I welcome this Bill in the hope that, by hard work and close co-operation on the Committee Stage between the Minister and the House, we shall be able to improve it considerably. If we achieve that objective we shall justify our return here during the holiday season for the Committee Stage.
The whole problem has admirably been summed up by the Advisory Committee on the Marketing of Agricultural Produce. On page 15 of their Report they say: "Indeed, the problems arising in the butter trade at present can largely be regarded as production problems rather than marketing problems." In other words, we cannot sell nothing. The weakness in all our efforts has been that what we have got to sell is relatively a drop in the ocean in the British market.
Even at the height of our exports in 1957 and 1958, we exported around 8,000 tons to the British market and that year, the British market imported some 360,000 tons of butter. In other words, we were providing less than two per cent. Consequently, our product could be available only in a few regions such as the Liverpool area.
As Senators will recall, we expended a great deal in 1957 and 1958 in exporting our products. We got the people used to looking for the Irish product. In the following year, due to discouragement here—more emphasis on beef, the effect of the levy on milk and a bad summer—we had no products for export. The markets which cost so much to develop in the previous year were left unsupplied. It is harder to go back to those markets than if we had never put a foot in them. The people there will say: "We do not want Irish butter because it is a come-day go-day product." Until we face up to a definite policy of increased production, that guarantees a high level of export, it is futile to talk about marketing. Actually, this Board will have little or nothing to do unless we guarantee continuity of supplies.
It is quite significant that the Advisory Committee places the following as No. 1 in its recommendations, page 35:
A long-term plan aimed at increasing milk output and providing a steady flow of dairy products for export should be drawn up.
It is my hope that before this Bill leaves this House, the Minister will give a definite statement of Government policy in this regard and that we shall remove from the Bill what I regard as its most dubious clause—that support for dairy products is to be not greater than two-thirds of the loss in exporting. That clause must be removed if any certainty is to be introduced into the approach to the dairying problem and if the farmers are to be convinced that the Government mean business, that they want increased production and are prepared to make a reasonable contribution to get it.
I am not suggesting that we should go back to one hundred per cent. support for exports. I want definiteness in the Bill. I am quite prepared to accept this two-thirds arrangement by which the State contributes £2 and the producer £1. I want it to be quite definite in this Bill that the support will be at the level of two-thirds, so that in future years, when we get very substantially increased supplies and when the Government feel that their commitments in maintaining this level of support are somewhat too high for them, the Government will have to bring in an amending Bill amending this clause and we shall have an opportunity of full and open discussion on the reasons for the reduction of the support level and the progress made up to that date. Otherwise, this clause is a real danger.
I appeal, especially to my friends across the floor of the House who have the interests of the dairy farmers very much at heart—those representatives from Munster who know the problem of the dairy farmers. They know the danger that uncertainty can create in the minds of the farmers. I hope and pray that we will have a clear statement of policy from the Minister before this Bill finishes in the Seanad.
The White Paper of 1958 was mentioned. It was—and let us be frank about it—completely defeatist on dairying. I do not blame the Minister or the Government for it, because, when that paper was drawn up in May, 1958, we had a real crisis in the sale of dairy products. Unfortunately, our financial control here, perhaps the Minister's Department and the Minister, panicked at that. They thought that henceforth there was no possibility of selling dairy products. We had somehow or other to try to convert all our surplus grass into beef. Beef was going well then but we know how it is going today. It is not in any way competitive with the dairy products.
Let us return to May, 1958. We had, in effect, in that period what was a trade war provoked by New Zealand on which she spent £30 million from her reserve fund, simply to break the small producers of dairy products in Western Europe, and especially small countries like ourselves that were just beginning to look as though they might become active competitors in the market for dairy products. Thank God, that monopoly attempt failed. It exhausted their fund. At least we hope that we will not see a recurrence of that type of sharp practice in the future. We can say that the conditions in which the Government White Paper in 1958 was drawn up have changed considerably today. Consequently, I think the Government and the Minister will be much more prepared to come forward and make a more frank statement on their intentions with regard to dairying.
