Dáil Éireann debate -
Tuesday, 3 May 1983

Vol. 342 No. 1

Private Members' Business. - Closure of Agricultural Based Industries: Motion.

Mr. Noonan

(Limerick West): I move:

That Dáil Éireann calls on the Government to review their decision in regard to the proposed closures of the many agricultural based industries as the consequences of such closures would be detrimental to the continuance and growth of the food processing industries in this country.

In proposing this motion I cannot but comment on the Government's amendment which reads:

To delete all words after "Dáil Éireann" and substitute: "supports the efforts of the Government to increase the production of raw material for the food processing industry and to promote the development of the industry along the most efficient lines."

When one looks at the Government's approach to the processing industry — for instance East Cork Foods and Mattersons in my city — one sees that this amendment is contrary to the action they have taken over the last three or four months. Actions speak louder than words. I hope the Minister in his reply will give us some hope and show us a way forward for our food processing industry. Their approach should be positive because this industry needs assistance, guidance and, above all, monetary incentives to help them progress in the future. Our food processing industry has taken considerable time and money to develop to the present sage. It is vital that we have a healthy processing sector in the interests of the farmers who produce the raw materials, the work force who man the factories and our balance of payments. Those involved in those three areas will lose if we revert completely to commodity trading. Surely no one wishes to return to the stage when all our cattle were exported on the hoof.

In a recent publication the IDA showed that the food processing industry employ over 47,000 people throughout the country, not just in one or two areas. Up to recently this was a very secure industry providing stable employment but I wonder if this situation will remain for very much longer. There have been a number of closures recently and rumours of further closures and short-term employment, as if there are not too many people unemployed already. From the point of view of the national economy as a whole, the food processing industry accounts for something in the region of 25 per cent of the total value added in Irish manufacturing. In addition, nearly three-quarters of that added value is exported and nearly 95 per cent of the input to our food industry comes from home sources as compared with only 16 per cent for all other firms. The home market is vital to our processing industry and it is most disturbing that we have such import penetration. In the interests of employment, the farmer producer and the damage that could be done to the national economy, action — and I repeat the word "action"— is urgently needed to prevent any further erosion in this important industry.

I support this motion and call on the Minister to ensure that the necessary action is taken to see that this industry progresses and that the decisions the Government have taken in recent times with regard to the closure of certain processing industries will be reversed. I will deal with that point later.

Producer marketing boards should be established to regulate the sale of potatoes, fruit, vegetables and most of the imported vegetables. The boards should be charged with responsibility for marketing, pricing, product development and presentation, which is so essential. I will deal with presentation later. They should also be responsible for bringing Irish products and produce to international markets, bringing them to the standard of international presentation — there is no reason why we cannot do this — and ensuring that our produce is up to international hygiene standards. The boards would also explore all areas of import substitution and seek new markets for Irish vegetables and soft fruits.

As well as promoting Irish produce for the home market, the type of board I have suggested must convince the Irish consumer to purchase domestically grown vegetables and fruit. This sector in agriculture has been untapped and it has tremendous potential. Irish farmers have proved that they can deliver if they have the incentive, but action by the Government has been starving the industry. For example, the farm modernisation scheme has been scrapped and Fianna Fáil's four year plan for the development of agriculture is being sadly missed by the farmers. Our farmers lack confidence because they lack Government incentives.

If I were to issue a message tonight, if the preaching of a message was called for, it would be one of hope, particularly to our young people in agriculture. I would say to them that the jobs and opportunities are there but they require the commitment and the incentives called for in this motion.

For small local industries to process, package and market our horticultural produce there are many old halls and disused primary schools in villages and towns throughout the country which could be used to house local enterprises based in the local environment and with all the raw materials available from the land. I am talking about processing and presentation for the home market of potatoes and other vegetables, as well as fruit. Such small local enterprises would employ four or five people. This is the type of activity I have suggested for the type of board I have been talking about. I am not proposing major undertakings or a massive national board. I am suggesting the setting up of local co-ordinating bodies purely at local level to foster small type industries based on agricultural products.

Another advantage of such small enterprises would be that they would turn the tide against wasteful imports of horticultural products. At the moment we are importing vegetables and other horticultural products to the amount of £100 million per year. This money could be kept in circulation in Ireland instead of going to the Danes, the Dutch, the British and the Cypriots.

