The object of this Bill is to make provision for the setting up of a company having for its special objects the acquisition, erection and operation of sugar factories and for empowering the Minister for Finance to invest in such company in accordance with the Government's policy for the extension of the sugar beet industry. I need not remind the House of the important part that the cultivation of sugar beet plays in the agriculture of virtually every European country, nor the extensive organisation set up in most European countries for its manufacture into sugar. Nor need I remind the House how well suited to the cultivation of sugar beet are the soil and the agricultural methods that prevail here. I am not an agriculturist but I understand that the sugar content of our beet is exceptional, and that the yield per acre is exceptional also almost in Europe. The only question that would arise is whether it would be an economic proposition for us to endeavour to supply all our needs for sugar out of the produce of our own soil. Apart altogether from the very low price at which either cane sugar or beet sugar can be delivered upon our shores there is no reason a priori why we, ourselves, should not manufacture and cultivate our own sugar. The question as to the merits of this Bill depends entirely upon the economic advantage of this proposition. The proposal under the Bill is to give the Minister power to form a company which would undertake ultimately the manufacture of our full sugar requirements.
At the present moment we have in existence in Carlow a sugar factory which roughly has an output of from 20,000 to 25,000 tons per annum. It will be convenient to discuss the Carlow factory in terms of 20,000 tons per annum output. In addition to the supply that is manufactured here by ourselves, we have imported on the average during the past three years 83,000 tons of sugar of an average value of £831,000. We can assume, therefore, that our total consumption of sugar, both home manufactured and imported, per year, is 100,000 tons, and is likely to be such in the immediate foreseeable future.
The question is how much would it cost us per annum to manufacture this sugar for ourselves? I have pointed out that as matters stand the value of the sugar imported each year is over £800,000. An investigation by an interDepartmental Committee set up by the Government during the past eight or nine months, which has very carefully examined this project, indicates that it should be possible, with a number of modern factories, enjoying management at least as skilled as that possessed by the present Carlow factory, and putting the price of beet at aboupt 35/- per ton, with a root content of 17½ per cent. sugar, so that three cwts. of sugar would be secured per ton of beet, to manufacture sugar here at about 20/- per cwt. The cost might rise to 21/- per cwt., but it would be between 20/- and 21/- per cwt. on the basis I have indicated to the House. As against this, as I pointed out, we import approximately 80,000 tons of sugar at a price approximately of 10/- per cwt. Thus it will be seen at once that if we propose to manufacture all our sugar requirement it would be necessary to protect the home manufactured sugar by the imposition of a duty of 10/- to 11/8 per cwt. It is proposed to impose a customs duty of approximately double the present customs duty.
I should like to point out in that connection that the Government would still require to derive a very substantial revenue of the order of £700,000 or £800,000 from sugar and that consequently, since all our sugar would be home-manufactured, the revenue would be derived mainly from the excise duty. The customs duty over and above that would have to be of such a margin that we could consistently keep out foreign competition. At first sight I know it will be argued: "What is the use of making our own sugar at a cost of 20/- per cwt. when we can import at least as good an article at a price of 10/- per cwt."? In that connection it has to be remembered that the whole of this 20/- per cwt. will be spent here. That is to say, if the total cost of producing here at home 80,000 tons which we now import were put at £1,600,000, the whole of that £1,600,000—with the exception of the amount which we might have to pay for foreign fuel, and the sum represented by the interest and sinking fund upon the capital cost of the machinery which we import to manufacture that sugar—would be retained in this country. I said that at the present moment we are importing sugar which costs us £800,000, that in order to manufacture that sugar we shall probably have to erect three additional factories and that these factories together with the Carlow factory would involve us in expenditure on foreign-made plant of about £1,000,000.
