Industrial and Provident Societies (Amendment) Bill, 1971: Second and Subsequent Stages

Question proposed: "That the Bill be now read a Second Time".

The object of this Bill is to facilitate the amalgamation of co-operative dairy societies, commonly known as creameries. The amendment was proposed by my colleague, the Minister for Agriculture and Fisheries, and I am sponsoring it as I am responsible for the administration of the relevant Acts.

The existing law tends to hinder amalgamations and I feel the time has come to amend it in order to simplify the process of amalgamation. This is necessary because the rationalisation and diversification of the creamery and milk processing industry is regarded by the Government as an essential and urgent aim of agricultural policy. This was indicated in the Third Programme for Economic and Social Development. The Minister for Agriculture and Fisheries has indicated that relatively few amalgamations of co-operative dairy societies have taken place over the past few years. Progress towards the rationalisation of the creamery industry has been much slower than had been hoped for. With the prospect of early accession to the European Economic Community, it is necessary that progress be expedited and it is expected that the proposed amendment will achieve this.

I should explain that co-operative dairy societies are industrial and provident societies, that is, societies which are registered under the Industrial and Provident Societies Act, 1893. Section 53 of that Act provides that two or more societies may amalgamate but only if each society passes a special resolution. Section 51 Paragraph (a) of that Act provides that a special resolution must be passed at a general meeting by not less than three-fourths of the members who vote, and paragraph (b) of the same section provides that the resolution must be confirmed at a subsequent general meeting by a majority of the members voting. Voting in either case may be in person or by proxy.

The purpose of this Bill is specifically to amend section 51 (a) of the Industrial and Provident Societies Act, 1893 to facilitate the passing of a special resolution for the amalgamation of co-operative dairy societies by a simple majority instead of by a mimimum three-fourths majority as at present.

The Minister for Agriculture and Fisheries has stated that the Irish Agricultural Organisation Society Limited and other farming organisations had emphasised to him that the passing of a resolution for amalgamation by the required minimum three-fourths majority had proved a serious factor in delaying the amalgamation of co-operative dairy societies and in the rationalisation of the creamery industry. These organisations support the proposed change to a simple majority requirement.

The Minister for Agriculture and Fisheries has told me that he accepts that the arguments made by the farming organisations are valid. He himself is aware of many instances where resolutions for amalgamation have been supported by a substantial majority of members at meetings. They have, however, not been passed because they did not get the required three-fourths majority. These instances have occurred particularly in Kilkenny and in the Golden Vale area of County Limerick and north Cork. It would be only in a few cases that all members of a co-operative dairy society would derive their living solely or mainly from farming. Consequently, in some cases it is a relatively easy matter to secure 25 per cent support, on various personal grounds, to oppose an amalgamation resolution. The result is that the real economic interests of the majority of members of such societies are not being realised. Further, agricultural development in accordance with the Government policy is being impeded.

I believe that amalgamations are desirable so that greater resources, both financial and other, would be available to the enlarged societies. This would enable them to achieve their aims more readily, and would be in the interests of the members and of the farming community generally.

I therefore agree fully with the Minister for Agriculture and Fisheries that, so far as co-operative dairy societies are concerned, it is urgently necessary that section 51 (a) of the Act of 1893 should be amended to enable a resolution for amalgamation to be passed by a simple majority.

I should like to make it quite clear that the proposed amendment will not change, in any way whatever, the present requirement for a confirmatory resolution as set out in paragraph (b) of section 51 of the Act, and it will not affect any other matters which, under the Industrial and Provident Societies Act, require the passing of a special resolution. For example, the amalgamation of registered societies, other than co-operative dairy societies, would still require the passing of a special resolution by a minimum three-fourths majority.

In conclusion, I should like to mention that this Bill passed all Stages recently in Dáil Éireann without adverse comment or opposition. I commend this Bill to the House.

It is about time someone made an adverse comment. I appreciate the economic reasons behind this measure. With some diffidence I approve of the idea behind the change, but to have under the Act two different types of special resolution is an extraordinarily bad step to take. We are going to amend section 51 and we are going to give "for particular purposes" a special meaning to a special resolution under that section, while the words "special resolution" are going to have an entirely different meaning, even under that section, for other purposes.

It is expecting too much of the ordinary lawyer, let alone the secretary of such a society or co-operative, to be able to differentiate between these meanings readily and easily. There is a tendency elsewhere for the law relative to industrial and provident societies to become assimilated to a degree—having regard to the different functions of the two Acts they are to serve—to company law where a special resolution has a completely different definition to the definition it at present has in section 51 or to the definition it will have in relation to dairy societies after this amendment. This would be to make the law much too difficult and much too complicated for people to understand. What is needed in relation to this is a special section dealing with the type of institution the Minister has in mind to facilitate amalgamations where it is an ordinary resolution without confirmation.

We would want to go a little further and to make an amendment. If the Minister will direct his attention to the Industrial and Provident Societies Act, 1893, he will find that it is open to a society or to the promoters of the society, when its rules are being drafted, to determine the mode of holding meetings and the scale and right of voting. There should be a protective provision in this section preventing such a society having rules which could give, for example, more than one vote to some person or to different categories of people. This would be a necessary protection if we are to have an amalgamation carried by, what is in effect, an ordinary resolution. I strongly recommend my remarks to the House for their consideration.

As a creamery manager and a member of the Irish Creamery Managers' Association. I welcome this Bill. It has often been stated in public that our association is against amalgamation and I am glad of the opportunity to deny those allegations. We, as managers, will carry out our duties and decisions—carried at the annual general meetings of our societies, at monthly estimate meetings and at any other meeting called by shareholders of our societies—to the fullest.

Creamery managers know better than anyone the difficulty of getting 75 per cent majority vote in favour of anything. They would find it more difficult to get a majority in favour of amalgamation of societies. The decision to amalgamate one society with another is a very hard one to make. People who have been voted as members of one society feel they should remain loyal to that society. They, therefore, find it difficult to make the decision to vote for amalgamation with another society. It is much easier to get a 25 per cent vote in favour of retaining the status quo. However, I believe that amalgamations must come. They will come quickly and this Bill will help to speed up the matter. Nevertheless, I do not believe that the Government or the Department of Agriculture and Fisheries are in earnest. Ninety per cent of the shareholders of a society in County Tipperary recently voted to amalgamate with another larger one. This decision was not allowed by the Department of Agriculture and Fisheries. I do not know the reason for that, nor do the people of that society understand it. This proves that the Government are not really in earnest.

