Seanad Éireann debate -
Tuesday, 5 Aug 1975

Vol. 82 No. 13

Nítrigin Éireann Teoranta Bill, 1975: Second and Subsequent Stages.

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

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Bruton)

Nítrigin Éireann Teoranta, with the approval of the Government, have undertaken the establishment of an ammonia and urea manufacturing plant at Marino Point, Cork. This project will be the first user of natural gas from the Kinsale Head find. Apart from the obvious and welcome effect of creating new industrial employment —about 500 permanent workers— the project will have the effect of ensuring supplies of nitrogenous fertilisers to the Irish agricultural industry without violent fluctuations in supply and prices. It will also, through replacement of imports and by way of exports, make a major contribution to our trade balance in a few years' time.

The purpose of this Bill is to facilitate the financing of the project by increasing the limits imposed by the Nítrigin Éireann Teoranta Acts, 1963 and 1970, on the issue and taking up of the share capital of NET and on the amount that the company may borrow under ministerial guarantee. These increases are considered essential.

The Bill proposes to increase the authorised share capital of NET from the present statutory limit of £7.5 million to £27.5 million. It further provides that the Minister for Finance may take up or purchase shares of the company up to a limit of £22.5 million and that he may take up additional shares up to the new limit of £27.5 million, subject to prior Government approval. It was considered desirable to include this latter provision as it was felt that in the future and in certain circumstances the Minister for Finance might wish to subscribe for additional share capital of the company. Section 3 of the Bill proposes to enable him to do this up to a limit of £5 million without the necessity of enacting further legislation. In addition, the Bill proposes to increase the limit on the guaranteeing by the Minister for Industry and Commerce of borrowings by the company from the present limit of £2 million to a new limit of £30 million.

In order that Senators may fully appreciate the need for the increases proposed, I will outline the main features of the Marino Point project. Briefly, the company are building a 1,350 metric ton per day ammonia plant and a 1,000 metric ton per day urea plant. The annual production of the plants will be 435,000 metric tons and 310,000 metric tons respectively. Work on the project, which has already commenced, will take about three years to complete. The ammonia produced will be utilised mainly in the making of nitrogenous fertilisers— calcium ammonium nitrate and urea —which are straight nitrogen fertilisers used mainly on grassland. Ammonia will be shipped to the company's calcium-ammonium-nitrate plant in Arklow. Surplus ammonia will be sold to other Irish users as well as abroad. The urea will be marketed both at home and abroad. It is estimated that the output from the new complex will secure essential supplies of nitrogen to the Irish farmer for the next decade and make this country independent of outside sources of supply of this commodity.

The capital cost of the project is estimated at £42 million and, allowing for other costs such as working capital requirements, price escalation, preproduction expenses and pre-production interest repayments, the total could be as high as £63.5 million. This is by any standard an extremely large investment but one which, I feel, is justified when one considers the long-term benefits and security which will accrue to the country's biggest industry.

It is envisaged that the required finance will be provided in the following manner: share capital to be provided by the Minister for Finance, £15 million; IDA grant to be paid during the period 1975-1979, £5 million; remainder from the company's own resources including borrowings, £43.5 million, estimated.

From these figures the need for the proposed new Ministerial guarantee limit on the company's borrowings can be readily appreciated. However, despite the anticipated heavy scale of borrowings the company are confident, because of the expected profit-making capacity of the project, that all borrowings can be repaid by the end of 1982. At this stage, in commenting on the viability of the project, I consider it relevant to point out that, because of the high level of State investment, it is proposed to amend the company's articles of association to provide for the payment of dividends. In other words, the State can expect from 1982 onwards to obtain a return from its heavy investment in NET.

Apart from securing supplies of vital fertilisers to the Irish farmer, it is estimated that, at current world price levels, the new project when in full operation will benefit the country's balance of payments to the extent of £60 million per annum. I confidently recommend the Bill for approval.