There must be something dreadfully wrong with out marketing of horticultral products when we import millions of pounds worth of potatoes annually. There is something entirely wrong with our system when we cannot package as well as other countries. It means we are losing out in a big way. The challenge is there to grow more vegetables, to process them and to market them, not just as well as the continentals but better. There would then be no need for imports.

Recently the Minister set up a committee or commission to examine the vast imports of horticultural produce. I suggest there is no need for this committee. We know the amount we import, we know the problems, and what we want is immediate action and that is needed not alone if we are to continue to keep people on the land. We need urgent action, not committees and commissions and waste of time. We know the problems and the remedy. What is needed is incentive action from the Government and we hope the Minister for Agriculture tonight will give us some ray of hope, some light for the future.

I have spoken about employment in agriculture. My proposal is the creation of small type industries throughout rural Ireland. This, inherently, would solve the second-son problem for many farm families as well as providing lasting jobs throughout the country. It would also give off-farm employment not only for the second son but for farmers with small acreages. The incentive should be there. Only political will can restore confidence in agriculture and provide much needed employment.

It is my party's policy to provide these necessary incentives. It was outlined in The Way Forward which proposed to assist agricultural marketing of finished products. We must do this. We must grow the vegetables, package them and present them to Irish housewives. The market is there in our towns and villages. The setting up of such enterprises would ensure that there would not be vast imports of vegetables. We would be doing something constructive by way of providing employment and improving our balance of payments.

I want to speak briefly about my own city. Other speakers from my party will speak about other localised food industries which are in severe trouble. To date the Government do not seem to be very concerned about providing alternative employment or ensuring the continuation of existing jobs. In Mattersons in Limerick 85 to 90 people have lost their jobs. The essential point is that it has been proved beyond a shadow of doubt to the Minister that losses in the canning section of Mattersons were reduced substantially since last year. It was the contention of the management of Mattersons that, within another 12 months, the canning factory would pay its way. They planned for a rationalisation deal which would mean the loss of very few jobs but would provide more flexibility in the work force.

These proposals were put to the Minister but he gave no hearing to the various deputations who met him. The canning section has now closed with a loss of 85 to 90 jobs. The Minister was contacted by the Irish Transport and General Workers' Union group secretary at the end of February but he did not respond until around 15 March. When the deputation met the Minister, he opened the discussion by saying the Cabinet had already made a decision which could not be reversed. This is a despicable approach by any Minister or any Government. At least one would expect the Minister to listen to the views of the interested parties before a decision was made.

The second deputation was led by the Mayor of Limerick, Councillor Tony Brommell, and consisted of a number of interested parties and unions. The message from the Minister to the deputation was that the company had to close irrespective of the social consequences to the city. Figures going back over a number of years were used by the Minister to support and substantiate his claim that the industry was not viable. That was a wrong decision and it should be reviewed. There is hope for the industry.

If the money allocated to redundancy payments and social welfare benefits now being given to the redundant workers had been invested in the company, it would have gone a long way towards ensuring the viability of the firm. Batchelors are now expanding in a big way while the Government, with their despondent approach, have closed down the factory in Limerick. The two deputations proved to the Minister that inputs had been falling in price. It was pointed out to the Minister that Mattersons had a good name and quite an amount of goodwill in the mid-west region, and were the second oldest company in the region.

There are major problems in the sugar industry, the Sugar Company and Erin Foods. Are many of those problems of their own making? Is there too much control at central level? Should the control be decentralised and more of it based at local level? Are the companies top heavy? Should some of their structures be dismantled? These are the questions I am throwing out, and which should be answered in the near future.

If we had small-type industries with very little overheads and based on our own raw materials, provided they stayed small and the employment content was in the region of five, six or ten persons, they would be of immense benefit to the economy. The cost factor of setting them up would be very low as compared with the price per job in some of the imported industries. The approach by the Government does not say much for their attitude to the food processing industry. They are about to close some existing plants.

Considerable concern has been expressed recently about the importation of fruit and vegetables. Traditionally this produce has been supplied locally. We must look at some of our imports from the point of view of producing and supplying these items ourselves. Provided the incentive is given, this can be done. An article in the farm and research publication of the Agricultural Institute of October 1982 states that about £19 million of the £94 million spent on fruit and vegetable imports in 1981 could have been saved by substituting home-grown for imported produce and that total fruit and vegetable imports, including exotic and processed produce, amounted to £94 million in 1981. I am sure that the figures would be increased for 1982.