This is merely a Bill to please farming organisations. We shall pass the Bill and leave it at that. Even though a society may wish to amalgamate with another if the Government are not satisfied with the amalgamation, they will prevent it.

This should not be allowed to happen, and this Bill appears to prevent it.

On our entry into the EEC we should have an active and progressive dairying industry. The only way to secure this is to have large creameries, to have costings as low as possible and to have an active sales programme. This cannot happen with the type of set-up we have. Our societies are not large enough to compete with the type of organisations that will be in existence in the enlarged Community of the EEC. We are a small State and the type of set-up we have is all right up to a point. With the advent of amalgamations we shall need changes.

Business suspended at 6.5 p.m. and resumed at 7.30 p.m.

As I was saying before the suspension of business, this Bill is to encourage the amalgamation of creameries, which is a good thing, but we must be prepared for this amalgamation. The factories where cheese, butter, full cream powder and chocolate crumb casing are produced must know in advance the quantity of milk available. The best way to obtain this knowledge is to have as many suppliers as possible in a unit.

Forecasting of supplies of milk must be carried out by creameries so that the development of the factories attached to those creameries can take place. Proper development cannot be carried out without this knowledge. The farmers must have a much wider area than at present. Diversification to and from skim powder and butter, to cheese, chocolate crumb casing and so on will be necessary so that the members of a creamery society will be guaranteed the maximum price for the milk supplied.

Greater quality control is also necessary and this is best done by having an efficient advisory service. Small creameries could come together and set up a service such as this. Earlier I mentioned an amalgamation which did not take place, although the voting was 90 per cent in favour. This could happen again and the position within the industry would remain static or would be little changed by the introduction of this Bill. Membership of the EEC allows dairy producers to sell their milk wherever they choose. I appeal to the Minister to allow the development taking place in Kilross to succeed. That is the first time I have mentioned the society in case the Minister would not know to what area I was referring. I believe the Minister is interested in amalgamations, and this amalgamation must take place.

There is no mention of the amalgamation of the creameries in Kerry or Clare or in certain areas of Cork and Tipperary. There are many small branch creameries in Kerry and Clare which should be amalgamated. When we see this taking place we will believe the Government are sincere. Efficiency and the price of milk will be a deciding factor in this amalgamation. I welcome this Bill and hope the Government realise what it involves.

I, too, welcome this Bill. Senator Butler mentioned Kilross creamery. It is well known that this creamery are anxious to join the Mitchelstown group of creameries. Kilross is within three miles of Tipperary town where there is another central creamery. Some time ago the IAOS and the Department of Agriculture drew up areas in which amalgamation could take place and Kilross happens to be in the Tipperary area. That is why Kilross cannot join with the Mitchelstown group, even though they supply Mitchelstown with milk during the year and Mitchelstown manufacture their butter.

In my area there are numerous small co-operative creameries who are not able to carry on alone, yet when their shareholders are asked to amalgamate with a neighbouring co-operative, they cannot get a three-fourths majority in favour. Only neighbouring creameries or creameries within the group should be allowed to amalgamate. Mitchelstown is a great concern, but it is large enough. We in Tipperary have a wonderful opportunity, as we have more milk in the catchment area than they have in the Mitchelstown area and we should keep Kilross creamery.

It is time to change the law whereby a three-fourths majority was needed to amalgamate. With our entry into the Common Market there is not place for the small co-operative society. There should be at least 20 big co-operatives spread over the country.

I welcome this Bill, too. The proposed change in section 51 of the 1893 Bill will certainly make it much easier for the members of the co-operatives to decide to amalgamate with a neighbouring or some other creamery, I was interested in the idea the last speaker expressed relative to a creamery in his area. I really think that the members of any co-operative not only should have the power, as under this Bill, to amalgamate but should be able to amalgamate with whom they like.

We all know that different creameries are able to pay or can afford to pay different prices, and the members of a co-operative should be able to opt to join the best possible partner they can find in the Republic. This is very important. I suppose there is something to be said also for zoning and regionalisation. Nevertheless, I feel that the farmers are entitled to vote themselves into the best possible combine there is. I do not agree entirely with the idea of having just a limited number of powerful creameries or co-operatives. The organisations that have grown perform quite an amount of useful work, but the original doctrines and theories of Sir Horace Plunkett and others whereby the members of the co-operatives were the greater beneficiaries from this type of co-operation seem to have been lost sight of. I feel that the profit margin of too many of these large co-operatives represent a very small percentage net profit. Having regard to the prices being charged in these places that are supposed to be non-profit making, the individual member has very little to gain monetarily from them.

The IAOS, who have a very fine structure, seem to me to be either indolent or very inefficient. They have never made their mark on the co-operative scene in this country. Perhaps they work too quietly and do not get credit for their work. I consider a body of men and an organisation with the structure that the IAOS has should be able to lay a more definite pattern on co-operation in the country. I know definitely that they have been actively engaged in the rationalisation of this industry and, indeed, in many other matters. Nevertheless, there must surely be a better and more dynamic role for the IAOS to play. I think they have underplayed their part and I should like to see them coming out more forcefully.

If I may, I should like to offer some criticism on the tendencies of co-operatives in the past to go into the retail lines. They appear to compete only with the retail organisation, in our towns and villages. All these co-operatives have a tremendous amount of capital involved, and I would prefer to see them encouraging the true spirit of co-operation, and, through co-operation, providing a service for their members on the lines, perhaps, of farm machinery pools and this kind of service which nobody else can afford to give or which nobody else has got round to performing. This Bill will facilitate that approach and enable many more co-operatives to grow stronger by the process of amalgamation.

