Agricultural Credit Bill, 1973: Second and Subsequent Stages.

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

The main objective of the Bill is to increase the statutory limit on borrowing by the Agricultural Credit Corporation. The present limit as fixed by the Agricultural Credit Act, 1972 is £70 million. I now propose to increase the limit to £120 million.

I should like at the outset to review briefly the progress of the corporation and to outline the credit facilities which they offer to the agricultural industry. The Agricultural Credit Corporation was one of the first public enterprises set up in this country. Its history goes back to 1927 and in the meantime the corporation have played a notable part in promoting Irish agriculture. The corporation's total investment in the industry now exceeds £65 million.

The major expansion in the corporation's business took place during the past five years, due mainly to the improved prospects for agriculture in the European Economic Community. Total advances by the corporation increased from £6.0 million in 1968-69 to £29.0 million in 1972-73. Business continues to increase in 1973-74 and their total advances for the year could rise to £50 million.

It is a tribute to the initiative of the corporation and to public confidence in the company that the bulk of this recent expansion was financed from deposits from the public. These deposits—which are guaranteed by the Minister for Finance—plus repayments on earlier loans financed the corporation's entire lending programme from 1968-69 to 1972-73. To cope with the increase in advances this year the corporation recently got a short-term Exchequer loan of £8.0 million and they may have to borrow a further £8.0 million from abroad.

I now turn to the loans available. Farmers can get ACC loans for the purchase of livestock, land purchase and improvement, erection of farm buildings and dwelling houses, and the purchase of farm machinery, seeds and fertilisers. Livestock loans are the biggest single class of loan issued. In 1972-73 they represented 42 per cent of total ACC advances. The corporation also give loans to firms in the food processing industry and in this way contribute to the expansion and modernisation of creameries, meat factories and grain mills.

Repayments generally take the form of equal half-yearly annuities. The repayment period varies from the type of loan. For example, the maximum period is five years for livestock loans. 15 years for loans for land purchase and improvement, 20 years for farm buildings and 35 years for farm dwellings. In addition the corporation give short-term loans to merchants to finance the supply of seeds and fertilisers at spring time and the purchase and storage of grain at harvest time.

During the past year the corporation, as well as the commercial banks, took part in a temporary scheme of loans for farmers at subsidised interest rates. The object of the scheme was to help small farmers to increase their breeding stock in order to benefit from EEC membership. The interest subsidy paid by the Exchequer was 4 per cent and total loans issued amounted to £4.0 million. This scheme may be viewed as a forerunner to the EEC farm modernisation scheme under which development farmers may get interest subsidies towards approved farm investment.

During the past year the ACC also became associated with the World Bank loan for livestock development. This loan is channelled through the ACC for relending to farmers by the ACC and the commercial banks. The World Bank contribution is £10 million and loans are available to farmers for long-term investment in livestock programmes. A preferential rate of interest is charged, 11¾ per cent at present, and the loans are repayable over 12 years.

Clearly there has been a rapid increase in the volume and scope of ACC business. It is likely that the demand for agricultural credit will continue to expand over the next few years. Because of better incomes farmers will themselves have more funds available for re-investment but they will still need considerable credit from sources such as the Agricultural Credit Corporation.

To finance an annual lending programme of £45-£50 million the corporation would have to borrow about £30 million each year: the balance comes from repayments on earlier loans. ACC's total borrowings at present are near the permitted maximum of £70 million. In the present Bill I propose to increase this maximum to £120 million. Section 2 of the Bill makes this provision.

Borrowings by the corporation may be guaranteed by the Minister for Finance. The maximum of such borrowings which the Minister can guarantee under existing legislation is £70 million. To take account of the new borrowing limit, section 3 of the Bill empowers the Minister for Finance to guarantee ACC borrowings up to a maximum of £120 million.

Sections 4 and 5 of the Bill relate to charging provisions which apply to lands offered as security for small loans. These provisions were put into earlier Acts to speed up the issue of loans. Existing provisions apply to loans up to a maximum of £2,000 which was fixed in 1965. To allow for the decline in money values, I propose to increase this maximum to £10,000. Sections 4 and 5 make this change.

Finally, section 6 of the Bill enables the corporation to make whatever changes are necessary in their memorandum and articles of association as a result of other clauses in the Bill.

This Bill is a further vote of confidence in the future of the agricultural industry. I recommend the Bill to the House.

I welcome this Bill. It is a clear indication of the importance of agriculture to our entire economy. I also welcome the Parliamentary Secretary here. Being a rural Deputy, he knows all the problems associated with the agricultural community.

The purpose of the Bill is to enable the ACC to have further lending powers. That is something we wholeheartedly agree to. It also enables the farming community to equip themselves for the challenge of the future. It is a challenge and I am convinced that if there is any section of our community to take up that challenge it is the farming community. They have proved that in the past. They have proved that whenever incentives are placed in their way they avail of them and the economy of the country profits as a result.

