Agricultural Credit Bill, 1979: Second Stage.

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

This is a short Bill. Its purpose is to increase the ceiling on borrowing by the Agricultural Credit Corporation from the present limit of £350 million to a figure of £600 million, and to increase, similarly, the maximum amount of borrowing which may be guaranteed by the Minister for Finance.

It is desirable to have the Bill passed urgently. Borrowings by the corporation are approaching the statutory limit and, as Deputies are aware, I recently authorised the corporation to borrow £25 million abroad for on-lending to the agricultural community for productive purposes.

When introducing consolidating legislation on agricultural credit—the Agricultural Credit Act, 1978—I gave a considerable amount of information to the House about the history and activities of the ACC, and, having regard to the nature and scope of the present Bill, I do not think it necessary for me to go over the same ground in the same degree of detail as before. However, to recap briefly, the ACC, one of the first State-sponsored bodies in this country, were established in 1927 in order to provide a specialised credit service for agriculture, particularly long-term credit. For many years the volume of business was small, reflecting the general economic climate and a reluctance of farmers to borrow. Today the corporation are a highly-developed lending agency investing well over £100 million a year in Irish agriculture.

The rapid increase in business began in the late sixties with improving market conditions, a growing confidence in the agricultural industry and the increasing willingness of farmers to invest heavily in other enterprises. ACC lendings which totalled £10 million in 1965 rose to £25 million in 1970. Business expanded with increasing momentum during the seventies. The corporation themselves did much to encourage greater investment and to adapt their own organisation to the new production and trading environment. Investment in agriculture increased dramatically as farmers availed themselves of the opportunities presented by membership of the EEC and the many benefits flowing from the common agricultural policy. The recognition of the importance of a high level of investment and planned development is one of the very encouraging features of the agricultural economy in recent years.

By 1978 the amount of advances issued by ACC had increased to £143 million representing over 23,000 individual loan transactions. The total amount owing to the corporation, which stood at £130 million at the end of 1975, had reached £320 million at the end of September.

During the present decade the corporation also established a wide network of offices throughout the country bringing their facilities within easy reach of the farmer. They are continuing to extend this network, thus ensuring that they can maintain close contact with the varied problems of the individual customer.

In recent years the corporation financed a large proportion of their advances through the medium of deposit income. The other principal source of funds is repayments on existing loans. Deposits proved a buoyant source of income. Net deposit inflows averaged £55 million over the past few years, and the total amount now on deposit with the corporation is £265 million. The deposits carry a State guarantee and enjoy the status of trustee security.

The corporation may give loans and hire-purchase facilities for any purpose which, in their opinion, is of benefit to agriculture or horticulture. The main demands are for loans for purchase of livestock, land purchase and improvement, buildings and machinery, seeds, grain and fertiliser, working capital, debt funding and family settlements. They give loans to farmers and to firms in the agricultural processing industries such as creameries, meat factories and grain mills. Repayment periods are from one to two years for short-term loans to 15 years for land purchase. Current rates of interest range from 17½ per cent for seasonal loans payable within one year to 18¾ per cent for term loans of ten years and over.

A particularly successful innovation in recent years was the scheme of development loans designed to encourage planned development of farm enterprises. Loans are given on the basis of plans submitted by prospective borrowers and repayment terms are geared to suit the type of project involved. Over £25 million was advanced for such loans during the present year bringing the total development loans issued to £54 million.

Deputies will be interested to know that in the near future the activities of the corporation will be reviewed by the Óireachtas Joint Committee on State-Sponsored Bodies. The committee's findings will be awaited with considerable interest both by myself and, I am sure, by Deputies in general.

Because of the continuing expansion in the corporation's business it is now necessary to raise the maximum amount which they are authorised to borrow. The new ceiling is £600 million for the total amount borrowed and outstanding at any one time. The Minister for Finance is authorised to guarantee borrowings by the corporation. It is accordingly proposed also to increase the ceiling on such guarantees to £600 million. Given the likely future pattern of growth by the corporation, I think that the new ceilings should take care of their borrowings requirements up to mid-1982. I would be glad to have the co-operation of the House in having the Bill passed quickly because of the decision to borrow £25 million abroad which I mentioned at the beginning. I commend the Bill for the approval of the House.

We will facilitate the Minister in giving him all Stages of the Bill as soon as the contributions from this side of the House have been completed. I do not see any problem about any of the sections of the Bill. I am a little confused about the following statement by the Minister of State:

Borrowings by the corporation are approaching the statutory limit and, as Deputies are aware, I recently authorised the corporation to borrow £25 million abroad for on-lending to the agricultural community for productive purposes.

I am aware that the Minister must underwrite the borrowings by the corporation but I understood that they were empowered to borrow abroad anyway. Since the Minister authorised the corporation to borrow £25 million abroad, would that not put them over the statutory limit of £300 million as agreed to in the consolidating Bill which we passed here two years ago? The £350 million that was authorised at that stage was supposed to last until the beginning of 1981. Can the Minister tell us when replying why within a very short period his Department or indeed the Agricultural Credit Corporation could be so wrong and so out of focus in their predictions about what money they wanted and how long it would last? Are we sure that the £600 million that the Minister is now asking us to pay will last until mid-1982 or will he be back again in 12 months time seeking to raise the ceiling again?

I fail to see how that amount of money will be lent to farmers when in his speech the Minister says: "Current rates of interest range from 17½ per cent for seasonal loans payable within one year to 18¾ per cent for term loans of ten years and over." Given the present conditions of the agricultural industry it is hard to see people borrowing huge sums of money at these penal rates of interest. I know that in other lending institutions the basic interest rates are comparable and are sometimes higher and I know that rates of interest are tending to go up all over Europe but given the depressed state of Irish agriculture after its long healthy run, it is difficult to understand how farmers could warrant borrowing money at these rates of interest when the future does not appear to be bright in the agricultural industry. Either the Minister's Department or the Department of Agriculture should consider subsidising these interest rates. It was done before in relation to the TB eradication scheme. Interest rates were subsidised and were brought down to as low as 2½ per cent to encourage farmers to keep cattle rather than sell them. The same applies now and the Minister should consider subsidising the extremely high interest rates particularly at the short end of the market where the rate is 17½ per cent. If that rate is brought down to about 10 per cent it might encourage farmers to keep their cattle rather than put them on the market, thus further depressing the price of cattle which is at a very low level at the moment.

A section of the agricultural industry which demands the attention of the ACC, the Minister for Finance, the Minister for Agriculture or the Minister for Industry, Commerce and Energy is the egg producing business. This section of the agricultural industry has in the last 12 or 18 months come up against heavy competition with which they cannot cope. The volume of native Irish egg producing business has been halved in that period. If something is not done urgently from the point of view of subsidisation or protection from the importation of eggs, the native industry will be wiped out and the egg producing business here will be entirely controlled by outside interests or else the market will be supplied with imported eggs which is happening now to a large extent. It is no secret that in an effort to diversify their interests the British Imperial Tobacco Company have invested in the industry through Ross Foods. They recently bought a 50 per cent holding in one of the egg producing companies in the Republic and to gain a foothold they cut the price severely and have wiped out half the industry here. Their ambition is to reach the dominant position in the Republic that they have in England and in the North of Ireland, which is 40 per cent of the market.

When the producers here saw this position coming about they contacted the Department of Industry, Commerce and Energy to seek protection under the Monopolies and Mergers Bill. They just got a shrug of the shoulders from the Minister concerned who said that she could not help them, that the case did not come within the scope of that Bill. These people said they found very little appreciation of or interest in their industry in the Department of Agriculture, and that they could not get the Minister there to concern himself with what everybody admits is a small section of the market compared with beef, dairying and grain industries.

There were about 2,000 engaged in earning their living in this industry, and the numbers are dropping fast because of outside competition. The Minister for Finance can help under this Bill through the Agricultural Credit Corporation. Co-ops, yards and sheds in the egg producing business have a relatively limited life and because of the historical coincidence of the industry here most of them will be coming up for renewal very shortly. If the Minister gave an undertaking through the Agricultural Credit Corporation to allow these people to replace their equipment and still remain in business by heavily subsidising interest rates, we could keep egg production as an Irish industry.