The article states that the figure of £123.6 million imports quoted by many commentators includes £29 million for exotic fruit and vegetable preparations — for example, fruit juices. It says that more than half — £50 million — of our total fruit and vegetable imports is produce which cannot be grown in this country, due to our climate. The remaining £44 million is made up of £14 million for frozen and fresh potatoes, £13 million for apples, £13 million for fresh vegetables excluding potatoes and £4 million for small quantities of other produce. It concludes by saying that all categories of imports have increased in the first six months of 1982.

That is proof enough that our imports of vegetables, soft fruits and potatoes are on the increase. The time has come for us to examine our approach to these matters. We must also take a look at the vast amount spent on the importation of frozen potatoes in the form of frozen chips by the big supermarkets. I understand that some of our potato varieties are not suitable for the frozen chip industry. Surely there must be a vigorous campaign to have the right varieties grown. With incentive, this can be done. The industry should be promoted through the existing chip producers, or by the setting up of a new structure.

We must examine the whole aspect of the food processing industry. We must substitute home produce for imported vegetables and so on, by giving incentives to provide these substitutes locally. As a people and a nation, we should be more loyal in buying our own country's produce. Other countries take a pride in their produce. The French are proud of their lamb and their wine. The Danes are proud of their home-brewed beer, their bacon and vegetables. Many of us are inclined to put more value on imported produce. Perhaps something could be done in our educational system to combat this. Our people must be educated to take more pride in their own industries. This can be brought about by better presentation and more aggresive marketing, not alone on the foreign markets but at home.

Most important, we must ensure that our products are presented in a manner which is attractive to the housewife. We must take heed of the changing trends in presentation. If we present our produce attractively we can encourage the housewives to buy their own native produce. The Government should provide the incentives and ensure that the existing industries are encouraged to expand rather than, as at present, to close down.

By doing this we would be saving something in the region of £50 million on imported produce. Now is the time for action, tomorrow may be too late. Example must be given by the Government and, particularly, by the Minister for Agriculture. I look forward to hearing what he has to say on this motion. I hope that his approach will not be as negative as the Government's amendment to this motion.

Minister for Agriculture (Mr. Deasy)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute

"supports the efforts of the Government to increase the production of raw material for the food processing industry and to promote the development of the industry along the most efficient lines".

The main aim of the Government in relation to agriculture is to create conditions that will generate increased output at individual farm level. They seek to achieve this, first of all, by tackling the basic problem of inflation which has been exercising such a severe price-cost squeeze on the agricultural sector and, secondly, by securing the best possible deal for Irish farmers from the EEC price negotiations in Brussels and Luxembourg. The Government have already set about easing the inflation level in a determined way and some improvement in this regard is already discernible. It is regrettable that, in spite of all my endeavours the price negotiations in Brussels and Luxembourg have not yet been finalised, but I am confident that the eventual package will be a worthwhile one and will show a considerable improvement over the level of the increase that had been anticipated earlier this year. I might point out that one of my main priorities in those talks in Brussels and Luxembourg was for an early settlement of those price talks. But, unfortunately — due to some differences of opinion between other member states — such a speedy conclusion has not been possible. However, I am hopeful that there will be a settlement in the weeks beginning May 16, which is the date scheduled for the next meeting of the Council of Ministers.

The Government's second aim for the agricultural sector is to encourage increased efficiency at all levels, not least on the farm itself. An abundant supply of raw material efficiently produced is essential to the welfare of any processing industry. This is certainly the case with our own food processing sector, which constitutes a major part of the Irish manufacturing industry as a whole.

Total employment in agricultural processing in 1981 was 40,000, or nearly one quarter of all jobs in our manufacturing industry. The numbers have remained largely unchanged over the past decade, the extra jobs created in producing more sophisticated value-added products being offset by the effects of rationalisation geared towards more efficient production and greater productivity in many of the longer established sectors. In 1980 agricultural processing contributed some £670 million in value-added, or the equivalent of 7 per cent of our gross national product. As was stated by Deputy Noonan, it accounted also for 25 per cent of the total value added in Irish manufacturing industry as a whole. It is important also to bear in mind that in the food sector home-based inputs account for 94 per cent of the output whereas for the remainder of manufacturing industry they account for only 16 per cent of the output. Export performance by the food sector has been a significant part of the improvement in our export performance as a whole.