We must ensure that this money is properly used. We must also ensure that we get maximum return from it. Therefore, there must be some new thinking by the officers and the administrators of the Agricultural Credit Corporation. There is need for greater flexibility regarding security for moneys on loan. There is greater need for simplification of the method adopted by the officers of the ACC in the processing of loans. We all know from our experience as local representatives that many a good farmer lost the opportunity to prove his worth because, through some technicality, he failed to secure a loan from the Agricultural Credit Corporation or from any of the other lending agencies. Perhaps the title to his holding was not in order and he was not the registered owner. There is great need to overcome many of those minor defects in our legislation dealing with the entire activities of the ACC. I know that it can be done and it must be done because each day and each week as we progress we realise more fully, especially in time of crisis, the importance of agriculture to our entire national economy.

The ACC should make an effort to cut down on the high cost of administration. When I say administration I mean the administering of the entire services and activities of the ACC. I do not know how much they spend on legal costs but I know they charge the borrower quite an amount for legal costs. That is something that should be cut in some way or other.

It often takes months, and sometimes years, to process a loan application and during all that time there is only one loser and that is the applicant who applied for the money in the first instance. Possibly he may have missed his opportunity through no fault of his own. I would ask the Parliamentary Secretary to make some effort to simplify the processing methods adopted by the ACC.

Another point I should like to deal with is how much it costs to process each application. From my experience of going into the ACC offices, I believe that the cost of processing each application it much higher than if the borrower borrowed from any other lending agency. The ACC would do well to put into operation a system adopted by the banks. Time is a very important factor at present and time is money in so far as the farming community are concerned.

I wish to refer to one statement in the Minister's speech. He said that:

Livestock loans are the biggest single class of loan issued. In 1972-73 they represented 42 per cent of total ACC advances.

There is an obvious reason for that. The greatest scourge confronting the agricultural community today is brucellosis. Many farmers have had their entire herds wiped out and the compensation they received was never adequate. As a result they had to secure loans from the ACC to enable them to restock and that accounts for the high percentage of borrowing by farmers for livestock during 1972-73. This is probably not the right time to state this but a fresh look must be taken at our entire brucellosis scheme. There is a loss to the country, to the taxpayer and the greatest loser is the farmer. I have no doubt that this trend will be borne out again when the 1973-74 figures are available. However, changes in the scheme are not the responsibility of the Minister for Finance.

With regard to repayments generally the ACC should take into consideration cases of hardship. I am again referring to the brucellosis scheme. If a farmer goes into arrears over a period he becomes black listed and he will always have difficulty from then on in securing any further borrowings whether from the ACC or from the commercial banks or any other banks. There should be some machinery written into the various Acts which will allow a hardship clause to be implemented. I ask the Parliamentary Secretary to look at that aspect of the borrowing system.

I should like to see the continuance of money being made available solely to farmers as they have proved time and again that they are creditworthy and are regarded throughout the country as a good risk. If their land certificates are in order and available there is no greater way of guaranteeing repayments.

Regarding people who are black listed by the ACC it is unfair that if a son of any such person should apply for a loan, he would be turned down because of the situation in relation to his father. I would like to see that system abolished. It can and should be done. The young farmers of today are more inclined to work to a system and a farm programme and they should be given every assistance and not hampered.

Most of this loan should be made available to farmers. When I speak about farmers I do not mean businessmen who take up farming as a sideline. I am referring to people who farm for a living. They should receive priority in the issue of any loan in the future. Businessmen, et cetera can borrow money easily from the ACC but this body were set up in the first instance to assist farmers. While it may be argued that there would be a quicker return from borrowers other than farmers, men who intend to live by farming should get priority.

The fact that so much of the borrowing facilities are being availed of is an indication that the farmers have confidence not only in their own ability but in the future of agriculture and nothing should be left undone to help those people in furthering their efforts and, consequently, in assisting the economy.

I, too, welcome the Bill and am glad that the ACC have the power to increase their borrowing power from £17 million to £120 million. This vast improvement is necessary so that the full benefits for our agriculture in the EEC may be obtained. Unless we have the power to invest in farming we have no power to invest in the EEC and to gain the true benefits of our entry into the EEC.

It is necessary now more than ever to pour finance into agriculture. From the benefits of our investments in agriculture, every section of our people will profit in one way or another. The purchase and increase of our livestock in agriculture is vital as by this we increase the volume of our beef and milk and of our exports to an extent never realised before our entry into the EEC. We cannot do that unless our farmers are capable of borrowing money through the ACC. This investment is vital and necessary for the welfare of our country.

It is also necessary for the development of the farms and the improvement of dwellings and farm buildings so that those living on the land can have a good life. The drudgery of the past will be gone. We can give all credit to the Minister for allowing the increase in borrowing as that also allows the people to develop their farms properly.

I should like to speak on the advice that should be given to those people who borrow from the ACC. Often the loan granted is of no benefit to those granted it unless they obtain the proper advice I should like to ask the Minister what co-operation is there between the ACC and our advisory service. This co-operation is necessary. When a loan is granted is the adviser for the area in which the loan is given notified or is he asked for advice before the loan is granted? If he is not then the investment by the farmer is not properly carried out.

