I move: "That the Bill be now read a Second Time."
The purpose of the Bill is to consolidate the Agricultural Credit Acts, 1927 to 1975, and to make a number of substantive amendments in the existing legislation. Those Acts deal with the objects, constitution, functions and financing of the Agricultural Credit Corporation (ACC) and with the various charges which may be taken on land and other property as security for loans.
Before discussing the Bill I would like to review briefly the work of the ACC. The corporation were established in 1927 to cater for the special credit needs of agriculture, in particular to provide long-term credit which was not readily available from the commercial banks. For many years the level of ACC's business was modest because of the traditional reluctance of farmers to borrow, a reluctance which was due in part to the poor profits in agriculture and the uncertain market opportunities available.
The big change in investment came in the mid-sixties, reflecting the rapid improvement in the agricultural economy and the expectations generated by the prospect of entry into the European Economic Community. ACC themselves gave a considerable impetus to the demand for credit. During the past decade they conducted publicity campaigns in favour of greater investment in farming, they launched a highly successful deposits scheme to help finance their lending and they expanded their organisation to cope with a big increase in business. They established 35 district offices, staffed mainly with agricultural graduates, in order to bring their facilities within easy reach of customers and to maintain close contact with the diverse problems of farmers in the field.
ACC's lendings, which were only £5 million in 1965, increased to £25 million in 1972. They reached £35 million in 1973 and £85 million in 1976. Their lendings for 1977 are likely to rise to £105 million bringing total loans outstanding to £210 million.
The corporation give loans, including hire-purchase facilities, for any purpose which is considered of benefit to agriculture or horticulture, the main demands being for loans for purchase of livestock, land purchase and improvement, buildings and machinery, seeds, grain and fertiliser, working capital, debt funding and family settlements. As well as loans to farmers, accommodation is provided for firms in the agricultural processing industries such as creameries, meat factories and grain mills. Of the £105 million estimated lending in 1977, £90 million will go to farmers and £15 million to the processing industries. Repayment periods vary from one to two years for seasonal loans to 15 years or more for land purchase. Current rates of interest range from 8¾ per cent for seasonal loans payable within one year to 11½ per cent for term loans of ten years and over.
The authorised share capital of the ACC is £10 million all of which has been taken up by the Minister for Finance. They also have outstanding Exchequer loans amounting to £12.5 million and foreign loans totalling £32 million. During the past few years they have financed the bulk of their business through their deposits scheme and repayments on existing loans. The estimated intake of deposits in 1977 is £55 million which will bring the total amount on deposit with the ACC at the end of December to £175 million.
I now proceed to the Bill before the House. As I mentioned at the outset, it is largely a consolidating measure. As legislation is urgently required to increase that statutory limit to which the ACC may borrow, the Government decided to avail of the opportunity to bring up to date the existing legislation on agricultural credit which spans a period of almost 50 years and is dispersed over nine statutes. Most of those statutes now contain several amendments and many provisions are obsolete. In addition it has been decided to include some substantive amendments which I will explain shortly.
The Bill is divided into five parts. Part I—Preliminary and General— contains definitions and conventional provisions about charges on the Central Fund and the payment into the Exchequer of money paid to the Minister pursuant to the Bill. Part II is devoted to the corporation, their objects, powers, constitution and financing and the appointment and superannuation of staff. Part III deals with chattel mortgages taken by the ACC and recognised banks—in practice the bulk of licensed banks. It covers the registration of mortgages, the effect of mortgages in relation to the retention and disposal of stock, the seizure of stock under execution orders and the penalties for breaches of mortgage agreements. Part IV relates to charging provisions on land in respect of loans obtained from the corporation. These include special charging procedures in cases where, for example, land is subject to equitable claims or a prospective borrower is only a tenant for life, the circumstances in which ACC charges can get priority over equitable interests or other land charges, and the extent to which tenants for life and others with limited tenancies may charge their holdings for ACC loans. Part IV also contains provisions whereby the ACC can themselves make orders charging loans on land with the consent of the borrower. Part V contains provisions to facilitate and protect lending by the ACC to agricultural co-operative societies.
I will now refer to the main amendments to existing legislation which are included in the Bill. Sections 8 and 9, which deal with the objects of the corporation, provide for an extension of powers to enable the ACC to give credit facilities for the fisheries industry. It is not envisaged that ACC should compete with An Bord Iascaigh Mhara and other credit agencies in offering such facilities but rather to make provision for the future. The demand for credit for our developing fishery industry may increase to such an extent that it may become necessary to supplement the services of the existing credit agencies. In those circumstances, it would be desirable for the ACC to have the power to provide for the industry.