I would regard this as being something one would anticipate from the formation of stronger units. To me, the philosophy of co-operation, as far as the farming community is concerned is something that is bandied about a lot. Many people say that farmers should co-operate, but they do not speak in those terms of any other section of the community. If is often held up as a cure for many of our aliments, and I feel that sufficient is not being done in this respect. I think it is very desirable that we should tackle this problem, once and for all, and consider in a very detached and calculated manner the possibilities there are for Irish agriculture through the co-operative system. Indeed, I was very glad to note the pilot projects undertaken this year and last year by the Land Commission in this regard.

I think the Senator is really going rather far from the Bill, which is a very limited one dealing with the amalgamation of co-operatives engaged in the creamery industry.

Yes, but these creameries are really the organisations who are looked upon as co-operatives and there are very few of these creameries in milk alone.

The Senator has gone on to these pilot schemes which really do not have any relation to this Bill.

I was just going to suggest that the creameries should foster more of these co-operatives. However, I have made that point and I am prepared to leave it at that. Nevertheless, now that a simple majority of members of the creameries will be able, more or less, to control their own destiny it is desirable that this be done. However, I think the dairy industry needs a little more freedom and a little more flexibility. By virtue of the fact that there is such a discrepancy in the price for milk paid to the farmers by one creamery compared with another, the Government should go that little bit further and enable the creameries to join or amalgamate with whatever societies they prefer. The whole industry should be looked at from the point of view of profitability. There are very few of the creameries closed down in the winter time and this has a detrimental effect. We should consider this problem.

I do not think we should look at this problem under this Bill. It does not arise.

Perhaps I shall have to find a motion whereby we can deal with the co-operative problem. I shall conclude by expressing the hope that the Bill will have the desired effect and that the industry will grow as a result.

The Bill has great merit, but I was a little perturbed when I heard the references to the Dairy Disposal Company. The Dairy Disposal Company was started by the Government at a time when the dairy industry was practically stagnant. The Government decided, in their wisdom, to bring into being the Dairy Disposal Board. Kerry and Clare, I would say, are probably the two counties that benefited most from it because at that time milk, and the various products from milk, were outside the scope of any type of industrial development. It was a social scheme to give the farmers a sense of belonging to the community. In my own county there is quite a wide diversion of opinion as to whether the co-operatives or the Dairy Disposal Board creameries are the best. The Dairy Disposal Board creameries have played a very important part——

May I interrupt the Senator for a moment. Senator Mc-Donald's reference to the Dairy Disposal Company was on the question of whether it should be amalgamated with other creameries or not. I do not think that justifies a general discussion of the whole question of the Dairies Disposal Company under this Bill, which deals strictly with amalgamations.

I understand that under the Bill it is suggested that the Dairy Disposal Company would merge with co-operatives. I think the Dairy Disposal Company has played a very important part in the western side of the country. It has been responsible to a great degree for bringing the farmers off their knees and making them into a productive unit. The point I wished to make was that the final choice should be with the farmers themselves. Everybody knows the advantages of the Dairy Disposal Company. It will take a lot of persuasion to convince them they will have these advantages in the future.

We can welcome what is in this Bill. As the Minister has stated it is to further the Government's policy of rationalisation in the dairy industry. Consequently, perhaps we would be in order in having a look at whether or not this rationalisation is desirable. What is proposed here is to further this in pursuance of Government policy. Practically all progressive writers and thinkers agree on the necessity for rationalisation. For one thing, we have only to look at our competitors to see the large units they operate. By contrast with those units, the largest units we have, like Mitchelstown, Rathluirc, Golden Vale and Lough Egish are very small. We have to get used to this form of thinking and it is well that at least this unreal obstacle of the three-quarters majority, especially a majority of shareholders without any regard to their stake in the societies, should be removed. In other words, the man with one cow has as good a say by his vote as the man with 50. The man making his livelihood from 20 cows has the same vote as the man with one or two as a sideline and depending on some other business. The Government should do much more than merely change the percentage here to give the lead.

I endorse what many speakers have said about Government policy and rationalisation. Surely those creameries that are directly controlled by the Government should be the first to be brought into line. Our view down south of the democracy of those bodies is not in line with what Senator Honan seems to feel. The suppliers have not been consulted in a proper way. There is positive Government policy preventing amalgamation in many areas. In the case of the Coachford group of creameries who for quite a few years wished to amalgamate with the very progressive centre in Ballyclough, obstacles were put in their way. This 50 per cent provision here will be no use to the Coachford suppliers because their votes do not count when it comes to dealing in this way. It is taken as being a deal solely between the Dairy Disposals Company and Ballyclough without any real say by the members concerned. I appeal to the Minister to look at this on a much broader plane. There should be, as a matter of urgency, a committee set up to look into this, to report on and co-ordinate the work. The first martyr for rationalisation died this summer when the dairying industry down south lost one of its pillars in the late Dave O'Loughlin who had actually spent himself endeavouring to promote rationalisation in the Golden Vale group over the past three years. He paid for it with his life. The demand had been made many years previously to the Government to change this very unreal rule. However, better late than never.

On the other side we see what rationalisation means. We must face up to it. It means the closing down by Government policy, as stated here, of the little branch creameries that meant a fair amount in the district. That has to be compensated for. Not alone do we want to build big units but at the same time we want to keep our countryside alive. I suggest that the Government should consider what is the alternative source of employment to be put into those areas when the local branches are closed down or reduced to insignificance. It may be said that small industries can go there. That is all right if they can. I am suggesting here that the Minister should seek those small industries or this local employment for the ten, 15 or 20 people who mean so much to the parish. You do need bigger units for processing of dairy products to have all the diversification that is needed, but you also need the machinery pools or the relief worker service to modernise industry. Anybody looking at it will say that in every parish the potential is there for first-class employment, for a properly organised and directed relief service from the co-operative. This can be from the centre, but working out to where the present local branches are. It is an indispensable work force in the development of agriculture in the time ahead.

That will more than compensate for what Government policy now seems forced, and rightly so, to take away from the parish. Obviously in this debate we cannot go into all the developments that are necessary, but I am suggesting that the provision of compensatory employment is necessary even if we are only to keep the local parish hurling team going. I know that will appeal to the Minister.