The Government are conscious of the great potential which the food industry holds for further development both in terms of processing a larger volume of raw material and of using that material to produce more sophisticated products. The IDA have estimated that the successful development of this sector will require new capital investment of £800 million — at 1981 price levels — up to the end of this decade. In addition to helping our balance of payments, greater output should generate more jobs here.

I am keenly aware of the problems which confront us in the food sector. More particularly, I have drawn attention to the importation of food products which we could grow ourselves. The trend of these imports has been rising and total imports of food and feeding stuffs now cost us about £750 million a year. As a member state of the European Communities and as a major exporter of agricultural products we cannot support a policy of deliberate barriers to trade in food, nor indeed can we be seen to support such a policy. It would be to our disadvantage were such an approach to be adopted generally as its repercussions would have very serious implications for this country seeing that we are by far a larger exporter than importer. It is estimated that about 45 per cent of the present imports of food are in processed form and that about £200 million of the total would represent products capable of being produced at home. Looming large amounts these imports are apples, tomatoes and potatoes, in the fruit and vegetable line, together with poultry and eggs. I might point out that the latest figures available to us are in respect of the year 1982. They show a very disturbing trend. I might point out also that I was not Minister for very long in 1982 — 17 days in all, about 12 if one omits public holidays, so I can hardly be blamed for being the cause of that magnitude of imports. It is a long-standing problem; these imports have been increasing steadily over the years. It would be my aim to extend further the trend towards greater food exports. That is why I set up a committee to monitor these food imports, to distinguish exactly what is being imported, the quantity and type of produce being imported and to ascertain if we can offset those imports by producing good quality produce at home and marketing them to maximum advantage. These imports figures are approximate only. More detailed information is required before we can effectively set about restoring a proper balance in the import situation. To this end I have recently set up a committee to monitor food imports in greater detail than has been the case previously, to identify more precisely what is being imported, or what could be produced here and, most important and perhaps most difficult, to assess why this is happening. As well as my Department, the Departments of Industry and Energy and Trade, Commerce and Tourism are represented on the committee and the whole range of food imports will be examined.

Of course we shall always have some imports of food, even of types which we can grow here. There will always be the need to provide for seasonal factors. There is also the need to meet an expanding range in food tastes brought about by increasing international travel.

I must emphasise, however, that the setting up of the committee is not a solution to the problem and I would not like anybody to get the impression that I believe it is the solution to the problem. It is intended rather as an aid towards achieving that goal. The real solution lies in the expansion of our own agricultural production and in updating and improving our production and marketing techniques to a level at least as good as, if not better than, those of our competitors abroad, so that finished products of top-class quality can be presented to Irish consumers as attractively and as cheaply as imported products.

The problems we are encountering with imports serve also to highlight some of the basic difficulties which confront our food processing sector and to which we must address ourselves if the industry is to realise its full potential. In some sectors of the industry there is an uncoordinated or fragmented approach between the three stages of production, processing and marketing. In particular a greater integration as between the production and processing sectors is required. We must also tackle the problems of suitability, volume and seasonality of raw material supplies. On the processing side itself it is clear that investment in research and development is far from adequate. In so far as marketing is concerned there is too much emphasis on a commodity rather than a consumerorientated approach. I might mention in this connection also that undue emphasis is being placed on sales into intervention rather than commercial sales on export markets. In this connection I fully agree with the sentiments expressed by Deputy Noonan that we must generally co-ordinate our efforts in this regard, not just in production but in marketing and in selling. We are amateurish in comparison with some of our European partners. Because of their very professional and skilled approach to selling they can often succeed in selling inferior goods at a higher price than their Irish counterparts. That is something we should be able to overcome. I hope, as a result of the efforts of the monitoring committee to which I have referred, we will be able to pinpoint such deficiencies in our system.

Turning to some individual sectors of the food processing industry, I should like to say something about State enterprise. Most Deputies will be aware of the central role which the Sugar Company has played in Irish agriculture over the past 50 years. In its early years it stood out as an example of the kind of enterprise that could be built on our natural resources and that could succeed brilliantly. The Sugar Company became an example of what could be achieved and was an inspiration to our national agricultural effort.

