Sugar Manufacture (Amendment) Bill, 1982: Second Stage (Resumed).

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

Mr. Hegarty

Before I resume my contribution on the Bill I should like to comment on some remarks made in the House on Thursday last by Deputy Sherlock. That Deputy launched a rather savage attack on my election agent and I should like, in the interest of fair play, to set the record straight. The person concerned is an elected representative of growers who call meetings at which votes are taken and decisions arrived at. The Deputy, as somebody who is involved in the trade union movement, should realise that that is how things are done. I should like to point out that during the 1980-81 and 1981-82 sugar beet processing campaign in Mallow a wide divergence emerged between the level of tare in beet delivered to Mallow compared with sugar beet delivered from the Mallow area to the Tuam factory. The beet delivered to Mallow was showing tare as much as 40 per cent while beet from the neighbouring farms with the same type of land was showing tare of 9 per cent in the Tuam beet factory. This problem, inevitably, caused a great deal of anxiety and frustration among the suppliers to the Mallow factory and, of course, there was a massive economic penalty on them. The growers and their representatives in desperation initiated an intensive around-the-clock investigation of this serious problem and, finally, after almost two campaigns, it was found that the sampling scales in the Mallow beet factory was seriously defective.

Even when this was established it took a lot of time and effort to secure an agreement on compensation measures. It was those events which led to widespread reluctance on the part of farmers to continue growing the sugar beet in the Mallow area. The man whom Deputy Sherlock accuses of leading a no-grow beet campaign is one of the largest growers of beet in the country on his own land and on rented land. He has grown and delivered to Mallow beet factory over the past three years 20,000 tons of sugar beet. He has purchased annually 250 tons of fertilisers from CSET, 200 tons of lime from the Sugar Company's quarries at Ballybeg and over a three year period purchased £40,000 worth of sprays. He has helped in the design of the sugar beet harvester and to date has purchased eight of those machines which were built by workers of the Sugar Company. He has purchased five Sugar Company-built sprayers, Sugar Company silage machines, steerage hoes and seeders. He is a recognised agricultural contractor who sows, sprays and harvests beet for a large number of farmers in the east Cork area. His farm has been used extensively by the Sugar Company for field trials down the years and trying out new machinery. During the period of the row there was a big demonstration of spraying and spraying machines held on his farm by the Sugar Company. This is the best type of friend the workers in the Sugar Company could have and I am glad to be able to inform Deputy Sherlock that in my recent discussions with CSET workers and with the workers in Erin Foods in east Cork the vast majority of them shared that view.

The workers in Mallow and Midleton have a far more realistic view of what is needed to promote their interests than Deputy Sherlock who apparently can do no more than bring up this scandalous, mischievous and nonsensical allegation. My election agent is a free citizen living in a democratic society. As a farm leader he is not answerable to me but to the growers who admire and respect him. He has contributed single-handedly more to the economy and the sugar industry than Deputy Sherlock and his entire outfit who seem to be hell-bent on destroying the economy in pursuit of their Trotskyite goal. If that is successful it will enslave the workers——

Minister of State at the Department of Agriculture (Mr. L. Allen)

On a point of order, I should like to ask the Chair if he feels that the contribution of Deputy Hegarty has anything to do with the Bill before the House.

Mr. Hegarty

It has in so far as an attack was made on a person who is not a Member of the House. The Member who made it was allowed to proceed by the Leas-Cheann Comhairle and I am grateful to the Ceann Comhairle for allowing me to defend that person.

An Ceann Comhairle

Deputy Hegarty to continue.

Mr. Hegarty

With regard to any remarks about hyprocrisy on my part I should like to remind Deputy Sherlock that I do not have to defend my record in sugar beet growing.

Mr. Sherlock

The Deputy is well known for it and he is aware of that. This is the Deputy's third time to speak on this. As a matter of fact, I believe the measure would have been adopted long ago if the Deputy had said his piece.

Mr. Hegarty

I am entitled to speak. One-third of my farm is under sugar beet.

