Private Business. - Agricultural Credit Bill, 1972: Second and Subsequent Stages.

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

The main purpose of this Bill is to increase the capital resources of the Agricultural Credit Corporation to enable it to keep pace with the growing demand for agricultural credit. The Bill proposes to increase the limit on the amount which may be borrowed by the corporation and similarly to increase the amount of such borrowing which may be guaranteed by the Minister for Finance. The Bill will also empower the corporation to raise moneys in foreign currencies and enable the Minister for Finance to guarantee repayment of such moneys and indemnify the corporation against any foreign exchange risks involved.

The Agricultural Credit Corporation was established in 1927 under the Agricultural Credit Act of that year, its object being to provide credit for agriculture and associated processing industries. The major expansion in the business of the corporation took place during the past decade. Total ACC loans issued in 1960-61 amounted to £1.1 million; by 1970-71 their annual lending had increased to £8.6 million.

A further dramatic increase took place in the current year and it is likely that loans and hire purchase advances issued in 1971-72 will total £13.5 million. Total ACC loans outstanding increased from £3.4 million in 1960-61 to an estimated £34.0 million at the end of 1971-72. Lendings during 1972-73 are expected to rise to £18 million.

It seems inevitable that the expanding demand for credit will accelerate during the next few years, particularly with the prospect of entry to the European Economic Community. Farmers will be seeking additional credit to increase their livestock numbers, acquire better buildings and machinery and generally to adapt their enterprises to EEC conditions. Such investment will enable them to benefit from the higher prices and improved marketing conditions available in the EEC. Additional credit will also be required by the agricultural processing industries, especially the industries engaged in milk and pigmeat processing.

These are the principal reasons which give rise to the present Bill. The Agricultural Credit Act, 1969, fixed the limit on borrowing by the ACC at £25 million. That limit has already been reached. It is felt that, on the basis of the existing and the prospective demand for credit over the next few years, the limit on ACC borrowing should be increased to £70 million. Section 5 of the present Bill puts the borrowing limit at £70 million and section 6 provides for guarantees by the Minister for Finance up to the same amount.

I now turn to the question of foreign borrowing. The existing borrowing powers of the ACC have been interpreted as empowering the corporation to borrow in Irish currency only. Suitable opportunities for foreign borrowing may arise from time to time and the corporation should be in a position to avail of them. For example, the corporation should be able to extend their deposits scheme to cater for investors abroad. Foreign borrowing would also arise in the case of loans negotiated through the World Bank.

Section 2 of the Bill enables the corporation to raise deposits in foreign currencies and section 3 extends their borrowing powers generally to include foreign borrowing. Under section 4 the Minister for Finance is authorised to guarantee such borrowing. Each of these sections contains a formula for calculating the equivalent in Irish currency of any foreign borrowing involved.

Section 7 deals with losses or gains arising on foreign borrowing as a result of changes in exchange rates: the Minister for Finance would meet any losses and receive the benefit of any gains.

Having given you a summary of the objects and provisions of the Bill, I should like to give a little more detail about the work of the corporation. They provide a wide range of credit tailored to meet the various needs of Irish agriculture. They give loans for the purchase of livestock, machinery and fertilisers, for land drainage and other land improvements, and for the erection of farm buildings and dwellinghouses. Periods of repayment vary, ranging up to five years for livestock, 15 years for land drainage, 20 years for farm buildings and 35 years for dwellinghouses.

The corporation also operate a budgeted loans scheme to help farmers to meet their seasonal financial needs in accordance with a budget submitted to the corporation. A written promise to repay is accepted as adequate security for loans up to £5,000 under this scheme. Loans to agricultural processing industries are becoming an important feature of the corporation's work and it is probable that they will have an important part to play in the future in financing programmes for the rationalisation of creameries and bacon factories.

The corporation maintain close contact with the farming community. As part of this policy, they have 19 area officers to ensure that applications for loans get individual attention and that the time taken to process applications is kept to a minimum.

The corporation's main rate of interest is 8½ per cent but, as a concession to small farmers, a reduced rate of 6½ per cent is payable by those whose total indebtedness to the corporation is not more than £400.

I referred earlier to the rapid expansion in the corporation's business in recent years. It is of interest to note that the bulk of this expansion took place without recourse to the Exchequer. During the past two years the corporation financed their lendings mainly from repayments on existing loans and investments by the public in their farm credit bonds and deposit accounts.

The farm credit bonds were introduced in 1962 and continued until 1969. Bonds could be purchased in multiples of £10. The rate of interest on the latest issue was 6¾ per cent and a tax-free capital bonus of 2 per cent is payable on bonds held for five years.

The amount invested in bonds at the end of December, 1971, was £1 million. Under the deposits scheme which started in 1965 the minimum deposit is £100: the rate of interest ranges from 5 per cent on seven days notice of withdrawal up to 7½ per cent on 12 months notice. The deposits scheme has been highly successful. The amount on deposit with the corporation at the end of December, 1971, was £20 million as compared with £11 million at the end of December, 1970. The deposits scheme offers a good return to the investing public and enables them to share in the development of the Irish agricultural economy.

This is a brief review of the corporation's activities. They are pursuing a progressive and flexible lending policy to meet the diverse and expanding needs of Irish agriculture. Their total issues of loans and hire-purchase advances in the current year are estimated at £13.5 million and the amounts are likely to expand considerably in the next few years.

The main purpose of this Bill is to enable the corporation to increase their resources and to maintain a rapidly expanding volume of credit. I recommend the Bill for the approval of the House.

This Bill has gone through all its Stages in the Dáil, and the Minister is anxious that it should go through all Stages in the Seanad this afternoon, if possible.

We welcome this Bill in the Seanad. It introduces a significant increase in the borrowing limits of the ACC. I should like to avail of this opportunity to comment on the work of the ACC since its inception. Of all our semi-State organisations the board of the ACC have shown very positive and dynamic policies. Over the years they have invariably met, in no uncertain way, the demands as they arose and during the past two years this has been greatly highlighted.

The employment of the area officers has proved to be eminently successful, and I would ask the board of the ACC to provide an even better service in this particular field. The 19 area officers are, in the main, agricultural graduates. Some have not degrees, but nevertheless they have done an excellent job assessing the credit needs and the creditworthiness of those seeking loans. If agriculture is to be adequately serviced in the years of greatest opportunity—the two years immediately ahead—we should have at least one area officer in each county. In the larger counties there would be room for more than one. From the accounts one could reasonably assume that the ACC require about 1 per cent of their income from interest to cover administration costs. That was all right on £50 million or on the borrowing limit they have had, but this figure will be greatly increased when the limit goes to £70 million. Therefore, I think that there is scope for employing more of these people.

Most area officers are agricultural graduates and it is important that there should be close liaison between the agricultural advisory services and the area officers. When recruiting for this type of job, the ACC should insist on agricultural graduates who have at least five years experience working for county committees of agriculture. There are a number of reasons why this is desirable. First of all, men need the experience of dealing with farmers, and the experience of drawing up farm plans, whether they be for five or seven years. This will be especially important under EEC conditions, when it should be possible to have a rebate on loan interest amounting to 3 or 4 per cent for borrowings negotiated on a six-year development programme. Since only a limited number of graduates are employed by the county committees of agriculture, the scope for promotion in this field is not great. To my mind there are not sufficient rungs in the ladder. Therefore, I should like to see the corporation, who are a reasonably wealthy body, providing an additional rung in the ladder. I should like to see their officers paid an attractive salary, at least equal to the salaries being paid at present to the deputy CAOs. If the ACC follow this plan, they will attract the best agricultural advisers available.

