Agricultural Credit Bill, 1982: Second and Subsequent Stages.

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

The purpose of this short Bill is to increase the maximum amount which the Agricultural Credit Corporation may borrow from the present figure of £600 million to £800 million and to increase similarly the maximum amount of borrowing which may be guaranteed by the Minister for Finance.

The Agricultural Credit Corporation were established in 1927 to provide a specialised credit service for Irish agriculture. The corporation have fulfilled this task admirably over the years. They have pioneered the creation of credit facilities specially designed to take account of farmers' particular problems such as seasonality and long pay-back periods. From small beginnings, the corporation have grown into a highly-developed organisation with 50 branches throughout the State. They have become an important instrument in the development of Irish agriculture, their total advances by way of loans and hire purchase contracts amounting to £455.8 million at 31 December 1981.

After the depressed conditions of agriculture in recent years, the increase in farmers' real incomes in 1982 is welcome, not only because of the resultant improvement in the living standards of farming families but also because it provides hope that a period of renewed expansion in Irish agriculture has commenced. The Agricultural Credit Corporation have a major role in facilitating this expansion by the provision of further credit through their range of loan schemes geared to the needs of agriculture.

However, the corporation are very close to their statutory borrowing limit. That limit therefore needs to be raised if the corporation are to acquire the resources necessary to expand their lending to farmers and agribusiness. It is expected that the increase of £200 million provided for in this Bill will be adequate for a period of about two years when the Oireachtas will have another opportunity to review the position. As the guarantee by the Minister for Finance of the corporation's borrowings is of considerable value to the corporation in their efforts to attract deposits, it is desirable to increase similarly the limit on the amount of the corporation's borrowings which may be guaranteed.

This Bill will accordingly enable the corporation to fulfil their role in the future development of Irish agriculture and I commend it for the approval of the House.

I welcome the Minister of State to the House, congratulate him on his appointment and wish him well in his new role.

I welcome this Bill which should give confidence to farmers and those involved in agriculture, whether on the input side or in the processing industry. This underlines the importance of agriculture to the economy. The Agricultural Credit Corporation are a very important element in the agricultural industry established in 1927 and I look to them to give a lead in the development of Irish agriculture.

Over the past five years farmers have experienced tremendous difficulties. I remind the House that this is the fifth year of recession in agriculture. From the corporation's report and the chairman's report to last year's annual meeting, one readily sees that all concerned with the credit corporation interpret correctly the situation in agriculture and understand the problems. Nevertheless, I was taken aback to find the corporation, a semi-State body, going after its pound of flesh in the courts over recent months. This is deplorable. Those in agriculture expect this semi-State organisation, this limb specifically designed to help farmers, to set the pace, as it were, in the agricultural credit area and I was disappointed at their rather harsh attitude. However, I accept that they are the experts in this field.

The importance of agriculture cannot be overstressed. It is also very necessary to recognise the great difficulties in agriculture. Agricultural prices are very carefully fixed each year by the Commission and increases in the main, are always modest. There is absolutely no attempt, either in the Community or at national level, to put any limit or curb on inflation as it affects agriculture. Our inflation is around 16 per cent, compared with our competitors — a little over 4 per cent in Germany and 5.7 per cent in the United Kingdom. It puts the Irish agricultural producer at a very distinct disadvantage. Much of our machinery and, indeed, inputs into agriculture such as manures are imported and no attempt is made to limit the annual increase in the costs of these commodities. In addition, this year we have VAT at point of entry, which puts 30 per cent on to agricultural machinery. This has resulted already in many merchants and agricultural garages having almost empty compounds which heretofore used to be full of farm machinery. If that situation is allowed to continue, the farmer will be ordering farm implements and machinery from a catalogue.

The decline in agriculture is very closely tied in with the loss of jobs. I hope that the Agricultural Credit Corporation will take the lead. As I said, I welcome this provision which shows their determination to provide the necessary finance to re-equip agriculture and set it on an upward trend again. I hope that, since the Oireachtas is providing the corporation with the tool, that is the finance or the facilities necessary to raise the required capital, the corporation will meet the difficulties that farmers are experiencing at present.

It is very necessary that stock numbers be increased, but from experience over the last couple of years this will be a slow process. Unless the credit corporation introduce a new system, at least for short-term stock development loans, and provide capital at not more than 10 per cent fixed interest rates for the specific purpose of increasing stock numbers, it will be difficult to get farmers to develop their industry fast enough. It is not necessary to be an economist to see the very direct relationship between increases in stock numbers and increase in industrial jobs in the agricultural processing industries. This is a pressing problem and one that I hope the Minister will address his mind to as soon as possible.