There is a provision in the Bill for investment in the creamery industry. I welcome this investment even though I have read elsewhere that this should not be done. It is vital that substantial moneys should be loaned to the dairy industry because it is from that industry that we will gain almost all our benefits in agriculture. It is from the cow we get the beef and the milk. In 1973 the total amount of milk received at the creameries will be about 600 million gallons. The value of that will be in the region of £130 million. Of that £130 million, more than £70 million will be exported. In any one's estimation this is a vital export which brings vital finance back into the country with the result that all sections of the community will benefit. It does not stop at that.

By 1980 it is estimated that 1,000 million gallons will be received at creameries in Ireland. It is estimated that the value of that 1,000 million gallons will be in the region of £270 million. We will probably use about £70 million of that produce at home and we will export £200 million. We must encourage the ACC to invest in the dairy industry.

I should like to make another remark about the dairy industry itself which employs thousands of people. One small section of it in the south of Ireland employs 1,500 people in a rural area. By 1980 it is estimated that there will be over 2,000 people employed there. However, it cannot carry on unless we invest and expand. Over the last number of years the industry has expanded enormously. The Minister for Agriculture and Fisheries paid a visit to dairying areas recently and he now realises what has been done. He also realises what must be done, what investment must be put into the dairy industry and into the agricultural industry as a whole because the economy of this country is based on agriculture.

I should also like to raise a number of points. One deals with the purchase of land. Has the ACC loan been increased from £2,000 to £10,000? How are applicants for these loans investigated? Why are some people granted a loan and others are not? I had a case recently where a person made an application for a loan of £10,000 to purchase land that was adjoining his own. This person was turned down and I could see no reason why he should have been. I asked for a reason but was refused. I can understand this because it is confidential but in a case such as this I felt some indication should have been given, even in confidence, to me. I felt it was a mistake and I asked the applicant to appeal against the decision. He appealed and I put in a word on his behalf but I got the same type of reply. A Member of the Houses of the Oireachtas should be given some idea, in confidence, as to why that person was turned down.

Loans are given for the purchase of seeds and fertilisers. In 1974 there will be a substantial increase in the purchase of seeds and fertilisers. It is estimated that there will be an increase of something between 33? per cent and 50 per cent in fertilisers. I would ask that ACC take that into consideration and increase their loans by that amount. If we cut back on loans for fertilisers and seeds then in all probability their use will be cut back substantially. I am sure everybody realises that unless we use fertilisers and seeds we will not be able to produce the products we require. The farmer, the economy and everybody will suffer. I appeal to the Parliamentary Secretary to take up this matter with the ACC.

I should like to see more co-operation between the ACC and the agricultural instructors. I do not know how many times they meet or if the staff of the ACC know the advisers. I hope they know each other and that they communicate with each other. I hope also that when applications for loans are made some form is used to give all the information necessary. Members of the Dáil and Seanad are available to help—but often their advice is not taken. I appeal to the ACC to listen to Members of the Houses of the Oireachtas and to see that something is done in that regard.

We all welcome the present Bill because anything that makes more capital available for agriculture is in the best interests of the country at the present time. We read in the Bill itself that over the last few years the activities of the Agricultural Credit Corporation have expanded dramatically. In fact, it is now beginning to fulfil the role of an agricultural credit bank. It has been demonstrated how necessary and successful such a bank is in Holland and Denmark. The dramatic increase in advances in the last year means that the ACC is now lending up to £50 million a year. That is very useful. We have heard from the Minister that repayments and other sources finance about £20 million and it is necessary for the corporation to seek borrowing for £30 million. If my calculations are correct, increasing the amount from the previous £70 million to £120 million is really going to cover only a two-year period, or perhaps less. I am not objecting to that because it will give us a chance, at the end of that period, to review the situation again, and it is right and proper that we should be in a position to do that.

In today's papers we read of the report by a committee set up by the Agricultural Institute, the IFA and some other bodies, about our future agricultural potential. In that, they gave figures that tie in reasonably well with the figures we have before us. They made the recommendation that it is a reasonable and modest target for us to aim at over the next ten years in order to double our agricultural production. That means an increase of about 7 per cent per annum compound rates on that. That increase, which would have to be an increase in cow numbers, as the main producers in the field, can be seen to be attainable.

In 1971-72 we had an increase of 7.8 per cent in cow numbers; in 1972-73 we had an increase of 11.2 per cent. which are both remarkable achievements. They show a great deal of confidence in the agricultural community and in the future prospects for agriculture. We must remember that the total we could get would not be more than about 20 per cent, which could not be attainable. Last year's 11 per cent was, therefore, excellent and a target of 7 per cent over the next ten years is quite reasonable.

The mind begins to boggle at the figures involved in such an expansion. The estimate made by this committee was that it would take £1,000 million. That puts the Telephone Capital Bill into the shade, and rightly so. The sum of £1,000 million, or an investment of over £100 million per annum, must be set against the present net production of agriculture, which is just short of £400 million. In other words, we are asked to reinvest over 25 per cent of the present production. That is a very heavy investment programme. There is also a time lag while we wait for the results. Obviously, the calf has to be retained to become the future cow, and the cow produces another calf. It is only when that calf reaches maturity that the money begins to come in. The time lag here is the most serious factor in it. Consequently, it is there that the helping hand of the Agricultural Credit Corporation has to be extended and extended very dramatically. The first years just have to be tided over.

