Agriculture Credit Bill, 1979: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Deputy Taylor was in possession but he is not here to resume.

I welcome the move by the Minister to increase the ceiling of borrowing from £350 million to the present £600 million. This will increase the maximum borrowing guaranteed by the Minister for the same amount. I am convinced that at this moment this is a good development. Down the years the ACC have given an excellent service to Irish farmers at a time when commercial banks were very hesitant to do so. I will take the mind of the House back a few years to the time when land was really value for money and when the merchant banks did not have the confidence that they should have had in Irish agriculture. The ACC at that time, with very limited resources, did tremendous work. It was not merely a question of lending money. They had as well to provide advisory and assessment services. This is an area where, through no fault of their own, they have been falling down. They had to be able to size up a farmer's ability to pay and the ability of his farm to produce the necessary finance to meet his commitments. Certainly with the limited resources they had, they have been doing a tremendous job.

We have been fortunate that the ACC were able to recruit the right type of people into the various offices. We have to look at the ACC as a semi-State body, and the tendency in such an operation is to be cautious, in fact to be so cautious as to do nothing. However, in my long experience of the ACC, and I have borrowed from the myself, I have found that, on the contrary, we have men of vision who, long before the EEC came the way they have, had confidence in the Irish farmer. We must remember that in those days we were dealing in a very limited market place, basically the English market and the home market. We had to get into the English market by subsidy. Even then, at a very vital time in agriculture development, the ACC inspired farmers. Anything we can to to provide money for farmers is a step in the right direction. Admittedly, at the moment farmers are receiving the money at exorbitant interest rates, which is very worrying for them. A farmer has got to pay back one-fifth of every £100 he borrows for the use of that money for one year. If the ACC are to continue to fulfil the very excellent role of a lending agency for farmers this aspect of their work will have to be developed substantially with possibly some sort of tie in with the advisory services. They would then have a complete picture of the requirements of farmers in every area.

I believe up to this only 20 per cent of Irish farmers have availed of the facilities of the advisory services and the ACC. Those people are probably on their optimum production and there is very little further they can go. I believe the area for development lies in the other 80 per cent. It is important to go after those people and encourage them through the advisory services and with the financial backing and support of the ACC. The purchase of land does not enter into this matter. It is a question of developing their resources and bringing them into line with the 20 per cent who are already fully developed.

This is where the ACC can come into their own, particularly when there is a credit squeeze. In my area there are many farmers who are in the embarrassing position of not having their cheques honoured by the commercial banks. We need the ACC more than ever now as a second source of borrowing for farmers when the commercial banks have called a halt very suddenly. The person who decides that a credit squeeze should be implemented obviously does not know anything about farming. Once a farmer borrows from the banks or the ACC this money is spent on development work and buying stock. If banks or lending agencies at this time of the year tell a farmer that he has to do something about his bank loan and his repayment he will have a sleepless winter. Farmers cannot do anything about such loans until their crops are harvested, the grass begins to grow and the milk production increases in the late spring. There is no point in telling those farmers now to halt because the decision to go ahead has already been taken. They have to rely very heavily now on the ACC.

Some years ago lending money to agriculture was not very popular. Lending money to industrial developments was the important thing. Where would farmers have been in those days without the ACC? Reference was made yesterday to the high interest rates charged by the ACC. I believe the State should come to the aid of farmers who are caught in the inflationary spiral. I do not believe that subsidising interest rates for the ACC is the fair way to do it. Any lending agency, including the commercial banks, who are giving credit to farmers, should also be helped out by the State.

Panic selling of cattle is taking place all over the country. I have seen half finished animals being sold. Farmers have been very hesitant to buy straw this year. Thousands of acres of straw were burned in east Cork partly because farmers were short of cash. This straw, which could not be given away some months ago, is now fetching unrealistic prices. The doors of the ACC will have to be kept open where farmers are having problems. The credit squeeze is affecting farmers very badly. Farmers borrow money hesitantly. When they decide to borrow money nobody has the right to cut off their source of finance or interfere with them in any way. Even talk of a credit squeeze creates a gloomy atmosphere. I believe that our salvation will have to come from agriculture. The 20 per cent of farmers who are fully developed have been using the ACC facilities. However, 80 per cent of farmers are not even in the farm modernisation scheme. If they are not in it now, it will take a lot of persuasion to get them moving at this stage. We need the extra milk, beef, grain, sugar beet and so on despite the rumblings from Brussels to the contrary. We should tell farmers that they have a choice. A great deal of play is made of the regional fund and developing our economy. In many cases all we have acquired is an opportunity to produce crops which are suited to our climate.

Yesterday one speaker referred to egg production. The egg producers are a small sector of agriculture who have borrowed heavily from the ACC and other institutions. When Imperial Tobacco, a multinational company, bought an Irish company they began underselling with the obvious intention of wiping out the small producers. The Government should be considering how to protect the small producers from multinationals who have the necessary finance to close the poultry industry despite the heavy financial commitments of the egg producers who employ many people. The small producers could be wiped off the face of the earth by a multinational company that has no interest in egg production. It is obvious that the price of eggs will increase when the small producers are out of business. Even the investments of the ACC would need protection from such onslaughts.

I believe that there was a union meeting in Dublin yesterday in connection with the production of sugar beet. It is bad that farmers can be paid to get out of milk production.

The Deputy will have to tie it up with agricultural credit.

The process of advice and assessment is a drawn out one. The time lapse between the application for a loan and the granting of it is too long. There should be a closer liaison between the Department and the advisory service. If more people were involved in assessing applications the extra £300 million would soon be spent. The taking over of the ACC by farming co-operatives has been mentioned. It is not for politicians to decide what is best in this regard. If the farmers and their organisations feel strongly about the ACC being developed on a co-operative basis, they should be heeded. I believe that such a move would create a better atmosphere. Unlike other State agencies, the ACC have not displayed the type of caution which can be so damaging. They have done what I consider is a brilliant job, and they have been sympathetic. That is most important. You can talk to the Agricultural Credit Corporation. They understand the problems of a bad year. They appreciate the ups and downs of farming. It is very difficult to communicate in the same way with a commercial bank who can see only black and white and red.

At this juncture we are fortunate to have the ACC. Thanks to the small extra loan they got of £25 million they are making an impact on the holding of cattle, on the purchase of fertilisers, and on the sort of development which takes place normally at this time of the year. Even the dairy farmer, who has been doing best of all, is meeting tough times at the moment. Milk prices have levelled out and, thanks to some of the levies, in some cases they have decreased. Some of the major co-operative societies are having their own fiscal problems and, as a result, they are talking in terms of a lower price for milk next year. This is bad news, but it should not increase the gloom that has already set in.

The ACC have a tremendous function in this regard. When others are battening down the hatches they should be in a position to go out after business, to go out actually looking for farming business. People who should be availing of the services of the ACC are not doing so. If you travel by train you have an opportunity to view the countryside and you can see that our farmland is crying out for investment. The initiative to invest does not always come from the farmers themselves. At a time when the banks are putting on the pressure, the ACC should adopt a different attitude and literally go out after these people.

This is where the advisory services come in. They know the people in the different areas who, if they got the necessary encouragement, would invest sensibly despite the high interest rates. It is probably on the cards that there will be a hike in the price of fertilisers in the new year. Even at high interest rates it would be a good investment for farmers to stock up their full requirement of fertilisers now. Their chance of getting money from the ACC at the moment depends entirely on whether the ACC knows them, and knows their history and their ability to pay. This is a long drawn out process. This is the job which must be short-circuited. The only way to do that is for the ACC to link up their advisory services more effectively and to set up a better assessment division to enable them to get the loans out quickly. The Minister said he was anxious to get this Bill through quickly. I could not agree more. Farmers who are short of money are making rash decisions to sell off cattle, to get rid of stock, or animals, or equipment they will need badly later on. This year there is a fairly good supply of feed on our Irish farms.