If we assume that the interest, the sinking fund and the depreciation on that plant would require about 12 per cent. to meet them, we find that on account of this one million pounds we have to provide each year and send out of the country either directly or indirectly, at the outset or for a period of years, £120,000 per annum. In addition to that it has been calculated that we should require to import £80,000 worth of fuel. In that connection, I should like to point out that experiments have been going on at the Carlow factory for some time which indicate that it may be possible to utilise what is known as Castlecomer "duff," which is Castlecomer coal refuse, for fuelling the boilers. When the new factories are in operation these experiments might be carried to such a stage that we should be able to provide a very large part of the fuel requirements for the factories from our home resources. However, that is in anticipation and these anticipations may not necessarily be fulfilled. Taking the worst possible aspect of the case, assuming that we should import the whole of the £80,000 worth of fuel, we should find that our outgoings would be represented by £120,000, which would cover interest, sinking fund and depreciation and the £80,000 which we should expend for fuel, making in all £200,000. We have to set off that possible outlay, the amount which would leave this country every year, against the sugar which would be manufactured here at home and which would be worth, if it were imported sugar, £800,000. The difference between these two figures, the £800,000 on the one hand which we save by manufacturing sugar at home and the £200,000 which we send out of the country, represents, I would suggest, the net economic advantage to this country of manufacturing our sugar here. The manufacture of the whole of our sugar supplies therefore would represent a net economic gain to the community of £600,000 per annum.
In addition to this there are, as members of the Seanad who are familiar with reactions of sugar beet growing on the general agricultural economy are aware, very many other important advantages. There may be certain increases in the amount of employment given upon land in this country, certain increases in the number of hands actually employed in the country. If there is no very substantial increase in the number of hands, at any rate there is this, that those who have land will find their time more fully occupied in tilling it and in tilling it more remuneratively if sugar beet growing is introduced into their economy than at the present moment. A Committee which has examined this matter has reported to the Government that it is satisfied that the introduction of the sugar beet industry into Carlow and the neighbouring counties resulted in an actual increase in tillage in most of the areas and in any event has more than counteracted the very substantial decline in tillage which might otherwise have taken place. In addition to the employment given on the land, of course there would be a considerable amount of employment given in the various factories. During the off-season there would be permanently employed almost 700 additional hands and during the campaign employment would be found for 2,600 hands.
The importance of these considerations, I think, cannot be too greatly stressed. First of all we would save for the community as a whole—and it is only from the point of view of the community as a whole that this proposition can be judged, not from the point of view of the individual consumer— £600,000 per annum which would go some considerable distance to redress the adverse trade balance. We should in addition provide on the land an increased amount of remunerative employment for all the people engaged in this industry. At the present moment the land of this country is not being fully worked, not being as fully worked as it should be and as fully worked as it must be when changes in the cattle supply to the neighbouring market more and more develop. There would be in addition to the employment in the factories a considerable amount of employment given in limestone quarries, in the sack-making industry and in the transport industry generally. I think that when the Seanad consider this matter fully they will have no difficulty in making up their minds that, in the circumstances of the time, and, particularly, in view of the changes that inevitably will have to be made in our agricultural policy in view of the changed policy elsewhere, something will have to be done to provide an alternative use for our land. In that connection, I should like to say that I am advised that there is no inconsistency in trying to develop our cattle trade to its utmost limit and, at the same time, endeavouring to develop the beet sugar industry here. I am told that the offal and refuse of the beet is a very good cattle food, and that the by-products of the manufacture of the beet itself into sugar can likewise be used.
