asked the Minister for Agriculture and Food if the former Irish meat processing plant at Leixlip, County Kildare, will be involved in the Goodman International proposals; and if he will make a statement on the matter.
5.
Ceisteanna — Questions. Oral Answers. - Meat Industry Project.
4.
asked the Minister for Agriculture and Food the number of cattle slaughtered and exported live in 1986; the estimated figures for 1987 and the projected figures for 1988 and future years; and the steps, if any, he proposes to take to ensure adequate supplies of raw materials for the future in the light of the major investment now proposed for the meat industry.
14.
asked the Minister for Agriculture and Food if the IDA received, audited and examined up to date audited accounts for Goodman International prior to approving the grants for the company recently; and if he will make a statement on the matter.
25.
asked the Minister for Agriculture and Food the date on which Goodman International submitted (a) an outline of their recently approved proposal; (b) a full application accompanied by a company development plan and other documentation required by the Industrial Development Act, 1986; when it was approved by (1) the board of the Industrial Development Authority, (2) the authority of the Industrial Development Authority, (3) the Government; and if he will make a statement on the matter.
28.
asked the Minister for Agriculture and Food when the IDA approved the application by Goodman International for grant aid for an expansion at its meat plant as recently announced; when it was approved by the Government; and if he will make a statement on the matter.
37.
asked the Minister for Agriculture and Food in relation to the jobs to be created in the Goodman International project (a) the number to be created at each plant; and (b) the number to be created in each of the five years covered by the grant package; and if he will make a statement on the matter.
40.
asked the Minister for Agriculture and Food if an employment-related clawback clause has been inserted in the Industrial Development Authority grant package for Goodman International as has been done in other grant agreements in order to ensure that, if the employment targets on which the grant payments are predicted are not achieved, the grants will be repaid; and if he will make a statement on the matter.
50.
asked the Minister for Agriculture and Food if the State is extending, through the IDA or otherwise, any special assistance in regard to the acquisition of, or covering the exchange risk in regard to foreign currency, in association with the recently announced package of aid for Goodman International; and if he will make a statement on the matter.
56.
asked the Minister for Agriculture and Food the amount of grants paid by the IDA in the past ten years to companies in the Goodman International Group; the number of jobs actually created in consequence of these grants; and the cost per job; and the number of jobs expected at the time these grants were originally awarded.
57.
asked the Minister for Agriculture and Food the present slaughtering capacity of each meat processing plant in Ireland; the slaughtering capacity that will be obtained after full implementation of the provisions of the Goodman International project; and if he will make a statement on the matter.
107.
asked the Minister for Agriculture and Food whether the former Irish meat processing plant at Leixlip, County Kildare, is owned by or is a subsidiary of the Goodman International group; or whether this plant will be utilised or incorporated in the plans to expand the Goodman International Group.
109.
asked the Minister for Agriculture and Food the length of time the investment plans for Goodman International were with the IDA for consideration; and if he will make a statement on the matter.
I propose to take Questions Nos. 4, 5, 14, 25, 28, 37, 40, 50, 56, 57, 107 and 109 together.
At their meeting on 16 June 1987 the Government approved IDA financing towards the cost of a major development plan for the meat industry to be undertaken by Goodman International Limited. The plan involves a capital investment of £120 million on the further development of existing processing facilities at Waterford, Dublin, Muine Bheag, Nenagh and Cahir and the establishment of four new processing facilities, two of which will be located at Tuam, County Galway, and Ardee, County Louth. The IMP plant at Leixlip is not involved in the development.
The IDA will contribute £25 million in grants and £5 million in redeemable preference shares. It is expected that the EC will also contribute towards the funding from the FEOGA fund. Neither the State nor the IDA are involved in the underwriting of the exchange risk in regard to any foreign currency that might be required for the project. Implementation of the plan will result in the creation of 664 new jobs, together with additional spin-off employment in the construction, packaging and services sectors associated with the new investment. Approximately 500 seasonal jobs are also expected to be provided. The details of the precise timing and location of the jobs being created is covered in the agreement between the IDA and the promoters.
The main features of the plan are the introduction of new advanced technological processes which will facilitate the production of long shelf-life consumer products, an expansion of cattle and sheep processing facilities, an increase in deboning and the development of new added-value products. Virtually all the new output arising from this investment will be exported.