The First Programme for Economic Development pointed the Sugar Company in the direction of food processing and led to the foundation of Erin Foods. I do not wish to deliberate on whether that was a wise decision, beyond saying that with hindsight it is always easy to be wise.

However, the record, regrettably, speaks for itself. The food division of CSET has consistently incurred losses since it was set up in 1963. A report of the Joint Committee on State-sponsored Bodies which was finalised in December 1980, gives an excellent summary of the fortunes of the food division. The committee, of which I was then a member, drew attention to the cumulative trading losses of the ten years to 1980, quoting them at £5 million. It made it clear, however, that real losses were much higher than that as sugar had been bearing the very considerable overheads of the food division. What had happened in effect was that by the late seventies the dehydrated vegetables branch of the processing industry in which the company had invested heavily, was being operated at international level on the basis of extremely low profit margins. An industry with high-cost inputs in raw materials and low margins on final sales could not fail to be in trouble. The joint committee commented also on other unfavourable aspects of the food processing operations of the Sugar Company. There was, for instance, a number of small scattered plants, which involved high overheads per unit of output and considerable under-utilisation of capacity.

With the publication of the company's accounts for 1979-80, it was apparent that the time for action could not be postponed any longer. These accounts revealed a loss of £11 million and the Government were now faced with the task of securing the very survival of the sugar industry itself.

I should not like anyone to think that the future of the sugar industry is secure just because the company have been in existence almost since the foundation of the State. We are operating in a free trading situation. Vast amounts of sugar are being produced within the Community and we must compete in an openmarket situation as any other member must do also.

In July 1981, the Government committed themselves to a large-scale rescue operation for the Sugar Company. Financial consultants were appointed to examine and report on the company's affairs. Their conclusions did not differ substantially from those of the joint committee. Severe pruning of unprofitable activities, and considerable financial effort from the State, were called for if Ireland was to have any sugar industry in a few years' time. Irish sugar must be able to compete with the sugar from our EEC partners. Otherwise imports are inevitable and our sugar industry could be wiped out.

What we are seeing today in the sugar industry has a parallel in the flour business whereby imports from member states are causing severe difficulties for the native milling industry. Legally we must allow those imports. Fortunately, sugar is imported on a relatively small scale but even if it were to be imported on a large scale we would not be entitled to take action to stop such imports. The only answer is to complete with the imports and luckily, up to now the Sugar Company have been able to do that. However, there is no certainty that that situation will continue indefinitely. It is vital that the Sugar Company be viable and be based on a sound financial footing.

In June 1982, the company's affairs again came to the notice of the House, when it debated the Sugar Manufacture (Amendment) Act. It authorised the issue of an additional £65 million of capital and taken with the unissued portion of the company's previously authorised capital — it meant that the Government could provide new capital amounting to £68.5 million.

A provision of £30 million for 1982 was made available to the company in October last. However, as my predecessor, Deputy Lenihan, emphasised during the debate on the Bill, every effort had to be made to see that this money was not swallowed up in unprofitable associated activities. Rationalisation was clearly essential to ensure that any additional funds to be made available to CSET were put to positive and constructive use.

The company had, of course, been chipping away at the unprofitable aspects of their business. The decision to close the Carlow food factory in November 1980, and the simultaneous decision to withdraw financial support from the Fastnet Co-operative Society's operation at Skibbereen, were evidence of this. That date is significant. We might well ask who were in Government then. That the Government then in office permitted these plants to close and yet criticise the present Government when they allow similar action to be taken in relation to other plants raises doubts in my mind as to the sincerity of the proposers of the motion we are now debating.

The losses in Midleton came to £1 million in 1981 and to £1.4 million in 1982. The company saw no prospects of any improvement for the future. For Mattersons canning operation also, the company saw no future. This is an operation, as the House knows, based largely on imported raw materials and imported cans, mainly the canning of imported beans. In 1981, the loss on canning came to nearly £1 million and this was repeated in 1982.