The ACC are unique. They are not a bank as such, or a hire purchase company. They were introduced by the State for a specific purpose, with very limited resources from the point of view of finance, staff, offices and facilities. They have done a tremendous job, but I believe they have scratched the surface only of Irish agriculture. They have been dealing repeatedly with the same people who, important though they may be, have nothing further to contribute in that they are producing the maximum they can produce. This is why I should like the ACC to be in a position to pay the same deposit rates as any other lending agency. They should not be limited in the amount they pay to their depositors. In spite of all their television advertising, this has had a very bad effect on the development of the ACC. They would take off in the morning if they were allowed to borrow freely, and if depositors were given the same facilities they can get in building societies, and so on. The very severe limit on their deposit rates has had a very damaging effect on the amount of money they can lay their hands on.

Looking into the eighties, and having regard to our heavy dependence on agriculture, I am very worried about the Government's whole approach to agriculture. It has been a very negative approach. Instead of encouraging agriculture, the question is what can the Government catch them for next. We have levy after levy. That is bad enough, but nothing positive is coming from the Government. There is no word of encouragement, no promise of a new market. Farmers are not getting the sort of backing they need. Until there is a firm commitment from the Government, there will be a great deal of hesitation on the part of the very people who should be borrowing.

Young people who are working part of their parents' farms or who are about to take over farms should be given every encouragement but such encouragement must come from the Government who must convince these young people that agriculture will flourish and prosper. The Government must be prepared to fight in the market place for the rights of those engaged in agriculture and must ensure that there will not be any question of, for instance, a herd of cows being sold for X amount of money or of an international tobacco company being allowed to ruin our egg industry. Simply because Tate & Lyle can play Molly Bawn with the EEC sugar market, we must not allow anybody in Brussels to tell us that our farmers should produce less sugar beet. It is the job of the Government to spur the EEC into action. The ACC cannot do this. As a priority the Government must be prepared to say now to farmers that despite whatever problems we may have with regard to inflation and so on and despite the market not being as good this year as it was last year, the market is there and that there will be a readiness on the part of the Government to make available adequate finance to allow farmers to avail of that market. Farmers must be guaranteed the right to produce during the next five to ten years and, if necessary, 20 years. This is the sort of guarantee they need.

The present policy of stop-go is harming agriculture. If we take the case of a dairy farmer who has sold his herd of cows, there is little if any chance of that man ever again being in a position to build up another herd. That is how damaging the lack of confidence can be but if there is the necessary impetus from the Minister for Agriculture and from the Government by way of telling the farmers that the country is depending on them, that industry is depending on them, there can be a great deal of confidence in agriculture. In the whole debate regarding the payment of income tax by farmers it is easy to overlook the input of agriculture to industry generally and, of course, to employment. I recall talking with a floor manager in a shop in Grafton Street and, on asking him how business was, being told that while it might sound strange coming from a city man, the situation was that a setback in agriculture was reflected right into the heart of Dublin. Obviously, the situation will be reflected to a much greater extent in country towns such as Midleton, Youghal, Cashel or elsewhere. The whole buoyancy of these town depends on a flourishing agricultural industry.

When one hears of the major co-operative societies losing £1 million and having to reduce their price to farmers by 2p a gallon for milk, we realise that this is an area the State must move into and offer the necessary encouragement in regard to marketing. In particular, the aid I would encourage most would be by way of aid in terms of the subsidisation of interest. I am not talking about land purchase in this context but what I am suggesting in not unprecedented. I would not advocate subsidising interest rates for farmers across the board. Instead, any such subsidisation should be on the basis of the policy in the Department of the Environment in respect of local authority housing in which case a person with an income of not more than £4,000 a year is entitled to a subsidised loan for a period of years. In regard to farmers I would not even use acreage as a yardstick. Instead, I would think in terms of farmers in the development or potential development categories and give them subsidised loans over a long period. In that way we would be ruling out those whose interests are purely commercial and who are very well able to look after themselves but we would be helping directly that 80 per cent of our farmers who have not been availing of borrowing facilities in any way and who are not likely to start borrowing now at interest rates of up to 19 per cent.

I would not confine such subsidisation to the ACC but would extend it to the commercial banks if they were prepared to give long-term loans to farmers. We have many co-operative societies, creameries, marts, slaughter houses, meat factories and so on as a result of the initiative of our farmers. If our meat factories were developed further, increasing numbers of our cattle would be exported in cellophone bags and that is the ideal situation. At a time when there is much development of our creameries, meat factories and so on we should not be talking about closures or about an easing off in any respect. It is easy for the Germans and the French to talk about cutting back. Germany in particular is heavily industrialised with relatively few farmers. We must emphasise in Brussels that our economy will either sink or swim on the basis of our agricultural exports and that we cannot afford to allow anybody to interfere in any way with the right of our farmers to produce. If every farmer were in full production we would not create so much as a pimple on that so called mountain of surplus.

If the EEC have any regard for us at all—and I presume they have—then surely it is more honourable to say that they will not give us aids, handouts and so on but that they will help us to develop, they will help our infrastructure, roads and drainage as they have been doing in a limited way and that they will also ensure that we have the right to produce freely the crops which we are most suited to produce and which we have been traditionally producing. That should not be too much to ask. The former Minister for Agriculture, Deputy Mark Clinton, succeeded in doing this but his successor has failed miserably to keep up the impetus by making that point day in and day out to these people.

This is climatically probably the most suitable country in the world for agricultural production. We have a lot of good land. We have a lot more land that could be excellent if developed fully. The initial moves will have to come from the Government and not from the ACC or from the agricultural advisers and not even from the farming organisations. Encouragement in its many facets will have to come from the Minister for Agriculture, from the Government, to get farmers to improve their farms, to develop their capacity to produce, to invest in agriculture. Developing farmers should be given subsidised interest loans. There is a precedent for this in the Department of the Environment who help people to buy houses. This is an excellent way of helping and it is not a handout either. The Government would only be doing the same as they do to encourage foreign investors to come here. Putting this money into the potential development of the farmer would be an infinitely better way of spending such funds at this juncture.

We are now regarded as being the producer of some of the highest quality products. The Kerrygold name is held in esteem all over Europe. Our horticultural products produced by Erin Foods are regarded as being second to none where they can gain a place on the market. These are the areas that we can develop and expand. These are the areas that will give employment in our factories, in transport, in shops and supermarkets. When the Government say that we must tighten our belts they remind me of the parable of the man who got five talents. The Government inherited the State in 1977 and their own Senator Whitaker said the economy was in sound heart They got the five talents; they have squandered four and now they have buried the one. So I appeal to them to use that last talent to develop agriculture. There is no point in giving the ACC permission to borrow £300 million if the impetus is not given from the top. There are good years ahead. Prices cannot be guaranteed but reasonable prices can be guaranteed. The Government should guarantee that they will fight for the farmers in the market place and at the Council of Ministers. All we need at this juncture is a little bit of confidence and, if we have that, then we will solve a lot of our problems. We will help our farmers and we will help our workers.

(Cavan-Monaghan): I should like to join with the other speakers who have paid tribute to the work done by the Agricultural Credit Corporation over the years. As the Minister of State pointed out, the ACC were established in 1927. They were then one of the first semi-State bodies in the land. I cannot help admiring the Government and the men of the twenties who, in the midst of all their difficulties, were farsighted and enlightened enough to establish bodies like the ACC. During last week we laid to rest another great man, one of the Ministers of the first Government, Paddy McGilligan, who established the first semi-State body, the ESB. Again, that is a tribute to the men of those days who were enlightened enough to establish these semi-State bodies which have done so much good for the country from an economic and social point of view. Many tributes were paid at national level to the late Paddy McGilligan and I would like to go on record here, since the Minister introduced the question of such bodies having been formed then, as expressing my appreciation of the work that Paddy McGilligan did in establishing the ESB and my appreciation of the work that the Government of that day did in establishing the Agricultural Credit Corporation.