I see the road ahead for Irish sugar, in spite of the contribution from the State, as being a difficult one. We must compete against some of the largest and most efficient sugar producers, those in the European market place. We have small factories and the problems relating to small competition from other crops and this growers such as servicing. We also have competition from other crops and this accounts to some extent for the difficulty in getting more beet grown. That is a serious situation now. For instance, with regard to the dairy industry we must consider the subsidies that are paid for calves and so on. There is a real tendency for somebody who has cows already to invest more and more in that area. We have also the lucrative crop of winter wheat which is taking over half of the midlands and the south. Sugar beet is a paying crop now but the follow-on crops, such as spring barley, are not giving the return that they should. That is something we must worry about and we must seek better markets for malting barley and do something more with the marketing of seed grain.

The Minister mentioned the whole question of shareholding. I welcome that suggestion, shareholding by the growers and indeed the workers. The amount of money might not be very significant but it will increase the involvement of people which I think means a more successful industry. The Minister mentioned Erin Foods and that the problems of the Sugar Company were to some extent brought about by Erin Foods. In so far as the Sugar Company had to build up Erin Foods and promote it in the market place, this is true. It was a new industry built out of the very limited resources of the Sugar Company. At that time the people in our own area had to be taught new skills and technologies and we had some very difficult periods in growing these crops. Quite a lot of them were sold at a loss but despite that the practice has survived and I look at it now as the base for an entirely new food industry.

We saw in the papers in the past week that we are importing £75 million worth of vegetables which we should be growing, but it has to be done in an organised way and I think the Sugar Company would be the proper agent to initiate vegetable growing by competent people on a national scale because we cannot really consider anything else — it must be done nationally. The market must be assessed to find out what is needed and when it is needed. There is a time factor involved and you have to vary varieties in order to ensure continuity of supply. You must have quality control of all the vegetables, proper packaging, storage and so on. With improved technology it has been found possible to store fresh vegetables over reasonably long periods without going to the expense of freezing. This should be the new role of Erin Foods as well as continuing and forging ahead with their processing side and certainly the new research and development section in Carlow should forge ahead. Our supermarkets should be stocked up — sometimes they are not — with Erin Foods products. I can still see a very exciting future for fresh vegetables in this country because, as I have already said in regard to agriculture, we can ill-afford an import bill for something we should and can produce ourselves.

I do not think it is realistic to expect everybody to dig up their back gardens and produce what they should be producing. With the high costs and so on they might end up not only buying vegetables but wasting money also if they do not have time to devote to them. I would expect that if we are to tackle the import problem realistically, whether in the case of potatoes or carrots, it will have to be done on a contractual basis, with a fixed price, even a price guaranteed in advance to encourage growers year in year out to pursue that activity knowing in advance that they will have a reasonable market.

I welcome the Bill, I am proud to have been associated with the industry down the years in my capacity as chairman of the Sugar Beet Growers' Association and as a founder-director of East Cork Foods Limited — I am still on the board of that small company. I am very interested in the food and sugar side of things. The industry has certainly contributed more than anything else over the years to the welfare of rural Ireland and of the towns fortunate enough to have factories built in them. That is as relevant now as ever and I am convinced that given the proper impetus we can go from strength to strength. While there is a lot of money involved now it must be remembered that this money should have been sought years ago. They should have insisted year by year on getting an allocation and should not have allowed the debt to become so heavy that they are now faced with this massive bill.

An Leas-Cheann Comhairle

Mr. Sherlock

The borrowings of the Irish Sugar Company are so high that a massive amount of the turnover of the company is now being paid in interest on borrowing. This equity capital should have been put into the company long before this. I know the operation of the Irish Sugar Company and I know the capital works which have been undertaken by the company in the last four or five years, particularly in the last few years in the Mallow area. This was done in order to have a more efficient factory for the purpose of giving a better service to beet growers. It is important to provide the best facilities possible so that the beet grown in that area can be processed and the total acreage of beet can be disposed of by the end of December or early January. If that is done beet growers will be encouraged to increase their acreage of beet. The capital works in that area are part of the overall operation of the company.

I believe there is a great future for beet growing. A great number of people are employed in the sugar industry. If this company were a private company they would have gone to the wall long ago. There is a great future for the country in State enterprise in industries like the Sugar Company, Bord na Móna, NET and those other companies. It is important that this equity capital is provided for the Irish Sugar Company.

