In asking the Seanad to give a Second Reading to this Bill, I think it well to give a little bit of the history of the policy that we are now seeking to complete. About 16 years ago a motion was brought into the Dáil to deal with the proprietary creameries at that time, resulting from a sort of war between the proprietors and the co-operatives. As a result of that war the co-operatives were compelled to pay a higher figure than the economic price for milk, and some of them were hardly able to continue. Some of them, as a matter of fact, failed. Some of the proprietors, of course, failed also.
A scheme was introduced at the time for the taking over of these properties by a holding body and the intention was to hand them over to the Dairy Disposals Board as it is now known. It was formed for the purpose of holding these properties and it took over the Newmarket Company and the Condensed Milk Company and also a toffee factory. The Condensed Milk Company comprises not only the condensery in Limerick but also a condensery in Drumkeen and two creameries in Tipperary. The greater part of the properties were handed over to co-operative societies but for one reason or another some were held by the Dairy Disposals Board. In the case of the Condensed Milk Company there was no body of people here, whether co-operative society or company, prepared to take over the condensery and work it. In other cases, for reasons of re-organisation and so on, the creameries were held. Now, as time went on, the Dairy Disposals Board was more or less forced into the position, or at any rate it accepted the position of taking over co-operative societies that were in a bad way financially and of reorganising them and handing them over to other co-operatives, dividing them or retaining some of them.
Later still, the Dairy Disposals Board went into the business of developing new areas. Now the development of new areas was a very interesting development of this body, and I think that everybody will agree that these areas would never have been developed were it not for a body of that kind. If you take areas like West Cork and South Kerry where farmers were getting very poor prices, it was not possible to get any co-operative society to develop them because the chances of success looked so poor. The only hope of getting development in these areas was by some big company, a financially backed company of this kind, that was encouraged to do so by the Government and insured against loss, if loss there would be. I remember, as a matter of fact, going before the Dáil with an estimate for the areas of Cahirciveen, Kenmare and Castletownbere and asking for £40,000 for the purpose. I stated in the Dáil that I could give no guarantee whatever that the money would ever be returned to the Exchequer, and that it was quite possible it might be a loss. As a matter of fact, these areas turned out to be a great success. I think they are probably on a paying basis by now. The Dairy Disposals Board now hold a large number of concerns, a large number of creamery units and so on. A question that will have to be dealt with on another day is, what is to be the future of the Dairy Disposals Board. Well, the organisation that I refer to that commenced in 1927, was, in my opinion, well-timed because the world depression in butter prices came about 1929, and it was a great thing that the competition between one society and another and the competition between co-operative societies and proprietors had to a large extent ceased by 1929, because the creamery industry as a whole could never have withstood the world depression if it had been organised as it was organised prior to 1929. The Dairy Disposals Board since 1927 has taken over 182 private concerns, 114 of which were owned by one firm.
It was always intended, of course, that this policy of taking over the proprietors would be completed, and it is proposed now in this Bill to complete the business. What we are doing here is not by any means original. The history of the co-operative movement in other countries will at least give us some precedent to go upon. In most countries, as far as I have read about co-operation, there are actually laws which compel the minority to come in when there is a substantial majority already in the co-operative movement. That majority is defined by different percentages in different countries but usually where, say, two-thirds of the producers in a particular agricultural industry agree to co-operate, then the other third must come in and join the co-operative movement. In the particular case we are dealing with here I think that there is only about 4 per cent. remaining outside the co-operative movement, that is, if we regard the property held by the Disposals Board as being co-operative, as I think we must for this particular purpose, because the Dairy Disposals Board is holding these properties in trust for some future co-operative societies. The Bill gives me power to compel the remaining proprietors to sell. As the Bill is set out, it gives first an opportunity for agreement with regard to sale. When the Bill is passed the proprietors that are there will make returns of the properties and then the Dairy Disposals Board and the proprietors will try to come to agreement. If they fail to come to agreement, then an arbitrator will be appointed to determine the price and the proprietors will then have to accept that price and hand over the properties to the Dairy Disposals Board. I am not, unfortunately, in a position to give an estimate of what this is going to cost, because I cannot naturally determine what an arbitrator is likely to decide. Whatever the cost may be, there will be in this, as in all these transactions, an element of subsidy.
I want to explain what this element of subsidy is to Senators who may not have given detailed attention to the activities of the Dairy Disposals Board. The Dairy Disposals Board takes over a property, let us say, a creamery which is an individual unit. They buy the goodwill which includes the milk supply and the premises. The Board, if they come to agreement, buy at the best price they can, but if it goes to arbitration they have to accept whatever the arbitrator decides. The Dairy Disposals Board will make an estimate of what the co-operative society will ask them to pay, but there may be this difference, they may only want the milk, and may not want the premises. As they cannot sell the premises for a creamery it will have to be sold for some other purpose. Possibly, it will not be worth as much to another person as it would be to a creamery proprietor. Therefore, there will be a loss and that loss will be put down in the estimate to be met by subsidy.
Now, another question that may be asked is whether this is going to finish all competition between one society and another, or between one buyer of milk and another. Well, this Bill will go a long way towards the elimination of any such thing as competition. After all, the co-operative societies seldom carry on what has come to be called a milk-war. On a few occasions such a thing has happened but, so far, we have succeeded—although there is no law to stop such disputes occurring— in making peace between the people concerned.
It is intended, at some future time —in fact, before very long, I think—to bring in a Bill dealing with the question of co-operation in general, and I expect that in that Bill there will be provisions dealing with the question of competition as between one co-operative society and another. For instance, I take it that there will be spheres of influence laid down and that there will be no necessity or, indeed, even an opportunity, for competition between such societies. That Bill, however, has not yet seen the light of day, but when it appears, the question of competition between co-operative societies, as well as many other questions in regard to this matter, will be dealt with.
