This Bill is designed to ensure that the development of agriculture will not be hampered by lack of reasonable credit facilities. Similar action has already been taken as regards credit for industrial development. The subject of credit for agriculture has been under study for some time past. The survey of agricultural credit in Ireland made by Mr. F.W. Gilmore, Deputy Governor of the U.S.A. Farm Credit Administration, which has been presented to the Seanad, has greatly facilitated this study and the Government's thanks are due to Mr. Gilmore for his valuable report. The changes in the law which the Government considered desirable following the study made are contained in the Bill now before you.
The Government's aim is to enable the Agricultural Credit Corporation fully to perform its functions of extending the prudent use of credit for agricultural purposes and financing the general modernisation of our agriculture and the other capital outlays necessary for the improvement of the productivity of our farms. The Corporation must have sufficient resources to be able to lend money for all agricultural purposes at reasonable rates of interest, and any obstacles to judicious borrowing by farmers from the Corporation must be removed. It is also proposed to create conditions in which arrangements can be worked out for participation by farmers in the membership of the Corporation.
The present authorised capital of the Agricultural Credit Corporation is £300,000. All of this has been issued and it is held by the Minister for Finance except for a few shares held by his nominees. The Government envisage a greatly increased future scale of activity for the Corporation and, accordingly, the Bill provides for the increase of the authorised capital to a maximum of £2 million. The availability of substantial funds in the form of share capital will provide greater flexibility for the Corporation in dealing with the demands on it for credit and the Government hope that these demands will be on a growing scale. While it is expected that a major part of the demands will come from the individual enterprising farmers who are the backbone of the agricultural industry, there will also be an increasing demand by co-operative and corporate enterprises undertaking investments in specialised forms of agricultural production and processing. Enterprises of this kind will not be operating against the individual farmer but can be used constructively to strengthen his position in production and marketing.
The pattern of agricultural production and distribution is undergoing profound changes in countries with advanced economies. The changes involve new techniques and processes and integrated forms of development requiring the investment of large sums designed to give vast increases in production and productivity. These are developments that we must face in export markets and it is the Government's intention that we will not fail to do so through lack of reasonable credit facilities for farming or for ancillary agricultural enterprises.
Some agricultural co-operative societies are already engaged in, or are proposing to engage in, specialised or integrated forms of agricultural production involving close co-operation with local farmers. These societies are setting a headline for sister societies throughout the country and I earnestly hope that many other co-operatives will follow the example in ways best suited to farming needs and prospects in their areas. The need for a widespread and energetic development of the co-operative movement in this way was never greater, particularly in the interests of smaller farmers who, in a rapidly changing agricultural world, are likely to find it very difficult, if not altogether impossible, to prosper without the help and guidance of the co-operatives. Credit must, of course, be used wisely if it is to be profitable.
The Government are now taking steps to ensure that the Agricultural Credit Corporation will have adequate funds to enable it to consider applications from co-operative societies for credit for all soundly based projects which cannot be financed from other sources. The Corporation will not be expected to pay a greater dividend on share capital provided from the Exchequer than it is in a position to pay when it has met its various obligations, including provision for reserves and for the remuneration of any special credit officers who may be appointed to the staff. This will meet the recommendation made by Mr. Gilmore that the Corporation should be enabled to employ credit officers so as to improve its services to farmers. The extra resources being provided should enable the Corporation to invest in, or lend to agricultural enterprises which, while profit earning eventually, may not prove remunerative for some time. The Corporation is already considering what special scheme or schemes it can introduce to encourage development by co-operative societies in the desired direction.
As the law stands, shares of the Corporation may be held by the Minister for Finance only, except that the directors may hold qualification shares and other nominees of the Minister may hold one share each for the purpose of complying with the requirements of the Companies Acts. The Bill empowers the Corporation to issue shares or stock to persons other than the Minister for Finance but the Minister's consent is necessary so long as he holds not less than half of the issued capital. The Minister is also being given a general power to purchase and sell the Corporation's shares. These powers in addition to the increase in the authorised capital which is being provided for will enable arrangements to be made for the purchase of shares by farmers as soon as this becomes opportune.
However, as is proper for an institution which is primarily of a banking nature, most of the Corporation's capital will continue to be raised by borrowing. The existing borrowing powers are unduly restricted. It is proposed, therefore, to confer power to borrow money in any way the Board thinks fit and to raise the effective borrowing limit of £8.3 million to £10 million. Provision is being made to widen the power of the Minister for Finance to guarantee borrowing by the Corporation and a new power is being provided to enable the Minister to make direct advances from the Central Fund to the Corporation. The total of guarantees, advances and any other borrowings must not exceed the limit of £10 million already mentioned. Provision is also being made for the guarantee of the Corporation in approved cases against losses on agricultural credit schemes subject to a maximum of £5 million at any one time. The additional powers should facilitate greatly the financing and operation of the Corporation.