I have been critical in the past of the manner in which the company have been prevented from diversifying. The Minister should remember that in the past few years it was only natural that the Sugar Company, who are manufacturers of sugar, should want to have some control in the fertiliser industry. They made an effort to get into that industry in a big way a few years ago by trying to purchase a factory in Waterford. Some person said no and the Sugar Company did not proceed with the development. That should be looked into because a fertiliser factory is very complementary to beet growing. I believe that in the past sugar manufacture was a more lucrative business than it has been in the last few years. The food processing industry should be developed also. There is no reason why this company should not be able to take over land and grow vegetables to be processed in their factory. This should be done in a competitive way which would mean jobs and the production of cheap food in our own country.

I would like to refer to the grow no beet campaign in the Mallow area, which was referred to by Deputy Hegarty. The price agreed for the 1982-83 campaign should have been agreed in all the other areas, like it was in Mallow. I became aware of that because a number of people in the North Cork area came to see me and one of them told me that he was a conacre man, paying £100 an acre for beet on conacre and found he was doing quite well out of it. He told me he was concerned about the grow no beet campaign and did not see any sense to it. He told me who was involved in it and thought it need not have gone so far. He was not the only person who came to me about that.

This was a most unreasonable campaign. It had some effect on beet growing because it continued even beyond the sowing season and perhaps led to a little reduction in the acreage under beet. I hope we will be back to the situation we had some years ago. I am confident we will because the attitude of the company to the growers is to provide the best facilities and pay the best price for beet. I believe there will be such a demand for beet acreage that there will have to be a cut-off point. I have listened to people who will always give an accurate appraisal of the situation and they have told me that there is a great future for sugar production in this country. The Sugar Company must be in complete control and that is the reason why I welcome this Bill.

The interest rate on the heavy borrowing by this company will have to be looked at very seriously. A change is needed in the whole financial system of the country. It is very important for the Government to have control over credit. This will have to take place if we are to succeed and develop. The Government must have some say in the control of credit. This means having some say over the banks.

Mr. Ryan

I support this enabling Bill to increase the capital of the Sugar Company. As a rural Deputy I welcome it, and I am sure it will be welcomed by the entire sugar beet industry, workers and farmers, in areas where the factories are located. This is only the first stage, we hope, in a development plan for the agri-food industry. We have heard so often that Ireland has the land, the good pasture and the good soil to enable its people to develop a highly successful food processing industry. However, we hear of £600 million worth of food imports annually, and that is clearly a situation in 1982, when we are beset by borrowing and trade deficits, that we must be critical of. If this happened in England it might be tolerated but when it occurs here something is wrong.

Another impediment to our sugar beet industry is the appearance of sugar imports from France which we have been told are on the increase. This is worrying and it must be of great concern to the entire industry here. It must be controlled, irrespective of EEC regulations.

This investment in CSET is long overdue. For many years we have been giving lip service to the agri-food business and I hope that this at last is a genuine effort to develop a branch of the industry which has tremendous potential. At a time when we are endeavouring to create jobs and when thousands of jobs are going to the wall, we must try to develop with urgency an industry that has such great potential. The company have been hamstrung by their need to borrow at such high interest rates. If we are genuinely concerned to develop this industry the Government must look at the cost of borrowing because it is retarding the growth of the industry we are now talking about. In consultation with the banks every effort must be made here to introduce a system of cheaper money for such promising enterprises.

We have had difficulties in regard to Erin Foods. Efforts are being made to ensure the continued viability of the Tuam factory. I come from an area that has a sugar factory, in Thurles, which is urgently in need of modernisation, including renewal of plant, and that can be done only by increased investment. Many promises have been made over the years but even today nothing is seen to be happening in Thurles and this is of great concern to the town and the surrounding areas. In the past 15 years the number of promises we have heard and commitments given to the workers and the sugar beet farmers in the Thurles area would overflow the Shannon. The work in the factory is being continued with worn-out, outdated machinery. I make a special appeal to the Minister that the Thurles factory, which is so important to farmers and workers will be given priority in regard to the renewal of machinery.