I should also like to see the present officers servicing the farming community. It is not possible for them to do so at present because they are already overworked. There is a good case for additional personnel in this field and they should be in a position to call back periodically to the people with whom they have done business to see how they are progressing.

Recently there has been a significant increase in the number of unsecured loans. It may be of interest to the House to know that the repayment record of farmers who have obtained unsecured loans has been as good, if not better, than the repayment record of those who obtain loans with security. Therefore in these cases, if we had either regional officers or area officers, or more than one officer working in the one office, it should be possible to have decisions on applications taken more speedily. In the case of people seeking loans to buy cattle for winter feeding, for example, by the time the legal personnel in Harcourt Street give their decision, half the feeding season is over. This is a pity. I do not see any reason why the decision to grant unsecured loans should not be taken at local level in each county town. It is imperative that we should at least have an office in each county town.

There is a need in this country for a farmers' bank. In some of the EEC countries there are co-operative banks. However, since the ACC have been so successful and since they have a forward-looking and dynamic board of directors, it should be possible for them to fill the need which exists for a farmers' bank.

Investment prospects with the ACC are very good. The return on capital investment for cattle can be as high as 40 per cent on short-term loans; and indeed for some commodities the range is from 20 per cent to 40 per cent. These are true figures. They were given at a meeting at which some gentlemen from the World Bank spoke, and it is reasonable to assume that these people would not give figures which could not be supported.

While £1 million is invested in bonds, according to the Parliamentary Secretary's speech, there should perhaps be a greater effort by the ACC to get more money in this way. The ACC were very early in the foreign money market. This is a healthy development. Certainly the ACC is a gilt-edged investment. As I said, the ACC should endeavour to have at least an office in most towns so that they could act as a farmers' bank to receive deposits. In regard to small unsecured loans, I should like to see the system evolving whereby a man could go in, make an application and come out with his cheque almost in his hand. In the years ahead this is the type of development we require and look forward to.

There are a few other points with regard to ACC policy. I read through the three Acts and found difficulty in finding the particular section I wanted. There is a regulation, or perhaps it is only a policy decision, whereby the ACC have precedence where equities are concerned up to a sum of £2,000. This is a reasonably long-standing arrangement. It must be brought into line with present money values and the figure greatly increased. It is in this that the greatest time lag arises in regard to loans. Several months have been known to elapse before a decision, even in respect of people seeking short-term budget accounts. Some tend to blame this time lag on the ACC's legal section. I do not know whether they are correct or not. With the increase in the capital limit for borrowing, perhaps the ACC will be able to improve matters in this respect. If the matter has to go to the Land Registry it can cause a delay, but it is important that credit should be made available in the shortest possible time.

Some years ago the ACC provided a very good service in making available funds for marriage settlements. Marriage settlements are still with us whether we like it or not, especially where people have two or more sons working on a farm and one wants to get married. With the price of land at present there is a crying need for the ACC to provide funds for long-term family settlements. It was done before, when funds available to the ACC were not as plentiful as they are now, and I would ask the policy makers in the ACC to seriously reconsider accepting applications for money for family settlements. It would be a very good service.

With regard to the ceiling figure for purchase of land, this has remained static at £6,000 for many years. Over the past few years we all know the way land prices have spiralled and surely we should have a more realistic figure. Even if the ACC were to increase this figure to £10,000 it would be of some help. The problem may be exercising their minds at this very time. In any event, they should take another look at this figure of £6,000 and double it up.

Perhaps it is fair that, since the Minister for Finance is guaranteeing the loan, he should have any gratuity there may be through a revaluation. But it would not cost so much if we were to offer this double attraction to the foreign investor. It is unlikely that we would lose on such a move. Perhaps the Parliamentary Secretary might look at this matter, so that in the case of revaluation of a foreign currency, or of our currency, where the investor stands to gain on his original investment, this gain should go to the investor and not to the Minister for Finance.

The only criticism I have of the ACC at present is that their main interest rate is 8½ per cent. The extraordinary thing is that for agricultural and productive purposes the commercial banks find it possible to offer credit at the rate of 7¾ per cent. They, too, are doing a very good job.

Facing EEC conditions this country is particularly fortunate in having institutions like the ACC. It is the ideal institution to handle loans under the agricultural fund or the regional funds whenever those are set up. Other countries have not this type of well organised institution. The dedication of successive members of the board and of those on the administrative side of the ACC is going to pay off in an exceptionally profitable way for the farming community.

The standing of the ACC in rural Ireland was never so high. In the past it was necessary for them to come to grips with some of the slower pays, but the new system is working extremely well and the ACC representatives throughout the country are looked upon as the friends of the farmers.

I should like to see a special scheme being introduced by the ACC to help dairy farmers engaged in the brucellosis eradication scheme. These people are meeting exceptional and unprecedented difficulties. Special arrangements are needed to help them over this difficult problem. Brucellosis is a national problem. I think that the Department of Agriculture's voluntary scheme falls far short of what is required. Perhaps the Department of Agriculture might consider making funds available to the ACC and subsidising interest rates to a greater extent. This type of scheme would not prove to be nearly as expensive as the one at present in operation. The farming community will not look for handouts if they get a fair crack of the whip. After all, the farmers are not asking for the brucellosis eradication scheme; it is being forced upon them from outside. We can only do our best to co-operate with all the agencies concerned. Perhaps we could have, in the immediate future, some special scheme to help people faced with the problems of the brucellosis eradication scheme.

I should also like to ask what special preparations, if any, the ACC have made in order to give an increased service to farmers in an EEC situation. This is a very pertinent question at this time. I expect that an organisation such as the ACC have given this problem a considerable amount of thought. I have not read anywhere their views on this matter. It is something on which we should like information.

Last year, when the Minister for Finance was announcing a boost to the economy, he said that the ACC would make a further £1.5 million available for agriculture. This was a bit of a gimmick because I find the Department of Finance have not been called upon to provide any funds to the ACC over the past few years. While we in the country thought that the Minister, in his generosity, was passing on £1.5 million to the farmers, this in fact was not so. I certainly congratulate the ACC on being self-sufficient and being able to provide money to meet demands. It is a little highhanded of the Minister to curtail the lending capabilities of the ACC. I would welcome more comprehensive legislation in this field so that we could give the ACC more autonomy in regard to the issue of credit.

Since 1928 the ACC have proved they are a most responsible organisation. They have helped many farmers throughout the country. I should like to ask one final question: could we get a breakdown of the actual amount the Agricultural Credit Corporation lend to industry based on agriculture? This is a figure I have not been able to extract from the accounts. I should like to know what percentage of their total loans go to the industrial arm of Irish agriculture. Might I, in conclusion, wish the chairman, the board and the administrators of the ACC continued success? I look forward to their dynamic expansion. I hope that they will see their way to provide a type of farmers' bank in this country. The ACC could perhaps fill the role farmers' co-operatives fill in other countries. They are well-geared to do this. It would involve those farmers who have a few pounds to invest more closely with their own industry. No industry in this country at present can give and guarantee a better return on money invested than the ACC can do on money invested in productive agricultural projects.