Deputy Noonan stated that I was discourteous to two deputations who came to visit me at Agriculture House. I reject that allegation totally. I told those people the truth and I cannot think of any reason for their being aggrieved at being told the facts. Perhaps honesty in such matters is a factor that is all too often missing in Irish political life. Surely the Deputy would not have wished me to tell lies, to say that I was recommending that a plant be kept open when that was not the position. The decision in that regard was taken originally by the company who recommended that both plants in question be closed. The Government accepted that recommendation. I have never treated any deputation with discourtesy and there was no indication on the part of the two deputations in question as to their being unhappy about the way I treated them. I find it extraordinary that later assertions such as those made by Deputy Noonan could be made.

As I have said, the board with full knowledge of all the circumstances decided on both courses of action, no doubt reluctantly. All of us are reluctant that any business should close but the financial losses were intolerable. With reluctance, the Government, too, agreed to the inevitability of the closures. In considering the company's plan for their return to viability the Government had to consider the overall picture which had emerged. In the most recent three years of operations the company had reported losses of £11 million, £12 million and £22 million, the latter including provision for redundancy. This year there is provision for redundancy payments. Those figures speak for themselves. They represent staggering losses and it should be remembered that we are dealing with taxpayers' money. Erin Foods alone had incurred losses of £13 million in 1982, and over the three years their overall losses had amounted to £29 million, again including the redundancy provision. It is against this background that the company's decision to cease activities at Midleton and Mattersons has to be considered.

I am satisfied that the decisions taken by the company, and in which the Government concurred, were the correct ones in all the circumstances just as the Government in November 1982 acquiesced in the closure of the Carlow and Skibbereen food plants. I fail to see how one can separate one decision from the other. If any Member believes there is a distinction I would be glad to hear it. For its part the company could not see the operations now in question ever becoming profitable. In so far as the Government were concerned they had to bear in mind the taxpayers' interest. Further public funds to meet continuing losses could only be provided through the imposition of extra taxes. God help us, but we have had enough of that in recent times. We want to alleviate the burden on taxpayers. Is this the way to do it? By letting unprofitable public concerns remain open the trend would be the reverse, we would be adding a burden and not relieving one. In present circumstances, or at any time, the public do not welcome extra taxes.

A condition attached to the capital provided last October is that a further rationalisation plan must be furnished by the company. This was stipulated by the last Government as well as by the present one. We still have quite a distance to go before the company are on a sound financial basis. I expect to have, within the next month or so, the company's proposals for further rationalisation. In the light of these the Government will be able to take the financial restructuring a step further. However, we can be very sure of one thing: there will be no scope for keeping unprofitable operations going if the Sugar Company are to survive. The fundamental choice facing us is, do we or do we not want a sugar industry which will hold its own in the intensively competitive international environment in which the company have to operate? There is a constant threat from imported sugar, which we will ignore at our peril. I am confident that the Sugar Company are acting in a responsible manner. They are doing an excellent job and are most anxious to put the company back on a profit-making basis and I support them in that objective.

Turning now to the beef industry which is entirely private enterprise, we have the capacity to carry much greater cattle numbers than at present. I hope that with the range of aids now available — including the calf premium, the suckler cow premium, the calved heifer scheme and the headage payments — farmers will take positive action to increase their herds and build up the supply of raw material for future years.

My Department have over the years concerned themselves with the elimination of anomalies in the EEC export refund and MCA systems which operated either to favour the live cattle trade over the beef trade or to favour carcase beef exports over boneless beef. By and large the efforts have been successful and indeed if anything boneless beef exports now receive the most favourable treatment. The previous Coalition Government were largely responsible for that in that they gave an incentive to employment in the beef industry rather than to live exports. That incentive was badly needed and has created a balance which was desirable.

In connection with exporting generally I must put in a cautionary word about intervention, which has been a matter of concern to Ministers for Agriculture ever since we joined the Community. Intervention is a valuable and indeed essential mechanism for supporting producer prices. However, some factories tend to take the lazy way out and sell into intervention everything that the Department are prepared to accept — which at the moment is 50 per cent of the steer kill — and only then seek commercial outlets for the balance. In good times or bad, when market prices are high or low, intervention has become a market outlet in itself for some factories. This is not really its proper functions. Intervention ties up a lot of public funds in capital and substantial Exchequer costs are incurred. Even in difficult times like the present, this would be acceptable, if it were inevitable, but it is by no means inevitable. I can understand that at some times of the year intervention is the most rewarding outlet and that it gives essential support to producers' incomes. But there are also times when factories should be looking elsewhere for commercial outlets for all of their production. In fact over the last ten years or so this has never once happened. Recently one or two exporters have shown a more enterprising approach and have successfully developed new markets. I would like to see this become more widespread.