Mr. Killilea

I welcome the Bill. We on this side of the House are glad to note the creation of employment for 500 people in Cork. It is heart-warming to see that at last we are making an effort to supply our major industry from our own natural resources. In welcoming the Bill there are a few points I would like to make concerning Nítrigin Éireann. They have done a reasonably good job. They have had their complications. Due to the bad management of the Government every store in the country is full of fertilisers and farmers are unable to purchase them. We have had the greatest down-fall in the percentage of fertiliser application this year. The Government blamed the Arabs and inflation for this. That is the opinion of the financial experts in this Government of geniuses.

However, I welcome the fact that urea will not be imported from other countries such as Russia. I hope the Government will play some part in helping the farmers to purchase this product. No matter how much of it we make, it is an unviable proposition if the products manufactured by this company cannot be purchased at a reasonable price. The person buying urea must know that he will have a marginal profit at the end of the year after its application. The Parliamentary Secretary was the first person to come into the House in two years and proclaim to us that agriculture is the country's biggest industry. That was not the attitude of the Government over the past two years.

Margins of profits have reduced enormously. There has been evidence of farms sold at abnormally low prices and of farmers being continuously in trouble. Agriculture is in such a state at present that Government rescue is needed, particularly in the application of fertilisers. If the Government could help in some way towards the purchase of fertilisers for the farming community we would not have the situation that arose last week where the ports in the south eastern part of the country were picketed due to importation of fertilisers. The reason was that producers of fertilisers, particularly NET had stockpiles of fertilisers unsold.

Some subsidisation, such as direct payments to farmers to enable them purchase fertilisers, is needed to maintain the production rate obtaining when Fianna Fáil left office two years ago. Fertilisers have been the one feature in farming that caused most trouble in recent times. Prices have increased by more than 150 per cent. There is something very wrong in the distribution and sale of fertilisers. I know the Parliamentary Secretary is aware of what I mean.

While we welcome the fact that our natural resources will be used to produce two necessary products we hope also that some relief will be forth-coming from the Government to enable farmers overcome this serious situation in which they find themselves unable to buy fertilisers. If the Government came to the rescue of the farmers they would automatically be coming to the rescue of the workers who picketed the ports to stop the importation of one of the fertilisers mentioned here. They would be creating also a better atmosphere for Nítrigin Éireann Teoranta and other companies which are our biggest producers of fertilisers. Perhaps the Parliamentary Secretary could give us an assurance that the Government would come to the rescue of the farming community by providing some form of subsidy in alleviation of this abnormal price. They would thus also relieve this terrible stockpile of fertilisers.

In welcoming the Bill I welcome also a statement by the Parliamentary Secretary, on behalf of the Government, that they will at last come to the rescue of the farming sector, the workers and of Nítrigin Éireann Teoranta in particular.

Mr. Butler

I welcome this important Bill, providing help for the farming community. Nítrogin is one of the most important fertilisers required for producing food for the country and for export. It produces not only grass but it is also part of the compounds that produce barley, wheat and other grains necessary for foodstuffs.

We, on this side of the House, have always recognised the importance of agriculture. We realised the importance of that industry by appointing Mr. Clinton as our Minister for Agriculture and Fisheries. We are proud of the position he holds and the work that he is carrying out for the industry.

We are very happy also that this factory will be sited in Munster. Munster contributes more to agriculture than does any other province. Munster can produce the beef, milk and anything else necessary from its lands. Nitrogin will help to produce more. We recognise the justified investment of £63.5 million.

The co-operative movement should be deeply interested in this factory and should be allowed to invest in it part of its finances. This is a co-operative movement that distributes most of the fertilisers produced or purchased outside the country. A co-operative movement is one that helps to sell produce, to educate the farmer and keep down the cost of fertilisers, especially nitrogen. I heard many complaints a few months ago about stockpiling. As somebody involved in the co-operative movement I know that the co-operative movement bought its fertilisers at a price and sold them to the farmers at very little profit. It is not a movement that creates large profits. It is owned by the farmers, managed by the farmers and, therefore, is to their benefit. It benefits them particularly by keeping down the cost to the farmer and whatever is left is distributed amongst them. I should like to see the co-operative movement involving itself more in this industry, having a large share in it. They should be allowed a monetary investment so that the people who are closest to the soil would have a say in the manufacture and distribution of fertilisers.