On the other hand, we just could not possibly contemplate financing this expansion from external sources or from savings outside the agricultural community. The largest proportion by far of the investment would have to come from the ploughed-back earnings of the agricultural community themselves. This is where the role of the Agricultural Credit Corporation becomes so important, because a discipline can be exercised there on the investment in agriculture. You can see that the investment is coming from the Agricultural Credit Corporation and has to be matched by corresponding investment by the farmer from his earnings. The two together, therefore, provide the worthwhile capital investment that is needed to gear the industry.

The report in today's newspapers is nothing new to those of us who have been in fairly close touch over the years with our agricultural potential. It claims that this expansion over a ten-year period would create 100,000 new jobs. I think there is a familiar ring about that 100,000 figure; most new jobs seem to end somewhere around the 100,000. Of these jobs, 50,000 would be on the land and the other 50,000 in spin-off industries.

The main point to be taken from that is that it is being realised that we must call a halt to the drift from the land. We cannot, on the one hand, expect increased agricultural production and, on the other hand, have a decrease in the work force on the land. It is the pattern all over Europe that the work force on the land is decreasing, because the pull from European industry is so strong and the alternative opportunities are so great that there has been this flight.

In Ireland, we are in a different position. Our land is only half-developed compared with European standards and our population on the land is a very ageing one. The decrease in numbers is largely due to people leaving in their coffins. We must try to ensure that there is a recruitment pattern of young people coming back into agriculture to make their mark. This is where very positive help is required by credit groups. especially the Agricultural Credit Corporation, to encourage and entice these people back on to the land.

Let us look at the figures involved. The report said that in a developed agriculture we should look at about one worker, fully employed, per 50 cow units. We all know that today the cost of a cow is somewhere between £200 and £250, and more. There are ancillaries to be provided, such as fencing, passages, milk parlours, housing, et cetera, all of which the study team estimated would be over £500 per cow unit. For example, 50 cows at £500 comprises £25,000 capital in order to keep one man busy, and that does not include the land on which the cows graze. Taking the study team's target of one cow per acre—a very modest figure on the land and which is about £500 or £600 an acre—that is another £25,000.

In other words, agriculture today has gone from being a very low capital industry to being probably what is one of the highest capital industries per unit of employment. We must face that change and realise that in the change itself there is so much capital involved that it proves too much for anyone who has no starting capital to make it on his own. The emergence of a very sizeable portion of the agricultural income going to repay capital is a reality that has to be faced. What we need is to ensure that what is left provides a good living for the operator on the land.

Obviously with a £50,000 investment we must look very carefully at the training the operator of that investment receives. The training must be of the best quality. It is not sufficient merely to look at what we have in agricultural credit. We must look more critically at the agricultural payments. The correct strides are being made but they are not being made fast enough. We see the dramatic expansion that is taking place in investment because people with money, whether banks or otherwise, see the returns that can be had by lending to farmers. This means that far too much of the money is going in paying interest. That would be all right if the training of the operator matched the investment of capital so that he was in a position to get the best out of the investment. You cannot service an investment of £50,000 without having a top-grade performance and maximum efficiency in what is produced.

It is a line of industry which is exceedingly costly. On the positive side, most of the inputs are home produced. The increased stock comes from our own resources. Local buildings and so on are home resources. This encourages us to incur the very heavy financial commitments which are needed to get this industry started. We must make an act of faith in the future as to whether this industry is capable of carrying the debt in the future and as to whether it is capable of servicing those heavy loans. We cannot be certain. We have had agricultural slumps in the past. We can remember the expansion of the 1920s, where those who had courage to invest wound up in the hungry thirties. Today we can afford to be more confident—we have no choice but to be confident. We can look to the EEC. It is one mammoth industry in which we have distinct advantages over all our competitors. We can produce the raw material, the grass and so on, much cheaper than anywhere else. We must look more critically at the world energy situation and be careful of the assumptions we make of availability of ever-increasing quantities of fertiliser or concentrated foodstuffs. The price of these products is increasing rapidly. This will make a very big impact on the balance of profitability in European agriculture where they are far more dependent on the supply of concentrates and fertilisers than we are at present. It may put many of those producers out of business or else make them strive for increased returns on the European market. We are a stage behind this process so we can face the big investment. We are mortgaging our future to develop agriculture at the rate at which we are going and we must ensure that both labour and capital, first-class trained labour and capital, is profitably used and maximum benefit extracted from the produce of the land in order that we can meet this fantastic challenge.

I see that the Agricultural Credit Corporation are still lending money for land purchase. I thought there had been a go-slow and that the ACC were not lending money for this purpose. The price of land has been inflated beyond its real value. The work of the ACC should enable those on the land to increase their productivity rather than acquiring more acres. We read that ancillary industry about which we had some doubts a year ago, for example, the pig industry, now has a great future. If this is so, there is a great future for increasing the income of our small farms rather than trying to increase their size. In today's Irish Press there is an article which says that from ten lbs. of pig manure suitably treated one could produce as much gas as from ten gallons of petrol. If this situation comes about we will be producing pigs just for the gas they produce.