The proposed development plan was the subject of consultation between the IDA and the promoters over a number of months. A formal application for grant assistance was submitted on 9 April 1987. Approval of the application was recommended by the board of the IDA on 10 June and by the IDA on 12 June. As is customary in cases involving grant applications, the audited accounts of the promoter were examined as part of the assessment process. The conditions for the grant assistance include a performance clause with grant clawback options related to employment and value-added created.
The Goodman International Group received IDA grants totalling £5 million since 1977. During that time 835 new jobs were created at an average cost per job of £6,000 approximately. The number of jobs anticipated was 820.
The numbers of cattle slaughtered and exported live in 1986, 1987 and 1988 are estimated as follows:
|
Slaughtered number |
Exported live number |
|
|
1986 |
1.72 million |
322,000 |
|
1987 |
1.5 million |
250,000 |
|
1988 |
1.5 million |
250,000 |
|
(estimated) |
The grant aid for the introduction of new processing capacities is linked to adequate supplies of cattle being available to meet the needs of the plants. While the Department's policy is directed towards increasing cattle supplies no specific Government action is required for this project. The slaughtering capacity of the industry is difficult to quantify as it depends on the hours worked, processing facilities — chilling, freezing and deboning capacity — and other technical considerations. In 1986 the export plants slaughtered 1.4 million cattle and 1.2 million sheep. It is not possible to give details of the capacity of individual plants. The Goodman International plan is concerned for the most part with the creation of a new generation of meat plants based largely on existing throughput and the plan should not lead to any significant excess capacity.
Deputy Spring raised on the Order of Business yesterday the question of further State support for the Goodman project. In particular he sought clarification of the impact of the proposed change in section 25 of the Finance Bill in the tax treatment of certain grants. The Government's development intentions for the food industry have been expressed in clear terms to the House already. An intrinsic element in that approach was the creation of a more favourable tax climate for the food sector in general. All new grant-aided food manufacturing investment will be eligible to benefit from this proposed change and the Goodman Group may benefit in the same way as any other manufacturing food firm. The extent of any such benefit for individual companies is difficult to forecast as it will depend on the tax position of the recipient company. The only State money to be paid directly in support of the Goodman project will be those which I have outlined in this reply and which I gave to the House in the course of a full Adjournment debate last Thursday.
I propose at first to call Deputies who have tabled questions on this matter.
Will the Minister state if the fact that grant-aid is linked to adequate supply, as he indicated in his reply, means that if there is not an adequate supply of cattle the package will not go ahead? Is the Minister in a position to confirm that the package may not proceed if adequate supplies are not available? Will the Minister indicate his answer to Question No. 57 which seeks information on the present slaughtering capacity of each meat processing plant and the slaughtering capacity that will be obtained after the full implementation of this project? I do not think the Minister answered that question. Will the Minister indicate if the project, if fully implemented, will involve extra slaughtering capacity? If so is the Minister satisfied that in the event that there is not an increase in supply that the extra slaughtering capacity involved in the project will not have the effect of prejudicing employment in other plants?
I should like to dissuade the Deputy from putting a large number of supplementaries in omnibus form?
As it is the intention of the Chair to operate a rotation system among all the questioners I thought it would be better to get all my supplementaries in now.
That is all the more reason why the Chair would like brevity.
Will the Minister state what will happen to the project if FEOGA is not available? Will it fall due to a lack of finance or is there a possibility that the State might be asked at that stage to provide more money? Will the Minister say how the Department of Finance were expected to examine the details of the project in between a meeting of the IDA authority on 12 June, over the week-end, and a Government meeting on the following Tuesday after one working day?
I should like to emphasise that the main thrust of the project is greatly enhanced added value and not any increase in livestock throughput. This project can operate on the basis of the company's present kill which is 40 per cent of total slaughterings and even after implementation of the project there will be plenty of room for competitive processing. The three new slaughtering processing facilities will have an additional planned throughput and already the expansion of the beef cow numbers is the subject of a promotional campaign launched by ACOT. That body are bullish about the numbers as a result of their campaign. The reduction in interest rates will also improve the climate for producers and processers but if a shortfall occurs the IDA have the right to review those elements of support which might be linked to additional cattle throughput.
It is all conditional?
Yes, it is conditional.
What additional throughput is involved?
I am anxious to answer the questions as fully as possible. The Deputy questioned me about procedures and I should like to assure the House that all normal and correct procedures were followed in the submission and the examination by the IDA of the proposal and in the ultimate recommendation for approval by the Authority. This proposal was under discussion for a number of months and a formal application was submitted on 9 April. The Authority, and the board of the IDA, were made aware of the project during those months before the board recommended approval on 10 June. The Authority approved it on 12 June. In the last few weeks, because of the scale of the project, there was frequent consultation between Government Departments. That consultation made it possible for the Government to give a quick response to the recommendation of approval given by the IDA.