The loss of even ten or 15 of those type of creamery jobs is a very serious loss to a parish. On the other hand, I have said the effort should more than compensate for that. As regards machinery pools, there probably is the question as to whether these are better operated from co-ops or from local enterprise. In many areas local enterprise is doing quite well. Again that is an area in which the co-ops could do something. Obviously, they need local stores for the keeping of supplies and so on. Therefore, I suggest that, if we look at it properly in a developed and co-ordinated way, we would find that, far from denuding the parish still further, rationalisation will leave the parishes and the areas much stronger in the future.

I do not believe a word of it.

I suggest at this time also that there should be deliberate Government policy to have "hands off" those suppliers who want to go elsewhere. They should be free to go where they get the best price. Kilross creamery, about which I know quite a bit, has been mentioned on both sides of the House. It is ridiculous that the suppliers there, by Government edict, are losing at least 4d. to 6d.—old money—a gallon on milk due to the fact that they cannot join Mitchelstown. On the other hand, their products are taken and sent into Mitchelstown, so what is the difference? The only difference is that there is some type of zoning map that says there will be a big centre in Tipperary some time in the distant future that will rival Mitchelstown. It is not fair to the struggling farmers on the foot of the Galtees that they should have to "live horse and get grass" while this new complex in Tipperary takes shape, because there is not a sign of it at the moment. Therefore it should be: "Hands off Kilross". Indeed the Government have given the green light to the Knocklong suppliers to join with Mitchelstown, so I cannot see why another parish should be treated separately.

In short the quickest way to further rationalisation and development is to let progressive forces develop. There will be more than enough processing for all when the industry is really developed to its full potential. In the meantime let us not penalise the struggling farmer, least of all the struggling farmers on the slopes of the Galtees.

As regards the 50 per cent voting here I suggest the Minister should have a look at this some time in the future to get some sort of weighting into this. I am not suggesting that a man with 50 cows should have 50 times as many votes or five times as many votes as a man with ten cows, but surely there should be some scale? There should be some weighting, depending on whether the man is earning his full livelihood from dairying or not. Example is better than any preaching in this. The Government should set the example with the Dairy Disposal Company creameries. Senator Honan should realise that these were put up as a holding company merely to ease the transition to co-operatives, and this was to be done over a number of years

There was not a transitional period.

When the people were somewhat more educated and things were more co-ordinated, then it was Government policy at that time, which should never have been gone back on, that these were simply holding for the co-operatives in the future.

To rescue the people and take them off their knees.

It is only in the full development of the co-operative movement that we can hope to match our competitors.

If the people want to be with the Dairy Disposal Company should they not have a vote?

Senator Honan has already spoken.

They have a stronger vote. To conclude on this, I appeal for this urgent review of the co-operatives here. We have a number of reports which have not been acted on. This present Bill is one of the few bits of recommendations from various committees connected with the co-operative movements that the Government have implemented. There are many many other things to be done and the most pressing of all is to give the IAOS its rightful place at the head of affairs. It would have to be almost more than a permissive society, it would have to be one that has got real power in the industry, commensurate with the powers enjoyed by similar bodies in Denmark, Holland and elsewhere, where they have taken our ideas and earlier development of the co-operative movement and fashioned it into an indispensable instrument of agricultural marketing. We have now got to learn from them, and we have to have our say in the development of the co-operative movement. We have waited a long time since the first co-operative in 1908.

This is a very short Bill, and, quite obviously, completely non-contentious. It is one which any sensible person must welcome. There have however been many contentious matters referred to here. Unfortunately, as they are irrelevant in discussion on the Bill, I do not feel that I would be justified in replying to them, including Kilross creamery about which many half statements and misstatements have been made.

The Bill, in so far as it goes, will undoubtedly help the amalgamation of the creameries. I believe, however, that it should have gone somewhat further and that, when there was an amendment being made of the principle Act, as we are now going to deal with very much larger business units, there should have been further amendments incorporated in this Bill. We must realise that a creamery society in the ordinary way is not managed by a board of businessmen who have given their whole lives to business. It is usually managed by a committee of farmers who take things as facts, in particular if they are returned to them as facts. This is where I feel a further amendment should have been incorporated in this Bill dealing with the audit of the accounts of friendly societies. In a public limited liability company at present only certain types of auditors with certain qualifications may audit their accounts.

This does not apply to creamery societies. Anybody who is called a public auditor may audit their accounts, sometimes with very tragic consequences. I have known a case of a creamery society with a turnover of almost a million pounds a year. It is a society which should have been progressing very rapidly and nobody could understand why it did not. The accounts always showed favourably. Ultimately, after many years, and only when members of the society applied to inspect the books, was the reason discovered. That is another amendment of the Friendly Societies Act which I should like to see. Even if it is provided in the rules of a friendly society that the books may be inspected by any member, nonetheless, the 1893 Act provides that the books or accounts may not be inspected by any member of the society. The only account that any member of the society may inspect is his own.

Furthermore, if ten members of the society make a complaint to the Registrar of Friendly Societies and if the Registrar suspects that something may be wrong, even at that stage he will do nothing whatsoever unless those people can lodge with him in advance whatever amount he considers an adequate deposit for a special audit of the accounts of the society. Even if the auditor finds that the books and records of the society have been badly checked and badly audited, there is still no provision, no power in the Registrar, to insist that the society must pay the expenses of that audit.

In the society to which I have just referred, you will have an idea of what the auditors must have been like when I tell the House that there were no creditor's ledgers kept. In other words, when it came to auditing the accounts the society might have owed at the particular audit date, £50,000 to creditors, £80,000 to creditors or only £10,000 to creditors. There was no such thing as a creditors' ledger and apparently the creamery manager had never heard of it. Yet, year after year after year, you had the auditors coming along, certifying the accounts of that society. It was only thanks to Macra na Feirme and the new brighter and more progressive type of young farmer that we are getting today that some of those young men suspected something was wrong and after a great fuss insisted that some of them be elected on to the committee; when they were on the committee they insisted on getting in a new auditor and it was only then the complete chaos and difficulty were discovered.