It says that the ACC are lending money for dwellinghouses at the archaic repayment period of 35 years. I would have thought that in the present high interest situation such loans would be absurd. You would pay so much in interest that the slight increase needed to liquidate the loan over 20 rather than 35 years would be insignificant. You pay 5 per cent on average to liquidate it over 20 years and you pay 3½ per cent to liquidate it over 35 years—this is only a 1½ per cent addition. If you can afford to carry a burden of 12 per cent interest plus the floating of 3½ per cent, that would be 15½ or 15 per cent. The logic is that these long-term loans are no longer useful. It is better to make the slight additional effort and get it finished on the 20-year basis.

The small farm loans are a worthwhile scheme. I hope we are in a position to take the maximum advantage of whatever benefits can be extracted from Brussels on that score. We must match whatever is produced. We have no option but to make the most of our agriculture. In that spirit I commend what is recommended in this Bill but I hope the Minister will be back before the two-year period to ask for an increase in agricultural credit. It is better that the credit should be channelled through what is effectively an agricultural credit bank rather than having it come through all the various agencies and so on. There is a better chance of having an overall policy carried through if the main bulk of the lending comes through the Agricultural Credit Corporation.

The main policy I see necessary is to ensure that there is £ for £, or better, investment by the farmer from his increased returns. There may have to be a time-lag; there has to be. The increased stock will not produce for a few years. Perhaps his return on his investment for the first couple of years will not be £ for £ but after a few years it will be more than £ for £. Then we will reap the harvest from our agriculture. With confidence in the future of agriculture, I warmly endorse what is contained in the Bill.

Like the previous speakers I should like to pay a tribute to the corporation on their role in promoting the agricultural industry. The title, ACC, might lead us to believe that the benefit derived from the corporation is confined to the agricultural community. That is not correct. I believe when prosperity exists in rural Ireland, that prosperity is channelled to the towns and the cities. I believe, in fairness to the ACC that they have never really got full credit for the prosperity they have brought to us all over the past 46 years. The fact that this Bill proposes to increase the borrowing powers from £70 million to £120 million in itself is an indication of the confidence of the Irish farmers in that corporation.

There are a few points I should like to raise regarding applications for a loan. I often wonder if there is a certain amount of duplication. A farmer makes an application and hands it into the local office. An inspector comes out and assesses his holding and income, goes back to the office and makes a recommendation to Dublin and, after about three weeks or so, if the loan is accepted and approved, then the farmer is notified. Then he is requested to produce his deeds plus all other legal documents and forward them to Dublin. After another three weeks or so, he is notified of approval. I wonder could most of that be eliminated by giving more power to a local manager. I would not go so far as suggesting that a local manager should have power to write out a cheque and forward it to the applicant. I would suggest that his recommendations should be accepted, that he should notify headquarters of the approval, and they should then forward the cheque.

This delay can be of very great importance, particularly in 1973, when the emphasis is on time. A farmer may have an opportunity of buying a farm or a field. In desperation, to get that field or farm in order to improve his own economy, he is forced to go to a bank for a short-term loan. He finds, after a while, that time is too short and the repayments are too hefty. He finds himself in a bad financial position. He may be a young man with a family. He then gets a brainwave to contact the ACC and they in turn, will refuse to grant a loan on the grounds that they refuse to take over a bank loan or what they describe as a bank debt. I do not believe that this is correct.

I believe, in circumstances such as that, there should be no question of refusing that man, if he is creditworthy and, indeed, if the bank gives him a loan he is creditworthy. For that reason I fail to agree with the powers that be that they should have the right to refuse a bank loan in that case. I am not criticising the staff in any way. I found the staff courteous, and efficient, and helpful in every way. Their inspectors carry out their jobs with the minimum of embarrassment and the maximum of secrecy. The fact that so many farmers repay their loans promptly is a tribute to the farming community.

Another aspect of the ACC is the marriage settlement agreement which is very good. Take the case of a farmer and his wife with three sons. He makes a will leaving the place to one son who is faced then with having to pay out £2,500 to £3,000 to each of his brothers. Without such help as is forthcoming from the ACC such a farm may not make the same contribution to our economy as it should. There should be more liaison between the Land Commission and the ACC. The value of land has gone to such a pitch that, as happened in my own county, a number of people refused to accept a portion of divided land because the rent is £70 or £80 per acre. The Land Commission have really defeated their own purpose.

Here is an opportunity for the ACC, at least for the first five years. They could have a ceiling on the valuation. The very fact that somebody qualifies for a portion of divided land is proof that he has not got an economic holding. The ACC should have some kind of a scale of a reduced rate to help people in that plight.

I often wonder, in view of the many glaring advantages in the ACC, why Irish people are very slow to invest their money with them. We should give them more publicity and greater incentives outside of this country. Not alone have investors security for their money, but they are also doing something worthwhile for the economy of their own country. I welcome the Bill. If the ACC are as successful in the next 46 years as they were in the past 46 years the people of Ireland need have no fears for the future.