Some dramatic measure is required urgently of the Government to keep this industry alive. I am not talking about next year when the matter has been considered but about positive steps being taken in the next few weeks. It is quite definite that the reinvestment will not be made after Christmas, that many people will go out of business, and that the major egg producing company here will be 50 per cent owned by the Ross Company and then by the Imperial Tobacco Company in Great Britain which has had the effect in England of virtually wiping out individual egg producers. In the north they have a huge investment and are producing eggs cheaper than the small producer which has a very damaging effect on them and the same thing will happen in the Republic unless something is done urgently.

Egg producers here are in the minority and they spread from Monaghan to Cork and from Galway to Dublin, right across the country. They are not a large number of people in any one area but they will be out of business in 12 months' time unless the Department of Agriculture take an interest or unless the Department of Industry, Commerce and Energy protect them under legislation. I suggest that the Minister interest himself in them and instruct the ACC to immediately enter into negotiations with them to provide them with capital at nil interest rate for the replacement of their equipment. At least that would be a sign of interest, a sign which they have not got from the Government up to this. On that side nobody has shown any sign of interest in the fact that in 12 months' time the Irish involvement in the production of eggs will be almost wiped out. The immediacy of the problem is not appreciated in the Department of Agriculture. A cursory glance at the legislation available in the Department of Industry, Commerce and Energy, would not, on the surface, appear to be applied to them, but I am suggesting what they have not suggested, that something can be done through the Department of Finance which needs to be done very urgently. That is the major point I want to bring up.

I said at the outset that of course we welcome this and we welcome any investment in agriculture, but the time has now come, because of high interest rates and the depressed condition of the agricultural industry, when the Government will need to start thinking about subsidising interest rates if they are going to stop a very serious erosion of confidence in the industry in the future. This was done previously under the TB eradication scheme.

I would like the Minister to comment on two further points. One is the news item in this morning's papers about the setting up of a farmers' bank as announced by Mr. Maher yesterday. I quote from this morning'sCork Examiner:

Mr. Maher saw the emergence of a new finance institution as "a logical step" for co-ops. "It is not logical that farmers wearing one hat are taking out money at 18 per cent and wearing another hat are putting it into banks at 12 and 12½ per cent," he said.

For the Minister that should be a very disturbing news item. On the very day that he is coming in here looking for extra borrowing facilities for the agricultural institutes, farmers' co-operatives are announcing that they are contemplating and, even further than that, have maybe perhaps made arrangements for the setting up of a farmers' bank. At least on the surface that would appear to be a mark of no confidence by the farmers in the ACC, although that is not apparent when you talk to individual farmers. They have nothing but praise for the way they are treated in the offices throughout the country by the officers of the ACC. They use the ACC pretty extensively; they are given a very sympathetic hearing by the company generally and they have a lot of confidence in them which they did not always have. That is at individual farmer level dealing with one of the many offices that there are in the country. Yet at the top level of the farmers we have this announcement that the farmers themselves are thinking of setting up a bank, presumably providing an overlapping service with the ACC, unless the item in this morning's papers is incorrect or unless I am misinterpretating what they have in mind. The Minister should at least give an indication of the first reactions of his Department to this news this morning and he should let us know how they intend to keep the ACC in competition and in business if the farmers take what Mr. Maher described this morning as "this logical step".

The other point, the last I want to make, is that when the consolidating legislation was brought in in the past two years, it contained a section which allowed money to be lent to the fishing industry and it was introduced for the first time under ACC legislation to allow money to be lent to the fishing industry. Exactly how much use was made of that section of the 1978 Bill? Did the fishing industry take that up and, if so, to what extent and to what purposes? I would be grateful if the Minister would give me that information when he comes to reply to the debate.

Naturally, we support the purpose of this Bill. Agriculture remains the most important industry in the country and as a national resource its development at any stage must not be held back. However, I would like to make one or two points.

A reflection on the serious economic situation facing the country is the fact that the Minister towards the end of his speech talked about the rates of interest on seasonal loans at 17½ per cent. The mind boggles at the economy of the agricultural operation which can repay loans at interest rates of that high level and 18¾ per cent for term loans of 10 years and over. Irish agriculture this year is not as prosperous as in recent years. This is not one of its best years. In the context of this Bill it is unlikely that the present price support mechanism that we have known in the European Community over recent years which has been responsible in large measure for the prosperity which has come to Irish agriculture will continue into the indefinite future. The point must be made, and it has relevance to the operations of the ACC, that if it is necessary for the Minister now to look for an increase in the ceiling of loans permissible under statute, there is a question mark over the whole future of the present prices system in Irish agriculture in the sense here that the political support for the common agricultural policy of the EEC which we have known since our entry into the Community is now clearly on the wane.

Obviously, this has serious implications for the kind of agricultural policy pursued by the country to date and for the future operations of the ACC themselves. The Minister has explained that he wants support for this measure. We give support for this measure in the sense that credit is necessary for Irish agriculture, but credit to be made available for agriculture in the years ahead must be chosen very carefully and must be the product of calculation of the kind of policies to be pursued in agriculture by the EEC. At present it would be a mistake, a grievous policy error, to conclude that the CAP as we know it will remain intact over the years immediately ahead. I do not believe it will and political support for the present CAP is on the wane. The implication of that for Irish agriculture is that Irish agricultural leaders must now consider what strategy they would like us to adopt for the benefit of agriculture in this changing system in relation to CAP.

I would like the ACC to review that part of their credit facilities which apparently, to some extent at any rate and in the last two or three years particularly, was concentrated on loans for the purchase of land and constituted a very large part of their operation. Especially in the context of the kind of agricultural policy which we would be facing in the EEC—which after all is the overall context in which the Irish agriculture is prosperous or not—they must review the proportion of their business which at present is occupied with the purchase of land and, instead of concentrating on the land purchase needs of the farmer of 200 or more acres, they should now perhaps give greater attention, in the context of changing agricultural policy, to the man who is referred to by many political parties as the smaller farmer. I refer to the farmer with under 100 acres. His development needs should now be looked at afresh and perhaps greater attention paid to his development needs in the period immediately ahead. The criticism can be made that the ACC have unduly concentrated their activities in recent years on land purchase, particularly at the upper end of agricultural holdings. The case can be made that they have contributed to some extent to the over-pricing of agricultural land.

It is the banks more than the ACC.

Perhaps the banks are more to blame but the ACC have to some extent contributed to the tendency to over-price agricultural land. I do not believe that the immediate outlook before Irish agriculture could sustain the kind of prices that have been paid for land in the last year or two. There has been a change downwards recently but it is a very belated change.

In the European Parliament all the Irish members voted together to retain CAP as we know it. The four Irish Labour members, the Fine Gael members and the Fianna Fáil members voted to retain CAP intact because of what we considered to be the national interest, that as other Community policies had failed to produce assistance here we could not see agricultural funding damaged by any voting of ours in the European Parliament. We all voted to retain CAP in its present form, irrespective of what our political groupings in Europe had so decided. The House is aware that the socialist group had already changed their attitude towards CAP and they voted for large scale changes in it. The Irish Labour Party voted against the nine member socialist grouping, of which we are members, to defend what we considered to be a national interest, especially as we saw that items like socialist policy and regional policy had not lived up to expectations.

(Interruptions.)

Deputy O'Leary, without interruption.

I am making the point that the Irish members voted together on this issue because we considered that the net national advantage was to maintain CAP. Political support for CAP in its present form is on the wane. Leaders of Irish agriculture should consider this situation. They should meet this changing situation constructively and not behave Canute-like, hoping that CAP can be maintained intact without a change in its present form. I do not believe this is possible. This Bill is not a debate on this and I do not propose to go into the matter at length. It is relevant to the Bill but is not the main subject of it. I am only making the point about the changing future of Irish agriculture and the impact this must have on the operations of the ACC. The ACC are probably looking at this situation very seriously. I advise them to concentrate their activities much more closely now than they did in the past when land purchase had an undue portion of their attention. In the context of the development of the medium sized farmer, the farmer below 100 acres, more attention should be paid to his needs in the more difficult period now before us.