If the projection is correct that Irish agriculture needs £200 million over the next ten years, will the ACC's figure of £18 million be sufficient. Nevertheless, taking into account the large amount the commercial banks have always given to the industry, and continue to give, and in addition the £50 million or £60 million the agricultural industries themselves will invest from their own savings in the coming year, the figure of £100 million investment in agriculture will not be that far out in the coming 12 months. On those figures it is reasonable to assume that the ACC will have reached the level aimed at in this Bill in at least a year and a half's time. At that stage, instead of bringing in a Bill similar to this one, I would look forward to a more comprehensive Bill to enable us deal with the administrative problems which seem to cause delays at present.

I should like to join in the tributes paid to the chairman, the secretary and officers of the Agricultural Credit Corporation and to compliment them on making credit facilities more easily available to the farming community since the corporation were set up in 1927. Lately there has been a significant increase in the amounts of money advanced to farmers, because the farming community are now less afraid of borrowing. This fear on the part of the farming community of borrowing money was one of the factors which retarded the development of agriculture. They felt that it put millstones around their necks. They had a horror of having to meet commitments at regular intervals during a year when prices often fluctuated and when misfortune of one kind or another struck them in their agricultural activities.

There was also a reluctance on the part of the banks to advance money to farmers. It was the general opinion that a farmer had no hope of raising money in the bank unless he could prove to the bank manager that he did not really need it. Farmers did not like to have to get guarantors before they could borrow money.

The amount of money advanced by the ACC to the farming community during the past four years has trebled. This is an indication of the new line of thought with regard to borrowing. It is also a clear indication of the faith the agricultural community have in the ACC.

There is a great need for more credit to enable the agricultural community to make the greatest possible contribution to the economy in the years immediately ahead. Productivity in the past has been less than it should have been because of lack of capital. In so far as this Bill will enable the Agricultural Credit Corporation to advance more money to the agricultural community, it is welcome. Like Senator McDonald, I am of the opinion that in a short time the £70 million given in this Bill will have been lent and it will be necessary to come back to the Oireachtas to increase the limit.

I do not wish to sound a carping note regarding the ACC but I am surprised the officials of that corporation have not realised before now that a £6,000 ceiling on land purchases in these days of devaluation of money and of increased costs of land is ridiculous. It may have been high enough when it was introduced, but changing circumstances have made it an unreasonable ceiling to apply now. I look forward to an announcement in the near future that that ceiling is being raised considerably.

The change in the attitude on the part of the agricultural community with regard to borrowing money is in a large measure due to the sound advice given to young farmers by the various farming organisations, such as the Creamery Milk Suppliers Association, Macra na Feirme and so on. It is also due in some degree to the advice given to farmers and the plans drawn up for them by officers of the advisory services. When one farmer in an area sees the benefits gained by another farmer in the same area with the help of a loan from the ACC and the advice from the advisory services, he is more inclined to get into the stream.

Unfortunately the rate of productivity we should reach cannot, in every area, be achieved in the immediate future because of the slow progress of arterial drainage. There are many farmers who, because of the help available from the ACC and the advice available from the advisory services, should embark on much greater drainage programmes. There are areas where effective drainage cannot take place because of delay in proceeding with the major arterial drainage schemes.

There is also the need for assistance from the ACC to people whose herds are stricken by brucellosis. Taking into account the rapid increase in the value of cattle and the devaluation of money, it sometimes happens that the amount of compensation, which was thought to be all right at the time the dairy herd had to be taken off, is not nearly sufficient to buy replacements. This leaves those concerned in great difficulty. My experience in this connection was that the ACC were helpful. With the very significant increase in the price of milk, it is likely that people who are forced to destroy their herds will have a difficult task in replacing them. The ACC will be in a position to render good service to such people.

It is the policy of the ACC to assist those farmers who have spent a year or two at an agricultural college and find themselves on what could be regarded as less than economic holdings. In this way a young man with the "know-how" to be a successful farmer is helped to establish an economic holding. In this way the ACC are helping towards achieving a greater permanency among the agricultural community, and helping directly and indirectly towards increasing national production.

Taking all these factors into consideration I am happy to be in a position to welcome the introduction of this Bill and to pay tribute not only to the chairman and secretary and officers of the ACC but also to the officers representing them in rural areas.

I should like to echo the hope expressed in the Dáil that a greater effort will be made to get more and more Irish people to invest their money in the ACC. The suggestion was made in the Dáil, and it is a one with which I thoroughly agree, that a greater effort should be made to encourage Irish people abroad to invest their money in the Agricultural Credit Corporation, secure in the knowledge that their money will be safe and that their investment will be doing something worthwhile towards building up prosperity at home.

I too welcome this Bill. I wish to congratulate the board of directors and the area officers who are operating throughout the country on behalf of the ACC. They are doing a wonderful job of work and they have been a great help especially to the small farmer. My office is situated beside the ACC office in Ballina and the traffic to their office by investors and borrowers is much greater than the traffic to my office. I am not sorry for that because I get enough work.

I do not agree with Senator McDonald's suggestion that area officers of the ACC should pay a follow-up visit to farmers they help out. If they did this the impression might be given that the small farmer was unable to repay the loan and that he was being pressed severely by the officer. I appreciate Senator McDonald's point that it might be a good thing to have a follow-up visit to see what practical use the farmer is making of the money he has got. On the other hand, it might be better not to interfere with the people, if they are paying back their loan, by calling on them and probably giving their neighbours a bad impression that these people are unable to repay their debt and are being severely pressed by the ACC. If that impression was given it could do terrible damage to the ACC and people would be very slow to approach them to borrow money.

There should be more area officers. In regions like Mayo, Sligo and Donegal, where there is perhaps the largest number of small farmers, it is too much to expect one officer stationed in Ballina to operate effectively in that whole area. I know this man is working night and day. When I was up in Donegal for a by-election I met a man in Ballybofey who was going out to address a meeting at 10 p.m. It is unfair that this man who starts off in the morning at 9 a.m. is forced to work until midnight. The remuneration he gets is insufficient. In order to alleviate this overwork more area officers should be appointed. There should be one to every county. There are 19 at present and it would only require seven more to bring the establishment to the required number. They should be a little bit more flexible in their lending powers. Maybe the regulations should be changed.

In the small farms in the west of Ireland only one son can remain on the farm. The other sons have to get out and make a living somewhere else. It happens in my area that at least one of the sons buys farm machinery— tractors, plough, disc-harrows, mowing machines, harvesters and various other farm implements — and hires them out. They also buy cattle for grazing and do a little bit of conacre. These men are very anxious to settle down and buy farms of their own if and when a farm becomes available in the area. But I understand the ACC cannot lend money to that man unless he already has a farm he wishes to enlarge. The young man who wishes to start off in farming, is interested in agriculture and has shown that by the work he has carried out, should be assisted by the ACC to buy a farm and settle down.

The methods the ACC have adopted in lending money to farmers have shown themselves to be highly practicable and must be working well, because the ACC have become self-sufficient without much aid from the State. I do not think it was necessary for them to accept this £1.5 million the Minister offered them some months ago. That is another testimony to their efficiency and their capabilities.