How much additional slaughtering capacity is involved?
I am calling Deputy Jim O'Keeffe.
This project can stand on its own.
How much additional slaughtering capacity is involved?
Will the Minister of State confirm that the existing slaughtering capacity can cater for a throughput of 65,000 head per week, a figure that has never been exceeded? Will the Minister agree that the maximum throughput per week has never gone beyond 63,000 head and is usually a lot less? Second, has the Minister given any consideration to a provision of funds to ensure an adequate and possibly an increased supply of raw material in the light of the major investment of national funds now proposed for the processing end?
The main thrust of this project and programme is that this is an investment in new technology rather than an investment in bricks and mortar. It is not an investment to increase slaughtering capacity. What we want is more processing and to create more jobs at home. Last year we exported 322,000 head of cattle live and I would hope that by the end of this programme we would substantially reduce that number. Additionally we have too great a dependence on intervention and third countries markets, both of which are coming under increasing pressure. Too high a percentage of the meat exported is in carcase form and in many instances the additional processing is done outside the country. At the end of this programme we should be creating all that added value and additional jobs in Ireland.
While I am in favour of investment in additional added value, the point I was raising dealt with additional slaughtering facilities since the existing maximum facility of 65,000 has never been exceeded. There are four new operations involved in this proposal. What will be their effect on slaughtering capacity? I am interesting in getting a true read out of the impact of this investment in relation to slaughtering capacity.
Secondly, what were the Government's intentions in the light of this major investment in relation to the production end? I would agree with the Minister on the question of trying to divert live exports into our meat factories, but that will not provide the answer. There is need for investment in beef cows and there seems to be no intention on the part of the Government to make an investment at that end——
May I appeal for brevity?
On production and increasing the beef herd, as I have said already, it is a major part of ACOT's programme to increase the beef herd. They have communicated with me to the effect that there will be a 12 per cent increase this year in the beef herd. Additionally, with reducing interest rates, it will create a better employment environment for the farming community to expand the beef herd.
No funds?
Does the Minister know how much money there is in cattle production?
The Minister does not have 1,000 acres of winter grass.
The only Deputy I know who had that was on the other side of the House.
(Interruptions.)
The Minister, Deputy O'Kennedy, has already had consultations with the banking groups——
Is there any State funding proposed to increase the number of available heads of beef?
As I said, we are not so much throwing money at the problem but creating a better environment——
I am bringing in all the Deputies who tabled the questions. Deputy Durkan.
The Minister indicated that the former IMP plant in Leixlip was not included in the package, but will he tell us if that plant was discussed during the considerations which took place and, if not, why not? Will he tell the House if perhaps there could be job losses in other areas in the meat killing and processing areas as a result of the implementation of this deal? What is the percentage of the total killing and total processing capacity now controlled by the Goodman group? Have the Department of Finance, in the usual way, carried out an examination of the proposals prior to approval?
The Department have no information on the ownership of the plant at Leixlip, and the plant had no part in this project.
Did it arise at all?
No. In relation to the group's slaughtering percentage, they slaughter 40 per cent of the national kill at present.
There were two other questions which were not answered.
I have no control over that.
May I ask the Minister why he will not say how much extra slaughtering capacity is actually involved?
I have already said this project is not about additional slaughtering capacity.
There is extra slaughtering capacity. How much is there?
If there is additional slaughtering capacity, grant aid will be dependent on additional cattle coming on stream.
How much extra is planned over the five year period?
There is none planned. This proposal is about increasing the added value of the products processed at home.
What is going to happen in the four new plants?
Is the Minister saying there is no extra slaughtering at all as part of this project, or is he saying there will only be extra slaughtering capacity if there are extra cattle. He said both of those things at different times today. Which is the case?
What are they slaughtering in Tuam?
Please allow questions to proceed in an orderly fashion.
What we are talking about in this plan is investment in technology and additional downstream——
Just answer the question I asked.
Please, Deputy Bruton.
What is the Minister covering up?
If the Deputies are going to raise the temperature, indulge in argument or attempt to debate this matter, I will move to the next question.
Let the Minister answer my question.
I am trying to answer it to the best of my ability. As I said, the whole thrust of this project is to increase added value and additional processing jobs downstream, getting away from live exports and carcase meat——
Are there extra slaughterings?