We cannot any longer depend on automatic price increases under CAP coming from our membership of the Community. It is clear that the future direction of the agricultural policy in the Community will concentrate increasingly on an efficient agricultural sector in Europe. This should, theoretically, assist us if we have, as we have had, many advantages in maintaining our agricultural efficiency. We have many conditions which favour our maintaining efficiency. This kind of policy need not be as disastrous as some of those who support CAP in its present form would maintain.

The ACC have a vital role to play in this very competitive situation opening up for agriculture. It is in the national interest if agriculture is maintained in as efficient a state as possible and that we maintain as many people as possible on the land if only because unemployment will face them in the city areas. If we can delay departure from the land for as long as possible then our unemployment situation will be saved from getting that much worse. It is obviously an objective of political parties in the House to keep as many people as possible on the land but it is not possible to keep as many people as we would like on the land in the standard of living they now desire. Nobody wishes to maintain a low standard of living for any person in any part of the country. The demand of the electorate is for an improved standard of living. That can be done in agriculture only if it is maintained in as efficient a condition as possible.

The agricultural spokesman of our party, Deputy Bermingham, has said that he would like to see the ACC move into the purchase and leasing of land. He has advanced the argument that such land should be leased to farmers who are not considered by the ACC to be in a position to own land of their own. He has said that he is anxious, presumably in the interests of efficient agriculture, to see those best qualified to manage farms being able to do so.

One of the alarming features which sociologists have noted about Irish agriculture is that such an important national resource is on many occasions managed by those long past the age of considering competitive factors at all. A large proposition of land is owned by septuagenarians, those with no families and no particular interest in maintaining their holdings at an efficient level. This is a loss to the country. Agriculture is too important an industry to allow this type of fate to befall a good deal of agricultural land. Nobody wishes to see any person deprived of an asset. People are buttressed in the Constitution in regard to ownership of that asset. It is a fair point, which any person on the other side may concede, that it is nothing less than a national tragedy to see so much good land allowed to run into disuse for the sole reason that the vagaries of inheritance have made those holdings the property of people with no interest in managing them in an efficient way. I am sure the ACC consider those problems in their offices up and down the country but it is outside the scope of this Bill for us to advance solutions to them.

The Minister said that he hopes the ceiling he is looking for will make it unnecessary for him to come back to the House for any increase until 1982. I hope he is correct. He has referred to a very important development, the setting up of the Oireachtas Joint Committee, which from now on will have the opportunity of meeting with the ACC and considering how their operations should be shaped in the future. A lot of money is involved in the Bill. Although we are giving the Minister a speedy passage to the Bill we are giving him an increase of £300 million. It is very praiseworthy that the House should set up a committee which will on future occasions make an in depth study of some of the matters I have referred to this afternoon, which I believe will become much more serious concerns in 1980 and 1981 because the good old days of automatic price increases have gone.

That message must go out from this House and it should go out from farm leaders. They are leading their followers up acul de sac if they are holding out the prospect of automatic price increases coming from Brussels into the eighties. Common Market or no Common Market, only properly managed and financed farms will survive into the eighties. It is important that agriculture, on whose prosperity so much else depends, should be given wise management, constructive leadership and correct information over the next decade.

I welcome this Bill, which increases the ceiling on borowing by the ACC to £600 million. The ACC have been one of our more striking success stories. As the figures show, they have increased their lending to farming from £10 million in 1965 to £143 million last year. This money was lent to 23,000 farmers. I do not agree with the previous speaker who said that they have aided the spiralling price of agricultural land. There is a limit to the amount of money which the ACC can lend to farmers. It is only fair to say that the ACC have a prudent lending policy. Their success can be gauged by the increase in the amount of money lent and by the improvement in agriculture. As recently as 1960, the total value of our agricultural exports was £89 million. In 1970 our agricultural exports increased to £200 million and are now valued at £1,000 million. It is only fair to give the ACC credit for allowing the farming community to develop.

Although progress has been made, agriculture is still in an undeveloped state. We have only six million head of cattle. Our stocking rate is one animal per two acres and our milk yield is the lowest in Europe. There is room for improvement in agriculture and I am glad that the ACC have been given additional facilities to help the farming community.

Another recent praiseworthy development of the ACC is the opening of offices in many of our rural towns. Their offices are staffed by outstanding personnel who give advice not only on the financial implications of loans but on the best way to use them. This is an important development, as finance must be given to farmers for general development plans. The staff of the ACC are doing a great job in helping farmers to plan their developments. I hope the ACC open more offices in rural areas. If this is not possible, perhaps they would consider holding a weekly clinic in towns where they have not opened permanent offices.

I believe that the processing sector of agriculture should be funded by the ACC. Our main problem today is getting good prices for agricultural products. We seem to be processing products for which there is not a ready market. The ACC should give sympathetic consideration to applications for finance for the re-equipping of processing plant. In order to increase our agricultural productivity, we should process products which are in demand. There is no doubt that we can double our stocking rate and quadruple our milk production. In order to gain lucrative markets for our products we must diversify and modify our products.

This year has been a difficult one for farming. The low growth rate in agriculture this year is a tragedy for the economy. Its influence on the balance of payments is greater because of this year's difficulties. Those who are not involved in agriculture have a narrow view of the industry. They look upon agriculture as basic farming in which 23 per cent of our population is engaged. The difficulties this year have made many people realise that agriculture affects the service and processing industries. If the people employed in the service and processing industries are included, the total number of people engaged in agriculture is 43 per cent of the population. This shows that an improvement in agriculture benefits the whole economy.

According to the Minister's speech, the amount of money advanced for planned development has been increased from £25 million to £54 million. I believe that that amount should be further increased because the emphasis is now on planning. Under the farm modernisation scheme farmers must have plans and must keep accounts. More emphasis should be placed on agricultural planning.

I welcome the Bill and I commend it to the House.

This is a progressive step and we all welcome it. Some of the increases in borrowing power needed by the Agricultural Credit Corporation may be due to inflation. That is not a criticism of the Bill. We do not know whether the figure asked for until a certain date in 1980-81 is correct. I hope if it is not correct the Government of the day will come back here with a similar Bill looking for more borrowing power for the ACC.

It is right for somebody who has been associated with the borrowing end of the Agricultural Credit Corporation for a long number of years to think about the beginnings of the corporation in 1927. I am sure the House would not object to my mentioning a man whose funeral occured the other day, the late Mr. Patrick McGilligan, S.C., and his influence on the ACC in their formative years. We should remember that during the formative period the father of Deputy John Kelly, the late Mr. Joe Kelly, was secretary to the ACC. I celebrated my 56th birthday a short time ago but, as long as 27 years ago, I borrowed money from him.

Those men must be mentioned and remembered as well as many others such as a chairman appointed by this Government, Mr. B. Considine, who happily is still with us. He was a very good chairman and played an executive part as well. We must all thank him for his contribution. Another man who followed the late Mr. Joe Kelly as secretary, and who is still hale and hearty, is the redoubtable Mr. G.R. Pearse, B. Comm., B.L. We have to remember those men and the work they did for the Agricultural Credit Corporation. It is on the foundations they built that we have what we have today. They should be remembered by all sides of the House. We should remember all the men from all sides who gave everything they could to this great institution.

The Minister said it has been announced that the Agricultural Credit Corporation are to borrow £25 million, in Deutschemarks as I understand it. They borrowed money abroad before and they lost out on the deal because of the way the currency went. They showed a special loss on that transaction. I understand this borrowing is at a very favourable rate of interest. It is most important that the ACC should show a profit each year and that the Minister for Finance, who is charged with looking after them and seeing that they follow the proper lines, will be reassured by the results.

I should like to comment on the results as examined year by year. The repayment record by Irish farmers is absolutely marvellous. Over the years there was very nearly no such thing as a bad debt. When you lend as a bank lends—and the Agricultural Credit Corporation lend in that way—it is very hard to have a bad debt because you are dealing with somebody who has property, such as a farmer. The creditworthiness still holds good. The ACC should give heart to all politicians and to everybody who would like to see this Bill bearing fruit. That creditworthiness still holds good. The Irish farmer will repay.

The outturn on the previous occasion when money was borrowed from abroad did not affect farmers because they had made their bargains with the ACC and those bargains were carried out faithfully. At the same time, the corporation must be prudent and see to it that they lend their money at a proper rate. Later I shall join with speakers who referred to the high rate of interest. Just as goods have to be bought money has to be bought, and it has its price. We are in a bad market today. However, I will have more to say about that later.