Therefore, I think if you are going to have amalgamation, you are going to have a bigger society, you are going to have a greater turnover of money. Therefore, you are going to have greater losses if things go wrong. When this Bill was being brought in, making this particular amendment, it should have made other amendments as well. One is in relation to the audit and another is in relation to inspection of the accounts. Another should provide a right for the society to purchase back its own shares in certain circumstances. A farmer is a member of a creamery society. He sells his farm, he goes off to live in a city for a time. He has had some shares in a society. Those shares stay there. He is no longer a member, yet he has a right of voting at any meeting of that society and he must be notified of every meeting of that society if the meeting is to be regular. When a person no longer is making his livelihood, it may be his main livelihood or his substantial livelihood as a farmer in the locality, the creamery society should have a right of purchasing back his shares. This, for obvious reasons, is not a right which exists with a limited liability company, but I feel that in the interests of creamery societies, having regard to their special circumstances, that it is a power that should be given to them.

These additional amendments with this would assist not only in the amalgamation but in the success of societies when they amalgamate. The IAOS was referred to by the Minister in his speech here. I feel also that the IAOS themselves could do somewhat more than they are doing to help in amalgamation. I assure the House that I do not intend to be critical of them, I know they do a vast amount of very useful work, sometimes under the most difficult circumstances. Any sensible person will realise that a committee of 22 or 24 people managing a friendly society will not manage it to advantage. Their rights, their obligations, their responsibilities become almost anomalous at that stage. The committee of management of a society like that should be five or seven people, just as on a board of directors, where everybody will have his sense of responsibility.

In these societies where you have 22 or 24 people on a committee, what happens? It is more a question of honour, or prestige to be on the local creamery committee. A man's father was there, he helped to found the creamery society, therefore the son feels that it is a matter of prestige for him to be there too. He might not attend two meetings in the year. This is the type of man that is managing that society very often, instead of having a small compact responsible board of five or seven people, who could be held responsible and who therefore will be responsible because they will have to act responsibly.

For the amalgamation of a society outside the purview of this Bill, I would ask the indulgence of the House and of the Minister to refer to it. I would imagine that if it is to produce all the natural products of milk, butter, cheese, casein, milk powder—the most economic basis from certain calculations I have made—and I have some experience of these things—is if the creamery society or the amalgamated society has an annual intake of milk of not less than about 25 million gallons. To operate a milk processing station to deal with that volume of milk, to avoid polluting our rivers and our streams, requires the investment of a vast amount of money. In the ordinary course of events—but again, depending on the quality of the soil—it would need a site of 200 to 300 acres. The purchase of the site alone, when you are dealing with a site of that size, is going to cost in modern terms £50,000 to £60,000 before they start to do anything.

They have got to erect their buildings and put in their machinery. Those are in the heart of the country. The only grant they get, and they get no grants for their site, is a 25 per cent grant which is the minimum given to an industry. Industries in various parts of the country, particularly export industries, are getting far more and bigger grants than that. A very high percentage of what a milk processing station of that nature will manufacture is going to be for export. It is going to be, in so far as manufacturing is concerned, our biggest source of exports. Therefore, I feel we should encourage amalgamation. In those societies that are not amalgamated, it would be a very great encouragement if a time limit were put, be it two years, three years, or as the case may be—certainly not longer than three years and preferably two years— and if possible a somewhat shorter period and that provision is made for the giving of bigger grants than the present 25 per cent for the erection of buildings and the introduction of machinery for the processing of milk. I think if these bigger grants are limited to a specific period it would expedite considerably those creameries which are still standing on the sideline.

I welcome the Bill. I feel that it will do much to remove an obvious ulcer which is, at the moment, preventing the co-operation so necessary between various creamery societies. I would like to see the Bill go that little bit further. I would like the Minister to consider what I have said and he may find that there is something in it with which he agrees. If I have been of any help in my criticism in this regard I shall feel that I have done something for the benefit of our creamery milk suppliers.

I wish to say a few words on this Bill which I welcome. I think it will give a new impetus to the inevitable amalgamation of co-operative creameries throughout the country. I should like to sound a note of caution with regard to it. Senator Honan struck the right note, when he spoke a short time ago in saying, that one great danger in amalgamating the dairy co-operative industry would be to try to rush the matter too much. In fact, one of the reasons why it has not made as great progress as everybody would have wished is because efforts were made to force the issue at too great a pace. I am sure the Minister will agree with me when I say that such things cannot be rushed. It is quite different in regard to industry but the agricultural industry is somewhat different to a commercial concern.

Industries usually find it quite easy to amalgamate. You have the take-over process or the amalgamation of compatible industries. But it would be a great mistake to apply the system that successfully works in industry to agriculture, because the two industries differ considerably. I have no doubt that amalgamation and nationalisation of the agricultural industry will come in time— and the sooner it comes the better—but most Senators appreciate, even Senators such as myself who do not live in rural areas, that there are very serious problems involved. We have what one might call the mountainy creameries, the small separating stations, in isolated areas where, as Senator Honan quite rightly pointed out, they are the only source of employment. Some method will have to be found of making good the loss of employment in those isolated country areas.

Amalgamation offers tremendous advantages. Apart from rationalising production methods, it will assist in the purchase of very expensive equipment, which is becoming more and more expensive as time goes on. Such advanced equipment must be purchased if the full benefits of rationalisation are to be achieved but it can only be purchased by big units. I should like to support the Senator who spoke in favour of the Government setting an example with regard to the question of amalgamation and mergers of the various co-operative dairy societies. I am particularly concerned here because one of the biggest, if not the biggest, co-operative dairying industry in the country is situated in my native city of Limerick. It was one of the dairying industries taken over at the time the Dairy Disposal Board was set up in the 1920s.

