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.