Perhaps at times we devote too much attention to third country markets to the detriment of the markets within the Community. That is unfortunate because the markets within the Community are generally more lucrative.

The milk processing industry too, is a private enterprise sector, as the co-ops are in fact privately owned concerns. Here, of course, the basic raw material has to receive a certain amount of processing but we tend to keep this to the minimum in as much as the vast bulk of the milk output is used for butter and skim milk powder. In this sector we have had one of the more spectacular developments of recent years—that is the development of cream liqueurs. These have been an outstanding success and are now being copied world wide. We need more developments of this sort. Indeed we need quite a large number of such new developments to make any significant impact on the disposal of our milk output. Eminently successful though they have been, the cream liqueurs accounted in total for some 30 million gallons of milk last year but this was less than half of the annual increase in our milk supply. It will, therefore, be clear why I said that we need many such new developments if we are to diversify our milk output away from the traditional links. Of course, cheese production, is a worthwhile outlet also. The main brand of cheese we produce is cheddar but, unfortunately, there is an over-supply of it on the UK market. With regard to new initiatives I should like to commend the enterprise shown by my local Waterford Co-op in launching their very successful Yoplait yoghurt on the British market. This is the type of approach that others could usefully imitate. One of the major problems when launching a new product is the cost of promotion which runs into millions of pounds. For that reason I can understand why many firms are not capable of diversifying to the degree they would like.

In conclusion, I should like to reiterate that the course being followed by the Government is aimed firstly at expanding the output of raw material for processing — in other words, expanding the level of production on our farms. Then it is aimed at encouraging and assisting the processing of that output to the maximum extent possible, thereby providing much needed employment. Aid towards the provision of processing facilities is available from the IDA and FEOGA. The common agricultural policy provides the support and conditions for the expansion of agricultural production. For their part the Government are working to provide the economic and financial environment in which co-operative, private and public enterprise can succesfully process what our farmers produce.

Mr. Kitt

I should like to support this motion, proposed by our spokesman on Agriculture, Deputy Noonan, which calls on the Government to review their decision in regard to the proposed closures of many agricultural-based industries.

I should like to refer to the Minister's comments regarding inflation rates and the price negotiations. I am glad that inflation which was falling last year may fall this year because this is a problem that concerns all farmers. It is imperative that the Minister should have the price negotiations concluded during the week beginning 16 May. These negotiations were originally to have been finalised on 1 April and the Minister is aware of the large amounts of money being lost to farmers and the country generally because of the delay.

Our motion has been put down because we believe we can create jobs in agriculture and in agriculture-based industries. The Minister has responded in some way in his speech. We are concerned that our produce should be well packaged and presented and that storage facilities should be improved. We know that the consumer will purchase goods which are well presented and we must improve our marketing. Not only should we be self-sufficient in potatoes, vegetables and fruit but we should be looking for export markets. There seems to be a problem with storage of produce. I am told that other EEC countries have good storage facilities and we are at a disadvantage. We rely too much on imports. Deputy Noonan referred to the setting up of a produce marketing board and I strongly support that proposal.

Ireland has traditionally been a country where vast amounts of potatoes have been produced. I was amazed to find that from January to October 1982 total imports of potatoes amounted to 82,000 tonnes. That was more than twice the amount imported in 1981, which was 39,000 tonnes. In 1980 potato imports amounted to only 20,000 tonnes. The figures show a vast increase in potato imports during the past two years and many people have commented on this. Potato imports in 1980 came mostly from Cyprus but the then Minister for Agriculture, Deputy MacSharry, made an order to prevent imports from Cyprus except with special permission. The Dutch, however, were allowed to send potatoes here and 16,600 tonnes were imported in 1981. The very high figure for imports in 1982 was due to a shortage of potatoes here.

The figures I have given must be considered in the light of closures of food processing industries such as Mattersons, East Cork Foods and various potato cooperatives. The closure of these industries and the threatened closure of others are undermining this industry. Any closure will create unemployment but there is a further blow when it is an agriculture-based industry.

The only encouraging point is that we have apparently found a market for seed potatoes in Egypt, the Canaries and Great Britain. The Department and other agencies should ascertain whether there is further potential for such exports.