I am happy with this Bill because, as the Parliamentary Secretary said, it will create 500 new jobs. Everybody will be happy with that situation. It will create 500 new jobs at the centre itself but if we produce extra fertilisers to export and distribute it will create more employment. So it is not only 500 more jobs; it will create five times that number of jobs throughout the country. We must be very happy because of this.

If we value fertilisers we must value nitrogen. When the ground is treated with nitrogenous fertiliser rain has little adverse effect on the soil. I would advise farmers, even today, to spread nitrogen because the land will benefit from it. This is a product that can give great value for its cost. It is an investment in the soil. There is no doubt that nitrogenous fertilisers cost 200 per cent more than they did two years ago and it has been implied that because of the price they are not of great value. Even though the price has gone up 200 per cent, it is very good value still.

If we want products from the land we must spread fertilisers. If we must spread fertiliser it is no good spreading fertiliser without spreading nitrogen. For that reason alone nitrogen is important, even at the price it is costing today. I know that the farming organisations, the IFA and the ICMSA, have had meetings with their executives throughout the country to convey this message.

They have made the case for a reduction in the price of nitrogen. That is their job. They are an association and that association like any other one works to reduce the cost to the members. At the same time they are also advising the farmers to spread nitrogen because they realise more than anybody else what nitrogen means to the country and to the farmers.

I welcome the Bill. I welcome it because everybody in this country will gain by the introduction and the passing of this Bill. The manufacture and export of nitrogen, as the Parliamentary Secretary stated, will help our balance of payments by £60 million. That is not something to be sniffed at. We should welcome this Bill for the reasons I have stated and, on behalf of this side of the House, I welcome it.

Mr. Dolan

I welcome this Bill. Last week we discussed Bord na Móna and we lavished well-deserved praise on them. Nítrigin Éireann Teoranta have also been doing very useful work so far as the nation is concerned. There are a few criticisms I should like to make. There is not much use in producing the article unless it is being sold. I do not know the general figures but it is a well-known fact that there is a fair amount of fertiliser all over this country lying in stock since last year that was not sold. If we are unable to sell the finished article we cannot maintain production for a very long time.

In recent years the farmers were fairly well aware of the benefits of using Nitrogin and other fertilisers, but it is a well known fact now that because of the way the price has escalated in the past three years it is beyond the means of any small farmer to buy fertilisers at present. Let us be honest about this. He has not the capital to do it. Fertilisers are costing from about £75 to £110 per ton. That is a very dear price and few farmers, especially small farmers, can afford to pay it. The price of cattle has deteriorated and confidence has gone from the pig industry and the cattle industry. There have been appeals, week by week and month by month, to people asking them to hold their stock. There is not much encouragement when they were selling calves last year at 70p whereas three years ago they were getting up to £70.

These are the things that must be got over to the farmer. It is all right advising and telling him he should do this but he is a fairly down-to-earth, honest-to-God person who has a fair idea as to the economies of the whole situation and he cannot dig down into his pocket when there is nothing in it and buy fertilisers at this exorbitant price. Consequently, because he is unable to do that, he is losing heavily.

I had great hopes when we entered the Common Market because of the fact that we have the best climate in Europe for growing grass, and we all realise that grass is the cheapest food that any farmer can produce. This year because of the poverty of the small farmers, apart from the dry weather, the hay and the silage crop is halved. The reason is because of the bungling of this Coalition Government, last spring the farmers got nothing for their stock, they were fleeced in the meat markets all over the country and they were unable to buy fertilisers. Consequently when the good weather came they had no silage or grass to cut. The prospects are gloomy enough for them in this coming winter.

If the high cost of fertilisers is maintained the farmers will not be in a position to buy it, if somebody does not come to their rescue. I do not know who is going to come to their rescue because last week the Government asked the farmers to pay an extra £2½ million to subsidise some other project at a time when the farmers were in their worst financial situation in the history of the State.