Both Senator Honan and Senator Quinlan are right in what they said, although they approached the problem differently. Senator Honan was right in saying that the dairying industry in the early 1920s was in a deplorable state. The Government had to step in at that time to rescue it, but it was the intention that in due time those dairy disposal co-operative creameries would be transferred to groups of farmers. I think the time for this has now arrived. However, I see a danger to the Condensed Milk Company in Limerick. If we are to have mass amalgamations on the perimiter of that company's supply area there is a very real danger that the Lansdowne factory may be isolated and that some of the amalgamations at present taking place, literally on its borders, may encroach on its areas of supply. That would be a very serious danger to the Limerick factory which is giving very substantial employment and has an export industry which is tremendous value to the Port of Limerick and to the transport agencies in that city generally.

I would urge the present Minister, or the Minister for Agriculture and Fisheries, if he is to take the initiative now and go ahead with the rationalisation of the Dairy Disposal Company creameries, to take a very close look at the position of the Condensed Milk Company in Limerick. It must be assured of regular and expanding supplies of milk from its contiguous area, which is a large area. Any form of amalgamation or rationalisation which interferes with that supply will create very grave difficulties for the dairying industry in the Limerick area and for the continuation of employment in Limerick city.

Perhaps there was no other way of giving an impetus to the amalgamation of co-operative dairy societies except by doing away with the provision that it required a 75 per cent vote to carry an extraordinary or special resolution to this effect. However, I have some regrets that a well established commercial practice is being departed from in this case. In saying that, I appreciate that you cannot apply the same standards or the same rules to the agricultural industry as can be applied to commerce and industry. I am sure the business community would be very slow to depart from the procedure whereby they require a 75 per cent majority to carry a special or extraordinary resolution and they would resist such a departure very strongly. Obviously, there are special circumstances in the dairy industry where, as was pointed out, all votes are not equal. Some departure at this stage was necessary and having regard to the eventual good this will bring to the industry I am prepared to join with other Senators in welcoming it.

I should like to pay a tribute here to a very far-thinking man who recently went to his eternal reward, the late David O'Loughlin, general manager of the Golden Vale Creameries. He was a farseeing man who built up a tremendous industry in a small country town. He was a man of vision and a man of enterprise who worked very hard indeed. It is a pity that the dairying industry has not got more David O'Loughlins to help it on its way. I am sorry that he did not survive long enough to see this Bill come into effect and to see the impetus it will give to the dairying industry and to farmers generally.

I do not think there should be any delay in the passing of this Bill in the House. It has been given a general welcome in both Houses and I, too, welcome it. I hope it will bring tremendous expansion and greater prosperity to the dairying industry and the agricultural industry generally.

In common with the other Senators who have spoken, I welcome the Bill. Senator Nash has sounded a cautionary note which we would be well advised to heed. After amalgamations which the Bill proposes to assist, the situation will be that we will have some extremely large creamery units. We may well find, as Senator Nash has pointed out, that some of the legislation, which at present deals with the smaller units will be entirely outmoded when it comes to be applied to the very large units which we hope will grow up in Ireland. They are very necessary. We have only to think of our proposed entry into the European Economic Community to realise the essential nature of large units in our agricultural industry.

Senator Nash has dealt with the problems of audits and the legislation pertaining thereto, as far as friendly societies are concerned. I should like to ask the Minister and his advisers not just to look at the legislation dealing with one section of the creamery business, such as the audit. I should like them to look at all the legislation because there is a danger that the legislation on the Statute Book will prove to be outmoded when it deals with these very much bigger units. They can have a tremendous amount of power and they will totally change our situation as regards membership of an individual in a creamery society, seeing that the society are so big. I should like the Minister to look very carefully at the legislation because bigger units will certainly cause problems which we had not to face before. I am in no way against them. Indeed, I am very much for them. However, I should like the Minister to look at the total legislation concerning the creameries which we hope will grow and develop.

In common with Senators Quinlan and Russell, I should like to pay tribute to the work of the late Dave O'Loughlin He was a pioneer in building up a society such as we envisage will be built up in more parts of the country when this Bill has been passed. In a sense Senator Quinlan hit the right note when he said that Dave O'Loughlin was, in some way, a victim of the system. He found problems in running a very large society inside the present legislation, and the lessons to be learned from his work could well be taken into account by the Minister when he is looking at the problems of drawing up further legislation relating to creamery societies.

I should also like to support an idea of Senator Quinlan when he spoke about the problems that will arise in some country areas when the smaller units are closed down, as they inevitably will be, as a consequence of amalgamations. There will be a problem and, like Senator Quinlan, I should like to see that the people who find themselves redundant in this situation would be helped to remain in the dairying industry.

I have some experience of the industry in my vacations in the south—which are not nearly long enough. I spent quite some time working in a dairy with 100 cows. It is a unit that has increased considerably in size. It deals with one of the creameries which will be coming under the scope of the Bill. The man who owns this dairy—or milk parlour, which is the correct term nowadays— realises that if he is to compete on a realistic scale in the European Economic Community he will need to double the number of his cows and he will need to more than double his milk output. As Senator Russell said, the dairying industry is not just the same as any other commercial enterprise. First, it must be manned day and night. There are two routines per day and there is a tremendous problem of manning in the dairying industry. Anybody who works in this industry must not merely be someone who can deal with cows and their particular problems; nowadays he must be a skilled engineer.

I think perhaps the Senator is dealing with the problems of dairy farming rather than with the rationalising of the industry.

No. I should like to explain that I am talking about the relief policy which I hope will come about when the smaller creamery units will be closed, as inevitably they will be after amalgamation. What I am trying to explain is that the people who are working in these small creamery units, which will be closed, could easily be used in relief work in the dairying industry as it now exists. This could be done if there was some encouragement from the Government. I should like to see the Minister, in conjunction with the Department, looking into this problem of people who will be made redundant when amalgamations occur. This is important; we do not want to see those people leaving the dairying industry and coming to work in the towns: we want to see them staying in agriculture. This is one problem that we will have to face. I am a countryman and I am sure other Senators coming from the country would agree with me that this is a way in which the Minister could keep people in the agricultural industry.

I certainly welcome the Bill. I hope that the points which Senator Nash has made—and which I have made—about looking at legislation affecting these societies as a whole will be borne in mind by the Minister. I welcome the Government's attempt to help amalgamations which will ensure that the creamery units will be large enough to compete with those in the European Economic Community.