There could be more liaison between the area officers and the advisers of county committees of agriculture. It would be a good idea if the area officers attended some of the meetings of the county committee of agriculture. I do not say it would be necessary for them to attend all meetings but they could attend at least one during the year and give the instructors and members of the committee an idea of the work that went on in the area during the year. The policy advocated by most of these agricultural committees and their advisers was that farmers should borrow money and get on with the job of work instead of sitting back waiting for the money to pour in. In order to make money you need money. The only way small farmers in the West of Ireland can get that money is by borrowing from the ACC. It is almost impossible for a small farmer to borrow money from the bank unless he has a substantial deposit account there.

This Bill should be more welcome now than heretofore because evidently over the next year and a half to two years and probably for a longer period the farming community will be borrowing heavily from the ACC due to our proposed entry into the European Economic Community. The thought of entering the EEC is being reflected in the price of cattle at present. If farmers wish to increase their herds they will find it very difficult to find the capital. Springing cows and cows in calf are fetching from £150 to £200 each. It is difficult for a small farmer to find that sort of capital without borrowing from the ACC.

It is very important that we have raised the ACC's capital allocation to its present level and I should be surprised if next year we did not have to increase their capital to double the present figure. Small farmers will require more capital on our entry into the EEC in order to bring them up to the level where they will be able to make money by investing it in farm projects.

I will conclude by again congratulating the board and their area officers who are doing a tremendous amount of work. I should like to impress on the directors the necessity, within the next year, of having the number of area officers increased from the present figure of 19 to at least one to every county.

Like previous speakers, I should like to commend to the House the value of the Agricultural Credit Corporation. It is likely that we will enter the European Economic Community and the advantages we will derive from that will depend mainly on the industries for which we can produce our own raw materials, such as agriculture and fisheries. Any other industry which we have in this country will, of necessity, depend on special scientific skills. We will have to import the raw material for those, like the Swiss do for the watch-making industry, but they can afford to do this.

The two industries which must be watched in this country in the immediate future are agriculture and fisheries. We must welcome a Bill of this nature because of the scope it will give the Agricultural Credit Corporation to prepare agriculture for entry into the EEC. This does not mean that I do not find inherent faults in this Bill. Some of them may be due to the condition of the economy at the present time.

Senator Garrett referred to a point which is quite valid—that small farms in the country must hire out machinery. It is one method of getting over an uneconomic unit in the new EEC. It was also valid for him to say that if a contractor wants to enter into the agricultural industry himself he should be allowed to do so with loans from the Agricultural Credit Corporation. This is reasonable enough. It is however valid to say that there are uneconomic holdings in this country in present agricultural conditions and that these conditions require capital, which we are trying to provide under this Bill, and machinery of a type which was not foreseen 20 or 30 years ago when such holdings could then have been considered economic.

I do not wish to denigrate the hard work and industry of the people who own those uneconomic holdings. Usually the eldest son gets the farm and the rest of the family have to emigrate or migrate. If I had to choose, I would consider migration the lesser of these evils.

I should like to refer to something which worries me quite a lot. It comes into the Parliamentary Secretary's statement and came into other Bills before us recently. It is stated on page 2 of the Parliamentary Secretary's statement:

I now turn to the question of foreign borrowing. The existing borrowing powers of the ACC have been interpreted as empowering the corporation to borrow in Irish currency only.

There is a danger in extending the powers of the Agricultural Credit Corporation to borrow externally. The Government and other semi-State bodies have indulged in the luxury of foreign borrowing. This is a sign of the weakness of the economy. It means, in effect, that no loan can be floated which would fulfil the purpose which the Parliamentary Secretary mentions in his statement—that no internal loan can be found to provide sufficient money to finance what is a very good intention, that is, to lend money to the ACC which will in turn lend it to the farming community. We are no longer confident of finding loans internally when we have to borrow externally. The effect of borrowing externally—I have mentioned it in this House before — is that the profit on that loan is spent externally: the taxation on that profit is applied externally. If there is any free money within this country at the time when such loans are floated, it is not taken up but is allowed to run through the economy and add to the inflation which exists.

Within this context I should like to mention something which happened some years ago. The Government insisted on the disclosure of deposits by the banks. This action resulted in one of two things. Money either flowed out of the country or else it was spent immediately and so contributed to inflation and no saving occurred. All these aspects of our economy are intertwined in this external borrowing in which we are indulging at present. Do we know where this increased external borrowing will end? I do not think so.

I am quite sure the Minister for Finance has been warned that most people who take up the greater portion of the loans floated internally, which are the finance houses rather than the banks and insurance companies, will not now take up the same proportion as they did formerly. The reason given for this, especially by the banks, is a very valid one. If they take up the proportion the Minister would expect them to take up if the loan was floated in this country for a purpose such as this—which is a very good purpose and should be placed ahead of other projects we have had before us—they would thereby deprive the private sector of the accommodation that might be needed for production.

I am in general agreement with the Bill but I wish to sound a warning note about external borrowing. On page 3 of the Parliamentary Secretary's introductory statement he says:

Under section 4 the Minister for Finance is authorised to guarantee such borrowing.

That is external foreign borrowing. If questions are asked about this in the Dáil the answer invariably is given that in regard to semi-State bodies the Minister has no function. But surely if the Minister is to give the guarantee under section 4 he should be answerable to the Dáil to some extent for the operations of semi-State bodies.

It is most unfortunate that it has become necessary for me to speak about the most important industry in the country in the terms in which I have just spoken, but the present economic position renders it necessary for someone to speak out at this juncture. When our own people will not contribute by way of investment or savings towards a worthy purpose such as the ACC, it is a very serious situation indeed. I am sorry that I find myself having to make such remarks. I would have much preferred to find myself in a position in which I could have made more favourable remarks. Agriculture is the prime industry of the country and any help, whether by way of subvention or loan, for the ACC should be and must be seriously considered.

I feel, like previous speakers, that if the Agricultural Credit Corporation need more money they must get it, but, again, I would sound a warning note with regard to the economic situation. The ACC have asked us for more money and, perhaps, next year the Minister will return here seeking further finance for them, but where are we to get the money if our own people have not faith in our country? Will the extra money needed be obtained by further external borrowing?

I waited for the debate to develop a little before intervening. First of all, I should like to congratulate the Minister for bringing in this Bill to enable the ACC to fund agriculture in a more forthright manner. In saying this I am fully aware that the ACC have increased the number of loans to the agricultural sector very substantially in recent years and will lend more than £13 million to agriculture this year. The agricultural sector does not depend entirely on the Agricultural Credit Corporation for borrowing. Substantial amounts are borrowed from the commercial banks and the hire-purchase companies.

This Bill is extremely important at this time because of our imminent entry to the EEC. When we enter the EEC, farmers will need substantial amounts of capital to bring their enterprises to the highest level of productivity possible. In the EEC we will have free markets with guaranteed prices and there will be no quantitative restrictions on the amounts produced. One of the most important factors with regard to the funding of agriculture is to ensure that our dairy herds will be increased to the maximum in the shortest possible space of time. If we do so the resultant profits will give an immense impetus to the economy of the country.

For this reason alone the importance of this Bill cannot be over-emphasised. The need to build up our herds, which are smaller in size than they should be, is obvious. At present, replacement cows or heifers are costing the small farmer up to £200 per head. Because of the high prices, the small farmer in particular cannot increase the number of his stock and he must be assisted substantially by way of loan. We depend on the ACC to provide such loans. It is, therefore, essential to increase our cow herds if we are to benefit fully from entry into the EEC.