Section 11 increases the authorised share capital of the corporation to £20 million from the existing limit of £10 million. At present, however, it is not envisaged that the State would increase its investment in the corporation. They are not in need of any further State equity at the moment but it is desirable that the State should have the power to increase its investment if a situation arose in which the corporation unexpectedly found themselves unable to meet their commitments from their normal sources of finance. Section 12 and 14 provide for an increase in the maximum amount which may be borrowed by the corporation and guaranteed by the Minister for Finance. The new maximum of £350 million as against £220 million at present should meet ACC's requirements over the next three years.
Section 15 continues the existing provision under which the corporation may obtain a ministerial guarantee against losses in certain circumstances. Two changes are, however, being made. The ceiling on such guarantees —now £5 million—is increased to £10 million. Secondly, in order to simplify procedures, guarantees will in future be given by the Minister for Finance, instead of the Minister for Agriculture with the consent of the Minister for Finance. Section 23, which deals with the giving of chattel mortgages as security for loans, extends the existing arrangements so as to obviate the need for separate mortgages and separate registration where more than one loan is envisaged for the same borrower over a period. The definitions of both floating and specific chattel mortgages are being extended to permit a single charge to cover both a current advance and future advances.
Section 26 extends the period for registration of chattel mortgages in Circuit Court offices to one month from the existing period of 14 days which has been found to be inadequate. Section 37 contains a wider definition of permanent improvement purposes. There are at present a number of provisions in the Agricultural Credit Acts whereby persons with limited tenancies can charge as security for loans from ACC provided that such loans are obtained for permanent improvements purposes. As defined up to now such purposes are confined to improvements to land and buildings only, whereas other improvements, such as investment in extra livestock or machinery, may also be of permanent value to the land being charged. It has been decided therefore to extend the definition of permanent improvement purposes to include any purpose which will be or is intended to be of permanent or long-term benefit to the farm business conducted on the land. Section 39 and 42 enable the ACC to acquire priority rights over various equitable claims on the land. At present the corporation may avail of this facility only for loans up to a maximum of £10,000. To allow for changes in money values since that limit was fixed the ceiling is being raised to £25,000.
Section 47, which deals with the extent to which tenants for life may charge land for loans from the ACC, contains a new provision to facilitate lending to minor full owners where no trustees have been provided for in the original settlement. Up to now where the ACC were prepared to give a loan to such a person they were precluded from advancing the money to anybody except trustees appointed for the purpose by the courts. It is proposed that in such cases the ACC may, with the consent of the President of the High Court, nominate two suitable persons to receive the loan, such persons becoming trustees solely for the purpose of handling the loan in question. Section 48 contains the existing arrangements under which a personal representative of a deceased person may charge the land of deceased to secure an ACC loan. Under existing legislation the amount involved may not exceed £10,000. The ceiling is now being increased to £25,000 to take account of changes in money values.
Section 54 relates to charging orders whereby the ACC may, with the consent of the borrower, make orders charging the land of the borrower with money advanced by them, or liable to be paid by them on foot of a guarantee. There may be occasions where the ACC would be prepared to give loans which would be unsecured at the date of issue if they knew that, in the event of default in payment, they could proceed to make a charging order in arrear. It is desirable, therefore, to empower the ACC to make such orders in arrear in addition to their present power to make charging orders when the loan is being given. The section provides accordingly. The charging order would, of course, be made only with the consent of the borrower and would take effect only from the date on which it is made, not the date on which the loan was originally advanced. Any priority rights acquired by other lenders in the meantime would not, therefore, be upset.
The Schedule of enactments repealed lists the nine Agricultural Credit Acts which are being subsumed into this comprehensive Bill together with two provisions of the Agricultural Co-operative Societies (Debentures) Act, 1934. The effect of repealing these two provisions is to dispense with the existing requirement that agricultural co-operatives must have the prior consent of the Minister for Agriculture to the issue of debentures. It is considered that this requirement is no longer necessary and tends to duplicate investigations which the lending agencies undertake in any event to determine the credit-worthiness of the customer.
The various amendments to which I have briefly referred are necessarily of a technical nature and I will be glad to elaborate on them when we come to Committee Stage.
In conclusion, the financial provisions in this Bill recognise the prominent and successful role played by the ACC in agricultural development and are designed to enable them to cope with the likely demands on them for credit over the next few years. The changes proposed in the charging provisions are intended solely to simplify administration, leading to a more flexible charging system and more expeditious issue of loans. There is also the advantage that all the legislation on agricultural credit will now be available in a single statue.
Before I finish I would like to pay tribute to the directors and staff of the corporation for their dedication and enterprise in developing their organisation to its present impressive level. The aim must now be to consolidate their position following a period of very rapid expansion while continuing to provide a first-class service to Irish agriculture. I wish them every success. I commend the Bill for the approval of the House.