I am sorry that this Bill was not introduced by the Minister for Agriculture. I am sorry that the ACC are not entirely under the control of the Minister for Agriculture. I fear that the fact that they are under the control of the Department of Finance means that they are hindered in their work and that they have a city approach to their activities. I know, for example, that the Department of Finance intend to bring the activities of the Land Commission to a halt because in their ignorance of rural Ireland they believe that the Land Commission are engaged in some sort of social welfare activity. Nothing could be further from the truth. The Land Commission have been engaged over the years in the slow process of getting land out of the hands of people who are not working it properly and putting it into the hands of farmers who will put it to work to produce agricultural products for home consumption and for export.

Another glaring example of why it is not safe to have the Agricultural Credit Corporation in the hands of the Department of Finance is that that Department proved this year that they are completely ignorant of how to get agriculture going and how to get the best results from farming. The Department of Finance and their Minister early this year introduced the 2 per cent levy by way of taxation—a levy which was calculated to kill rather than encourage productivity. Nothing over the years has done more to engender a lack of confidence and uncertainty in agriculture than this levy which has no regard for the profit made by the man who was asked to pay it or for the capacity of that man to pay. The Agriculture Credit Corporation should be controlled by the Department of Agriculture rather than the Department of Finance.

The Bill proposes to increase the borrowing powers of the corporation from £350 million to £600 million which is a good thing since the Minister says that the corporation have almost reached their limits in the field of borrowing. In introducing the Second Stage the Minister also mentioned that recently he had authorised the corporation to borrow £25 million abroad; apparently we have reached the stage where the corporation cannot borrow sufficient money at home. While I welcome that authority for the corporation to borrow £25 million abroad, that is an entirely inadequate sum. It would amount to a thousand loans of £25,000 or two thousand loans of £12,500. Some of the loans requested would be more than £25,000, so the inadequacy of the sum being made available will be seen, especially in this year which has been a very bad one for agriculture, because the budget proposals engendered uncertainty and a lack of confidence into the farming industry.

Never before was any sector of the economy inflicted with a form of taxation such as the 2 per cent levy. Furthermore, the budget was being negotiated well into the year, another innovation. Farmers did not know, when half the year had gone by, what sort of taxation was going to be imposed on them; they do not know yet. The levy has been brought to the courts; it is proposed to bring it to the European Court and the Minister for Finance has given an undertaking that, in certain eventualities, he will refund some of the tax extracted from farmers by this levy. Surely that is an extraordinary state of affairs. It is no wonder that, in those circumstances, the farming community have no confidence in their own industry and are uncertain as to how they should proceed.

That budget and that form of taxation brought about a credit squeeze, resulting in a drop in the price of cattle, which means that people who bought cattle this spring are now selling them at a substantial loss, notwithstanding that it was said, from the Minister of State's own constituency, that the price of cattle had increased by 50 per cent since his Government came into power. That was the joke of the by-election campaign. Farmers are, in fact, losing as much as £100 a head on cattle bought early this year, without taking into consideration their own labour, or the feeding of the cattle. More credit, rather than less credit, is necessary this year to enable farmers to retain cattle they wish to retain and to purchase feed for them.

The £25 million, which the Minister seems to think almost warrants congratulations, in my view is totally inadequate when it is considered that this money has to be used by the corporation for loans for purchasing lands, for erecting farm buildings, for replacing stock, for manure and other requirements of the agricultural community. I know of one farmer who is building a beef house at the moment, costing about £15,000. He has put £4,000 or £5,000 of his own money into it, is getting a grant of equal proportions and cannot get a loan of £4,000 or £5,000 to complete the job, which is at a standstill. That is not the fault of the Agricultural Credit Corporation but it is the fault of the Government in imposing this credit squeeze.

I would like to compliment the national and local officers of the Agricultural Credit Corporation. It was very wise to select county managers and local officers who not alone are competent in the financial sphere but have experience and training, qualifications and degress in agriculture. The sign of that experience and training is to be seen in their approach to the farmers and to agriculture. It is not their fault that they have not more money to lend or that they cannot pay a higher interest on investments.

My main reason for intervening in this debate is that I am particularly concerned about the plight of the industrious small farmers of 30, 35 or 40 acres who are making a good job of the area of land which they have but want more and cannot get it, while at the same time, they have seen land, over the last couple of years, passing into the hands of non-farmers and into the hands of speculators and large farmers who have enough land already. I said in my opening remarks that the Department of Finance are bringing the operations of the Land Commission to an end. So far as the acquisition of land is concerned, the Land Commission are at a standstill. I understand that the number of section 40 notices being served are reduced to a trickle. I know that the Department of Finance are putting the screws on the Land Commission to bring their operations to an end. I think that is a mistake.

Any Bill that the Minister for Agriculture introduces to control land by means of some kind of tax will not work. The only way a small industrious farmer will get land that comes on the market is by the intervention of the Land Commission. I do not deny that the operations of the Land Commission may be too slow. I think they should be stepped up. I know that a long debate on the Land Commission would not be in order on this Bill but I wish to make the point that as the activities of the Land Commission are being brought to an end by the Minister for Agriculture at the behest of the Minister for Finance, the least the Minister for Finance should do is to make more money available to the small farmer who wants to buy an adjoining farm that comes on the market. The ACC could play a part by assessing the performance of the applicant for the loan—I know they do this—and by judging his worthiness for credit. If they are satisfied he is a good farmer and would make a good job, credit should be made available to him.

It is sometimes said that the ACC increase the price of land. I do not believe that. I believe it is the speculators and the man who has more than enough land and who can afford to pay who do that. If the ACC had enough money they could play a valuable role by lending money for the purchase of land on a more generous scale. It has been said that if the ACC did that there would be the situation where two or three farmers would bid for the same 25, 30 or 50 acres with money provided by the corporation. That can be avoided. If the ACC know that two or more people are interested in the same land and that the price is going to soar, what is to prevent the corporation telling the applicants if they are worthy of credit that the ACC do not propose to put them in competition with each other in order to boost the price of land. They could tell the applicants to decide to buy the land between them and to divide it, with the ACC providing the money. That would be a wise approach and it would bring two or three farms to a viable level or as near to it as possible. It will be a calamity if the Land Commission are shut down. It will be throwing the small farmers to the wolves. If the Land Commission are closed down small farmers will have to be assisted in some other way to get more land.

The reason I intervened in this debate was to highlight the scandal of the Land Commission refusing to assist uneconomic farmers while the ACC are not properly financed to help them. There is, of course, another question—that of the interest rates for money at the moment and whether farmers can or should borrow money at the rates now obtaining. It is in the interests of this nation that as many farmers as can viably stay on the land should be kept on it. It is not in our interests that the countryside be depleted of farmers. The Constitution states that we should keep as many people as possible on the land. If it is necessary to subsidise interest rates in order to enable small farmers to bring their farms to a viable size that should be done. It is in the national interest to do it. If things continue as they are, with people leaving the land because they cannot have holdings of a viable size, this nation will rue the day. There is no doubt about that.