The Bill, as it stands, is divided into three parts. The first part, I think, sufficiently explains itself. The second part deals with the formation of the company which it is proposed to set up to carry on the business. This new company will be registered under the Companies Act as a limited liability company and the nominal capital will be £2,000,000 divided into 2,000,000 shares of £1 each. These shares may, with the consent of the Minister for Finance, be divided into several classes and have attached thereto any preferential, deferred, qualified or special rights, privileges or conditions. Under Section 7 the Minister is empowered to acquire shares of any class provided that the amount of the shares so acquired does not exceed £500,000 nominal. The company is also under the Bill authorised to issue debentures to an amount not exceeding the paid-up share capital, and these debentures shall be guaranteed as to principal and interest by the Minister. A prospectus will in due course be issued in respect of such portion of the authorised share capital as the company may find necessary to offer for public subscription. In that connection I should like to say that, if an adequate response from the public is not forthcoming, it is hoped that the new Industrial Credit Corporation will underwrite the issue and make good any deficiency. Arising out of this, it may be said that the company will be financed largely out of public moneys and it will be essential that it should be given a monopoly of the sugar requirements of the home market in order that it may be able to carry out its full programme. Accordingly, it is considered desirable that the Minister should have a controlling interest in the operations of the company, and that of the number of directors, which has been fixed at seven, four, including the managing director, will be nominated by the Minister for Finance. Control of the company in this way is to be continued so long as the rate of customs duty chargeable on the imported sugar is higher than the rate of excise duty on the home-manufactured sugar; that is to say, as long as the company enjoys any measure of protection, and that, I think we must assume, it will continue to do so long as it is Governmental policy to manufacture all our sugar requirements at home.
The Bill provides that the memorandum and articles of association of the company are subject to the approval of the Government and powers are also taken in Part III of the Bill to compulsorily acquire land, etc., and do other things necessary in order to enable the erection of the factories to be proceeded with expeditiously. It may be thought that these powers are formidable, but it is not anticipated that any occasion will arise for putting them into effect. They are merely included in the measure as a safeguard so as to ensure that no undue delay will occur. It is hoped the factories will be completed in time to deal with the 1934 beet crop, and it is essential that the preliminary work in connection with the construction of the factories should commence early next month, if possible. If any undue delay were to occur in the occupation of the lands selected as the most suitable sites, it might not be found feasible to have the factories erected in time to carry out the terms of the contracts which would necessarily have to be entered into with the growers for the provision of beet. The company, however, I should like to say, will proceed to purchase in the ordinary way the land they require for the sites, and if they are compelled to use the power of compulsory acquisition which it is proposed to give them, it will only, I anticipate, be in isolated instances and in relation to very small areas. The powers which are taken in this part of the Bill, and to which I have referred, will terminate at the end of five years, at the end of which time the company will be in a position to know definitely the number of factories that will ultimately be required. While the Government feel that, in the circumstances of the day, it will be essential that a substantial subscription should be made towards the capital of the company, it is desired, at the same time, to leave the company as free as possible to carry out the task of establishing the industry. Once the company is formed, it is the intention of the Government that there should be as little Governmental interference with it as possible. The directors will be left as free as possible to carry out the undertaking entrusted to them. They will be empowered to secure the best available technical management, and I am in a position to assure the Seanad that, as soon as the Bill becomes law and the company is formed, the most highly-skilled technical manangement in Europe will probably be available for the company. It is the intention to allow them to act in accordance with the advice of that technical management in matters pertaining to the construction and equipment of the factory and, in short, to allow the company to develop the business in the same way as a privately-owned company would be allowed.
It is also the desire of the Government that this new company should acquire the Carlow factory, if the proprietors of that factory are willing to dispose of their interest in it at a fair price. In that connection, I should like to point out that the existing contract with the Carlow factory has still three further manufacturing seasons to run. If we cannot acquire the factory at the moment, it is not the intention of the Government to renew the contract with the Carlow factory at the end of the period. At the same time, it is not the intention of the Government to interfere with the contract. In any event, at the very latest in 1936 the company will be the sole manufacturers of sugar in the Irish Free State and will enjoy that monopoly which it is felt is essential to the successful development of the industry here. I do not know whether the members of the Seanad would like to discuss this matter further on the Second Reading. If so, I should like, in accordance with the suggestion that has been already before the House, to have the debate adjourned at this stage, I having concluded my statement.