There were times when relations between the ACC and the Fianna Fáil Government were not of the very best. I remember an occasion years ago when the Taoiseach was Minister for Finance and there was the matter of the difference between £1.6 million and £2.3 million, I think, and whether the Department of Finance and the Government would make up the deficit, if there was a deficit, and if the funds did not turn up from the resources of the ACC. I was refused bluntly by the then Minister for Finance and I availed of my right to raise the matter on the Adjournment. After a pretty hard drubbing on the Adjournment he gave in. That is on the record of the House. I have not got the reference with me but, if anybody wants to read it, I will produce it.

The hope is that there will be the best of relations between the Department of Finance and the ACC in the years to come. This is vitally important to the Irish farmer. The Department of Finance have been described as an inverted Micawber. They are not like Micawber always waiting for something to turn up, but always looking for something to turn down. We are not in that position in regard to this Bill. I hope the ACC will be free in their business efforts, free in their efforts to borrow money abroad, and free to take commercial risks when all the risks have been assessed by the best people they have and on the best advice they can get outside their own organisation. When that is done I hope the permission we are granting to borrow money will lead to more money for farmers at lower rates of interest if possible.

One of the great advantages the ACC have, and should continue to have, is the sinking fund operation whereby the farmer who borrows money for capital requirements is asked to repay on two gale days, 1 May and 1 November, in two half-yearly repayments which include principal and interest. That suits the farmer because on 1 November he has received his cheque for his harvest, and on 1 May he will have sold the stock he has been feeding for the winter. That is an old system: 12 May was hiring day and 1 November was the end of another period in farming. The system of having two gale days is the best one for the Irish farmer. It was instituted by the men I mentioned. It is the right way to do it. It is the best way for the farmer and it should be kept. It spreads equal payments over the period of repayment. That helps the farmers. With inflation, in money terms the money repaid could be worth less than it was on the date of borrowing. This system is better than the bank's system and it should be continued in the future.

In relation to interest rates, we are in the position of being able to go into the market place to buy money in the same way as we buy goods. I have occasion from time to time to borrow money in respect of my business and all I can say about these interest rates is that they are the prevailing rates. I do not think it would be possible to borrow money today at lower rates in the ordinary market place but I should hope that the licence being given here to the ACC regarding the manner in which they may conduct their business will mean that in the years to come they will be able to lend money at interest rates lower than those prevailing in the common market place at the time. But I appeal strongly to the Department of Finance not to get in the way of the corporation. I suggest that the ACC should be let off the leash in this regard and that as time passes and opportunities arise they may be in a position to borrow abroad at better terms and, consequently, be able to lend the money to the Irish farmers on more favourable terms. The Department should not interfere with such a perfectly ordinary commercial operation.

There has been reference to the pig industry and to the poultry industry. There is a problem in this regard because there is a loss of £2 or £3 on any pig that is not being fed whey or skimmed milk. Most efficient operators will be able to prove this from their accounts. There is a similar problem in respect of the egg industry. Deputy Peter Barry mentioned the great takeover and the vertical integration. If the very big combines can take over an industry we may all end up in the situation of having to work for them because the small, medium-sized or ordinary large farm operator, those people who for the most part are Irish nationals, will find themselves squeezed out.

Therefore, this is not a time to be faint-hearted or for saying that the industry has not been paying for the past six to twelve months and that another six months may elapse before the situation is righted so that in the meantime money will not be made available to the industry. There should be a policy line in the ACC in relation to the lending of money so that those facets of Irish agricultural industry that are suffering a temporary setback should not be allowed to die from malnutrition but should be nourished by the input of capital on a planned basis. In this way we will ensure that at the end of the bad cycle there will be an opportunity for production and profit, that the factory-farm enterprises will not be taken over entirely by the very big multinational and national combines and that undesirable vertical integration to which I have referred will be avoided.

Another matter which is very important and which concerns me greatly is the question of the housing of stock. Far too many cattle are left out for too long during the winter. There is nothing as bad for land as having it trampled on by cattle during the winter months. This results, the following summer, in land that is covered in weeds and thistles but with very poor grass. Regardless of the cost of housing stock and of the ensilaging of grass, expenditure in this sphere will pay dividends. In the first instance, the cattle will be better and even if profit is reduced as a result of the cost of feed and so on, it will be recouped in the following year by reason of grassland that is properly managed producing a good deal more grass than would be the case otherwise. Therefore, there should be a strong policy within the ACC in regard to the provision for housing for cattle and for winter feed.

Hear, hear.

Of course we must not charge the ACC with neglect in this area but in many instances we can accuse the farmers of such neglect, though we must remember that the road has been long and hard. I have a self-servicing silage unit for 100 cattle which 17 years ago cost me £4,800. This year I bought an identical unit for £30,000. Therefore, the cost of that unit has increased sixfold in those 17 years. Such cost present difficulties but this is where the long-term financing comes into operation. There has been reference to a ten-year period but I have borrowed money from the ACC for a 21-year period. I have borrowed money from them also on a 15-year term and I have borrowed money from the Department of Industry, Commerce and Energy, under the Grain Storage Loans Act, for 25 years at a four-and-a-quarter per cent. When one considers the increased cost of housing cattle and the absolute necessity for housing them if we are to achieve full production from the land, the longest time quoted in respect of a period of repayment is too short. Consequently, the period should be extended for specific purposes where it can be proved that the need is great and that the advantages are also great.

I agree with those other speakers who have said that there has been a situation in this part of Ireland in which land purchase was accelerated by the banks. As somebody said recently all that was needed was one's signature and a kind face in order to borrow money to buy land. The price of land rocketed because one bank manager was vying with another to give money for the purchase of land, the price of which was far in excess of what it should be if ordinary farm enterprise were to repay and show some profit. But I would not blame the ACC in this regard. They are prepared to advance money to those seeking to render a holding more economic. I understand, for instance, that if there is a question of the consolidation of two holdings into a more viable single holding, the corporation will not be totally inflexible. When one considers that about a year ago the price of agricultural land in England was about half the corresponding price here and that the price there now is still less than two-thirds our price, taken in terms of a business enterprise, the price of land here was on a scarcity value basis and was far too high.

I can understand this because, for instance, there would not be any point in my buying ten acres of land in County Wexford because of the difficulty that would be involved in administering such land from County Louth but in the event of a holding coming on the market and there being adjacent to it three or four farmers who had sons and who had always been very good in terms of repaying loans to the banks or to the ACC, it would be only natural for those farmers to be prepared to commit the following year's profits in addition to whatever they might have in order to acquire that extra bit of land which might provide them with their last opportunity of being able to get another holding in the area. That represents a scarcity value situation and is something we must live with because there will never be enough land for everyone. At the same time there has been too much lending for that kind of buying. Perhaps the ACC are a little loose in that regard but I would not like to see the situation being continued whereby farmers pay far too much for land with the consequent high repayments that such operations require. I wish both the Government and the ACC well in regard to financing agriculture. I want to see the Department of Finance acting not as a complete watchdog on them but allowing them to do their thing in a commercial and progressive way. I would like to see them go ahead with this approach.

I welcome this Bill, which is a follow up to the Agricultural Bill of 1977, passed here in 1978.

The ACC have made a major contribution to agriculture and this is recognised by everybody in the House. They are playing an important role and it is a continuing one. A very important development took place at yesterday's conference of the ICOS and it has a bearing on the future of the Irish agricultural banking institutions. The Minister stated that it was intended to place the affairs of the ACC before the Oireachtas Joint Committee on State Sponsored Bodies. I welcome this decision because there are tremendous opportunities in agriculture which are not being availed of by the ACC to the extent that they should be. It would be a retrograde step for the ICOS to form an alternative banking system to the ACC. A far more logical approach would be for the ACC, by arrangement with the Irish farming organisations, to form in time a truly Irish farm banking system which would entail the full extension of the facilities which they have at this stage. At present the ACC are not in a position to provide the full banking facilities available to the farming community from the commercial banks and I cannot see the logic in not, at some stage, extending the services of the ACC by giving them full cheque book facilities and other banking facilities for their customers.