Let us come to the present arrangements. A change is proposed in this Bill. The present arrangements are founded on the Butter Marketing Committee. Let us pay a tribute to this committee which has done excellent work. At least, it has got over the trade wars which prevailed in the late 1930s between the various Irish creamery units selling in competition with one another and undercutting one another in the British market.
If you look through the Butter Marketing Committee report, you find that their main criticism of our existing selling organisation is not of the butter but of the other products—the cheese and milk powder—in that there has been very detrimental undercutting in both of these between Irish firms in the markets abroad. That is instanced here in both Canada and England. Consequently, the need is stressed again and again in this report —and quite rightly so—to avoid that type of absolutely suicidal undercutting and over-competition by our firms at home in the export market. What we have to sell in any one of these products is little enough that it should be channelled at least through one body.
That is, perhaps, the best justification that can be advanced for the formation of this Board because we have not at the moment the volume of products that will get this Board operating in the sphere in which it should operate. You can take it as an axiom that the cost of selling nothing is appallingly high. That is what we have been trying to do. One other function which this Board will have immediately is that of selling surplus milk to manufacturers here, that is to say, to chocolate crumb, milk powder manufacturers and so on. Those interests have stressed in the marketing report that there dare not be price support by us. It would only provoke counteractions by the English competitors. Of course, the price at which they buy the milk from our Irish creameries is a matter of trade between themselves and this new Board. Consequently, there is, if you wish, a hidden element of support contained in that clause. I think it is one we cannot disagree with so long as the price at which it is sold to them is higher than the price that can be paid for the same product converted into the cheapest type of alternative dairy product.
Let us come to the various milk products. Here we have to be extremely cautious because there is a feeling abroad at the moment in regard to denigrating butter. It is what is called a "sink product". There is the feeling that we should get into all other forms of production, such as cheese, milk powder, chocolate crumb and all the rest. You have got to be very careful about that. You have got to remember that we are in a selling competition. We are opposed by very shrewd businessmen and very keen men from other countries.
I suppose there are long term prospects that one product is likely to sell at a higher price than another. For argument's sake, suppose there was a big market for whole milk, milk powder and that you could get a higher price for that than you could realise by converting the same milk into butter and consequently that we should rush out and put up factories to process milk powder. That situation is quite well known to our competitors. Therefore, if there is a switching of milk products to be done, you can take it that they will switch just as quickly as or, perhaps, quicker than we will. Consequently, the long term view of these products must be that they will all tend to find their equilibrium. Over the long term, if you take, say, a range of 20 years, the one economic fact about which you can be certain is that these products will equalise over that period, when you make due allowance for the cost of capital and all the rest involved in any change over from any one product to another.
Let us face it, our problem is not one of changing or switching products. It is the problem of doing what we are doing a little better and a little more competitively. In saying that, I welcome the opportunity of processing the other milk products and especially do I welcome this new factory in Mallow. I think it offers the type of insurance policy that we need. However, do not let us look on these as the salvation of the dairying industry. The salvation of the dairying industry depends on the products for which there is most demand in the world. If you look at the report of the Advisory Committee you will see that the really significant figures in it are that the total world market today for butter is 10,000,000 cwts; the total market for cheese is about 9,000,000 cwts. and the total world market for milk powder is about 6,500,000 cwts. We know that it takes about 2½ times as much milk to produce 1 lb. of butter as it takes to produce 1 lb. of cheese; consequently when we express these figures in terms of milk we find the world market today is 60 per cent. for butter, 22 per cent. for cheese and 18 per cent. for milk powders. That is the picture and consequently the urgent need here is to improve the main product. By all means, have your subsidiary products but improve and cheapen the production of butter.