Another point that has been raised was whether the Dairy Disposals Board are competent to carry out this business, and whether we can come to any conclusion, as a result of the working of that Board in the past, as to how they are likely to fare in the future. I should like to give the Seanad some general idea of the finances surrounding the operations of the Dairy Disposals Board from the beginning of their operations up to the present time. I have said already that the Dairy Disposals Board have been dealing, up to the present, with four separate concerns—the Newmarket Dairy Company—which was the first big group of creameries taken over in County Cork in 1927—the Condensed Milk Company—which comprised a condensery in Limerick, a condensery in Drumkean, and two creameries, Tipperary and Knocklong—also the toffee factory in Limerick, which was a separate entity and, in addition, something like 17 or 18 groups of creameries—some of them held since they were taken over from other proprietors, but mostly such creameries as were developed by the Board in new areas. The Board operate all these concerns and, in discussing the finances of the Board, I am taking the finances of all these concerns together, without going into the details of one concern or another. The total amount of capital voted by the Dáil since 1937 is, roughly, £1,172,000. Now, the Dáil, in voting that money from time to time, were made aware of certain facts that I have mentioned here already in regard to expenses, subsidies, and so on, and therefore we must deduct certain sums from that amount in order to find out how much money is due to the State by the Dairy Disposals Board. First of all, there is an item of £53,000, which was voted by the Dáil for expenses in connection with the taking over of these concerns, and with the provision of compensation for redundant staffs and so on. That sum of £53,000, therefore, is not held as a liability against the Dairy Disposals Board, because it was felt that that ought to be a State charge. In every deal that is undertaken the Dairy Disposals Board give an estimate to my Department, and it is more or less to the following effect: "We estimate that we can buy this concern at such-and-such a price, and resell it to a co-operative at such-and-such a price." The difference is put down by us as a subsidy. The total amount of subsidy, estimated on that basis, since the Dairy Disposals Board started operations, was £215,000, but actually they have only utilised, by way of subsidy, £90,000 so far. They have repaid to the State, £187,000 of the capital.
Now, I am sure that Senators will recollect that, about nine or ten years ago, there was a good deal of talk about what was often referred to at that time as the £3 per cow. When the Dairy Disposals Board took over the proprietary concerns they did not ask for cash down, because many of these proprietary or co-operative concerns had not cash in reserve, and they were given eight years in which to pay. The price was £1 per gallon for the milk, and there was also 2/6 per year to be paid. That was raised, usually, by the co-operative societies, on the basis of the £3 per cow. Sometimes, of course, it was lower than that, but at any rate a good deal of money has been collected in that way by the Dairy Disposals Board from the co-operative societies, and they make repayments each year to the Exchequer. They have repaid to the State excluding certain interest £187,000 of the capital. We have three sums to be taken into account here, which I have already given to the House. First of all there is the compensation to be paid to redundant staffs, which amounts to £53,000; then there is the sum of £215,000 regarded as a subsidy, estimated on the difference between what the Dairy Disposals Board buy a concern at, and the figure at which they can resell it—of which they have only utilised £90,000 so far; and finally the sum of £187,000 repaid. If you subtract these three sums from the amount originally advanced you get a total, up to date, of £717,000 which might be regarded as legitimately due by the Dairy Disposals Board to the Minister for Finance.
The next point that I might be asked about is whether there are any assets there to meet this. I cannot go into that question in any great detail, but I think I can satisfy any Senator that there are at least sufficient assets to meet the amount involved. In looking through the balance sheet, the first item to be noticed is that in connection with liquid assets— and, in speaking of liquid assets, I am excluding the matter of travelling creameries, transport, and so on—the amounts due on foot of sales of property, milk supplies of co-operative creameries, and so on, amount to £428,000. In addition to that, we have the amount due on foot of sales of properties, milk supplies, co-operative creameries, and so on, amounting to something like £30,000; and then we have transport and travelling creameries. We have fixed assets in connection with such companies as the Lansdowne Creameries, the Condensed Milk Company, the Toffee Factory, and also miscellaneous small proprietors down through the country, attached to these units. At any rate, there is certainly more than sufficient to meet the liabilities to the State.
There is one other item that I should like to mention. I think that Senators will remember that, in or about 1933 or 1934, I came before the Dáil and asked for an Estimate of £112,000. The condensery had been losing money from the time it was taken over up to 1932 or 1933, and I was pressed by the Minister for Finance to regularise the position by making the Dáil aware that this Government-owned property was losing money. I came before the Dáil with an Estimate of £112,000 to cover trading losses. That sum was voted. The trading losses went on increasing and, by the end of 1933, the losses had reached £137,000, including the £112,000 already voted. Then, the tide turned and things began to look better. In the balance sheet for the year ended 31st December, 1941—I have not yet seen the figure for 1942, but it is not any worse—that loss of £137,000 had been converted into a profit of £51,000. The years from 1933 to 1941 were very good and the condensery had recovered all its losses and had a trading profit of £51,000 at that time.
That is, perhaps, all the financial information that it is necessary to give of a general nature. If any Senator wants more detailed information, I shall try to give it to him so far as possible. However, we have to keep in mind that these properties are held by the State, the intention being to sell them at some future time. When asked for information with regard to the value of any of the properties concerned, we must have regard to that fact. Before concluding, I want to say that the Bill is a very simple one. It may be a far-reaching Bill but it is easy to understand. It provides for the possibility of agreement between the present proprietors and the Dairy Disposal Company with regard to the taking over of the properties. If that agreement is not forthcoming, then an arbitrator will be appointed and the properties will be taken over on the valuation of the arbitrator. That is the big point in this Bill. Everything else is subsidiary to the taking over of the creameries.