I hope the Department of Finance will cease thinking that the Land Commission are some kind of social welfare agency. I shall give one example of what I am talking about. I know a parish which is populated largely by small congested holders, with farms of about 25 acres. The only decent farm—a holding of 100 acres—was put on the market in the past 12 months and was bought by a speculator who lived 25 miles away. He never intends living there because he has more land where he lives at present. Had the Land Commission moved—I urged them to move; I put down a question in the House to get them to move, but they did not—and intervened in that case they could have divided those 100 acres of land among five or six industrious, hard-working congests in the neighbourhood, bringing them up to a viable acreage.

That is the sort of thing that is happening here and the nation will live to rue It unless the Minister for Agriculture, who seems to be converted by the Department of Finance if not subdued by them—I know that for years the Department of Finance have had this hobby horse of getting rid of the Land Commission—rectifies the situation. I sincerely hope that the Minister for Agriculture and the Minister for Finance will have a re-think on this, ensuring that people prepared to make good use of land get the finance with which to buy it through the Land Commission, the Department or the ACC at a reasonable price.

I welcome this Bill. It is clear that the ACC should be given the necessary extension of their borrowing limit to enable them to proceed with the services they are providing to Irish agriculture.

The Bill proposes that the borrowing limit be increased from £350 million to £600 million. The urgency of the Bill arises because of the recent decision to permit the ACC to take up £25 million in EMS borrowing. I understand that it is not because of the fact that the borrowing is from abroad, EMS borrowing, but because the taking-up of those £25 million pushes the amount of the borrowings over the existing limit. Of course this raises the point, and I do not make it in any political context, why the limit was set at £350 million under the 1978 Act. Suggestions were made at that time that that figure would be insufficient and those suggestions have now been proved to be correct. I might raise one question with the Minister on that, and again I am not making any political point: is the figure of £600 million sufficient? Perhaps I might ask an even more innocent question: why is there a need for a limit of £600 million on the ACC at this stage? It is a State-sponsored, State-guaranteed body. I imagine that the normal way in which one runs the finances of the country requires some figure but we are not dealing with a fly-by-night corporation; we are dealing with a strong, well-established, State-guaranteed and State-sponsored body. Perhaps the Minister would comment on this in his reply. Assuming there has to be a limit, I would urge the Minister to ensure that the new figure we are now introducing less than two years after the last Bill is sufficient to cover the requirements of the ACC in providing services to the farming community.

I anticipate that in the months and years ahead the ACC will be making much more use of EMS credit. Certainly, if there is difficulty or a shortfall in funds at home, I would hope that the ACC would be given the full go-ahead to utilise EMS credit as required, so that the facilities they are making available to agriculture can be maintained and expanded.

This leads me to another important point. The need for taking-up EMS credit is no doubt a result of the shortfall in what I might term native borrowing, the inability to raise sufficient funds on the home market. It is incumbent on the Government, and indeed on all of us, to examine the situation, the reasons therefor and whether anything can be done to improve the competitiveness of the ACC in this area. As I understand the situation, in 1978 the net inflow of the ACC was approximately £70 million. That sum, together with the loan repayments, permitted the ACC to make loans available to agriculture and to agri-business totalling £143 million. Another figure, which would bring home more vividly the services being provided to agriculture by the ACC, is provided by breaking down that £413 million into the 23,000 individual transactions involved in the lending of that money. I imagine that the ACC this year would have targetted to achieve at least the same level. The question now arises as to whether they will be able to raise the £70 million on the home market they were able to raise last year. On checking my notes I find that the figure, as I understand it from their report, was somewhat higher than £70 million last year.

If the ACC are unable to raise a sum on the home market, we must examine the reasons therefor. Is it because their deposit rates are not sufficiently competitive? I realise that the ACC have to compete with other bodies in securing deposits. They have been very successful in the past, particularly among the farming community, in getting sufficient deposits. But the indications are that, despite their best efforts this year, there will be some shortfall in the amount as opposed to the figure last year. There are certain competitive edges which other institutions have. In particular one has to bear in mind that the ACC are in competition with the building societies. Certainly, the building societies have a strong competitive edge from the point of view that their interest payments are free of tax. On the other side the ACC are constrained by the same restriction as the commercial banks in regard to their returns to the Revenue of interest earned over the sum of £70 per annum. Therefore, there is the situation in which the ACC are subjected to the same constraints in that regard as are placed on the commercial banks, and they do not have the advantage of the building societies with whom they are in competition. Taking into account the deposit rate that can be paid by the ACC, it seems to me that this must be a factor.

In the interest not alone of the ACC but of the development of agriculture in this country and in the light of the services provided to agriculture by the ACC over the years, and particularly in recent years, I suggest to the Minister that it is important that the ACC will always be left in a situation in which they are able to stand up in open competition with other financial institutions so that the deposits they need can be maintained. Those deposits are not huge sums. Normally they are relatively small amounts, as I know from my experience working in a rural constituency. We must ensure that the ACC continue to be attractive to the small depositor so as to be able to maintain the income inflow necessary to carry on their business.

The ACC came in for a lot of plaudits yesterday and today. They deserved that praise because they built up their remarkable operation since 1927. The corporation has developed in recent years to the extent that it now enjoys the total confidence of the farming community. The corporation was not built up by chance; it was built up by initiative, vision and hard work. That has led to the establishment of offices throughout the country, numbering about 44, which brings the services of the organisation where they are needed, to rural Ireland. The stage has now been reached where local offices have been given substantial authority to deal with applications. The policies of the corporation conform to the principle of bringing services to the areas they are needed and not having them centralised in Dublin like so many other affairs of our State.

I should like to refer to the discussions that took place in the last few days in Dublin regarding the establishment of a farmers' bank. I suggest we look at that with our feet on the ground bearing in mind the comments of Mr. Lardinois yesterday to the effect that Ireland, in relation to its population, is the most overbanked country in Europe. On that basis it does not appear to be a prime situation to be rushing in with further banking facilities. At the same time I believe that in the event of such a bank being established in future years the ACC have a role to play. In the meantime it is important that the ACC are given every support in their efforts to improve services.

I should now like to refer to another role which the ACC may be able to play in the future. It relates to one of the greatest problems we have in agriculture, that of land structure. In recent years there has been an improvement in the encouragement of young people into farming. From my experience I know that the age of 66 years seems to be the regular one for handing over farms to the younger generation. It is no coincidence that that is the age when one can apply for a pension. My experience as a lawyer is that approximately 90 per cent of farms are transferred when the owners reach that age. We will have to devise structures which will permit the encouragement of the handing over of farms to the younger generation at an earlier age. Structure should be developed which would enable the younger generation to get involved in the control of farms before the retiring farmer—normally a parent—reaches the age of 66 years.

The Deputy will have to relate his contribution to agricultural credit.

My suggestion is important because it may be one of the primary functions of the ACC in the future. I must be given an opportunity to explain what I have in mind. There should be some land structural arrangement which would permit the son of a farmer to establish some degree of ownership and control before a retiring parent reaches 66 years. That could involve a gradual taking over of the farm by the young person when the parent is between 55 and 66 years of age. The importance of the ACC in this regard is that the corporation may be able to provide the financial backing to permit the preservation of the balance between the two generations at that vital stage. The younger generation must be encouraged to establish some degree of ownership, to be increased annually, before the parent retires, as opposed to the present situation under which young people do not have any control or sense of ownership until the parent reaches 66 years of age. Such a proposal would involve a new type of arrangement, but, of greater importance, it would involve a certain amount of financial backing. In may be necessary for the young person to provide an extra house on the land and in this regard the ACC have a role to play. Funds may also be needed by the young person to develop the land.

The Chair may be wrong, but it strikes the Chair that this would involve new legislation. It is hardly relevant to the Bill under consideration, which deals with agriculture credit.