I welcome this Bill and I am glad to see the Parliamentary Secretary introducing the Bill here. Being from a rural area, I am sure he is quite conversant with the needs for this measure. Over the years the Agricultural Credit Corporation have done a tremendous job but it is only in the last five or six years that really great expansion has taken place. In the past it was much too difficult for a farmer to get a loan of any kind, and I doubt if it was as difficult in any other country in Europe for a farmer to get a loan through an agricultural credit corporation or through a bank. Here, not alone would the farmer have to bring in the deeds of his land, but he would have to bring in most of the people living in the townland as guarantors in order to get even a miserable loan.

This was very degrading from a farmer's point of view. He was a hard-working citizen, fit to work in any country, and this old system of loans was the most depressing aspect of his life. It will take a long time before the fear in the heart of farmers seeking loans from a bank or a credit corporation is allayed because the imprint is still on their minds from the old eviction days, the days of the rack rents, and right down to the present day of the degrading process they had to go through to obtain a loan. The Agricultural Credit Corporation and other people who may advance loans expect to get their money back in a reasonable time, but very often in the past their repayment schedule did not coincide with an opportune time for the farmer and he was often forced to sell his cattle when the market was depressed whereas, if he could have kept them for another couple of months, he might have made a reasonable profit.

I am glad to see the Agricultural Credit Corporation getting this extra money. There are very many capable men, who have a good grasp of Irish farming and of the needs of present day farming, in the corporation at present but I hope in the future that they will be more generous with the farmer. We are living in a time when agricultural methods have changed more over the last ten or 15 years than they changed over the last 2,000 years. We are now members of the European Economic Community and we know how much farming methods have changed. It is unreasonable to expect the small farmer to cope with this rapid change. I have known of small farmers—they might be termed cottiers by other people—who reared large families by ekeing out an existence on small mountain farms. They and their families made a tremendous contribution to this nation. It would be wrong if such people were caught out in the present day rush for modernisation and their method of farming wiped out.

If rural Ireland is being depopulated it is because most of our small farmers are not able to eke out an existence on their farms. It is the duty of the State and bodies such as the ACC to come to their assistance and stop this depopulation. Many of our industries are based on agricultural products and many of the thousands who are working in well-paid positions in industry would not be there but for the farmer. It is the produce of the farmer which creates the raw materials which keep these industries in production. Therefore, it is important that the small farmer be given a reasonable chance of survival in today's severe competition.

I do not believe that the average small farmer is sufficiently educated so far as obtaining loans is concerned. The millstone surrounding loans in the past still lives in the memory of these people. If we could remove that it would be a step in the right direction. The members of the Agricultural Credit Corporation should meet these people and, in consultation with the local agricultural officer, work out a plan which would help the farmer to better himself and his family.

The Agricultural Credit Corporation have been in existence for many years and a great amount of money has been loaned out from their funds; it might be interesting to find out what type of people borrowed this money. I remember a farmer in the south applying for a loan of £10,000 or £14,000 and getting it while, at the same time, a small farmer in County Cavan was experiencing great difficulty in getting a loan of £100 or £200. That kind of situation should be remedied immediately because in the past many of the people in banks and in corporations such as the ACC were too eager to lean backwards to facilitate the farmer who was in a position to put on a good outward show. That type of farmer succeeded for a couple of years and then probably went out of existence. The majority of the small farmers I know are people who never like to owe money. They have always done their best to try and meet their commitments and these are the people who should be helped by the ACC.

There are other matters which affect farmers greatly, such as death duties and rates, when they apply for a loan. It means that a farmer's overheads are too great. The rapid expansion that has taken place in agriculture during the last ten or 15 years, such as the heifer subsidy scheme, the brucellosis scheme and other such schemes, has pushed this country into a very advantageous position vis-a-vis Europe. Because of our temperate climate and our great potential for growing good quality grass we are in a unique position and any money spent on helping the farmer to advance and increase production should be welcomed. For that reason I am very happy, indeed, to see this Bill before the House. I compliment the Parliamentary Secretary on bringing it in.

I should like to welcome very sincerely the provisions in this Bill. Public representatives have wide experience in dealing with State Departments and semi-State bodies but the Agricultural Credit Corporation stand out in their workings as an ideal of what semi-State bodies should be. In the representations made to me in connection with agricultural credit it is most unusual to find a farmer complaining that he has made application to the ACC and not received a reply, or that he has not got a decision on his application, or that the decision was entirely wrong. Any representations I receive of this nature are usually from people who are not aware that money for various schemes can be obtained from the Agricultural Credit Corporation. Having put these people on the rails, I normally find that the Agricultural Credit Corporation do their job in an admirable fashion. I attribute this smooth working of the corporation to the fact that many of the people in head office in Dublin started their careers as field advisers with farmers and were promoted into the ACC. Hence, in the office in Dublin there is a very wide knowledge of individual cases, of regional and county problems, and of all the factors that are important when this body are deciding to make money available to farmers.