I hope that the Joint Committee on State Sponsored Bodies will come up with such recommendations so that it will be possible to combine the efforts of the ICOS, the IFA, the National Land League and all the other farming organisations to form a major banking institution. This institution would be in competition with the present lending organisations. These organisations are not in competition with each other and they form a major cartel with excessive profits of about £20 million per annum. Indeed, their profits are so excessive that they represent what I would call the unacceptable face of capitalism. The only alternative is to extend the facilities of the ACC so that they can become a fully operative bank in competition with other commercial banking organisations and, by providing full facilities for their farming and other customers, they would be in a position to compete fairly and squarely with the other organisations.

It is not just a coincidence that the major banking groups offer preferential treatment to farmers. The lending rates for farmers are about 1 per cent less than the normal rate for non-farmers. This is an indication of the effects of the ACC at present. They are providing services for the farming community and they are obtaining finance for them. As a result the banking organisations are very anxious to obtain the farmer customer, because he is a very good customer. As Deputy Donegan has said, the farmer is such a good customer that very little of the funds have been written off by the ACC and that is evident from the director's report dated 31 December 1978.

To develop the point I am making in relation to the ACC, they should be given more freedom to operate in the market place. The need to come before the Dáil at regular intervals to increase their borrowing capacity should be dispensed with. Certainly they should be supervised by a Joint Committee of the Oireachtas at regular intervals, but having to come back here to increase their borrowing capacity is restrictive. In this case there was sanction for £350 million. They are now seeking £600 million. I hope this will satisfy them for some time, but if it does not it is unfortunate that they have to come back here regularly to get permission to obtain the finance. This situation should be looked at and they should be given more flexibility.

At the moment the interest rate on deposits is from 11 per cent to 18 per cent depending on the type of funds that are being made available to the ACC. This compares with the commercial banks' rate for deposits at from 10 per cent to 13½ per cent. The lending rate of the ACC is from 17 per cent to 19 per cent and this compares with the commercial banks' AA lending rate, which is one of the best rates they have, at 16 per cent; but I suspect that in reality the commercial banks charge much more than that.

The ACC could attract more funds if they had all the facilities of the commercial banks. The commercial banks have a major advantage: they have funds on deposit and cheque book facilities available. So far as the cheque book facilities are concerned they have to pay no interest but only to provide a service for overdrafts and mortgages. The ACC could quite easily be geared to provide such services. They have roughly 6,000 employees at the moment. They have excellent facilities throughout the country. They have top level management. They need a new incentive. The suggestion by the ICOS to form a banking institution could be the opportunity for the ACC to combine their efforts and to provide a truly Irish farm banking institution which will provide finance not only for the farmers but for the co-operative movement. It is a remarkable situation that at the moment, as was stated at the conference last night, it is costing the co-operatives about £60 million per annum for loans. That is a lot of money which could be used in the development of agriculture. The total combined turnover is about £2,500 million per annum and with that type of money in circulation the combined efforts of all the major farm banking organisations would be viable and succesful.

Now is the time to review the situation, because if it comes to pass that the ACC would be operating in all the marts and in all the co-operatives where facilities and offices are available they could provide facilities there for a national farm banking institution. There is great potential. It is a great opportunity and the Minister should consider it. The Department of Finance should look into that matter and when it comes before the Joint Committee on State-Sponsored Bodies this idea would be worthy of their serious consideration. There are great opportunities there. Agriculture is our most important business and we have not the banking facilities to meet the needs of the farmers. Credit is due to the ACC for their tremendous work but they are being restricted to a great extent. Consideration should be given to the possibility of having the ACC formed into a public company quoted on the Stock Exchange.

Their top executives do not receive an adequate remuneration for their talent, ability and contribution to a company which, in the year ending 1978, had a profit of around £3.290 million, which was added to the revenue reserve service. The ACC are being restricted by the Devlin Commission in relation to remuneration in the public service, but if they were taken out of the public service and provided with a State bank in line with all the other organisations, there would be a different approach to remuneration. The interesting point is that probably the chief agricultural advisers to some of the banks would be getting equal remuneration to the chief executive of the Agricultural Credit Corporation. Though they are getting a lot of money and are well paid, the incentive is not there, compared with the incentive for the chief executive of the commercial banks; there is no comparison between the two salaries. If such a company were set up, there would be a board of directors, with representatives of all farming organisations, able to advise the directors and the management on the trends of farming and to ensure that funds would be available to the area of greatest need and greatest potentiality. As Deputy Donegan has said in relation to housing for cattle priority must be given to cattle housing because it is an expensive item on any farm at the moment, as is provision of silage facilities.

The ACC are playing an important role in providing funds for farmers for the development of these facilities on the farm. They could assist more, perhaps, in relation to the provision of finance for farmers building houses and for making improvements in their homes. If further funds were made available for this, it would relieve the loan situation of the commercial banks and the councils, and would assist generally in the provision of houses in rural Ireland.

The welcome increase from £350 million to £600 million, as stated in this Bill, is a clear indication of the healthy state of agriculture here at the moment. Contrary to the pessimistic views expressed by certain people, I feel that agriculture has the greatest potential for development. The Minister for Agriculture and the Government are encouraging it in every way possible and the fact that this Bill has been brought speedily to the House to increase the borrowing facilities of the ACC is an indication of the commitment of the Department of Finance and the Department of Agriculture in relation to the development of our agriculture. 1980 will see even greater success in the agriculture field. Finance will be required for the building of houses for holding cattle over the winter and I know the ACC will not be found lacking when the farmers ask for further assistance in retaining cattle.

In regard to the annual report of the ACC, dated 31 December 1978, it is very interesting to note that the operating profit for the year was £4.056 million and the consolidated profit for the group, after taxation, was £3.290 million. That is a tremendous contribution and a great success story for the company, which is State-sponsored and principally engaged in the provision of finance for agriculture. The advances during the year amounted to £143.3 million compared with £114.4 million for the previous year, which is quite an increase. The loans and hire purchase contracts outstanding at the balance sheet date amounted to £290.9 million. The net inflow of deposits during the year amounted to £74.9 million, as compared with £56.4 million in the previous year, and at the balance sheet date deposits stood at £254.4 million. The total assets increased by £75.3 to £313.8 million. It indicates the viability of the farming community at present that these funds are being made available by the community. In that connection, I would say that the funds for the Agricultural Credit Corporation are not just being made available by farmers but are made available to the ACC by the ordinary average depositor and this should be recognised.

The people of Ireland, shopkeepers, workers and ordinary people, have deposited their savings with the ACC and have made a contribution towards the development of this country. Without their support the money would not be available for the farming community. The fact that the ACC is a State body, guaranteed by the State, is a particularly attractive feature, which would have to be maintained under any arrangement.

I come from the rural constituency of Roscommon/Leitrim. We are fortunate to have in both these counties ACC offices. As Deputy Walsh said, Roscommon town has an office staffed with excellent, talented people who do not only make the finance available but give excellent advice to the people coming to them and they should be commended for their activities in bringing about the development of agriculture in these two counties. I hope their contribution will continue and expand in the years ahead.

This Bill is one of extreme urgency and our party will do everything possible to facilitate its speedy passage through the House. The proposal which it is designed to support—that the ACC will borrow a substantial amount of money in other EMS currencies abroad and lend it to Irish farmers because the money is not available in our own currency—is very urgent, a matter of days. Because of the credit squeeze, money from domestic sources is not available through normal channels to the farming community. If this Bill were delayed for a week, or two weeks, damage would be done because money was not available. Indeed, I am sorry that the Government did not bring this Bill in even sooner than they have done. In the last week farmers have been in difficulty in stocking their farms and have been unable to buy cattle at marts simply because they have not the money. Because of this, the farmers wishing to sell cattle had to sell at a very serious loss, which very few could afford to bear.

Small farmers in the west without silage, or sufficient fodder to feed their cattle over the winter, have to sell; and because the people who should be buying their cattle from them have not sufficient money, they have to sell at a very great loss. The effects of this are twofold. Firstly, they and their families will be a great deal worse off than they would otherwise be; and, secondly, they would be far less inclined to engage in building up cattle numbers in the future. Indeed, our land at present is carrying as few cattle as it could possibly carry. We are seriously understocked. Our land could carry, with ease, twice as many cattle; in fact, we are carrying fewer cattle than was the case when we entered the EEC.