I accept that it would involve new legislation and I hope the Government will give consideration to that. It is important that the ACC be put in a situation where they can make an input to such an agricultural development and have sufficient funds and sufficient authority to back that type of new development in agriculture and in land structures. They will not be able to do so unless they have sufficient funds. The Bill before us is to extend the borrowing limit of the ACC so that they can have sufficient funds in the years ahead. In that context we have to consider the use that will be made of these funds and therefore my point is entirely relevant to the Bill. We will have to have some new thinking on land structures and we will have to provide new types of ownership to further encourage young people to stay on the land and to make greater use of it. There is no doubt that the younger the farmer the greater the chance is that the land will be fully utilised. The future development of farming requires that this aspect be carefully examined. It arises even when one looks at the cost of land. The average cost of land reclamation is only £500 an acre and land was costing up to £3,000 or £4,000 an acre earlier this year. This highlights the need to look at the amount of land utilised. The credit should be available so that land can be reclaimed.

It is in order to discuss credit for the purchase of land. Land reclamation and other matters of that kind are for another Department.

I am not arguing a point and I appreciate that the Chair does not want me to continue on this line.

What is happening in this debate is that we have turned it into a complete agricultural debate and it is not that. Can we get back to agricultural credit? The Deputy is no more an offender than a lot of other Deputies who have spoken.

I will raise this again on another day. Despite the Chair's ruling, the Agricultural Credit Corporation will have a major role to play in the financial backing and underpinning of any such new arrangements in that area. In the years ahead the two most important commodities that will be needed in the world will be energy and food. We have not a great deal of native resources to offer in the energy field but we have been favoured with a climate which makes it possible for us to develop our food resources. A terrible contradiction exists where people are starving and yet there are surpluses of food. Those contradictions will have to be resolved. We as an agricultural country will be able to play our part in ensuring that our food production can be of benefit to our people, particularly to the farming population, and also to the citizens of the world. In that whole scene the ACC will have a major role to play. I commend them for the services they have given to the agricultural community in the past and I look forward with anticipation to them continuing and expanding that role and service.

I welcome this Bill which is primarily designed to increase the present limit on borrowings by the ACC from £350 million to £600 million. The need for this Bill reflects the dynamic growth of the ACC and is a recognition of the important and comprehensive part they play in our agricultural and industrial life. The growth in ACC lendings in the seventies is a reflection of the growth and prosperity of the agricultural community. The ACC lendings which were £25 million in 1970 grew through the seventies to £143 million. The total amount owing to the corporation was £130 million in 1975 but it grew within a period of four years to £320 million. This illustrates the rapid growth of investment in the agricultural sector and is a reflection of our membership of the EEC.

Our membership of the EEC has had a tremendous and beneficial effect on the agricultural community and has brought that sector of the population to a modern pitch. This is now one of our fastest growing sectors and is likely to remain such in the next decade. We have heard of pressures within the EEC on the finances required for the common agricultural policy and we have heard of reservations and criticisms from some countries, especially England, about the present method of financing the CAP. We must fight for the continued expansion of the CAP because that policy was the cornerstone of our fighting a campaign to enter into Europe. We must under no circumstances allow the benefits gained by our entry to Europe to be changed as they are threatened to be changed by some members. It would be a serious blow to the agricultural sector.

The reason for the vast investment that took place and is taking place in agriculture is our membership of the EEC and the existence of open guaranteed markets and guaranteed prices for our products. We must ensure that our beef and milk sectors, particularly, are protected from any shortage of finance in Europe. The price guarantees which were fought for over the past six years must be protected and expanded; we must fight for other products to be brought into the CAP and we must ensure that the price guarantees will continue and will be increased to take into account increases in inflation. That basis of investment, the CAP, which is the basis of the growth of the ACC, must be recognised and protected by whatever Government are in office. If anything happened to the structure of the CAP or to the price guarantees, many farmers would be open to financial ruin in a very short time and what might appear to the assets of the ACC would turn out to be bad debts. None of us would like to see that.

The pressures currently felt on the EEC's CAP must be countered particularly by the Minister for Agriculture. The bulk of the lendings of the ACC are in respect of livestock purchases, land purchase and improvements, building, machinery and so forth; indeed they are working capital. I will come back to that later. The policy in relation to loans for land purchase should be looked at. We in Ireland must be coming into a time when land purchase and farm structure must be examined in this House and a policy laid down in order to protect genuine farmers from the speculators. I doubt if any one in this House would support the buying of land by speculators where there are genuine, full-time, small farmers waiting and hoping for the opportunity to purchase land. A policy must be laid down, if necessary in law, that will ensure the capability of small, full-time farmers to acquire land which is for sale and will give them the opportunity to purchase that land. If we are to keep small farmers on the land of Ireland we will have to adopt a positive policy. We cannot just let the present situation continue where small farmers are outbid time and again at auctions by people who have no roots in farming and who are merely buying land to hide money, not working the land properly and, indeed, not allowing other people to earn a family living on a farm.

The future of the Land Commission has been raised here this morning by Deputy Fitzpatrick(Cavan-Monaghan) who was formerly the Minister with responsibility for the Land Commission.

It was raised and I will allow the Deputy to refer to it but very briefly, because the Land Commission has nothing to do with this Bill.

I am putting it in the context of the finance available for land purchases which is one of the prime functions of the ACC.

That is in order, but the ACC are not involved in the Land Commission.

I am aware of that, but there is a pool of money available for land purchase and the ACC and the Land Commission are linked together in the moneys available for the purchase of land. I would be surprised and disappointed at any move to make the Land Commission ineffective or to weaken to any extent the well-established policy of helping congests to acquire a family-sized farm. There should be a clear statement of policy by the Government on the future of the Land Commission.

I ask the Deputy to leave it at that.

The policy of the ACC related to land purchase has been conscientious, progressive and positive, unlike that of the commercial banks who have been involved in giving large sums of money to the non-farming sector, the private people, for the purchase of land. The ACC have pursued a proper social policy in relation to finance for land acquestion. That is as it should be, because any person who has to run a farm has to earn a living and has to pay interest on the moneys he owes. At the prices which have prevailed this year, certainly in the earlier part of the year, of between £3,000 and £4,000 an acre, unless one were very highly financed and involved intensively it would be very difficult to repay the high interest charges on loans. I doubt whether the farms could create enough net revenue to justify present land prices. In some cases they do when the full-time farmer is involved intensively in farming, but I doubt if the prices of many farms are economic for the people who purchase them. Indeed, some people who bought land during the past two years may have regrets about the price paid for it at the auctions and may have severe reservations about their initial investment. Let us hope that we can have a continued rational price level on farms which will allow existing full-time farmers to continue to acquire and develop a proper family farm which will justify a good investment.

This leads me to the other involvement of the ACC, that is loans to agriculture based industries, in particular to agricultural processing industries such as creameries, meat factories and grain mills. That would be a natural area of involvement by the ACC, as has been the case. However, there must be a conscious banking policy in relation to such investments and, while short-term propping up of factories, creameries and so on might be justified, I do not see a tremendous long-term benefit in propping up lame ducks. A rational commercial policy is justified and may be needed even though the ACC are a State company and have been very successful in their investment in many projects in agriculture-based industries. They deserve our encouragement in this area. They are extremely well based for such investment and the staff of the ACC, not only in Dublin but throughout the country, are very well qualified and professional. That is as it should be. Under a recent restructuring of management the area managers have now more power in relation to their own lending policy and to decisions which they can take at local level. That is a proper approach to decentralisation and ensures that the man on the spot is able to talk to local farmers and local management people and able to make decisions on a local basis.