The increase in loans granted by the Agricultural Credit Corporation in recent years is indicative of the anxiety of all farmers to build up their enterprises. It also shows a renewed confidence in the economy of the country and in our impending entry to the Common Market, which is very heartening.

In regard to borrowing generally, each of us, particularly those who come from rural areas, has had the experience of being contacted by people who have made applications to the ACC and requested to add a little weight to their applications by making representations on their behalf. It is quite a legitimate thing to do and I have done so on a number of occasions during the short time that I have been a Member of the Seanad. These applications are examined by the experts who are guided entirely by the plan which the farmer submits to the corporation in relation to what he intends to do with the borrowed money.

From experience I have found that when a farmer's application has been turned down, if a public representative helps the farmer to reapply for a loan by adjusting the application to the corporation's satisfaction, it is possible to have the application accepted eventually. It is very important that wherever a loan is applied for this sort of exercise should be done by the ACC. I am rather surprised that the commercial banks are not doing more of it. It is essential for the safety of the person seeking a loan that his plan be examined by an expert and that he should be told where he is wrong and where he is right. This is most important and the success of the ACC today hangs on the fact that they are operating in this way, and because of this they are successful in having repayments made.

The last speaker suggested that there was a lack of confidence shown by people not investing money in the Agricultural Credit Corporation. I do not agree with this. On page 4 of the Parliamentary Secretary's speech it is stated:

The deposits scheme has been highly successful. The amount on deposit with the corporation at the end of December, 1971, was £20 million as compared with £11 million at the end of December, 1970.

This indicates that if investment in the corporation has increased by £9 million—I presume from the ordinary people—the corporation must have the confidence of these people.

I consider this Bill to be an excellent one. In my view putting money into agriculture is one of the safest and best things that this country can possibly do. As far as I know, this Bill permits the corporation to seek foreign aid. At the same time it does not mean that they must, but merely gives them permission to do so if they wish. This is as it should be because there may not be sufficient money available to Irish people to invest in the ACC during the coming years. I believe that in the future there will be a considerable amount of money necessary to finance agriculture. Furthermore, the more we can put into agriculture the more our economy will benefit in the future.

Like other speakers, I should like to welcome the Bill. A Bill like this would be welcome at any time but particularly at a time when we are considering going into the EEC. I am not too satisfied that the increase of £70 million is sufficient. It is not realistic in view of the increased cost of land and the increased cost of cattle at the moment. Very often the farmers are slow to seek credit. I often wonder if the title of this corporation is a suitable one—the Agricultural Credit Corporation. I believe that it would be more attractive if called the Agricultural Investment Corporation. Many farmers possess a certain amount of pride which might make them slow to seek what would be described to them as credit. Therefore, I consider that a change of title would be no harm.

I should like to refer to the Land Commission and in this connection I wonder if it would be possible for the ACC to grant loans at a reduced rate to small farmers who have received portions of divided land. One of the qualifications for acquiring divided land is to have an uneconomic holding. When a small farmer receives the additional portion, the rate can become a severe burden on him. There should be some liaison between the Land Commission and the ACC in order to ensure a further reduced rate for the first ten years. In addition, where the father dies and a son takes over, and where there is no young dependant, death duties have become a very heavy burden. At the moment it is colossal because of the price of land. Although death duty may not be relevant, I think that a case could be made for making money available at reduced interest rates by the ACC to a farmer in such a situation.

I am not too happy about the ceiling of £6,000 for land. At the moment it is not a realistic figure. It may be argued that if the agency increased their ceiling it might lead to competition. I do not believe it would. The method of investigation is questionable. I have experienced an unpleasant situation—but still more unpleasant for the man concerned—where somebody bid for a farm at an auction and bought it. There is a closing date on every sale. Although the man in question had made an early application to the ACC, he did not receive an answer in time and the sale went through. That was in a period of roughly four months. The solicitor and auctioneer deferred the closing date to give the applicant an opportunity to get the money. I do not believe that four months is really necessary to investigate a man's position. They should be able to ascertain in a month or six weeks whether or not the man is likely to be a good pay.

Of course it is often said that to get money from the ACC the best qualification you could have is not to want money. I believe the investigation is very severe and very often an applicant is turned down and not informed why he is turned down. Maybe 20 years ago his father raised a loan and was not in a position to meet repayments as quickly as they would have liked. I do not think that is right. A man should at least be told why he is refused.

At present when land is so valuable I do not see why the ACC should play so safe about giving the loan. I do not for a moment say that they should give out loans at random. They are entitled to investigate but they should relax a little and give the younger people an opportunity. I would like to see more Irish people investing their money in the ACC. Not alone is it an investment for our primary industry but it is a very good investment in general for the country.

I welcome this Bill as a step in the right direction. As Senator O'Brien has said, the unfortunate thing is that it does not go far enough. I would like to see the Agricultural Credit Corporation raising this to £100 million rather than £70 million. I do not have to spell out the problems which farmers have, but one of the biggest problems is under-capitalisation. I am convinced that 50 or 60 per cent of the farmers could double their production if they had the capital to do so. The ACC make it rather difficult on some occasions for people to get money. Maybe on some occasions they have not got the money themselves. Now this Bill is coming along to provide them with more money.

I am also pleased at the Minister's decision to allow foreign capital to be invested in the ACC. I know a foreign investment company in this country who are prepared to invest millions in the ACC if they are underwritten by the Department of Finance or by the Government. The Parliamentary Secretary can have their name from me any time he wishes. The Bill is most desirable. This money is not being lent at an exorbitant interest but at a very reasonable rate in the region of 7 per cent. I heartily welcome the Bill.

I join with the other Senators in welcoming this Bill which provides for the urgently needed increase in capital in agriculture. This is especially important if we are to take advantage of the agricultural development that will be possible if we enter the EEC. The amount involved here is only a flea bite in this large problem. The amount is raised to £70 million, with an anticipated lending in the current year of £18 million. If we are to get some idea of the capital requirements of an expanded agriculture we should read the recent report by Mr. Walsh, former director of the Moorepark Agricultural Station and now with the World Bank, or the recent report of the Grassland Association, where the figure was put somewhere in the region of £500 million. In all those figures the most comforting part is the tremendous development that is provided for in agriculture. The rate of return which is calculated on this capital is highly attractive. Rates of 25 per cent or 30 per cent have been suggested in our long-term development.

While I am normally against all foreign borrowings, and I believe this should only be resorted to in the very last resort, this problem of the sudden expansion of agriculture if we enter the EEC just cannot be met from our own resources. If we try to do it from our own resources we will slow down very drastically the rate of increase of which we are capable.

In this regard we have to look at the agricultural pattern in Western Europe, where since the last war they have had reasonably favourable conditions for agricultural expansion and development. The result has been that they have averaged in that period between 4 and 5 per cent increase in agricultural production per annum. Their increase since the war has been over 150 per cent whereas our increase has dragged along at scarcely little over 1 per cent. This was in large measure due to the fact that we were unable to plan with any certainty because we were stop-go. At times there were markets for agricultural products— dairy products—and at times there were not. We had a scare in beef some four or five years ago. In short, we did not have the conditions where we could encourage investment and where capital borrowed could be ploughed in on the scale that would be required for development.