Senator Alexis FitzGerald said I had arrived from the Dáil with news that there had not been any criticism there of the Bill, and he opened by saying he would offer criticism. This opened the door to a very constructive discussion in relation to this amending Bill.

I fully accept that when dealing with a Bill designed solely to change an Act to allow a co-operative dairy society to amalgamate with a group of others in an easier way, it is difficult for speakers to find ways and means of making a useful contribution without at the same time finding themselves being hauled over the coals for being off the mark. In my efforts to deal with the observations which have been made I will possibly find myself a bit out of line also. I do not know how to seek your indulgence in this regard.

An Leas-Chathaoirleach

It is dangerous to ask for it.

Senator Alexis FitzGerald spoke of having a second special resolution. The necessity for the amendment to this section of the original Act is so pronounced that I do not expect any complications with regard to the provision of this facility for dairy societies. The Senator cannot have been too serious when he suggested that not alone would it be difficult for the ordinary man to comprehend, but even for a solicitor. It is a simple amendment and it is specifically applied to dairy societies as such.

A number of Senators addressed me as if I were the Minister for Agriculture and Fisheries. The effect of this Bill, which is to amend the original Act, is to benefit the dairying industry. As explained in moving the Second Reading, I was moving on behalf of the Minister for Agriculture and Fisheries.

There have been some useful contributions on the question of rationalisation. It was stressed by Senator Quinlan that there should be a special committee to look into this rationalisation scheme. Later on, he pointed out that there had been a number of reports presented relating to the co-operative movement, about which he alleged nothing was being done. I thought it extraordinary that the Senator should suggest a further committee in view of the fact that we have a rationalisation scheme which both the Department of Agriculture and the IAOS have been endeavouring to sell to the various co-operative societies for a number of years. It is because of the difficulty encountered in getting across the message to three-quarters of the membership of the various societies that this Bill to amend the original Act is here before this House tonight and the creation of a further committee to look into rationalisation is not called for.

A number of Senators contributed to the idea that individual societies should be allowed to amalgamate with which ever group they desire, but, while under the terms of my legislation and under the terms of the Industrial and Provident Societies Acts, the type of amalgamation visualised by the various speakers here this evening is allowable, there is nothing to stop a society in Kerry from amalgamating with a society in Wicklow. It is obvious that that would be non-productive, but apart from that, while it would be legal under this Bill, there is the necessity for rational amalgamation from the point of view of the Department of Agriculture and the IAOS.

Senators McDonald, Butler and Quinlan all subscribed to the idea that individual societies should be allowed to amalgamate with societies which at the present time seem to be doing well. I can visualise that you could finish up with two big overall societies. I cannot speak with the same authority as the Minister for Agriculture on this subject, but I can imagine there is the one extremely attractive, sizeable co-operative in the Munster area to which possibly every society would want to amalgamate. The same could happen in the Cavan area, perhaps, with which the people in the north of the country would wish to amalgamate. If that type of development remained uninhibited, you would finish up with something which would not be for the overall benefit of the dairying industry.

Senator Nash spoke of the ideal society from the point of view of the through-put of milk and spoke of an overall society, catering for a throughput of 25 million gallons per year. The rationalisation schemes as presented by the IAOS. and backed by the Department of Agriculture are very much on those lines. In the long term, if the type of development which was subscribed to in the contributions made by the three Senators mentioned were allowed to develop, you would have small, individual societies which the big fellow would not want and they would have to sell themselves cheaply or try to buy themselves in cheaply without having the proper representation they should have if the present rationalisation recommended by the Department of Agriculture were acceptable to all concerned.

May I explain my position to the Minister?

An Leas-Chathaoirleach

If you put it in the form of a question it will be in order.

I will ask the Minister a question. I mentioned the society of Kilross. The IAOS accepted the position that Kilross would be an advantage to Mitchelstown and Mitchelstown would have——

I disagree.

The IAOS have stated this. I should like to ask the Minister is it a disadvantage to have suppliers passing one another on the road going from one creamery to another? That is the position regarding Kilross and Mitchelstown. I do not propose the amalgamation of creameries in Kilkenny with Mitchelstown. I had in mind the amalgamation of creameries surrounding the large creamery.

Let me say that in mentioning the possible amalgamation of a creamery society in Kerry with one in Wicklow, I was talking about what technically would be possible under the amendment we have here this afternoon but that would be most irrational from the point of view of a rationalisation programme.

There has been a lot of talk on this subject. We have had the Knapp Report and the Cooke-Sprague Report on the rationalisation of the creamery industry and a great deal of talk has gone into the rationalisation programme which is at present, I think, jointly being sponsored and pressed by both the IAOS and the Department of Agriculture. While a Senator may speak to me this afternoon about a situation in his own county of which I am specifically unaware, I know myself as a rural Deputy that most irrational applications are made by parents of schoolchildren seeking school transport to pass one school and go on to another. Rationalisation of a programme of that nature is not too easy to define on a national basis when one is trying to pinpoint the experiences in a particular local area.

Let me say that the contribution made by Senator Nash in this regard, in which he joins with all the other speakers who have contributed to this debate, had the effect of welcoming the introduction of this Bill. I think every Senator did this. Senator Nash, on the other hand, stressed that the Bill did not go far enough. Then he mentioned two or three experiences or instances in which I as Minister could look at the overall legislation dealing with industrial and provident societies with a view to improving or updating the legislation in this regard and bringing in further amendments.

I think I should inform the House that it is the intention to make changes in the law relating to co-operative societies in general. There are, however, a number of items pressing in my Department and this is one of the things I have been looking at for some time and we are having an overall look at the legislation dealing with co-operative societies. There were points mentioned this evening that certainly appeal to me but I think, as the House will be aware, there was a degree of urgency which demanded that I take this amendment and try to put it to both Houses with a view to having the legislation enacted so that the rationalisation of the dairying industry should not be held up any longer. Senator Russell said we should make haste cautiously in this regard. The reason why this Bill is in the House as late as this evening is because we have been making haste too cautiously as far as the rationalisation of the dairy industry is concerned.