This is an alarming but true fact which people do not seem to realise. The effect of the credit squeeze and, in particular, the serious slump in cattle prices will be to make farmers even more reluctant to stock up in the future. The present trend in downward numbers will be maintained and even accelerated because of the crisis of confidence that is taking place this year in cattle production as a result of the credit squeeze and other factors. Unless urgent measures are taken to restore confidence and give farmers in the cattle industry reasonable grounds for confidence in the future, that damage will be with us for many years long after the credit squeeze has been forgotten. Farmers have long memories. If they have a bad year in 1979 that will inhibit them from investing and going into debt in order to expand. That fear will be with them even in 1989. That is the background against which we are operating.

The initiative of the ACC in going abroad to get this money and in forcing the Government to introduce this legislation to facilitate them in extending their borrowing capacity is the only measure of a confidence-giving nature being taken by any Government agency in the face of one of the most acute crises of confidence in agriculture. I could almost say that the ACC are doing the Government's job for them so far as agriculture is concerned. The ACC are showing a sense of initiative and urgency which the man chiefly responsible, the Minister for Agriculture, is most assuredly not showing.

I have said already that we are carrying far fewer cattle than we should be carrying and this has the effect that many of our meat factories are working at half-capacity. They have the capacity to slaughter almost twice as many cattle as they are slaughtering now. Because our land is understocked, because farmers have not the confidence to invest, the number of cattle being slaughtered is much less than it should be. It is up to the Government and to the State agencies to give farmers grounds for confidence. That is not being done.

There is another area where the credit squeeze has caused particular problems. I refer to the most efficient farmers in the country who in recent years expanded their farming businesses to such an extent that they were carrying the absolute maximum number of cattle—mostly cows, because I am thinking of dairy farmers—that their land would bear. If these people were to go on expanding they had to buy extra land in the past year or two in order to maintain the pace of development they were setting in the national interest. Many of them have come in for snide criticism—I heard it in this House today—because they have bought up the extra land. They have been treated as some kind of criminals, some kind of anti-national people. Most of them are among our best farmers. They have made the best possible use of their existing land and they would have continued to make even better use of additional land were it not for the crisis of confidence mentioned and the acute pressure many of them are put under because they are so heavily in debt. They borrowed last year to buy land at the going price but they now find that the value of the land is falling as is the value of what they are selling, and the pressure being put on them to repay the money is increasing.

All of those three phenomena combining at the one time are putting acute pressure on our most progressive farmers, the people who are making maximum use of their land on a per acre basis. I can see serious problems, almost amounting to bankruptcy in some cases, among some of the more progressive farmers because of the credit squeeze. These are the men who are supplying our processing factories, who are keeping people engaged in the processing industries in employment. If they go out of production the processing industries which are working at undercapacity—this applies not only to meat but also to milk plants—will be in danger and employment in them will be affected. These progressive farmers are in acute difficulty because of the credit squeeze.

A third category of problem has arisen because of the credit squeeze, namely, a problem among the processing co-operatives. They are in debt but they are not being immediately affected. Their farmer clients have been unable to meet their repayments to the co-ops for seasonal facilities with the result that the effect of the credit squeeze on farmers is being transferred to the co-operatives. In fact, the effects of the credit squeeze are seeping right through agriculture from the farmers to the co-operatives and I foresee them being in acute financial difficulties. This will particularly affect the more intensive co-operatives who have been involved in seasonal credit to their farmer clients this year.

I hope that with this money the ACC will be cognisant of the three areas of difficulty I outlined that have arisen because of the credit squeeze. The three areas are: first, the problem with the cattle industry, particularly the low prices at which cattle are sold; secondly, there is the problem with regard to the intensive farmer who bought land in the recent past and who has acute solvency difficulties and, thirdly, there is a problem with regard to the co-operatives. The three areas should be given serious attention.

A question must be addressed to those who are responsible for the credit squeeze on agriculture. Do they realise that Irish agriculture has one of the best debt equity rations in Europe, that Irish farmers have more security for thier loans and have more capacity to repay their loans in real terms than almost any of the farmers in Europe? We have a debt equity ratio of 93 per cent; in other words, for every £1 loaned, without taking the land into account there are goods on the land ready to match it to the extent of 93p which could be disposed of there and then to repay the loan. That is a very sound position to be in. In Denmark there is only 50p for every £1 loaned to Danish farmers. Taking the industry as a whole, Irish farmers are in a very good position to make repayments. Yet that is the sector being told now: you cannot borrow any more from the banks because the banks have loaned too much this year.

I question the economic wisdom of putting on the brakes at this time of year in agriculture in Ireland. I do not believe it will serve the objects which the Central Bank are seeking to achieve. The Central Bank's chief reason for imposing the credit squeeze was that our balance of payments was in difficulty, there was a danger that our currency—now in the EMS, maintaining quite a high rate of parity, quite a high value within the EMS—would be forced to devalue if our balance of payments situation continued in the bad shape in which it was and still is to a great extent. The Central Bank said: we will have to put the brakes on; we will have to restrict credit so that we can, through that, restrict imports, thereby bringing the balance of payments back into balance.

But the effect of a credit restriction in agriculture will be precisely the opposite. As Deputy Walsh correctly pointed out, agriculture is our largest export industry. Ten per cent only of every £1 worth of agricultural exports is represented by imports of raw materials whereas 80 per cent of every £1 worth of industrial exports is represented by raw materials. If one cuts credit to agriculture one is directly cutting our largest export earner. Therefore in an effort, through this credit squeeze, to restrict imports—thereby restraining the balance of payments—the effect the Central Bank will achieve will be a restriction in exports in agriculture, which will require an even further tightening of the screw to reduce credit to other sectors which are importing, when we will be on the classic downward spiral of economic decline and depression which characterised the economies of Europe in the late nineteentwenties and early nineteen-thirties.

I believe there are grave reasons for doubting the wisdom of the credit squeeze as it affects agriculture at present particularly in view of the basic solvency of Irish agriculture, the fact that we have a 93 per cent debt-equity ratio, the fact that agriculture is an exporting industry and that any depression of agricultural output will immediately hit exports and, therefore, the balance of payments in precisely the opposite way the credit squeeze was designed to achieve.

Why has the credit squeeze occurred? I have indicated already the basic reason—the desire to maintain the value of our currency in a difficult balance of payments situation in the EMS. But the unfortunate aspect of it is that one sector only of our economy is being asked to bear the burden of keeping our currency in line. It is the productive sector only which is borrowing from the credit institutions. There is an 18 per cent limit being imposed on borrowing from the associated banks but there is no 18 per cent limit being imposed on Government borrowing. I should like to know if our Government will keep their borrowing with the 18 per cent limit. I very much doubt it. In fact one of the reasons that this credit squeeze is necessary is that Government borrowing—hence spending by the Government, hence imports by the people who are receiving the results of that spending—has gone completely out of control in the recent past. That is what has brought us into our present balance of payments problems. Instead of the Government cutting back on their borrowing, the people being asked to cut back are those whom I have mentioned in export industries, such as agriculture.

I should like to revert to the basic rationale behind this Bill, which is one of confidence in agriculture. What the ACC are saying to us today, through the Minister, is that whatever else there may be grounds for not investing in, there are good grounds for investing in agriculture. I agree heartily with that proposition. There have been points made already in this debate which would appear to query to a degree the validity of that proposition. These have arisen chiefly from the current very weighty attacks being made on the CAP, which is the ground upon which confidence in agriculture can be based. Indeed in many circles there seems to be a sort of fatalistic approach to the prospects for the forthcoming price negotiations and for the CAP. There seems to be tacit acceptance that: well, there is not much we can really do about it; the budget of the Community is in serious difficulty; far too much money, it is alleged, is being spent on agriculture; I suppose we will have to accept serious cutbacks. I wonder if that attitude of fatalism and quiescence, in the face of the attacks being launched on the CAP, is justified on any ground.