What does that mean? It means removing many of the handicaps on the creamery industry, and the short season handicap above everything else, so as to encourage early and late production. I welcome the provision in the Bill whereby the amount of levy can be varied for different periods of the year. I suggest it would be a very good incentive towards lengthening the factory season if slightly higher prices were paid in the early spring months and the late autumn months.
We have one other outlet for milk which could be competitive and could fit into our plans here and that is calf production and especially the type of baby beef that commands a premier price in world markets. I wonder would it be possible to find some way of diverting some of our surplus milk into calf rearing in the future? This might necessitate something akin to what is being used for surplus potatoes, some type of dyeing arrangement that would make the milk unfit either for human consumption or resale to creameries. A certain amount of surplus milk could be sold back to the farmers at its value for conversion into butter. At the moment it would probably work out somewhere in the region of one shilling a gallon and, at one shilling a gallon, a good deal of the surplus would more profitably be fed to calves for beef production. I should like to hear whether the Minister considers that practicable. I take it that such a type of sale would come within the scope of Bord Bainne. There is provision for the Board to sell milk.
On this question of markets we should be very careful. Foreign cows wear long horns and we want to go into markets in Africa and the Middle East, but we should remember that the main markets are on our doorstep, in England and on the Continent, if we can manage to edge our way in. The total market for milk production in England is somewhere in the region of 70 per cent. We must remember also that in going into competition in Africa and those other places we are moving nearer our most dangerous rivals, the New Zealanders. If we go into Africa our transport expenses go up, while theirs decrease—consequently we become less competitive on those markets. While we value markets in those places, we can never regard them as more than small offerings, to be gratefully accepted when offered but having very little impact on our main problem.
In the Bill the Board is charged with promotion. We have many ideas about promotion—shops, selling centres and so on—but these are old ideas and if we are to beat our competitors we shall have to think a little bit better than they do. We shall have to be a little more novel and original than they and to offer something in our products that our competitors cannot offer.
In this regard I should like to renew a plea which I made here a year ago, that the Government, or Córas Tráchtála acting as their agent, should organise some type of sweepstake in connection with Irish products sold abroad: have a number on the wrapper of the pound of butter or on the pound of rashers and have periodic draws in centres like Liverpool or Birmingham, and let the prize for those draws be something that will aid our economy here. It could be free holidays in Ireland and the means of bringing the winners over here could be our own transport system, Aer Lingus; then we would get all the publicity of the airlift of these holiday-makers. If desired, it could be arranged that some of these trips be in the off season, at the end of the main holiday season. That is what we are faced with. We have to be original and to have some sort of overall interlocking arrangement between our various boards, between Bord Bainne, the Tourist Board, the air companies and the rest, so that at all times we can ensure that each one of those boards where possible operates so that it can help the others.
Córas Tráchtála fulfils a very essential and very useful co-ordinating function, to try to harmonise the efforts of those bodies. It shows that with a little more effort in that direction, a body could aid a sister body here. That is the type of overall, co-operative approach that we have to make to the future.
I return to the suggestion in the Bill that the support price shall not be greater than two-thirds. I hope to move an amendment fixing the support in this Bill at the two-thirds, that is, £2 by the State for every £1 the producer contributes.
There is a little bit of reasoning in this. Suppose that by leaving ourselves open to paying a subsidy of £2 million in two years' time or next year, we get an additional £6 million worth of produce from our farmers that we would not otherwise get, thereby returning a cheque for £6 million plus £2 million, that is, £8 million, to the Irish farmer, it is very interesting to trace where that money goes. The farmers spend the £8 million. Some of it goes into buying commodities that are already heavily taxed. That tax finds its way back to the Exchequer. The farmer buys products of Irish industry. The money he pays for them goes to pay workers in the industry. Again, part of their wages finds its way back in both direct and indirect taxation to the central authority.