The principal objects and powers of the Corporation are being re-enacted in more general form and are being widened in certain respects. Under the powers as proposed, the Corporation will be able to lend or advance money or to guarantee credit for any purpose which the Board consider likely to increase the productivity of or be otherwise of benefit to agriculture. The definition of the expression agriculture is being widened to cover such activities as tree-planting and fish-farming as well as all the usual farm operations and the marketing, processing or completion for sale of any farm produce.
The existing limit of £10,000 on loans other than to co-operative societies is being abolished and the Corporation is being explicitly empowered to issue and accept bills of exchange and to engage in hire-purchase arrangements. It will also be able to take up shares and, if necessary, to sponsor special projects and companies for the benefit of agriculture. It is hoped that such activities and the further development of co-operatives will be of particular assistance and benefit to farmers in meeting the challenge of modern conditions in agricultural production and marketing and will result in increased exports of agricultural produce. The Corporation will be able to draw on the specialised knowledge and experience of the Department of Agriculture and of the Irish Agricultural Organisation Society in the development of production, processing and marketing enterprises, thus ensuring that these projects will benefit the individual farmer.
To simplify loan procedure the Corporation is being given power to make orders charging loans on land, subject to the consent of the owner, or of the occupier, if the loan is for work of permanent improvement. Charging orders made by the Corporation may be varied with the consent of the owner or occupier. The Corporation will make no charge for its services in ordinary cases and neither stamp duty nor Land Registry fees will be payable. This arrangement should be of great assistance to farmers in borrowing from the Corporation. It is similar to the systems used in the administration of Gaeltacht housing loans and of the fertiliser scheme operated as part of the Land Project under which charging orders are made by the Office of Public Works and the Land Commission, respectively. These systems have proved very satisfactory in practice.
As a further measure to assist in the provision of credit for farmers the system of chattel mortgages, that is, mortgages on livestock, crops and agricultural equipment, is being extended to cover contractual liabilities generally. Under the existing legislation a chattel mortgage can be used to secure a direct loan only; under the new provisions it will be possible to use it, for example, to secure a guarantee given by or to the Corporation to cover the supply of agricultural requisites to a farmer on credit.
In the present legislation loans charged in favour of the Corporation on registered land the title to which is marked "subject to equities" are given priority over the "equities" up to a limit of £400. The position is similar in the case of the corresponding burdens on unregistered land. The limit of £400 was fixed as far back as 1928 and the Gilmore Survey recommended that it be increased to £800. In view, however, of the decline in the value of money since 1928 an increase to £1,000 is justified. The change will simplify procedure for many loan applications.
Provision is being made to raise the maximum number of directors of the Corporation from five to seven to enable the Board to be strengthened as desirable to cope with the increase in its activities. It will be possible to avail of this provision to give greater representation to farming interests according as may be justified by investment by farmers in the Corporation. At present there are no effective arrangements in operation by which farmers or other members of the public can invest in the Corporation. With its new powers the Corporation intends to launch a scheme of investment designed to appeal to farmers. I hope this scheme will meet with an enthusiastic response.
As regards the scale on which the Corporation has been operating, I may mention that the aggregate of loans issued since it commenced business in 1928 up to 1960 was £9.4 million, an average of £300,000 a year. The present level of lending is of the order of £800,000 a year which approaches three times the average. This is still far from being adequate and it is the Government's hope that, following the enactment of the Bill, the Corporation will operate on a growing scale, performing fully its part in the provision of credit for agricultural development.
Before I close, I should like to refer to the commercial banks who in recent years have introduced various special farm credit schemes and are improving their relations and contacts with farmers. These progressive policies are very welcome. The banks with their country-wide machinery have, and will continue to have, a most important rôle to play in making investment in farming possible and fruitful.
Increasing attention is now being paid by the agricultural advisory services to farm management problems, including the use of credit. Educational work in this sphere is also being undertaken through the agricultural classes organised by the county committees of agriculture and the winter farm schools organised jointly by these committees and the vocational education committees. Farmers are approaching the agricultural advisers in greater numbers for advice on farm management problems and are being helped to place their programmes on a sound financial basis. The farmers' organisations have also been doing good work in educating farmers in the use of credit. As I said earlier, credit must be used wisely if it is to be profitable. The educational and advisory services point the way and there will be general agreement on the desirability of farmers availing of these services to the full. On this will depend largely the success of the improved credit arrangements now being made.
I am confident that Senators will be sympathetic to the objects and intentions of the Bill. I have sketched its main provisions and I now commend it to the House.