It is worth analysing the reasons the CAP is in difficulty, to see where they lie. The CAP is under attack chiefly because of the very substantial amount being spent on supporting the milk market. The are five basic facts I should like to put on record in relation to the milk market which might indicate that the problem is one that can be solved, that it is certainly not one created by Ireland, and that it is up to the people who created the problem in the milk market to solve it. First of all, I should like to point out that imports of milk products from outside the EEC, from New Zealand, are equivalent to Ireland's entire production. Secondly, there is only a surplus of milk in the Community equivalent to 60 days' comsumption, and we must have milk and food if we are to survive. Yet the very Community which throws up its hands in horror at a surplus of 60 days in milk is the Community that insists that we should have 100 days surplus of oil products in case we run into difficulty. But we need food just as we need oil. If stocks of oil are justified, then certain stocks of food are justified also. The Community must have self-sufficiency in food if it is to be safe in a very unstable international situation.

The Chair feels we are getting into a very wide debate now on agricultural credit as appertaining to the ACC.

I agree with the Chair.

The Chair has given a lot of latitude and is prepared to do that but, if we are going into a farm debate, it is stretching it very far.

I am trying merely to establish the basic justification for investing in agriculture and for not being too pessimistic. I should like to point out further—and this is the last point I want to make on this—that the milk surplus is due primarily to production in Germany and Holland based on soya imported at artifically low rates of duty from the USA. If that soya was bearing the same duty the wheat imported from the USA bears that production which is flooding the milk markets of Europe would not be possible. If one wants to solve the milk surplus situation one can do so by stopping the imports of soya, or at least by imposing the same level of tariff on imports of soya as are being imposed on imports of wheat from the USA. Thus, this uneconomic, energy-intensive production of surpluses of milk in Germany and Holland—which is not what we are doing—could be stopped and the surpluses got rid of overnight.

I believe there are very good grounds for investing substantially in Irish agriculture through the ACC. I believe there are grounds for confidence in the industry and, as Opposition spokesman on Agriculture, I should like to put my shoulder to the wheel and make it clear that, whatever anyone else says, I have confidence in the future of agriculture. As a country producing most of our products from grass we have a competitive advantage over those other countries who rely on imported energy-intensive concentrates to produce their milk and beef in competition with us. In the long run in any competitive situation we will win out and they will lose because we are more efficient, cheaper and we have the climatic advantages they do not have.

I have stated already that Irish farmers are more credit-worthy than others because they are under borrowed, but our yields are far lower than those of farmers on the Continent. We produce 603 gallons of milk per cow while the average production in the EEC is 870 gallons per cow. On that basis we have great grounds for catching up on them. That can be done without using concentrates. It can be done by better stocking rates, the making of better quality silage, better farm planning and more compact calving. We have also a big number of talented young men and women in agriculture only waiting to get money to get going in farming. Our agricultural colleges at present are packed out. A few years ago there was difficulty in getting people to fill places in those colleges, but it is now extremely difficult to get into such a college. The Government, I believe, will have to build another agricultural college in the near future to cope with the number of young men and women who are anxious to be educated in agriculture to make the best possible use of their land.

I have given some of the reasons why I believe confidence is well founded in Irish agriculture. However, there are areas where I believe the ACC should become more involved than they have been in the past. They should help to make better use of the farms which are spread throughout the country—many are to be found in the west but, also, elsewhere—and are owned and managed by farmers who are very advanced in years or, if they are not so advanced in years, have no identifiable successor: they are bachelors who do not have a nephew to take over the farm at any foreseeable time. Such farmers do not have any incentive to keep their place tidy because they do not care who it goes to. In most cases such holdings are left to cousins in England or elsewhere. Unfortunately, such people are not being reached by the advisory services or any of the services in the community. Many of them are living in circumstances of deplorable poverty and yet they are owners of assets worth thousands of pounds. They have no incentive, ability or motivation to work their holdings properly. That is one of the main reasons why we are so far behind our potential as far as agriculture is concerned. The ACC should give more thought to devising means, in conjunction with the Government, to get such land into proper production.

I should like to make two suggestions which the ACC should look at. They should investigate the possibility of financing on favourable terms the long term leasing of such land and the question of the formation of partnerships between such people and another local farmer who would be interested in working the land. I accept that old people would not be prepared to sell such land but I am sure some of them would be prepared to enter into a contract whereby they and the farmer who would be doing most of the work would share the profits. At the end of the partnership the land would remain in the ownership of the older party. That is an attraction of a long-term lease. It does not threaten the basic ownership of the land by the older farmer. Nobody is going to hand up land easily, even if such a person is living in deplorable poverty. Land gives such people a place in the community.

Any scheme, such as the retirement scheme for farmers, which is based on the idea that people should be encouraged to sell their holdings and give up farming, even if such a person's income is to be trebled in the process, is doomed to failure. We must let farmers keep their basic ownership of land and keep their position in the community but permit them to enter into a partnership, either on a leasing system or through a co-operative basis, whereby the land would be better used than at present. The ACC should devise model partnership deeds which could be made available to and entered into by young farmers who need more land and can use it properly and older farmers who have land but are not able to use it properly. The ACC should make the money available to finance such arrangements and also do a lot of the ground work in devising the legal terms under which such arrangements can be made. I believe that somewhere in that area we will achieve real progress in Irish agriculture.

If we concentrate solely on improvements in prices we are not going to get results. We have had massive improvements in prices in recent years. We must be honest about this. Up to this year we had a fairly favourable situation as far as cattle prices were concerned. This year we experienced a bad slump which is causing a serious lack of confidence but over the years cattle prices rose and yet the number of cattle on our land did not increase. I believe that the underlying reason is a human one rather than the physical capacity of the land or the financial availability of the resources. Something along the lines I have suggested could do a great deal to ensure that the land which is not being used properly at present is put to good use in the future. The Government must give the direction to the ACC. They must give an indication that, if the farmer invests and expands, the markets will be there and that they will take measures to support the farmers. We were told that economic planning would be introduced, presumably including agricultural planning, when Fianna Fáil were elected to office. But, in fact, no such plan has appeared for agriculture any more than plans for any other sectors of the economy. That is one of the reasons why confidence is lacking.

Deputy Leyden made a point with which I do not agree: that the ACC should no longer be required to come back to this House to obtain authority for any increase in their borrowing. I strongly agree that increases in the borrowing limits of the ACC should be made and they should be sufficiently generous to meet foreseeable demand for a number of years ahead. It is evidence of bad planning that in a Bill passed only two years ago the limits set were completely inadequate. Notwithstanding the fact that the total lendings by the ACC this year have not increased at all on those they made last year, they are bursting their limit this year when they want extra money. That indicates bad planning on the part of the people advising the Minister or by the Minister in setting the limit last year. I agree that there must be a statutory limit because all of these borrowings are being guaranteed by the State. If for one reason or another the ACC or any other Government agency default on the loans they enter into the Government and the taxpayer will have to pay. The Government will ultimately raise the tax necessary, so the Government must have some overview of the total amount of borrowing being made against a guarantee which the Government have given. This control is necessary. The only alteration I would make in the practice so far would be to set limits on a reasonably generous scale.

In the 1977 Agricultural Credit Bill, which did not become law until 1978, a number of new powers were given to the Agricultural Credit Corporation. We are entitled to know during the course of this debate what has been done in the exercise of these new powers. The Agricultural Credit Corporation were not solely to be a credit giving institution. They were given powers to engage in the provision of hire purchase and leasing facilities. They were given powers to undertake, promote, engage or participate in, manage or supervise any scheme or project which in the opinion of the corporation will or is likely to increase either directly or indirectly the productivity of or otherwise be of benefit to agriculture and fisheries. They were given the power to go into business.

The Deputy appears to be dealing with matters arising from the Principal Act. They have not any bearing or have very little bearing on agricultural credit as outlined in the Bill before the House.

It is one of the things that money can be spent on and I would like to know, seeing that we gave them the power to spend it, what they have done about this.

We are stretching it a bit, but however.

I have made the point, and I hope the Minister will be able to reply to it.

A point I am worried about, which was also mentioned by other Deputies, is the control on the salary of the Chief Officer of the ACC. In law, the salary of the Chief Officer must be approved by the Minister for the Public Service but any other person in the ACC could be paid any salary they liked. We have a situation where the second in command in the ACC could be paid more than the Chief Officer and that situation occurred on one occasion. That is not a desirable situation because it gives no incentive to people in the organisation to seek the top job, to work to the ultimate of their abilities so that they will get the top job. Could anything be more ludicrous than the situation where promotion means a cut in salary?