I appreciate the effects the Bill will have and I wish the Sugar Company every success. That will be forthcoming only if there is continuous investment. I particularly appeal for new investment in the agri-food industry so that instead of importing £600 million worth of food per year we will grow it and process it here and thus help to reduce our external deficits.

Mr. H. Byrne

I welcome the Bill and congratulate the Sugar Company. I do not accept Deputy Sherlock's suggestion that the company's achievements have been due to nationalisation. I have had long association with the beet growing side of the business and I can say that the growers have been propping up the industry for years through their sheer loyalty in the face of poor price increases. I have been a member of the BGA and I know the situation well. It will be claimed that in the recent past Irish beet growers got significant price increases, but they have paled into insignificance in the face of increased costs. The colossal investment in the production of an acre of beet must be of great concern to the company.

Other problems face the industry as a whole. For instance, if the harvesting and processing campaign are not adjusted I can foresee beet growers becoming uninterested in growing sugar beet. The length of the campaign, and the time of the year, are not given due consideration. The Minister comes from a beet growing county, he will be aware of this, and I hope he will ask the company's officials to take note of it. The beet campaign straddles Christmas and often runs into January. Such a season is tough on machinery and on man, and men today are looking for easier options. Therefore, if the beet harvesting season is not shortened there will not be beet growers and if there are not growers there will not be an industry. The factories should try to gear the campaign to finish by 20 December at the latest.

I also ask the Minister to consider part processing of sugar beet and to make more money available for such an enterprise. As everybody here knows, the Wexford grower has propped up the beet industry for many years. One quarter of the nation's sugar beet is grown in Wexford but we do not have any industry there apart from growing the beet. It would make good economic sense if a part processing plant was considered for the Wexford area. Possibly as much as 150,000 tons of beet is transferred from Wexford to Tuam each year. There are very high transport costs involved in that transfer and much harm is done to roads by heavy lorries. If the beet was part processed and then transported to Tuam it would be far less costly for the Sugar Company and do much less damage to our roads. It would make good economic sense and I ask the Minister to consider it carefully.

The Minister and the Sugar Company should make every effort to improve the consistency in tare and sugar content because it is in the tare house that the price of beet is decided. That price is not decided in March or April of any year; it is decided when the beet goes into the factory and the tare house. There is gross inconsistency in tare content. There could be a difference of 10 or 15 per cent. The company might claim that the higher percentage was the right figure but the grower will always claim that the lower percentage is the correct figure. I am asking for more consistency in this matter and I suggest that a visual content of tare should be considered rather than the present system. I know to my cost, because I was a member of the BGA, that the sugar content given to us by the Sugar Company is often far lower than that proven by independent tests. I ask the Sugar Company, as a matter of urgency, to take up this point and to consider it very seriously.

I welcome the Bill and I congratulate the Minister and the Government for making this money available to an industry that can and has been very worthwhile.

Minister of State at the Department of Agriculture (Mr. L. Allen)

First of all, let me welcome the goodwill with which the Bill has been received on all sides of the House. It demonstrates two things. It constitutes a recognition of the central role played by the Sugar Company in the development of agriculture in Ireland over the last half-century. And it places on record the commitment of the House to fostering an ordered future for the company. Much of what has been said by Deputies calls for no comment from me beyond a simple expression of recognition. Some questions have been raised and I will attempt to deal with them.

Before I do so, I think I should recall the basic purpose behind the Bill. The principal purpose of a capital injection for the company at this time is the broadening of its equity base. The element of loan finance in the company's present capital investment programme is far too high, and the element of shareholders' funds is far too low. This imbalance needs to be corrected. That is the basic problem we are attempting to deal with and, in doing so, we will be creating the conditions for further ordered development.

Deputy Dukes's remarks seemed to suggest or hint that the new funding should in some way be project-linked, that it should be employed to finance specific new projects that will be devised. I wholly agree with the concern underlying his remarks. It is of the utmost importance that the funds are used to back up the company's efforts to modernise and make itself more competitive. But these efforts are already under way, financed by borrowing.