I am in favour of the ACC being allowed to become a full banking corporation. At the moment they take in deposits and grant long and short-term loans. They are involved in hire purchase and I believe they are also involved in leasing. This is only one step away from the status of a full commercial bank, granting overdrafts and providing cheque book accounts. I submit that the ACC are in a unique position to become a farmer's bank. They are well aware of the seasonal requirements of farmers, their short and long-term requirements and of their potential to develop and remain profitable units.

The credit squeeze reinforces my opinion that borrowing for productive purposes, which the ACC would primarily be involved in, should be allowed. They would be involved in productive purpose in the farming sector and would ensure that in a credit squeeze such productive purposes were protected. There would be a unique procedure for channelling finance on overdrafts to the agricultural sector under quite clearly understood procedures.

The question of a farmer's bank should receive serious consideration. I suggest that the ACC are the best qualified banking institution with the best expert staff available to become a farmer's bank. Why has the Minister not allowed them to become a farmers' bank? Are there proposals before him to allow the ACC to become a full commercial bank? This would be a very constructive development and would be welcomed, especially by the farming community.

The Minister guarantees borrowings and the Bill allows the ACC to increase their borrowings up to £600 million. The question of borrowing abroad has been raised. The ACC lost substantial sums of money for two years running because of the exchange rates which worked adversely for them. It is now a fact of life that the rates of interest in Ireland and in England are substantially above the interest rates prevailing in Europe. If we take an average rate of interest in Ireland of between 17 per cent and 20 per cent the equivalent commercial rate of interest in France is between 14 per cent and 15 per cent and in Germany substantially less, around 10 per cent.

The attraction for people borrowing in Germany, and also in Switzerland which is outside the EMS, is very obvious. It is vital that wherever foreign borrowings are undertaken by the ACC there must be some protective mechanism to ensure against exchange rate losses. That has not been done except in relation to a loan which the ACC have from the International Bank for Reconstruction and Development where it is stated that no foreign exchange profits or losses would arise on repayments under the terms of the agreements between the company and the Department of Finance. That is a sound policy in relation to the loan of 25 million dollars which the ACC have.

Some steps must be taken, in relation to any borrowings which the ACC have in Europe, either by the ACC or jointly by the ACC and the Government, to ensure against such exchange rate losses. The condition of international exchange rates at the moment must be a source of worry. The American dollar is under extreme pressure and the £ sterling fluctuates like a yo-yo. The whole structure of the EMS currencies is hinged on a very delicate balance. If England becomes a member of the EMS what effect will that have on the present level of exchange rates between Ireland and the European countries? The Minister should take up this question of exchange losses and guarantees against such losses in the event of the ACC going abroad to borrow money.

The ACC are on the point of borrowing £25 million abroad. The Minister should tell the House in what country this money is being borrowed, the conditions and the guarantees there are to ensure that there will be no exchange rate losses. We all know that what was promised to us when we joined the EMS has not materialised. We were told that membership of the EMS would mean that we would have a lower level of interest rates but this has not happened. We are still linked with the level of British interest rates. That has been a disappointment to me and must also be a disappointment to the Government. Of course, the image of the Government has become tarnished in recent months in relation to economic affairs.

I welcome the Bill. I praise the ACC. It is important to understand that unless the CAP is maintained and its benefits are seen to be unchallenged, the big investment of the farmers in this decade will be open to serious depreciation. It is vital for us to ensure that we have a strong voice when agricultural matters are being discussed.

I am glad that the purpose of this Bill is to increase the ceiling on borrowing by the ACC from £350 million to £600 million. I am also glad that this Bill gives us an opportunity to discuss the affairs of the ACC. I understand that the passing of the Bill is urgent. We do not intend to delay its passage through the House.

I have experience of dealing with the ACC, both on a private level and as a member of the board. I have nothing but praise for their operation. The ACC were set up in 1927. Business was slow at the start but they have now made an impact on the development of agriculture. I do not understand why the ACC come under the control of the Department of Finance. I accept that the Department must control the movement of money but I have always believed that the ACC should be under the control of the Department of Agriculture. I believe that the ACC would make more progress under the control of the Department of Agriculture. The outlook of the Department of Finance has always been conservative. I do not blame them for their attitude because money is always scarce and there is always a demand for it. The Department of Finance are always trying to be strict. No matter how long I am a member of this House, I shall continue to ask that the ACC be brought under the control of the Department of Agriculture.

We are entering an era of uncertainty for the lender and the borrower. I do not know any borrower who has the margin to pay for the present interest rate of 19 per cent. Even a small increase in the interest rate would be the final straw. Both lenders and borrowers will have to ask themselves how the repayments are to be made. The present attitude of the EEC in not allowing any increase in the price of agricultural produce has made the situation worse. In 1979 the actual cost of agricultural production was in the region of 12 per cent to 14 per cent. The forecast for 1980 is nearly the same, which will result in an increase in the actual production cost of approximately 25 per cent. At the same time, we are being told that there will be no further price increases from Europe. It is clear that growth in agriculture is at the crossroads. Farmers will question the borrowing of money at such high interest rates. This year's figures are not yet available but I understand that the growth rate is less than 1 per cent. If the present conditions continue into next year there will be a big reduction in agricultural growth. In 1977 the growth rate was between 4 per cent and 5 per cent.

The Government will have to bear some of the responsibility for the reduction in growth in agriculture. The levy introduced by the Government aggravated the situation. I must criticise the Minister for Finance for not avoiding the 2 per cent levy by holding back the VAT, which would have given him the same yield. The levy did a great deal of damage to agriculture and led to a loss of confidence in the Minister.

As a farmer, I am nervous of the Minister's commitment to agriculture and of the fact that he controls the ACC. At this stage I must question the interest rate of 11 per cent being paid on the deposits by the ACC. Is this competitive? The commercial banks advertise that they are prepared to give from 10 per cent to 13½ per cent on deposits. Have the ACC asked to be made more competitive in this field? They must be competitive. When the banks say they will give 10 per cent to 13½ per cent on deposits they do not say you must have over £25,000 on deposit to get 13½ per cent. Therefore they are deceiving the ordinary people. Since I started farming 20 years ago, the policy of the banks has not been consistent. The policy of the ACC has been consistent.

The ACC should be put in the same competitive position as all other commercial money lenders here. I question the fact that 11 per cent is competitive at present. People are talking in terms of interest rates of 19 per cent, and the difference between 11 per cent and 19 per cent is enormous so far as profit is concerned. The banks will give a high interest rate for a short period to get in the deposits. Then they carry out their stop-go policy by reducing the interest rates and holding on to deposits. They have done that consistently down through the years.

The ACC depend to a very large extent on the amount of deposits they can attract. That is a very important part of their operations. Has any demand been made by the ACC for an increase in that figure? If not, is the Minister satisfied that they are in a competitive positionvis-à-vis the commercial banks? Since 1 August the ACC have been working under certain restrictions. They have not got the money. We all know that. It was never so important as it is now for the ACC to have sufficient capital available to enable people to borrow. We saw the collapse in the cattle trade. One factor which was responsible more than any other for the collapse in the cattle trade was the non-availability of cash to buy cattle. There is no doubt about that. We have seen ten cwt cattle sold for £32 a cwt. We have seen eight cwt. cattle sold for £28 a cwt. I went to some of the sales myself and saw this.

The ACC have not got the money to hand out to the feeders in particular. I come from a county where there is a lot of feeding. While people may have barley, silage, housing and machinery, 85 to 90 per cent require financing. We are talking in terms of very big money at the moment to finance the fattening of cattle. We are talking in terms of £45,000 to £50,000 and that would be for a small outfit.