The result is that since the war our increase has been scarcely 50 per cent in total, yet farmers in Western Europe and England have made 150 per cent increase. We have the potential of making up the leeway, but we do not want to make that up in 15 or 20 years; we want to get it quickly. It can be held, as the Grassland Association held in their excellent report on this, that a large measure of this improvement and expansion could be achieved in the next four to five years. Certainly the next ten years, given reasonable marketing conditions, could see this expansion.

We have to face the size of the capital bill involved and see that this £70 million is properly used. Therefore, we have to ask the Government to show much more imagination in their approach to this in the coming year. For instance, if we take this small farmer we hear so much about these days—a man with eight cows on something like 20 acres. Every agricultural adviser and everybody who knows anything about agriculture knows that his target should not be eight cows on that 20 acres. It should be at least one to the acre. Those eight cows have to grow to 20 in a space of four to five years at the most. Given the will to do it, the land can carry that in that time. The capital required today to provide those extra 12 cows is at least £2,000. The additional housing and silos necessary for the 20 cow unit would require at least another £2,000. You can put the capital requirements at about £200 an acre in order to reach the intensive level. How do we face the task of providing £4,000 for such a man over a four to five year period? Some farmers will not avail of it, but with encouragement, advice and guidance I think we will get a majority of the farmers to avail of it.

By far the best way to finance that type of expansion is through the co-operative societies. The main item in the expansion in the example I have taken is the addition of 12 cows, at £2,000, spread over, say, five years, that is £400 per annum. It would be quite an easy matter for the Government to arrange, as an extension of the small farms scheme, liberal credit facilities for the co-operatives, who would advance, in the case I have taken, the £400 to buy the three extra cows in the spring. The co-op has the farmer's account and can make the deductions. The deductions could be made quite quickly, as in the first year most of the produce of the cow would go back. The result would be that you would almost create a self-financing livestock scheme.

To make that attractive you would have to have a special subsidy to appreciably lower interest rates for this scheme. In fact, it should be possible to have loans repayable over five or six years, especially for livestock, and they ought to be repayable through the livestock account. Any money spent from the public purse should be spent in lowering the interest rate, and I would suggest that the interest rate for such schemes should be brought down to 2 per cent. This should be in every sense a small farmers' scheme, because I do not think that the larger farmer, while his need for capital is great, needs the same type of incentive, certainly not the drastic lowering of the interest rate that would be required by the small man.

As mentioned by Senator Prendergast, if we get into the Common Market, there are many loan sources who will be eager and willing to jump at offering loans to farmers. For the protection of the farming community from some of those people, who might be undesirable and exacting too much, the farmers should see to it that between themselves, the Agricultural Credit Corporation and their co-operative societies they would provide most of the capital for their expansion. A cow, on the other hand, will repay herself almost in a year, certainly in two years. With such a scheme it is a question of the farmer getting the extra stock, exercising consumer restraint on his own spending, at least for the two years until the cow has liquidated herself. After that his income has got that extra boost. The only way to ensure that type of restraint on the farmer's income is for the periodic deduction from the creamery cheques to ensure that the sum is paid back in the minimum time allowed. My suggestion is : to cut the interest rates almost to nothing but keep a very strict control on the period of payment. This, in a way, is a type of enforced saving on the community concerned. Again, we want to see that such enforced local saving cuts down the commitment for foreign borrowing. There will be a commitment for that no matter how far we cut down.

So much for this 20 acres, and the same goes at every other level. I put the cost of intensification at almost £200 an acre. Therefore, we should save something comparable to that and aim at getting the bulk of that work done in ten years. If we can do that we will certainly have caught up with the loss of production for the last 30 years since the war. We will be then well on the way to putting the country on a solid foundation by getting its major industry into a state of maximum production. There is no other royal road to the development of this country or any other country but getting the maximum out of its major industry. Our conditions here are the best in Western Europe. There is no comparable area of land anywhere in Western Europe with the same production of cheap grass for the production of dairy products or beef. Capital should not stand in the way of our expansion. I welcome this Bill; but it is only a start and I ask for a much more dramatic means of channelling, inducing and coercing capital into agriculture.

I should like to speak on one aspect of the Bill, that is, the aspect that includes loans to agricultural processing industries. This is becoming an important feature of the work of the corporation, and it is probable that the corporation will play an important part in the future in financing programmes for the rationalisation of creameries and bacon factories. Who will do the investigation into the proper rationalisation of the dairy industry. We have had many reports on rationalisation, such as Knapp Report, the Department Report and the IAOS Report. I believe the Department Report has been scrapped. I take a very strong view on this, as I am involved in the industry.

There is no doubt that rationalisation is necessary. Does rationalisation in this sense take in amalgamation of other creameries? If that is so, I welcome that section. Finance is very necessary for those creameries purchasing some of the Dairy Disposal Board creameries. Mitchelstown Creamery has had to invest about £100,000 for the purchase of the Knocklong area creameries. That is a large investment for a society. I welcome therefore the interest the ACC are taking in the matter and the fact that loans will be available. Loans should be at a low interest. I think 8½ per cent is a bit high for this type of investment.

Will there be loans for long leasing of land? This is the "in" thing now. The 11-month system is on the way out and when we enter the EEC long leases will be recommended. These would be in the region of seven to ten years. We should have loans available from the ACC for the purchase of those long leases. I welcome the help given by the ACC to small farmers for the purchase of land and its development. If money is not readily available, the big farmer with the capital will purchase all the small holdings around him and the small farmer will remain as he is. That should not be. We should have rival farms. The only way to do this is to increase the holdings. I estimate a holding of 40 to 50 acres will be a viable farm if we enter the EEC. Help should be given to farmers who have only 20 to 30 acres of land to purchase land near their existing land and keep out the farmer with hundreds of acres. Will loans be available for the setting up of producer groups? In the EEC there are loans and grants available for the formation of such groups. This will happen here too, especially in the creamery areas.

I come from the centre of the chief dairying area and I should like to comment on the merits of the Bill, in particular the proposal to increase the capital borrowing limit and the Minister's guarantee limit to £70 million. Like other Senators today, I question whether £70 million is a realistic maximum having regard to the statement made recently by Mr. Maher, President of the Irish Farmers' Association. He said that, in order to bring Irish agriculture up to its optimum, something in the nature of £1,000 million needs to be invested. This gives us some idea of the capital requirements of our most important and basic industry.

The section which refers to capital being made available for the requirements of the agricultural processing industry was referred to by Senator Butler. I should like to say a few words on that too. In his introductory speech the Parliamentary Secretary referred specifically to the milk and pigmeat processing industries, both of which are vital to the city and region of Limerick, Tipperary, Clare and Cork. I should like the Parliamentary Secretary in his reply to indicate in regard to the proposed amalgamation and rationalisation schemes which are mooted and which will undoubtedly have to take place over the years immediately ahead, if capital will be available for these schemes. If groups of creameries or bacon curing factories wish to come together and improve their units of production and have access to these funds, the limit of £70 million would not then be adequate for this purpose.

Senator Belton referred to foreign borrowing. I was pleased to hear that in the past two years the ACC have managed to generate from within their own resources the necessary capital to finance their loans. This is a significant message and one which deserves the commendation of this House and the other House. Very few State-sponsored undertakings can generate even a proportion of their required funds from their own resources. I should like to see this type of funding being expanded, if possible, by the ACC. If they have to borrow there is a lot to be said for borrowing internally rather than externally. Apart from the loss in taxation, borrowing abroad is inflationary. We are already living in a highly inflationary situation and it should not be accentuated in any way. However, I would rather see borrowings abroad than no borrowings at all. Provided reasonable control is kept on foreign borrowing I would not exclude it from the powers of the ACC. As a choice, borrowing from inside the country is desirable for many reasons, including those I have just mentioned.