In fact, the total national income is £500 million roughly and the total tax yield at present rates is around £115 million. In other words, it is almost one-fourth of the national income. So out of £4 million of the national income, £1 million finds its way back into the Exchequer in taxation. If you cause the income of the farming community to increase by £8 million, due to this increased production, you might expect one-fourth of that, or almost £2 million, to find its way back into the Exchequer, so that the £2 million will be there to pay the actual subsidy cost without causing anybody in the community to pay more taxation. That is something that is not appreciated, that subsidisation might cost little or nothing to the actual taxpayers. It is in that framework that we should think of efforts to stimulate and expand production in agriculture by means of guarantees at a certain rate of support.
It is well for us to know also that our problems here are not unique. I would suggest to Senators that there is a very useful publication that has just come to hand from the Food and Agriculture Organisation of the United Nations in reference to an inquiry into the problems of agricultural price stabilisation and support policies. There you will find that every country in the world is concerned with the same problem, first of all, the problem of levelling or stabilising the price to the primary or agricultural producers and, secondly, of giving a certain element of subsidy so as to bring the earnings of the agricultural community up to the earnings of the rest of the community.
We are no different. Every country has that problem. Why is that problem there? I think it is simply and solely because the farmers of the world were very late in getting organised at national level and have yet not got fully organised at international level and consequently were unable to bargain for the prices that were their due.
Can anybody for one moment justify that he should pay something like 8/-per gallon for mineral water, something that you put a few drops of some crystal or other into and bottle it up and grouse at paying 2/- a gallon for milk? It just does not make sense on any level, whether you take it on the nutritional level, on the cost of production or any other level. Yet, that is the situation in which the price structure of the world is set today and it is primarily due, I repeat, to the slowness with which the farming community organised to ensure that they got their rightful share as against the other sections of the community.
We have inherited that inequality of price structure and it is not improving. There seems to be no prospect of any real improvement except through what Governments are forced to do in the way of stabilisation and the policy of price support. When we know that, we will take much more kindly to the fact that we have to do those things and will realise that it is no fault of our farming community that the position is as it is. There is a feeling that the farming community has let down this nation simply and solely because agricultural production has been almost stagnant over 50 years.
The average increase in the past 10 years has been something like 10 per cent. but what you have to remember is that that 10 per cent. increase has been got with a very much reduced labour force. In fact, the labour productivity has been increasing about four per cent. per annum in agriculture here ever since the war. That means that today two men are doing the work which it took three men to do in 1950. Is that not progress as far as productivity is concerned? I venture to say that it is a higher rate of progress than has been achieved in industry over the years. It certainly is an achievement, but my criticism is that our numbers should not have gone down so fast; in other words, we should have been able to keep greater numbers on the land and, by that means, our total output should have gone up as well as our production per man.
If we are to survive, we shall have to have an expansionist policy, especially, in dairying, which envisages that happening because today the average dairy farmer has seven cows and the cost of going to the creamery and everything else would be very little higher if he had two more cows. Yet, we know that present management techniques and subsidies for fertilisers and all the rest make it possible for a man to keep nine cows today where he kept seven cows four or five years ago.
I want to see that type of expansion. In fact, I calculate that our total production would go up something like 90 per cent. in ten years if we could increase by somewhere around 5.7 per cent., if we could raise our general level up to the level that has been exhibited in the farm survey. What does that mean? It means that in ten years we should be able to feed three cows where two are fed to-day and that instead of getting a yield of 500 gallons we should be able to increase the yield to 600 gallons. Any expert will tell you that is not an idle dream. It would be a realistic target for ten years and a target which would provide for An Bord Bainne the continuity of dairy products which it needs in order to function properly.
I am not over-happy about the composition of the Board, even though it is substantially the same as recommended by the Advisory Committee. I have the feeling that it is a case of the tail wagging the dog in that there is one representative for cheese, one for chocolate crumb and one for milk products—three compared with four from the producers, from the creamery end.