I rang the ACC and they said they were doing their best and getting out as much as they could. Things have improved over the past fortnight and we are glad to know that, but the damage has been done. In that situation it is the small farmer who gets the wallop. The big farmer has the capacity and the money. He can buy cattle at poor prices. The same thing happened in 1974-75 but the situation was different then and there was a beef mountain. Now there is a lack of finance and a lack of confidence in the trade. I do not want to make a huge issue out of this but I should like to know from the Minister are the ACC competitive. That is very important. I should like to see the operations of the ACC carried on right down through the years. The present interest rates are penal.

I should like to move on to another area of interest rates which should be brought to the notice of the Department of Finance, that is, the question of hire purchase. The ACC have a hire purchase section, but they do not operate on such huge profit figures. Unfortunately, when money becomes scarce other people step in and fill up the gap. Hire purchase companies are attached to every commercial bank and they are financed by the banks. If you require a loan to buy cattle, or cows, or anything else, they say the rate is 19 per cent on a monthly repayment basis. There should be a condition that the true interest rate must be quoted.

A quotation of 19 per cent on a monthly repayment at true interest rate is 38 per cent. That cannot be contradicted. They say the rate is 19 per cent, but you are paying back on a monthly basis and the true interest rate is in the region of 38 per cent. No credit company, including the ACC, should be allowed to quote an interest rate other than the true interest rate. This matter should be taken up by the Department of Finance. People buy cars on monthly repayments. They make up their commitment and add 19 per cent. They believe they are getting the money at 19 per cent, but they are wrong. The Department of Finance were lax about this matter. It should have been dealt with long ago. Imagine lending money in this day and age at 38 per cent.

Over the past month interest rates of 21 per cent have been quoted but that is really 42 per cent. They are practically doubling their money in two and half years. This is damaging growth. There is no area, particularly in agriculture, where those types of margins are available so far as profit is concerned. I take this opportunity to bring this point to the notice of the Minister and the Department of Finance. People should not be allowed to deceive the public to the extent that intelligent people believe that a rate is the true interest rate when it is not.

I want to come now to the question of making the ACC a fully commercial bank with cheque book facilities. This is important, and again we get back to the question of competitiveness. For the commercial banks the lucrative side of lending money is in the current account. There they have money free of interest. As we all know, over the past two to three months the banks have been explaining that if your current account is overdrawn they have to charge you interest. When you have money in your current account, when you are in the black, they do not write to you and tell you they will pay you interest on the money they have which belongs to you. That is for their own benefit and that has been the position down through the years.

I know of some cases where people in clubs had large sums of money in current accounts and they were given no interest because they did not put them in a deposit accounts. The banks are very good at that type of business. It may be said that I am being hard on the banks, but I have dealt with them for years. They must accept a great deal of responsibility for creating the present severe credit squeeze. Last year you could go in to a bank and sign your name and get money. All of a sudden the tide turned, and the Department of Finance said the banks had over-spent or over-lent, whichever way you like to put it, and the squeeze was created. The banks created a fair share of it although I am prepared to accept that the Government created some of it as well by their consumer boom.

The ACC are entitled to have full cheque book facilities. It is well known that the ACC have what is known as gale dates, 1 November and 1 May. Over the past two months the banks stepped in and tightened up the overdrafts. Until this year I have never seen money scarce in the ACC in the month of November. I believe they have not got in their repayments for November 1979. If they had got the repayments in they would have more money but the reason for their not getting the money in is that the banks have tightened up on overdraft facilities for farmers. With the exception of one other occasion on which there was some shortage of money in the ACC, I cannot recall any time when there was a situation as bad as it is at present in that regard. The tightening up by the banks of overdraft facilities has led to farmers having to request the ACC to allow them forego repayments for three months or so.

Has any application been made by the ACC for permission to make available cheque-book facilities to their customers or is there any plan in the Department of Finance to make this service available? These are direct questions to which I should like the Minister to reply. While I was on the board I emphasised the necessity for such facilities. There was then a favourable reaction to the suggestion but I am aware that there was a problem regarding staff. However, I trust that that problem has been resolved and that there will not be any further industrial action in this regard. We must acknowledge that the ACC have always employed good qualified staff, staff who have local knowledge. That is an important aspect because in the event of a farmer finding himself in difficulty, his file is available to the corporation so that an official is in a position to take that file and go out to the farm to examine the situation which may have arisen because of herd disease, bad weather conditions, low yields or some other factor. That official will then be in a position to make a decision as to whether to give the farmer extra money. The situation is different in regard to the banks. They send out a representative only when the question is one of the collection of money.

Down through the years the ACC have been expanding. They have built offices in practically every town in Ireland. Hopefully, that important programme is continuing. If the ACC were in a position to extend cheque-book facilities to their customers, farmers would not have to depend on the banks for this service. This would be to the advantage not only of the farmer but of the corporation as money lenders.

Another important matter is the question of small industrial farmers borrowing money for the purchase of land. The movement of the Land Commission to the Department of Agriculture was a very good step. The involvement of the ACC particularly in regard to small farmers purchasing land in order to make their holding viable, is a very important question, but current interest rates cannot be justified. If we are to keep the small farmer on the land we must devise a system sooner or later whereby a certain percentage of interest rates will be paid from the ACC through the Land Commission to the farmer. The Land Commission may buy land on the open market now for about £2,000 an acre but the ridiculously high interest rate of 19 per cent means a cost of £380 per acre in terms of interest alone. That situation is not justified in any circumstances and one can only hope that the rates will not remain at this high level for much longer.

There have been various predictions as to when we may expect a relaxation in interest rates but it appears as if we must suffer these interest rates for some time yet. If small farmers are to be enabled to bring their holdings to anywhere near a viable position the interest rates must be reduced and, if possible, subsidised. The period of time for which money is borrowed is irrelevant in terms of repayments because regardless of how long that period is, the repayments are working out at £380 per acre in interest rates alone. The ACC have the personnel that would be necessary to operate a scheme of subsidisation in respect of interest rates. Farmers cannot be expected to expand or to modernise if they must borrow at these very high interest rates. In particular it would be impossible for farmers in the west to meet the cost of repaying money borrowed at such rates. Recently I spent some time in north-west Cork where the need for development and modernisation is obvious in at least every other farm. Agriculture is our main industry. This year we shall export more than £1,000 million worth of agricultural produce. That represents a significant amount of exports but next year there may be a reduction if the present conditions continue to prevail. That would be very bad as far as our whole economy is concerned.

I appeal to the Minister to ensure that the ACC will be in as viable a position as possiblevis-à-vis other money lenders.

Because of my responsibilities outside the country, I do not often have an opportunity of contributing to debates here but I am glad to be here today to speak on the subject before us which is one of the most important matters that we could possibly discuss. My interest has always been related to the formation, maintenance and development of family-sized farms. There is nothing more important for the country as a whole than this type of operation.

Undoubtedly the ACC down through the years have been making an enormous contribution in this regard. The Bill is simply enabling the corporation to borrow more money and to provide the additional facilities that are being called for by reason of the developing farming situation. Unfortunately there is an immense amount to be concerned about at present. There never was a time, for a long period, when farming needed more assistance and support that it does right now. The growth and development of farming here has unfortunately come to a standstill. This has happened for a number of reasons. Credit is one of the reasons and we should not be afraid to talk about it. It has happened because of a general overall loss of confidence in farming at present, because of the uncertainty of the position both now and in the future. When we are talking about credit we must also be concerned about whether or not that credit is going to be utilised if and when provision is made about it and we must be as much concerned about the things that encourage people to use credit as about the things that discourage them. It is relevant to this Bill and we should talk about these things.