We welcome this increase in borrowing by the ACC. It worked in the past, within the limits and within the regulations laid down when it was set up to do the job, and it has been entirely successful. Senator Quinlan was slightly more pessimistic in his remarks about the forecasts that were made by the IFA livestock committee a few days ago. He was more pessimistic than I might be in evaluating what can possibly be done by the agricultural community in the coming year.

From my own observations of some of the pilot areas where intensive advice was made available to farmers, where increased incentives were given to them, and from the increased production which was achieved in the last five years, I am absolutely convinced that the figures that were published yesterday by this committee will be achievable. I have no doubt about it, because I have seen over the past five years in some of the poorer areas of the country an increase in cow numbers of something like 50 per cent. Fifty per cent more in the next five years would be a higher target than that which has been set.

In regard to the question of this investment of £100 million a year, which at present is 25 per cent of the entire agricultural production, this would be for the first year and perhaps the second year, and once the fruits of the further investment begin to show up it would be a much lesser percentage of the money. In relation to the whole question of taxation on farmers, I am convinced that no other section of our industry have used an increased income more wisely or prudently than have the agricultural community. It is quite obvious from going around the country that farmers have enjoyed a higher income in the past year or two. It is quite obvious that this money is not being used for the luxuries of life but is being ploughed back into the land and is helping our entire economy. I have no doubt at all that those 100,000 jobs a year could be provided if investment was available for the agricultural industry.

The stage has been reached when progress in agriculture is being hampered by lack of services. Some services have not been sufficiently financed or modern enough to suit an expanding agricultural industry. This can be seen where land requires reclamation. It can also be seen in some of the processing industries. When somebody suggests that money should be made available to farmers alone, I could not agree with this suggestion, because an expanding agricultural industry will require a service industry to keep it going. In my own area the land reclamation programme is being severely hampered by lack of sufficiently well-financed contractors to carry out the job of improving land. Very definitely in the bacon industry I can see profits to farmers being reduced because the processing industry has been under-financed in the past and is still being under-financed.

To a much greater extent than people realise farmers are being financed in their day-to-day working by co-operatives and private firms. These firms should have money made available to them, where greater efficiency can result from it, because this credit is being extended to most farmers in any case. The Agricultural Credit Corporation do an admirable job. If we did not have this organisation, think of the position of farmers making applications to banks. The ACC try to create the proper balance in investing their money for the achievement of increased production, taking into consideration the security factor, and the social implications involved. They lend out their money to a well-formed pattern. Family circumstances of the borrowers are always taken into consideration and also the requirements of the area, the social structure, and the type of farmer who is applying for the money.

Compare this with the attitude of our banks who in some underdeveloped regions have gathered up more money and have more money in savings than they are prepared to lend out to borrowers in those regions. In the west some of the banks have more money in savings from the rural community than they are prepared to lend. Money is being taken out of the poorer areas of this country and reinvested in what is regarded as safer and, perhaps, a more easily administered type of investment in a built-up area.

The agricultural community should be made aware of the importance of investing their money with the Agricultural Credit Corporation. By so doing they can be assured that this money will be equitably distributed for the good of a greater number of people in rural Ireland, and for the good of the entire economy.

Somebody mentioned that money should not be lent for buying land. I would not entirely agree with this. I doubt very much if the lending policy of the Agricultural Credit Corporation has made any contribution to the very high price of land at present. The Agricultural Credit Corporation lend money for land purchase with discretion, and certainly never in cases of speculation that have come to my knowledge. In cases of speculation the banks rather than the Agricultural Credit Corporation are the offenders. Very often they have made money available to people who are not dependent on agriculture and who pay exorbitant prices for land in the knowledge that this is a very safe investment.

Another point I should like to mention is that a farmer cannot borrow more than two-thirds in excess of his fixed assets. This probably militates against the bacon industry at present. Practically all the agricultural field is under-financed. Pigs and milk are usually produced on the same farm. Farmers need to borrow to build up their dairy and cattle industry. Over the past few years dairying has given a much higher return than any other activity in agriculture. The farmer has fallen short of funds to expand his pig production, because he has met with this two-thirds obstacle. The investment in pigs, like the investment in cows and cattle, has become a big money business. We must realise that it takes almost £300 to provide a building for one sow and her progeny. I would ask the Parliamentary Secretary to bring this to the notice of the Minister. Some of us believe that this two-thirds limit should be abolished in some circumstances, particularly with a view to expanding the production of pigs on our many rich farms. As a result of this the pig industry is slipping out of the hands of the small and medium-sized farmer and going into the hands of the much bigger producer. This may be healthy and efficient for the industry but we would not like to see the smaller farmers losing their grasp on that industry which has been so important to them in the past.

This is a good Bill and the Agricultural Credit Corporation have done tremendous work. I look forward to seeing the land of Ireland giving increased production and a better return.

I should like to welcome this Bill as a man associated with agriculture all my life. I should like to thank the Parliamentary Secretary and the Minister for introducing the Bill here. I should also like to congratulate the ACC on the work they have done in the past for the agricultural community.