I should like the Parliamentary Secretary to clarify another matter because I am not too clear on it. I notice that the current rate of interest paid by the ACC is 8½ per cent, but a special reduced rate of 6½ per cent is payable to those whose total indebtedness to the corporation does not exceed £400. I am not quite certain if that means that a small farmer can get loans of up to £400 but no more, or whether, if he already owes £400 and requires to come back for further capital to improve his holding, he must pay the higher rate. If that is so, it is a step in the wrong direction. Every possible encouragement should be given to the small farmer who, with the necessary capital, can make his holding viable either by the acquisition of additional land or by stocking it. One way of doing that is to ensure that the capital he gets is at a reasonable rate of interest. I hope some arrangement can be made to amend this section. I am not sure whether it can be amended by the ACC of their own volition. It should be amended to allow loans of up to £1,000 to a smallholder to bring his farm up to a viable condition.

The services which the ACC are now providing are coming closer to the services provided by the commercial banks, with one significant difference. Although the ACC operate a number of branches throughout the country, decisions are made centrally in Dublin. It would be a step in the right direction if more authority and flexibility were given to the local managers to give loans up to a certain limited figure on their own initiative. We know from sad experience that in many Departments of State and in many semi-State bodies today anything that has to find its way up to Dublin for processing has a happy knack of getting stuck here and taking a long time to get back again to the grassroots. The amendment to the ACC borrowing powers comes, as other Senators have said, at a most appropriate time, when we are on the threshold of probable entry into the EEC and certainly on the threshold of wider free trading in the years ahead. As other Senators have also said, it is essential that farmers of today, like businessmen and entrepreneurs, should have access to capital rapidly and at reasonable rates of interest.

Before concluding, I should like to ask the Parliamentary Secretary one further question. Are the funds of the ACC to be made available to anybody or any corporation? It is true to say that we are going to see in this country the development, possibly by corporations, of large-scale commercial farming as is carried on in England, America and elsewhere. Is it intended that farming corporations per se will have access to the funds of the ACC? This would not be a good thing. Whatever resources the ACC can command should be primarily directed towards improving the position of the small farmer and the farmer who can bring his farm up to a viable and economic level. Corporations as such have ways of their own of gaining access to capital, either inside or outside this country. I should like to see the funds of the ACC primarily directed towards helping the small farmer and the man with a middle-sized farm to improve the fertility of their lands or to stock them, while keeping the EEC very much in mind. I join with other Senators in welcoming the Bill.

This is a very interesting Bill because it tells us about something that has been going on since 1927. Senator Butler has explained clearly to us how we have been affected. The whole trouble with agriculture is the way the money is channelled. My view is that it should be channelled through the co-operative societies. The co-operative societies know about the progress made in agriculture. Previously all the grants were channelled to a certain section who had enough money to repay them. We should be given a chance through the co-operative societies and the creameries. They are the people who know how the money should be channelled. I am in total agreement with the statement made by Senator Butler here today. This Bill has been long overdue and I welcome it.

I do not wish to say too much, but I should like to say something which requires me to start by referring to what I understand by membership of the Common Market. The Common Market needs a certain quantity of food to be produced. It must pay a price in order to get that food into the markets to meet that need. That price must be one which will at least cover the costs of producing the food on the farm. That means for us, having regard to the quality of our land and the costs of producing the food, that the owners of Irish land are going to receive a price which will, in fact, be an economic rent for their land. They will get a return over and above the costs of producing the food, a price which will include an economic rent for the mere ownership of their land.

That has, possibly, startling social if not fiscal implications which have not been referred to at all in the debate so far. It is an ironic fact that the historic tenant farmers of Ireland, who owned their lands by virtue of State intervention in enabling them acquire them, will become, in part, economic landlords. The immediate impact of this situation on the country is that the most certain consequence of our joining the Common Market is a substantial accretion to land value all over Ireland, varying of course with the quality of the land and the distance to the centres of population, and so on. Why any owner of land, thinking in terms of pure economics, is doubtful as to what he should vote for, just astonishes me. The economic benefits, if he thinks simply in terms of his land value, are unmistakable.

It is clear that the security which the Agricultural Credit Corporation already have, will, by virtue of our joining the Common Market, be greatly enhanced. I do not know whether the corporation need any additional power to make further loans on what will, in fact, be greatly increased values. which they hold as security for the advances which they have already made. The enhanced value of the land will certainly be brought into the ambit of consideration for loans.

I agree with Senator Russell that the figure of £70 million is too low. I would have no hesitation in supporting an increase in that figure.

With regard to some points concerning the performance of the corporation, the Parliamentary Secretary in his opening speech referred to the expansion taking place without recourse to the Exchequer. I do not wish to criticise the Parliamentary Secretary in the language he has used. I only want to get the realities. Of course, the corporation could not have achieved any of this expansion without the benefit of the guarantee by the Minister for Finance. The position is that if this were a bank and there was any call for the return of the deposit accounts or current assets, they could not meet them without the guarantee of the Minister for Finance. It is disingenuous to use such language and to say that the expansion has taken place without recourse to the Exchequer if one does not go on to say "because of the guarantee of the Minister for Finance".

There is only one word to describe the current assets and liabilities position and that is "deplorable". Current assets stand at £38,000 as against current liabilities in excess of £1 million. Even if we look at the earnings, we will see that we are earning no more than 4 per cent on the money invested in the corporation. This is money provided by the State and we should look at the performance of the corporation from the point of view of dividends.

There is in the Community a scheme for assisting farmers and smallholders to become economically viable. It is a scheme whereby they will be provided with loans at low interest rates of 3 per cent or 4 per cent under whatever is the prevailing market rate. Generally these schemes are administered to supplement existing national schemes. I see that there is provision in this Bill for a lower rate of interest charge for borrowers who are borrowing no more than £400. Have we machinery in this Bill whereby the Agricultural Credit Corporation will provide money at lower rates of interest to farmers in particular regions? It is part of the regional policy of the Community to assist farmers to enlarge their holdings so that their farms will be viable. If we have not this machinery we should have it. Perhaps the Parliamentary Secretary will inform me as to whether there are specifically encouraging provisions to enable producers to cooperate. I know there is the built-in resistance against co-operation but if one finds adverse facts in his life he fights against them. We ought to do that.

Mention has been made here by Senator McDonald of the delays in the legal department of the Agricultural Credit Corporation. We are all accustomed to hearing about delays of lawyers. These delays are no worse than those alleged against other lawyers. When one is talking about that, it should also be said that delays are very often caused or imposed by the facts and not always by the solicitor to whom the delay is imputed. I have an idea but I have never been able to convince anyone of its value. I have often thought that the Agricultural Credit Corporation might consider a scheme where, if they ran into difficulty with a title, they would be prepared to guarantee the title to an insurance company on receipt of the premium for the borrowing. I do not know whether the corporation have the power to guarantee the reward. This is insurance business, under the Insurance Act, and it might require an amendment of the Insurance Act to do this. Much of the difficulty of title could be overcome by a system of guarantees. Insurance business of this kind in Ireland could be encouraged, but it does not exist at the moment. Such business must be placed with Lloyds.