This is a serious matter for the nation because thousands of people are depending on the farmer not alone to produce the raw materials. We should remember that many people work in milk powder factories, meat factories and other agricultural-based industries. These people will lose their employment if the farmer is not able to produce the raw materials, as has happened this year.

I am pleased that gas has been found off Kinsale and that it seems to be of sufficient quantity to make it a viable proposition to use it in industry. I am pleased also that it will create 500 new jobs. There are more than 103,000 unemployed, and anything that would help to ease this problem would be welcome. When these new industries are announced in big headlines one would think that the 500 jobs would be made available immediately, whereas it is often the case that they are spread over maybe two or three years. Initially, the industry might only employ an extra ten or 20 people.

I do not know what experiments Nítrigin Éireann are carrying out, but there is a need for the carrying out of a study by scientists of the fertilisers used by the farmer, in particular pig slurry. In Bailieborough experiments of this kind are being carried out to see if the liquid can be sold in bulk form to the farmers. This would save farmers having to import fertiliser. For too long farmers have had to import fertiliser. It is time to see what can be done with the fertilisers available locally. The fertilisers polluting our lakes and rivers could be put to better use if sold to farmers.

Senator Butler mentioned the co-operatives. They have done good work in my area. Nobody is more aware of the plight of the small farmer than the co-operatives, and that their production is down on the previous year. They know that this is the cause of the high price of fertilisers.

Co-operatives are owned by the small farmers and they carry out a very important function. Last week we discussed the Agricultural Credit Corporation and we heard that that organisation knows exactly how the small farmer is placed. If the co-operatives have not sold much fertiliser this year it is a clear indication they are not doing well. Very often the co-operatives buy fertilisers in the late autumn for sale during the winter at, as Senator Butler said, a competitive price to the farmers. If farmers are not able to buy these fertilisers with the various credit schemes available to them this warrants an investigation. The Parliamentary Secretary should consult with his advisers to see what can be done to help the farmers this year and ensure that they will not be in the position of not being able to buy fertilisers and not having sufficient fodder to feed their cattle during the winter. There is no use waiting until the horse has gone to bolt the door. Now is the time for a survey to be made so that there will not be a stockpile of fertiliser because the place for it is on the farms. That is my message to the Parliamentary Secretary.

Mr. Kilbride

I welcome this Bill. I am sure it is welcomed by every sensible person, whether he is in business or a worker but, especially, by farmers. The dream which existed when Arthur Griffith founded Sinn Fein was that we would have our own raw materials and industries to provide sufficient employment and, consequently, a higher standard of living. Anybody who thinks there is something wrong with this proposal should have his head examined. The real situation which issues from this Bill is that we are creating 500 more jobs. Even if it takes up to three years to put these 500 people in employment it will mean we will have that number extra employed. This will also enable us to get in external assets and eliminate the buying of foreign goods; it will increase production in agriculture; make the nation more industrialised and the people wealthier and happier. This is the kind of thing we would like to see happening in Ireland, something that would stand the test of time. The people who work in our industries get satisfaction from the knowledge that they are using our natural resources. This makes us less dependent on imported raw materials for which we have to pay such high prices.

This is a welcome new departure as far as the farmer is concerned. Farmers are doing a satisfactory job in the production of livestock and dairy products. Nitrogen is of vital importance whether it is for the production of beef, milk, corn crops or vegetables. The extent to which it is applied in different parts depends on the type of land. In certain parts it is not in great demand but it is necessary for the production of cereals and grass everywhere. Nitrogen is necessary for a second cut of silage at this time of year. Nitrogen is the only thing that enables the farmer to use economically the land he has had under grass production for silage or hay earlier in the year. It is the lifeline for the production of fodder for all kinds of livestock with the exception, of course, of pigs. Although pigs are let out to pasture very often, it is for the dairying industry mainly that fertiliser products are used for silage at this time.

