The main purpose of this Bill is to support and finance the food processing project of Comhlucht Siúicre Éireann, Teoranta.
The Government's Programme for Economic Expansion published in November, 1958, encouraged State-sponsored concerns to extend their activities into projects related to their main spheres of operation and to test the profitability of new lines and new markets. Comhlucht Siúicre Éireann responded with characteristic initiative and started planning their food processing project in 1959. The company now have plants at Mallow, Carlow, Tuam and Thurles and their total investment up to the present in processed food production, including research and development, exceeds £2.3 million. Over 750 persons — including some trainees — are employed at the various plants. Some 120 other employees of Comhlucht Siúicre Éireann are supplying services to the food division and about 250 workers are engaged in building and construction.
The project is essentially aimed at export markets, only a small proportion of total output being retained for the home market. The enthusiasm with which the company embarked on the enterprise is well exemplified in their introduction here of the new method of accelerated freeze drying and also in the new technique developed at their Tuam plant for producing "instant potatoes".
The food processing industry offers to this country a great opportunity of establishing itself in an expanding external market. We start off with valuable advantages as regards soil, climate and labour force. Demand for these foods is growing — and is likely to continue to grow — because of the improving standards of living and the increasing attraction of foods which can be prepared for the table quickly and with the minimum of labour. The rewards for success in this field are very great. The processing plants provide substantial direct and indirect employment — some of it calling for high technical and professional skills. Over and above that they give the farmer the prospect of an expanding market at guaranteed prices for the raw materials required for processing. A processing plant can, therefore, hardly fail to have a stimulating effect on the economic life of the whole area from which it gets its raw materials. Indeed, if the company's hopes are realised, farmers will have a larger outlet than ever before for horticultural produce at economic guaranteed prices.
Then, of course, the food processing industry makes demands of its own which generate further activity such as the production of various kinds of packing material — boxes, cases, cartons, jute and paper sacks and polythene laminates.
The Government recognise that the opportunities offered by the food processing industry should be grasped as quickly as possible. Competition in export markets is particularly keen and it is therefore of great importance to future expansion that we establish ourselves there as quickly as possible. That brings up immediately the question of finance.
Up to now, Comhlucht Siúicre Éireann have financed their diversified activities without any addition to the share or debenture capital raised in earlier days. Other than the few shares issued to subscribers to the memorandum and articles of association or as qualifying shares to directors, that capital consisted of the 500,000 ordinary shares of £1 each issued to the Minister for Finance and the public issue of 500,000 6 per cent. cumulative preference shares of £1 each. A further £1 million was raised from the public by way of State guaranteed debentures. I should add that a bonus issue of shares was made in 1961 to bring the nominal value of the ordinary shares rather nearer their real value. This bonus issue brought the issued ordinary share capital to £1.5 million and the total issued share capital, preference and ordinary, up to the limit of £2 million permitted by the Sugar Manufacture Act, 1933. The bonus issue did not, of course, increase the money actually invested in the company.
The company now consider that the adequate future development of food processing will be beyond their available resources. Indeed some of the temporarily free funds which the company invested in food processing may be required on the sugar manufacturing side of the business for certain developments which involve capital outlay.
The Government have considered the outline of developments which the company deem necessary in order to exploit the potential of the food processing project and they have taken note of the directors' views that despite the keen competition which exists in this field the enterprise will pay its way. The Government are satisfied that Exchequer assistance should be made available for the adequate further development of the project. The Government feel too that the importance of the enterprise calls for the setting up of a separate company which, while very closely associated with Comhlucht Siúicre Éireann, should concentrate on food processing. Comhlucht Siúicre Éireann have this aspect of the matter in hands.
As regards the Bill itself, its main provisions may be summarised as follows:—
(i) it permits an increase of the authorised share capital of Comhlucht Siúicre Éireann from £2 million to £5 million;
(ii) it empowers the Minister for Finance to acquire shares, by subscription or by purchase, to the total amount of £3.5 million in Comhlucht Siúicre Éireann and/or in an "approved subsidiary company", that is to say, in the proposed new food processing company. The 1933 Act limited to £500,000, nominal value, the amount of shares the Minister might acquire by subscription in Comhlucht Siúicre Éireann, and the Bill will, therefore, enable a further £3 million to be invested by way of share capital in Comhlucht Siúicre Éireann or the new food company;
(iii) it empowers the Minister for Finance to make repayable advances to the parent company or to an approved subsidiary company and to guarantee borrowings by either body, provided that the aggregate of the principal guaranteed and of the advances made does not at any one time exceed £5 million;
(iv) it will relax the provisions of the Industrial and Provident Societies Act, 1893, in favour of an approved subsidiary company so as to facilitate association by such a company with local co-operative societies engaged in food production or food processing where this might be economically justifiable and in the national interest;
(v) it provides that the same provisions regarding submission of accounts and presentation of accounts to each House of the Oireachtas shall apply to an approved subsidiary company as already apply to Comhlucht Siúicre Éireann, and
(vi) it requires the previous approval of the Minister for Finance — given after consultation with the Ministers for Agriculture and Industry and Commerce — before any alteration can be made in the memorandum or articles of association of an approved subsidiary company.
There are also some consequential provisions and modifications of existing law.
The Bill has been drawn so as to provide within the stated limits the maximum flexibility as regards the financing of the food project. It will be possible for investment to be made either directly in the new food company or indirectly through Comhlucht Siúicre Éireann, or by a combination of these methods. Under the Bill, Comhlucht Siúicre Éireann might also be put in funds to finance expansion and improvement of the sugar factories, should this be found necessary.
The provisions regarding Exchequer assistance are, of course, enabling ones and do not at all preclude the raising of capital elsewhere, should this prove practicable. Indeed, so far as working capital is concerned, it would be my hope that the company, backed if need be by State guarantee, would be able to obtain considerable funds from the banks and other financial institutions.
I would expect the present Bill to cover requirements for some years ahead. If the project prospers in the way we hope it will, the provision of additional funds from the Exchequer may well be necessary if the full potentialities of the project are to be realised. In that case, a further Bill will be brought before the Oireachtas. Although the Bill makes provision for only a relatively short period ahead, I can, as I said in the Dáil, promise on behalf of the Government and myself that the company may make their plans for expansion in the full confidence that a further request for finance will be sympathetically received and welcomed.
The encouraging prospects which the processed food industry holds for us should not obscure the difficulty of the task that will face the new food company in trying to obtain an adequate share of the very highly competitive export market. The imagination, drive and enthusiasm which has characterised the project so far, however, give us good ground for hoping that these difficulties will be overcome. I recommend the Bill for the approval of the House.