There are three new slaughtering and processing facilities as part of the project.
With what capacity?
It is not envisaged that those three plants will have any additional slaughtering capacity. They will be involved in specialised added value products.
They will be killed elsewhere?
They can, yes.
And that is what will happen.
That is what we are talking about — a range of specialised added value products or processing the fifth quarter, as they say colloquially.
Why did they want the extra slaughtering capacity?
I thank the Minister for responding to the query I raised on the Order of Business yesterday morning and I have just two supplementaries on that. While the Minister persists in saying that the total amount of State aid is the £25 million grant and the £5 million redeemable shares, surely now, because of section 25 of the Finance Bill, the company will have an opportunity of writing off the State grants against their tax liability? Will the Minister accept that through this device they will be able to write off up to £12.5 million in any one year? Secondly, was this a prerequisite sought by the Goodman group before they would conclude the deal?
No. I was very glad that the capital allowance provision was restored in the 1987 Finance Bill as an additional encouragement to the food industry because we want to get development there. We have a sufficient number of reports, particularly in the meat industry, the most recent being the 1985 sectoral report.
This programme is totally in line with the recommendations of that report. Section 25 of the Finance Bill, 1987, covered the general food industry. The benefit to any company, including this one, will depend on their tax liability and it will certainly not be in the region of £12.5 million because manufacturing companies pay a 10 per cent tax rate and virtually all the products resulting from this programme will be exported. Therefore, the lower rate will apply and the maximum tax liability is 10 per cent instead of the usual company tax of 50 per cent.
The Minister said that 322,000 cattle had been exported live in 1986. Can he tell us the destinations of those cattle? Does he agree that probably the bulk of those cattle were exported to Northern Ireland to get the benefit of MCA payments but ended up being brought back to the Republic to be slaughtered?
A percentage of cattle went to Northern Ireland. The information I have is that 70,000 or 80,000 of the 322,000 went to the North. I should like to draw the attention of the House to the good work which Minister O'Kennedy is doing in the price negotiations in relation to dismantling the MCAs.
Why did the Minister not accept my motion?
Deputy Noonan has been trying to get in for some time, I will call him. We cannot dwell on this subject all day.
(Limerick East): The Minister will be aware that the Government do not sanction projects where the investment to return ratio falls below a certain point. Normally, the Government expect a return of four times the investment from IDA projects. Could the Minister tell us what the return ratio is in this case?
The total added value resulting from this package is estimated at £220 million.
(Limerick East): That is not the question I asked. Is the ratio three to one, four to one or five to one? That is the crucial question as to whether this was rushed or adequately examined by the Department of Finance.
There was no question of rushing this project. The IDA, through their managing director, assured everybody that normal and correct procedures were followed. However, neither the Government nor I have any apology to make for oiling the wheels of State agencies as we have been looking at reports for long enough.
(Limerick East): I will not chase that hare. I have seen IDA proposals to the Government over four and a half years and there is always an investment to return ratio which is underwritten by the Department of Finance to ascertain whether the taxpayer is getting good value for money. That information must be in the Minister's brief because it is in every IDA proposal to the Government.
I do not have that information in my brief. This is probably one of the lowest levels of grant-aid in the food industry and in general industry. I will read out some percentages. In the general food industry in designated and disadvantaged areas a grant of up to 75 per cent is available and the general rate paid out to overseas industry in the past three years was 26.85 per cent in the designated area and 27.19 per cent in the non-designated area. The total average for all was 27.11 per cent.
I take it that these people will not be on a three day week?
We have had a good debate on these questions.
In view of the proposed savings on intervention, Third World refunds and the proposed added value, will there be a better price for the producer of raw materials? As Deputy Bruton said, the price of cattle is variable and it is difficult to make money out of producing them. Does the Minister consider that this will give a guaranteed price to the producer of meat and for cattle in the market place? Is the Minister satisfied with the level of technology proposed in relation to shelf life and added value products——
I thought the Deputy intended to help the Chair.
Following their comprehensive assessment of this application over a number of months, the IDA are satisfied that the technology is available. The whole basis for this project was to provide a better cattle industry over the years. As the Deputy is aware, there is a seasonal supply problem and a dependence on opportunistic markets like third countries and intervention. I have no doubt that at the end of the project the Irish meat industry will be at the top of the world league in terms of added value, processing and the money paid to the original producer.
Deputy Durkan rose.
I have called Question No. 6.
Could I ask——
I have called the next question.