It is heartening to see that, instead of having to go into another market to buy fertilisers at the price at which they were being dumped here recently, thus putting some of our people out of employment, we can buy them competitively. Not only will there be no reduction in employment but we will give employment to 500 more people. This is a circumstance that should be welcomed. I cannot see Senator Dolan's reasoning when he warns against the consequences of this project. He acted as devil's advocate initially, although later he referred to the very obvious merit of this project. I want to wish the Government, Nítrigin Éireann and the Minister every success in this project. I hope we will see many more such projects with the same sort of productive capacity from the natural resources of this country which is bound to make our economy independent of outside interests.

Mr. Keegan

I think this is the fourth time in recent weeks that Government Ministers have come before this House seeking to increase the financial resources of semi-State organisations. Bord na Móna, the Agricultural Credit Corporation and the Industrial Development Authority have all been seeking increased financial resources. Now there is the Nítrigin Éireann Teoranta Bill, 1975. I regard this Bill as partly a rescue operation which will enable Nítrigin Éireann to continue in business, but I am disappointed that there has been no mention whatsoever in the Bill of the competitiveness of Nítrigin Éireann.

Senator Butler was correct when he said that nitrogen prices have increased by 200 per cent over the last two years. Nobody knows that better than the farming community who have always endeavoured to apply liberal supplies of fertilisers to their soil in order to increase production. Their efforts were hampered in recent years because of that huge increase in fertiliser prices. I am disappointed the Government in this time of crisis did not see fit to introduce some form of subsidy in an effort to assist the farmers in applying this fertiliser to the soils so as, first of all, to clear the mountains of fertilisers which are lying in stores and yards thoughout the country, and secondly, to increase production on farms, to increase the fodder available for the feeding of livestock, to increase the output from the growth of cereals, root crops and so forth.

The kernel of the problem lies in the fact that the price was so prohibitive, that the farmer felt he was not in a position to purchase the fertilisers and to apply it at the rate which was necessary to keep production increasing. Agriculture is so important to the economy that we should ensure that nitrogen is produced at a price within the reach of the farmer, who, in the end, is the man who will maintain the 500 jobs which have been mentioned and all the other jobs which the other industries associated with the fertiliser industry will help to create.

The fertiliser industry is a very costly one requiring a great deal of expensive and sophisticated equipment. It has the support of all those associated with agriculture and of the Members of the Oireachtas, but we must instil into the farming community the confidence that there is still a future for agriculture and for investment in agriculture. Because of the unstable position of markets for agricultural produce the farmers are driven to the point of despondency. The Government must take the bold step of announcing their long-term policies for agriculture, their long-term policies to ensure further use of fertiliser, because this is one industry that is tied up completely with the success of agriculture. If agriculture continues to flourish then the demand for this produce will, in turn, guarantee the success of Nítrigin Éireann and guarantee the safety of the jobs of those employed in Nítrigin Éireann and of the jobs that are about to be created.

I was glad that Senator Butler mentioned the role of the co-ops. The Government should introduce some form of subsidy here. It could easily be applied to the co-ops because of their dealings with the farming community. If fertiliser could be supplied to co-ops at a keener price this would encourage the further use of fertiliser. As I said before, we have heard of the mountains of beef, and mountains of butter. Now we have mountains of fertiliser.

I support the Bill in principle, but what is needed is the wherewithal to encourage an increase in the use of fertiliser. If it can be done through the co-op or through any other retail outlets that are available, or if it can be done through increased efficiency at manufacturing level, it will redound to the benefit of agriculture and the economy as a whole.

These things cannot be done without restoring confidence among that community. Such confidence has been lacking in recent years. We need more than this Bill. It merely helps Nítrigin Éireann Teoranta. It does not help the farming community. Therefore, I anxiously await the reply of the Parliamentary Secretary, who comes from a family directly connected with agriculture who have, indeed, made valuable contributions to agriculture. I hope he will be able to inform the House about some new methods and some new thinking, which will create further demand and will lead to more widespread use of nitrogenous fertilisers.

We must do this now. There was a fall off in demand last year. There is no improvement in the position this year. The farming industry will feel the loss if they do not use fertilisers because the soil will lose its fertility, production will fall and every section of the community will suffer in the long run. I give this Bill a qualified welcome because, as I mentioned, I have some reservations about it.