Something must be done for the small farmer. The previous speaker commented on the buying of land. The field at the back of the house of a small farmer is essential to this country. If he has a son, or is a young man with a family, he will keep the country going for the next generation and for generations after that. These people have been neglected. The big farmer can go to the ACC or the bank. He has the money to buy the farm. The small man has to go abroad or go into industry. The small farmer kept this country going and he should be assisted now. The big farmer can go into the bank and get £50,000 but the small farmer who will take off his coat and work will not get £2,000. A small farmer will get four cows through the creamery from the ACC. If he has a field to sell he will not get £5,000. That is what the Government should be looking into. The Parliamentary Secretary comes from an area where the majority are small farmers. I come from an area where there are both big and small farmers. I am speaking on behalf of the small farmers.

Two-thirds of this £120 million will be spent on those who do not really need it. The small farmer will not get it because he has nothing to offer. In a few years the Government of the time will be paying the small farmer to stay on the land and he will get money without having to pay interest because he will be an asset to the country. There will be nobody left to work the land if the small farmer is not looked after now. He has been the mainstay of the country down through the years. I ask the Minister through the Parliamentary Secretary, to look after those people and make some allowance in this £120 million for the small man whether he has two or ten sheds or even if he has no shed.

I am very pleased to say there has not been one dissenting voice regarding the implications of this Bill. I am delighted to hear Senator Bob Aylward speaking on behalf of the small man because everyone across the Shannon, so far as I know, would be considered in other parts of Ireland as small men and he quite rightly stated, when he interceded on their behalf, that money should be made available to help those small farmers. Just one or two extra acres would help them in more ways than we can imagine because in the small farms they make more use of whatever limited acreage they have than in some places where there are stud farms and larger farmers.

The cost of applying for loans is not very high. Senator Keegan is under the impression that it is. The cost of administration under the ACC is less than 2 per cent of the total expenditure. The ACC are constantly reviewing their system and its flexibility and trying to make things less difficult, cutting out as much red tape as they can and giving more power every month to the local officers who can, on their recommendation, have a loan rejected or granted. Their investigations are rather detailed. People will always tell the good side of their story but leave out something detrimental to the granting of a loan. Nobody wants to give a loan to a person who is insolvent and will not be able to pay. It will create difficulties along the line if people get loans and cannot pay them back. The ACC have never rack-rented or never evicted or made difficulties which were not already there or were made by the applicant. Some people are black listed but that is their own fault. This black listing system is not perpetuated to involve other members of the family.

I know of a case where it was carried on from father to son.

Mr. Kenny

Perhaps the son was as bad as the father.

He was a very successful farmer.

Mr. Kenny

This might run in families. If you have any complaint to make about the continuance of black listing just let the Minister for Finance know and he will deal with the matter in a perfect way.

Senator Butler mentioned that liaison with farm advisers should be got under way. The ACC employ their own agricultural advisers. They also avail of the assistance of farm advisers employed by the committees of agriculture and are in constant liaison with these people so as to get true information regarding applications for loans. Such liaison will become a permanent feature of the loan schemes when the new EEC farm modernisation scheme comes into operation, possibly in January, 1974.

If Senators have any information about refusals and bring them to the notice of any member of the committee or of the directors of the ACC they will bring it up at the next meeting at a later date and it will be thrashed out there for the second time and under further scrutiny this application may be granted.

I am replying very briefly because we want to finish by 10 o'clock. If I do not finish before 10 o'clock it means that we must come here tomorrow morning and, as the Appropriations Bill is to be taken tomorrow, we will have to wait until 12 o'clock before I finish.

Senator Quinlan went rather deeply into mathematics. Such is his bent. In the Department of Agriculture and Fisheries seminars and courses are held for the training of young farmers to help them to keep in touch with developments in machinery. Field days are held all over the country. If farmers visit these events and take courses they undoubtedly will become perfect farmers and the money they get from the ACC or elsewhere will not be wasted.

Senator O'Brien complained of a round-about system of dealing with loans. I find it very difficult to accept this because when somebody applies for a loan red tape is cut in the ACC. If the person is a straight-forward applicant, usually that loan is granted. As regards liaison with the Land Commission, the Senator's remarks will be brought to the notice of the proper authorities. If anything can be done to improve contact between those two bodies it will be done.

Every Senator who spoke voiced the same sentiments in regard to investment by the public in the ACC. It should be in everybody's mouth and it should be a propaganda point in all the farmers' organisations that we should invest in what we have and what we believe in, and that is the farming community. If we have confidence in them—and ACC represent the farmers—everybody should agree that the money of Ireland should be invested in a proper association which will give a proper return. No matter what anybody says the agricultural industry is the soundest and most fundamental industry in this country. From this on, I trust with the help of the ACC that we shall see Ireland move forward within the next ten years at a rate 100 per cent faster than it did over the last ten years.

Question put and agreed to.
Bill put through Committee, reported without amendment, received for final consideration and passed.
The Seanad adjourned at 10 p.m. until 10.30 a.m. on Wednesday, 19th December, 1973.