difficulty which, I hope, is now coming to an end. Some of the steps which we have taken today will assist us in that direction.

I should like to express my gratitude to all Deputies for the points which they made. I realise that the House is under some pressure today because of the urgency of the Social Welfare Bill. I will deal with any outstanding points raised by direct reply to Deputies' questions.

Question put and agreed to.

Committee Stage ordered for Tuesday, 19th June, 1973.