Senator Nash, certainly had a point with regard to the auditing of various society accounts. On the other hand, I am afraid I would argue a bit with him on the advisability of making it too cheap for ten members of any society to make application to the Registrar of Friendly Societies to hold a special audit. If it were too easy to get this type of facility it might be asked for too often. On the other hand, I appreciate that things may not have been, at co-operative society level, as correct as they should have been. Nevertheless, and I think Senator Nash himself made this point, we have a new generation of young farmers, a new generation of people who have come on to those co-operative societies, even if they are the sons of the parents who formerly occupied those honoured positions. With the benefits that have come to the rural areas, arising from association with Macra na Feirme and Macra na Tuaithe, those young farmers are more aware of what is going on than their fathers were before them. I know that, even though some of these committees are still quite large, they are possibly more productive than those committees were ten, 15, or 20 years ago.

In addition, Senator Nash suggested that another amendment should be included which might provide for a smaller board rather than the big committees they have at the present time. Nobody would know this better than the Senator himself. I am sure quite a few of the Senators here will appreciate the fact that to legislate in that way—we will call it dictatorial way—to the rural agricultural community, would not be something that would be acceptable. I have no doubt that at the present time if the committee or the society so decided, they could reduce their numbers and they themselves could see the effective result of such a reduction in numbers and of that committee appointing a board of six to superintend the management of the society. I think this is certainly possible within the existing regulations and it is something that will possibly come voluntarily, rather than arising from legislation.

Senator West suggested we should have another look at the legislation covering co-operative societies. What I have said in reply to Senator Nash, I would also say to Senator West.

Senator West, Senator Russell and other Senators mentioned that the closing down, following amalgamation, of the small rural creamery had the effect of creating disemployment in a small area and said this justified the maintaining of a rural creamery. One of the purposes behind the amalgamation and rationalisation of the dairy industry is to make the project more profitable from the dairy farmer's point of view. At present the implication is that is has become too expensive to transport milk, to process it and to retransport it for further processing.

With rationalisation the position would be be that the farmer would be getting a far greater return for the milk produced. This is one of the reasons why a number of societies want to opt into one creamery group rather than another because the price that applies in one area is that little bit more than the price that applies in another. This is why there is the anxiety to go like the bee to where the honey is. I as Minister for Industry and Commerce can take cognisance of the contribution made in an endeavour to encourage small industries to replace the creamery closed down. On the other hand, Senator McDonald in his contribution drew attention to the duties and responsibilities of co-operative societies. Their duty is not so much to indulge in competition with the local merchant as a retailer but to be genuinely a co-operative society operating on behalf of farmers and providing a service very much on the lines Senator West had in mind. This would be an agricultural machinery service not alone dealing with agricultural machinery but stocking, holding, lending it and allocating manpower.

And providing plant.

When you have to provide plant and machinery you must have manpower to operate it. In my personal view our co-operative societies have been a bit negligent from that point of view down through the years.

A number of Senators spoke about the Dairy Disposal Company and the necessity to hand it back to the farmer. This is strictly a matter for the Minister for Agriculture and Fisheries. I know he has repeatedly stressed that the Dairy Disposal Company properties are and would be available for transfer to co-operative ownership at an adequate price in the context of rationalisation. There is no question of the Dairy Disposal Company acting as a deterrent to rationalisation. My colleague, the Minister for Agriculture and Fisheries, is most anxious that it should be in the forefront of such a development.

I was more than surprised to find Senator Quinlan suggesting that the big farmer with 100, 60 or 50 cows should have more votes as a member of a co-operative society.

It was 20 cows as opposed to the one cow.

There you draw the line. The Senator mentioned that the unfortunate one-cow man——

I am drawing attention to the injustice of a part-time farmer with two or three cows on the side having the same vote as a man who is making his wholetime livelihood out of farming.

The Senator lives in Cork city. We have farmers in my part of the country with two or three cows and they are full-time farmers.

Wait until Mansholt gets a hold of him.

There are quite a number of very big farmers who have taken advantage of the beef incentive scheme but who do not send any milk to the creameries. A farmer sending the milk of three cows to the creamery is not necessarily a part-time farmer.

Surely he has not the same stake in it as a man who is a wholetime dairy farmer with 20 cows.

Is not the basic principle of co-operatives one man one vote?


I have not taken any power in this Bill to give the impression that the contribution of the small farmer is not considered to be as good a contribution nationally as that of the big farmer.

The contribution of the wholetime farmer is what we are concerned with.

I have endeavoured to cover all the points which have been raised as comprehensively as possible. In general, all the contributions made were very constructive. In relation to legislation dealing with industrial and provident societies as a whole, there is further active examination of this legislation within my Department under a number of different headings. I can take cognisance of what has been contributed in this debate when this is being examined in my Department.

Could I raise one query arising out of what the Minister has said?

An Leas-Chathaoirleach

It is only proper to ask if the matter could not be dealt with on Committee Stage. The House is slipping into the habit of having a short Committee debate at the end of Second Stage.

One question could elicit an answer. The Minister made a statement. He was referring to the policy that is enshrined in this Bill.

An Leas-Chathaoirleach

I do not hear the question mark.

The policy enshrined in the Bill refers to amalgamation. The Minister said the Government would hand over the Dairy Disposal Company at an adequate price. That seems rather strange because when co-operative societies are amalgamated no money passes. Does the Minister take it as Government policy that money must pass in handing over the Dairy Disposal Company creameries and that this money will pass out of the district?

When co-operatives are amalgamated——

No money passes.

——the benefit of the full co-operative passes. All of the assets of the members in that society pass into a collective society. What the Senator is suggesting in this regard is that a State asset be handed over free gratis to some co-operative society?

The State asset has been accumulated over a long period. The co-operative societies' assets have been accumulated. They have both accumulated in the same way. The State is very wrong in following that policy. It is the policy they have followed in Coachford and elsewhere.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for Final Consideration and passed.
The Seanad adjourned at 9.15 p.m. until 10.30 a.m. on Thursday, 2nd December, 1971.