Quite apart from the power of guaranteeing titles another way in which the Agricultural Credit Corporation could help the farmer would be by guaranteeing him to a stipulated amount with his own bank or with any other financier. The Parliamentary Secretary might look at the question of whether or not deposits with the Agricultural Credit Corporation have yet been ranked as suitable deposits for solicitors? I do not think they are. Perhaps representations might have the effect of leading to an increased flow of money to the corporation.

I would be grateful if the Parliamentary Secretary could tell me how much credit is given under the Agricultural Credit Acts, which were introduced in 1927, to people who are not farmers? There has been mention of the assistance given to food processing industries. How much money would be involved here? Is there an overlap in this? Is this function not also performed by the Industrial Credit Company? What has been the trend with regard to it? When was it first started? How long has it been going on? Senator McDonald made a very good point—and perhaps it is in order for me to repeat it—in saying that money could very usefully be provided in certain circumstances, such as to enable farmers to provide dowries for their sisters. Marriage settlements continue to be a feature of rural life.

My final point relates to the wording of section 8 which says:

It shall be lawful for the Corporation to make such alterations in the memorandum or articles of association of the Corporation as are necessary to make them consistent with this Act.

Surely it should be incumbent on the corporation to make such alterations? Is this the usual form of language used? It seems that to permit the corporation to do what they should be obliged to do anyway is not quite adequate.

I should like to apologise to the House for not being present at the start of the debate. I was away and, unfortunately, my flight back was delayed. However, I have been briefed on what has been said in my absence. Some of the contributions dealt with what would be the day-to-day workings of the ACC. While I would be interested in the workings of the ACC it is not a matter I shall pursue to any great degree. As a result of discussions which took place last week there has already been some rethinking by the board of the ACC which I shall announce shortly.

Some questions were raised, particularly by Senator FitzGerald, in relation to section 2 of the Bill. In 1965 the Attorney General ruled that where a power is conferred by express enactment related to money transactions it must be taken to refer to money in our currency unless otherwise clearly indicated. This ruling gives rise to sections 2, 3 and 4 of the Bill. On the basis of the Attorney General's ruling the corporation are not empowered to accept deposits from abroad. Deposits are becoming a major source of capital for the corporation and it is important that they should be free to accept deposits from both foreign and home investors. Section 2, accordingly, extends the power of the corporation to enable them to accept deposits in a currency other than that of the State.

Farmers appreciate fully the value of credit in relation to the development of their holdings. I do not think there is any need to change the name of the Agricultural Credit Corporation. The increase in borrowing will prove this point; the rapid expansion in recent years—in the total amount outstanding at the end of each year and the amount of money lent—shows that farmers are well aware of what is required in a modern agricultural society. Several Senators expressed the view that £70 million was not sufficient and suggested that £100 million would be a more suitable figure. The Government had some difficulty here because if we enter the EEC, as I hope we will, this amount is estimated to be sufficient for the next three years. If we do not enter the EEC it will be more than adequate for an indefinite period. It is true that in three years time, assuming that we join the Common Market and develop our agricultural industry to its greatest potential, the figure of £70 million will have to be increased; but it was proper not to propose a larger figure because that decision is one for the people and not for the parliamentarians.

Some Senators thought a rate of 8½ per cent interest was high. The main rate of interest chargeable is 8½ per cent but a rate of 9½ per cent is chargeable on short-term loans to merchants and a special rate of 6½ per cent is chargeable on loans to small farmers whose total indebtedness to the ACC is not more than £400. This caters for the small farmer who requires a few hundred pounds for an emergency situation. The effective rate for hire purchase advanced is 11 per cent. It may be said that these rates are too high but it must be borne in mind that the ACC pay a high price for this money. It must also be borne in mind that these rates are far better than the rates obtaining in merchant banks or associated banks.

A question was raised as to whether the ACC funds are available to any organisation. In this respect I should like to quote from the Agricultural Credit Act, 1961, which states that the ACC may invest money:

for any purpose which in the opinion of the corporation, will or is likely to increase the productivity of or be otherwise of benefit to agriculture or horticulture on such terms and subject to such conditions as the corporation thinks fit.

That gives the corporation a pretty free hand. I shall return later to the new development whereby they lend money to organisations.

The matter of the time taken to finalise loans also came up. The time varies in accordance with the security offered. For example, there may be an unavoidable delay in taking a land title and this is something of which the corporation are very conscious. The corporation are at present reviewing their security system so as to minimise delays. They recently increased the maximum amount of loans available— this was not published in the newspapers—under the budgeted loan scheme to £5,000. Such loans can be cleared in a matter of days and require no security beyond a written promise to pay. That is a good step forward.

With regard to loans for the purchase of land, loans are given to farmers with uneconomic holdings who wish to buy additional land. The maximum loan at the time this Bill was introduced was £6,000. Some Senators complained that the maximum was too low. The reason why the ACC impose this limit is because they have to be very careful lest they inflate land prices. If higher loans were available farmers might be tempted to pay inflated prices for land. There is no great demand for loans for land purchase from people other than those with very small holdings.

In view of the discussions which took place last week, the Agricultural Credit Corporation have decided to increase the maximum loan from £6,000 to £10,000. Senators can rest assured that every contribution made will be considered by the corporation. I consider the corporation to be an excellent body, they are doing an excellent job and they are prepared to listen to every suggestion which might help them to improve the efficiency of their operations.

There was a question about loans for leasing land. Such loans are not available at present. They would, however, have to be considered in EEC conditions as part of our programme for the improvement of the land structure, in other words, the creating of more economic farms, making it easier for some people to move out of farming. In the context of the EEC, this is a matter that will have to come under serious review. I should like to make very clear that more than 80 per cent of all applications for loans are successful. The corporation are perfectly correct in not giving reasons for turning down an application for a loan. The fact that there are now 19 area officers on the spot who have ready information as to a man's ability to utilise the money lent to him should be sufficient. These men know their job and we should leave the matter to their care.

The question of credit at low interest rates for small farmers for the purchase of livestock and so forth was also raised. Already such farmers qualify for grants under the small farm incentive bonus scheme. They can also get grants for livestock under the beef cattle incentive scheme. Low interest rates will be considered in the context of the EEC and, as I announced last week, the EEC are at present considering a directive on aids for development farms, namely, farms which have the capacity to become viable. One of the aids proposed is a subsidised interest rate. The EEC are thinking in terms of a subsidy which would bring down the interest payable by a farmer to between 3 and 4 per cent.

Another matter which is of great interest, because it is a recent development, is the matter of loans for bacon factories, creameries and so on. Plans have been drawn up by the Pigs and Bacon Commission for the rationalising of the bacon industry. These plans involve compensating some factories for closing and extending and modernising other factories. The ACC are likely to play a big part in the financing of this rationalisation programme. The same would apply, of course, to a programme for the rationalisation of the creamery industry.

I think I have covered the main points raised. I am very happy that the Bill has been acceptable on all sides. I should like to say that the passage of this Bill is rather urgent as the Agricultural Credit Corporation have reached the limit of their £25 million and their activities may be curtailed if any delay occurred in the passage of this Bill. I commend it to the House.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for final consideration and passed.