Deputy Noonan mentioned frozen chipped potatoes. The Minister might investigate the possibilities here. We imported 20,000 tonnes of chipped potatoes in 1981 and a similar figure last year. Also in 1981, 4,000 tonnes of frozen vegetables such as peas and beans were imported and a similar amount in 1982. This matter should be examined and the IDA could investigate the employment potential of frozen food industries. The figures show the need to develop a food processing industry and we should be looking for further outlets rather than contemplating closures of well-established industries.

There are obviously certain types of fruit which must be imported but it is amazing that in 1981 apples to the value of £13 million were imported. Competition is keen but it is a challenge to Government and to the producers, particularly within the EEC where the French are so proud of the apples they produce.

The Minister devoted part of his speech to the Sugar Company, for whom I have great admiration. They had profits at the end of the year, apart from recent years when they have had losses. It is very interesting to note the incomes they have provided for all the people involved in the sugar industry, the farmers who grow the product, the people who work on the campaigns and there is also the value of farm feed manufactured by the company. It is worth saying that, indirectly, the Sugar Company have provided employment for hauliers. In my county the company cut turf. There are also sales of machinery, fertilisers and chemical products.

I hoped the Minister would have a definite commitment to give in relation to the future of the Tuam Sugar Factory because he is well aware that over the last few years there has been uncertainty about the factory. It is very difficult to exhort farmers to grow more beet, as they have done in the Tuam catchment area, and every six months there is an announcement that possibly this factory will close. The first announcement I heard about this was in 1981 when the Minister for Agriculture, who is now Minister for Finance, announced that the factory would close. After a deputation to the Taoiseach the factory was given a years reprieve. That was the situation towards the end of 1981 but after Fianna Fáil returned to power a long-term commitment was given to the future of the factory by the Leader of our Party.

I am disappointed the Minister did not give a definite commitment about the future of this factory. The chairman of the Sugar Company in March stated in the annual report of the Sugar Company that the Tuam factory was a cost penalty on the company. He then made an amazing statement:

We are, therefore, asking western growers to increase their acreage for the factory for this year by 20 per cent over the 1982 figure.

The 1982 figure was 7,000 acres of beet and the chairman of the Sugar Company asked the western growers to grow 8,500 acres. In fact, those growers had arrangements made to grow 10,000 acres. The Tuam factory looked for a 50 per cent increase in the acreage but only 8,500 acres were allowed by the Sugar Company. This has discriminated against Tuam. Even though I have great admiration for the work done by the Sugar Company I am very critical of them for not giving the acreage sought by the Tuam company.

I understand that the rationalisation plan which the Minister spoke about is to be presented to him before 31 May. I take it, from what the Minister said tonight, that this plan has not reached him yet. I hope when he receives it that he will be able to give a commitment to keep the sugar factory open. I know my colleague in the constituency, the Minister of State, Deputy Connaughton, will use his influence also. The farmers in the western catchment area have increased the acreage; the output has increased in the factory through the hard work of the workers and the people on the campaigns. The campaign last year was the finest one we ever had in Tuam. This was acknowledged by the chairman of the Sugar Company, Mr. Fitzpatrick, who said it was an exceptionally good campaign with an increase of 1,000 acres in the amount of beet grown. It was also a good campaign by the campaign workers.

There is another statement made by Mr. Fitzpatrick I would like to take up, when he said that the case of the Tuam sugar factory is well known. He said that the company cannot say other than that it is a serious cost factor on the overall cost operation and this fact was recognised by the Oireachtas Joint Committee. I have read the report of the Oireachtas Joint Committee and what Mr. Fitzpatrick said is quite true about the commitee's findings. The committee made a very important point that the Tuam factory would not be allowed to close until alternative employment was found in the town of Tuam. Alternative employment has not been found. Quite recently, we were told, in relation to an IDA promotion, that they had got the agreement of an American company to take over an advance factory in Tuam but the negotiations fell through and the expected 200 jobs have not come to Tuam.

There is serious unemployment in the greater Tuam area. The Minister is well aware that, when the beet campaign is on in Tuam, between the campaign workers and the beet workers we are talking about over 600 jobs. The number of permanent workers in the factory was 376 but, because of redundancies there and the rationalisation programme by the factory, this work force has now been cut to 380. That has saved the company money also.

Debate adjourned.