Going back a few years I remember when we had a World Bank loan and it was one of the best things that every happened here because first of all it was at a reasonably low rate of interest and people were able to use it and make money by using it. The assurance that they were going to do sensible things came about because of the organised way in which it was used, because it was invested in a way that was more or less planned and supervised. I was extremely anxious at that time to ensure that that would continue and when the World Bank loan was exhausted I invited all the members of the ordinary banks and the representatives of the ACC in for discussions. Something worthwhile came out of that. There was an agreement that an additional £20 million over two years should be obtained. The loan period was a maximum of 12 years. At that time the ACC had just agreed to give development loans for a period of 16 years.

I, unfortunately, was not here when the Minister was introducing this Bill, but somebody told me that there is some question of reducing the loan period to ten years. That is a fair period and it may be enough. I do know that the ACC at the stage I am talking about considered it essential to have a loan period of 16 years. Why did they so consider it? Did it enable them to have a lower rate of interest and did it enable them to give a longer moratorium period in the early years when there was very little return? I simply do not know. When I get a chance to have a look at the Minister's opening speech I will certainly do so, but it would be a retrograde step if it was decided arbitrarily to reduce the loan period from a maximum of 16 years to ten years because there must be cases in which a longer loan period would be and should be necessary and agreed.

This has been one of the worst farming years for quite some time and many of the farmers here are now in a position where they have lost money in the present year and they do not know what is going to hit them next year or the year after. The Government have a responsibility to clear this up to the extent that it is possible. We should take the uncertainty out of the situation. Unfortunately in recent times nothing at all is being said to enable farmers to try to look into the future. They are being told about all of the difficulties there are now in the EEC and that the prospects for the future are even worse. Some of our own people here—and I do not exclude the Minister for Agriculture—are being influenced by British propaganda in relation to this. There is no doubt but that there is a concerted and well orchestrated attack on the CAP. This is being done for a number of reasons. First of all, it was always the policy of successive British Ministers on either side of the political divide to have no increase in agricultural prices and to get cheap food from any part of the world—to have a British policy only and nothing else. That attack has been increased in recent times and since the directly elected Parliament has taken office it is for a different reason: that the United Kingdom feel they are paying an unusual proportion of what it costs to run the Community.

The Deputy will have to relate all this to agricultural credit.

We are getting into an agricultural debate again.

If the Chair would bear with me, this justifies an agricultural debate.

But not on this Bill.

This Bill is concerned not merely with the provision of agricultural credit but about whether or not that credit can be used and what will give farmers the courage and the justification for using it and to what extent.

If the Chair were to accept that we could have a full scale agricultural debate and that is what the Chair has been trying to prevent for the last two days. I must admit that I have not been very successful, but we must try to keep as near as we can to agricultural credit and the involvement of the ACC in agricultural credit.

I am trying to do that, and I have always tried to keep within the rules of the House in any contributions I have made here over the years. But we cannot just have a narrow debate on this and achieve anything.

I was listening to Deputy D'Arcy and he covered a fairly wide range of things. His contribution was an excellent one. It was obvious that it was coming from a Member of this House who for years was also a member of the ACC. He was speaking both as a farmer and as a person who was able to look at the operation of agriculture credit from the inside. The Minister responsible for Agriculture would do well to listen to his recommendations. The worst thing we can do for farmers is to give them credit that is going to bog them down for the rest of their lives. They must be well advised before they borrow. They could over-borrow or utilise the money wrongly simply because it is not well planned, because the people using it may not know what they are able to bear at a particular time or because of the type of farming they are carrying on. So advice is extremely important. This is one of the things that should become a responsibility of the ACC. This borrowing must be accompanied by this type of plan and this type of advisory service. They have done a first class job and they have developed to a very substantial extent in the last five or six years when it became possible for farmers to use money and to use it in such a way that it will eventually provide them with a decent livelihood and with profit on their investment.

Unfortunately for the credit situation, at present it is the most progressive and most courageous farmers who are being worst hit, because they are the people who have borrowed heavily in the past. They are not enabled to carry the burden or, if they do carry on and carry it, we have a situation where in many cases the banks are putting on pressure to a point where people are getting out of farming or getting out of a particular type of farming because they cannot stand the weight of the overheads. In this situation the ACC should be enabled to come to the rescue. This is a time when strong consideration should be given by the Government to the possibility of subsidising interest rates in the ACC in order to allow the development and the maintenance of family-size farms, because if rural Ireland is not doing well the rest of the country ceases to be prosperous. The sooner this is realised by people the better for the country as a whole.

In the last couple of days there has been a meeting here of the Agricultural Committee of the European Parliament. From the small amount of time these people were able to give here, and from what they were able to see, one of the things very obvious to them is the inadequacy of farm buildings on our farms. This is in stark contrast to the situation in Europe, generally. First of all, there is the enormous and escalating cost of building. If a farmer wants to have adequate buildings to take his cattle off the land at a time and in such a way as to carry out a proper grassland arrangement on his farm, he must have quite a substantial investment in buildings, from the point of view of the proper conservation of what he produces on his own farm and the proper storage of grain, as well as grass silage.

The trend in Europe, as I read it, is more and more in the direction of not penalising people for whatever their line of production is, provided that the raw materials for that production are produced at home. This would suit us adequately but we are very badly situated for availing ourselves of this new type of development in Europe, simply and solely because we have not the investment we need in proper farm building and a 30 per cent grant contribution is certainly not adequate. Somebody has the responsibility of trying to get that fact accepted outside the country at present. Investment in building alone and, of course, in the development of farms, generally, is quite substantial. The greatest need, at least at the outset, on development of any farm is, by whatever means to raise the fertility of the land, then raise the stocking rate and, perhaps, the building should come last—when there is something there to produce an income. This sort of advice should be given and should be readily available, particularly for farms which are heavily worked.

To get back to the European situation, at the moment farmers—in Germany, in particular—can get credit at 7½ per cent—7 per cent in some cases. How can we compete, unless somewhat similar facilities are made available here? It is not possible to compete and this must be realised and realised very soon. One of the things we would be allowed to do, without interference from Europe, is to subsidise interest rates for worthwhile development. There is at present a great need for this type of subsidisation. Our interest rates are in the region of 17½ per cent to 20 per cent and it is impossible for people to use money, in farming in particular, where the return is quite small, by comparison with other investments that can be made in industry and in providing services here, there and elsewhere.

At one and the same time as this credit is available in other countries at 7 or 8 per cent, the national aids being provided in these countries are three to four times what they are here. There is no way that we can compete against these odds, and we are a country which exports approximately 70 per cent of our total production. We should bear this in mind, when considering the subsidisation of credit, especially as regards the ACC.

Deputy D'Arcy spoke about the difficulties facing the ACC in competing with the banks, because of the current account facility which the banks have. This is something which should be looked at very critically, because there must be an enormous amount of money in the ordinary banks in current accounts that people are careless about, which money the banks can use at no rate of interest. This must enable them to carry on their business in a way which ACC find it very difficult to compete with.

My notes are rather disjointed and I apologise for them but a point was raised about the salary of the Chief Executive of ACC. If we want to have, in the ACC, or in any other organisation for that matter, people of the right quality and want to keep them, we must pay them the going rate. There has been a great deal of controversy, rather ugly public controversy, about the salary of the Chief Executive of the ACC. Someone said that it was a farcical situation that he was the only person in the organisation whose salary cannot be decided on by the Minister. This should be seriously looked at. When I had some responsibility in Government, that was one of the things I thought was totally wrong—that the Minister was not able to say, when he had that responsibility, "Look we shall lose this man and we know we shall, if we do not up his salary to the going rates, to a reasonable level." The Minister simply had not the power to do it because of the repercussions elsewhere. We should not be afraid of these things. If somebody is worth having and is doing a first-class job he should be paid accordingly and I shall leave it at that.

Debate adjourned.
Business suspended at 1.30 p.m. and resumed at 2.30 p.m.