The ACC have a very large degree of freedom in their operations and must compete, on the basis of the salary they are able to pay, with other banks for their personnel. If they are not able to offer their chief executive a salary equivalent to those available to people in other banking institutions where the same competency is required, the likelihood is that the ACC will not get the best men and that the other competing institutions, such as the associated banks who are looking for people with similar capabilities, will be able to draw the best personnel from the ACC because they are not subject to the control of the Minister for the Public Service and are free to pay a higher salary. One could question the whole philosophy of whether people should seek these high levels of salary or whether the differentials in income are justified, but that is another matter. If a good man working with the ACC is offered £5,000 more to work in the Bank of Ireland it will be very hard to keep him in the ACC and we will ultimately be the losers.

We should have a good look at this whole system and we should examine the various types of State agencies. Where a State agency is entirely self financing they should be free to pay whatever salary they deem necessary to get the best personnel. On the other hand, if a State agency is heavily subsidised there should be a control on the salary of the chief executive. Such an agency is in effect an arm of the Government in all but legal terms and the chief executive is no different from any other civil servant because he is simply administering money paid by the State. We need to define clearly these two categories of State-sponsored body—the autonomously financed one, where there should be no control on the salary of the chief executive, and the subsidised one, where there should be a control. If an organisation cannot operate without State subsidies it should be treated in the same way as the civil service.

This is an urgent Bill. The money it is making available is sorely needed in agriculture because of the depredations being wrought by the credit squeeze, which has led to a dramatic decline in cattle prices which in turn will lead to a reluctance to invest in cattle in the future. As a result, many of our most progressive farmers in the milk sector are being forced to the brink of bankruptcy because, having bought land in the recent past at high prices, they are now unable to meet their repayments. Some of our best people will be driven out of production. Also, many of our co-operatives are facing difficulties.

This Bill provides some money, perhaps not enough, in the form of credit for agriculture and it deserves the full support of the House. The ACC are to be congratulated on the initiative they have taken in going abroad to get this money and putting it where it will yield a good return, in Irish agriculture. They are showing the confidence which the Government are not showing. This year the amount of money made available to the Department of Agriculture by the Government is being cut, whereas the amount of money being made available to industry is being increased by 40 per cent. That is bad economics. It is not where the money should be going, and cutting agricultural investment as the Department of Agriculture are doing this year is a wrong policy. At least the ACC are showing that they are not following the same line, by going abroad and getting money which they will be well able to repay because of the confidence that this investment will generate in agriculture. It is the right policy.

This Bill gives greater scope to the ACC to increase the ceiling of borrowing and provides for the corporation to spend approximately £600 million and to raise the amount from the existing £350 million. This is coming at a time when there are rumblings in our media and from many sources, particularly EEC sources, that in the future we cannot rely on the same stability in the CAP as heretofore. This is an attempt to condition the minds and the plans of our farming community to accept lower prices generally at the moment and to be satisfied with lower prices in a period of very high inflation when costs of inputs and fertilisers into the farms are increasing rapidly and when we have to pay much higher prices for machinery. With that background, this Bill might go some way—I hope the full way—to restoring full confidence to the people engaged in agriculture that there is for the people who live on the land and those intending in the future to live on that land a worthwhile living for themselves and their families.

Since the ACC were brought into existence in 1927 when very limited funds were made available to them, they have always provided a source from which farmers could borrow, but it was only in recent years that this method of borrowing was utilised fully by farmers. At present too few of our smaller farmers rely on this area within which they can borrow. One Deputy who spoke here said that offices of the EEC could with advantage be moved out to remote, peripheral areas rather than having farmers moving into offices in central areas. If this practice were introduced there would be a better line of communication between the offices and the farmers. I refer particularly to the type of farmer who has not the courage that people better off than he have. The small man has a conservative outlook. He dreads massive borrowing because he fears that with recurring recessions and instability of prices his means of repayment can never be assured.

At the moment we have a type of recession and a credit squeeze which are affecting the small farmers in a very big way. At present a farmer of limited means who has a high stocking rate is compelled at the end of the year, after the harvest and coming on to the winter, to reduce his stock. All over this country, particularly in areas where store cattle are reared, farmers have now to sell off stock at a reduced price, a price lower than that which they paid maybe in early spring. In common sense can we expect such people to go on producing stock continually in the years ahead when there is no stability within the market?

This situation has recurred maybe every five or six years, maybe more often. It is peculiar that with all our advisory services, our agricultural institutes and our Department of Agriculture, not even one person can give an alert, an early warning of a breakdown in our price structure and that our farmers must put on the market a glut of stock when prices are at their lowest. I will refer to our ACC executives in particular later, but I wonder whether a combination of the people I have mentioned would consider in the future that it is necessary to give some early advice to the people about trends in market prices to be expected at different periods of the year. This is vital. A person is entitled to know what price he can get for the goods he has to sell.

Another depressing fact in our economic life is that we are being conditioned in agriculture to assume that in the years ahead the prices we will get for milk at our creameries through our different co-operatives cannot be maintained at present levels. I doubt whether the Government are helping when they put unnecessary levies on milk sold by our farmers. I doubt if the payment of income tax which has been introduced on an accounts system and which will capture a very high yield from our varied farmers is going to be helpful to ensure——

I am afraid the Deputy is straying a long way from the Bill and from the ACC.

I appreciate that——

We are having an agricultural debate. The Deputy is not the only offender, but we cannot stray so far from the Bill.

I am sorry for broadening the scope of this, but it has relevance to the need for a greater expansion of our credit to the more needy sections within our community who have limited acreage and limited finance to play about with. I refer to the people who are trying to rear their families on such farms. We welcome credit being made available from different sources. I would like to see another lending agency established which would provide those engaged in our major industry with money at a lower rate of interest. They could borrow, on the recommendations of our advisory services or the ACC, money which is vitally necessary for expansion. This is very important for people with small acreage whose land is poor. I do not see anything wrong with existing farming organisations encouraging farmers around the country to invest heavily in the ACC and we hope in the future in a banking system composed of the farming organisations and others. This would provide an alternative to the old-established banking system, which was never very generous with the small farmers on the western seaboard, people who probably never wanted to borrow too much.

It is important for small farmers in the years ahead, if they want to continue in operation, to provide good outhouses and to improve their land. It is important for them to have good sheds and silage pits. Several Deputies have mentioned that what could be provided for £3,000 or £4,000 about 15 years ago will now cost £30,000. This means that farmers have to have an income adequate enough to invest in such necessary accommodation. If there is not a proper understanding by those who lend money and research done into price trends, we cannot envisage an outlay on adequate premises being made by small farmers.

I should like to know how, in periods of recession, people who borrow at 18¾ per cent can maintain their repayments? This is a worry to many borrowers. Perhaps those people could be given a little boost by reduced rates during a period of recession. The number of borrowers using the credit available from the ACC has gone up to 23,000, I believe it is the man with the higher acreage who is using that money. I hope that the officers of the ACC will encourage the people with limited means to avail of the credit now available.

In my county 70 per cent of the people are on a valuation of £20. I would like to see a large proportion of the money available going to those people who have never had good quality land and have never enjoyed the concessions available to people in better off areas. The executive secretary of the ACC comes from my county. I would like to compliment him and all the other officers in the corporation for the understanding way they approach problems and do their best to meet the needs of farmers. This man was treated with a very scanty reward for the initiative he showed, although he does not consider that aspect of the matter. Another man from my county also played a very important role in developing the ACC. It makes for a greater degree of understanding now that men who have degrees in agriculture are going out to see farmers. If in the years ahead agriculture is to be recognised as our major industry and if the buoyancy of that industry is to be maintained, it is important to have officers in the ACC who have established a liaison between the corporation and farmers.

It is very important that farmers should continue to borrow money from areas where it is available and with it improve their farm building. The rate of investment in the ACC could be much higher although it has shown an increase recently. The buoyancy of the corporation depends on having deposits made. This must be an ongoing process, because the need will become greater as the years go by. It will be recognised by all that the necessary expansion can only be made if capital is available.

Debate adjourned.