Nobody would wish to appropriate in a narrow way or to certain specific purposes the funds advanced to the company. The funds will be made available to the company in the spirit of the 1962 Act, namely "... on such terms as to repayment, interest and other matters as may be determined by the Minister". I can assure the House that those terms will be such as to ensure that the capital injections proposed will have their desired effect.

Deputy Dukes also mentioned the rationalisation plan to be substituted by the company as a condition for the new funding. As was indicated by the Minister, the submission by the company of a clear and specific programme will be a condition for any allocation of new capital. I would expect this programme to be furnished to my Department at an early date. Having said that, the approach will be to avoid laying down the details of the rationalisation plan in advance. This does not mean to say that certain ideas have not been developed. But what is primarily required is increased overall efficiency. While the immediate purpose of the Bill is to restore financial balance to the company's affairs, this is followed closely by a concern to see that the company moves consistently into the black.

The figure of £75 million does not imply an immediate injection of that sum. It reflects rather the kind of figure that the company's equity base would need to be set at taking into account the level of capital investment on which it was embarked to make the sugar industry competitive. For 1982, the Government will advance £30 million and that will be subject to the conditions already mentioned. I should like to make it clear that this £30 million is available and subject to compliance with the conditions, will be paid in 1982.

Deputy Dukes referred to the Minister's assertion that Erin Food was at the root of the company's financial worries. First of all I should like to emphasise that the Government have every expectation that the food division has a future with the company. But, given the integrated financial structure of the company, there is no point in not recognising what happened in the past. In effect, profits on sugar which should have been applied towards modernising the sugar factories have had to finance losses on the food side over very many years. In consequence, the company has had to resort to heavy loan commitments to carry out essential improvements. I think it is proper to impute the company's recent losses to the food division, even though the interest burden underlying them arises on the sugar side. The link to the food side, if not direct, is nevertheless real.

The question of the tightness of the company's financial control was also raised. Without going into detail on the subject, I should remind the House that when the 1980 irregularities were discovered the company carried out a full investigation and sought the advice of an independent firm of auditors with a view to preventing a recurrence. I understand that the company has fully implemented the recommendations made. Deputies will recall that the joint committee dealt with the matter in its report.

The consultants' report on the company's operations commissioned last year furnished a great deal of information to the Government. Deputy Dukes would like to see it published, and cites the publication of the joint committee's report as a precedent. I can assure the Deputy that the reports are very different in nature. The consultants' report has a great deal of detailed commercial information which, if put into the hands of the company's competitors, would disadvantage the company in the marketplace. The Minister has therefore decided not to have the report published.

Deputy Higgins raised issues of rather wider scope than those which relate strictly to the terms of the Bill. I could go along with much of what he said but when he seeks to dismiss the response of the market to the company's products as being of secondary importance, then I have to part company with him. The Sugar Company are up against the giants of the world food industry, as Deputy Hegarty reminded us, and it is necessary to be able to compete effectively with them. Market demand and market conditions cannot be ignored.

I know that the Sugar Company are encountering difficulties in the retail area, particularly in supermarket chains, and I recognise that some of the methods employed by the company's customers are pretty cut-throat. But if the company cannot defeat the competition on their own ground, this clearly points up the need for modernisation and greater efficiency. The capital investment programme at present under way is designed to achieve these results.

Deputy Higgins expressed concern as to whether the work force at Tuam were consulted on the future of the factory there. I can assure him the Minister has met the Tuam Workers' Action Committee, and that he has listened to their views.

Deputy Kitt put his finger on the one element that will contribute more than any other to assuring the future of the sugar industry in Ireland — that is the question of the beet acreage. It is important that a greater area of beet should be grown. We must have a constant eye on 1984, when quotas will again be discussed in Brussels. There is still a long way to go before we may be comfortable about the situation.

There were one or two other points raised by Deputy Ryan. I want to assure him that the Thurles factory is scheduled to benefit substantially from the funding being made available in this Bill and its future is assured.

Question put and agreed to.

Agreed to take remaining Stages today.

Dáil Éireann debate - Thursday, 8 Jul 1982

Sugar Manufacture (Amendment) Bill, 1982: Second Stage (Resumed).

Dáil Éireann debate -
Thursday, 8 Jul 1982