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Bruton)

I would like to thank Senators for the welcome they have given to this Bill. I agree with them in the emphasis they have placed on the importance of the agricultural industry. The Bill emphasises the interdependence of various sectors of the economy with agriculture. The success of the project will, of course, be in large measure enhanced by the farmers' decision to use fertiliser, particularly nitrogenous fertiliser, in large quantities.

Agriculture is an industry which has a very high domestic added value. Most of the inputs into agriculture are produced within the State and this Bill will further strengthen that position. We have been importing ammonia, which is used to a large extent in the production of calcium ammonium nitrate in Arklow. The Bill will provide the money necessary to enable us to produce our own ammonia and thereby increase the domestic added value of the fertiliser industry and indirectly of agriculture which is the user of fertiliser. The economic sense of this can, perhaps, most eloquently be demonstrated by referring to the increases in price which have taken place in ammonia. At 1st July, 1972, ammonia, which was being imported by NET, cost £25 per ton. At the present time it is running at between £80 and £120 per ton and indeed reached a peak of £180 per ton at the end of 1974. The Seanad can see from those figures the substantial saving which we will be making on this type of import which has been increasing very rapidly in cost in recent years.

Some Senators seem to imply criticism of the Government in relation to the increase in the cost of fertilisers, but they know that, particularly in the case of nitrogenous fertiliser, ammonia, which is based on natural gas and oil products, has increased in price because of the world wide energy crisis, which has had a direct effect on fertiliser prices. It is a consequent world-wide phenomenon also that there has been a fall in the use of fertiliser, but I am glad to be able to tell the Seanad that from figures supplied to me today by the Department of Agriculture, the use of nitrogenous fertiliser has increased in the most recent 12-month period. Farmers are thereby demonstrating their confidence in the future by increasing their use of this fertiliser.

On the other hand, there has been a fall in the use of phosphoric and potassium fertilisers of between 40 and 45 per cent, and this is a cause of concern. Speaking as a person not directly involved in this field, I think farmers would be wise to consider carefully the importance to them of maintaining a balance. It is right that they should increase very substantially their consumption of nitrogenous fertiliser. That is the matter with which we are directly concerned in this Bill. They should also, over a period of time, maintain a balance to ensure that they use sufficient P and K as well. I have some figures here supplied by the Agricultural Institute, and they show that over most farms one would expect that where P and K are omitted for one or two years on single-cut silage or hay yields will be reduced by 30 per cent. On particular farms, after three years cutting of grass, with three cuts per annum, without phosphates and potassium, yields have been reduced to 30 per cent of the maximum, that is a reduction of 70 per cent, because the use of P and K was neglected over those three years. While farmers, naturally enough, are right to react to movements in prices, which have been more severe in the case of P and K than in the case of N, they would be wise to examine the long-term implications of reducing their use of them.

Farmers' interests are protected in the management of NET as there is a farmers' representative on the board. Senator Dolan expressed some concern that the 500 jobs might be a rather long-term prospect and that there would be only about 20 or 30 jobs in the immediate future. In fact the reverse is the case. There will be a larger number of jobs in the immediate future because these will occur in the construction of the plant. There will be 1,000 workers involved from now on in the construction work. The figure of 500 workers relates to the permanent employment which will be created when the plant is constructed and in production.

There is one final point I should like to make. The debate was one which could more appropriately be replied to by the Minister for Agriculture and Fisheries than by the Parliamentary Secretary to the Minister for Industry and Commerce, but I can say that the Minister for Agriculture and Fisheries has established a fertiliser promotion committee consisting of chief agricultural officers, of his Department and representatives of the fertiliser industry, to undertake publicity and advisory measures aimed at increasing fertiliser consumption. In view of the figure which I supplied earlier, this is sound common sense to encourage farmers to use more fertiliser at this time. When one compares the cost of fertiliser with the yields which can be gained from increased use one will see that even still it makes very great economic sense for farmers.

I should like to conclude, therefore, by thanking the Seanad for the welcome they have given to this piece of legislation.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment, received for final consideration and passed.