Also, there is a great need to follow through by creating as many jobs as possible in the value-added area of agricultural processing. The agricultural industry and agribusiness is tied in very closely with job opportunities, especially across rural Ireland. Stock numbers are showing a slow upward trend and I hope that the Minister and the corporation will be able to come up with a very special deal and set the pace for the commercial banks to follow suit in encouraging farmers to take the risk of increasing their stock numbers. Surely, there must be thousands of extra jobs available in the food processing industries, if we had a higher density of stock on the land which at present is lower than a few years ago.

I must refer, in this context, to the scandal of our huge food imports. The Minister for Finance, perhaps wearing a slightly different hat, must deal with the cliques and rings of the supermarket chains to ensure that these do not continue with the present unfair trading and price fixing. This can only be brought about by equipping the farmers to produce and the processing industries to process the produce of the land and compete with food imports.

It is quite extraordinary that while there are a number of plants producing chip potatoes working right across the country — indeed, one not too far from the Minister's own place — yet they find that they are not able to supply semi-State organisations, for instance, the people catering for Aer Lingus and the civil service catering department. These people seem to prefer the imported Belgian chips to the ones produced in the midlands and the price does not seem to be a factor. These rings will have to be broken in the interests of the development and retention of jobs in Irish agriculture. Farmers and market gardeners must be encouraged to produce for the markets both home and export and not blindly continue to try to market what they produce as at present.

The recovery in our economy will only come to fruition if we have a very vibrant agriculture. I hope that the corporation will take this opportunity to give a lead in reviving agriculture. Indeed the Bill gives the corporation the facility to do that. It is necessary to tie in production, processing and marketing, with the corporation providing the finance for individuals, co-ops and companies who are engaged in these areas. The failure of the last administration to implement the interest subsidy scheme — or the rescue package as it was called a year ago——

I am sorry to interrupt the Senator but he is going outside the scope of the Bill.

I bow to the ruling of the Chair but I thought it might be appropriate to discuss the interest rates and the fact that the ACC are partners in the input packages designed by the Ministers for Finance and Agriculture. Like all other lending institutions, the ACC have been dragging their heels. I hope the Minister will make an effort to introduce the interest subsidy scheme which has been in abeyance for two and a half years. I hope the Minister for Finance will take up where he left off almost a year ago and introduce the original scheme which this time last year was back-dated to April 1981. It will be possible to do that because this year interest rates were reduced and therefore the £5 million which the Government earmarked in the budget should cover the period for which it was designed in the budget of 11 months ago.

I hope the ACC will play their role. It is no use recording recognition of the problem in their annual report, telling farmers what they already knew and then blandly carrying on as if they were operating in a different country. I would remind the ACC that they have a statutory duty to service and to serve Irish agriculture, and the nation as a whole will not forgive them easily if they do not shoulder their responsibility as a semi-State organisation. In such a capacity they are equipped to give a lead, they must give a lead and it cannot be left, it would be unfair to leave it, to private enterprise to set the pace in this regard.

I expect the Ministers for Finance and Agriculture to insist that the rescue package in the scheme will be implemented without further delay. The problem caused by the non-spending of the money will not go away without the aid of the institutions concerned. People say there has been bad borrowing, but I say equally there has been bad lending. Lending institutions, whether private or public, are well equipped with advisers, specialists who are able to vet everything. If they make mistakes we cannot expect farmers who have not got the benefit of such expertise to be shouldering all the blame. I request the Minister for Finance to take off from where he left off in February last, to come to the rescue of the couple of thousand farmers who have found themselves in deep financial trouble because after they had borrowed at 9½ per cent the interest rate shot up to 20 per cent and it was consequently impossible for them to meet their commitments. They need the benefit of the rescue package and I am glad the ACC have taken the first step to make it possible for them to provide the additional resources necessary to service Irish agriculture which will then be enabled to make an immediate contribution to an expansion of job opportunities in the short-term.

I have very little to say on the Bill. I should like to welcome it and to congratulate the Minister of State on his appointment — I do not think it would be right for me to say that I hope he will have a long and happy reign. I hope he will be there for a while anyway until we get back again.

The ACC have come a long way since 1927. At that time and well into the forties, if you wanted a loan from them you nearly had to prove that you did not need it. Half the parish knew you were getting it because you had to have securities and to get people to witness your signature. Thank God all that has been dispensed with and in recent years the ACC have been most helpful to agriculture. I do not quite agree with Senator McDonald's criticism of the ACC for having taken people to court for bad debts. I have as much sympathy with the farming community as he, and I am sure the ACC explored all ways and means to try to get back some of their money before taking drastic steps. There are people who do not mind looking for loans without thinking of the day when they will have to pay them back. I am sure it is not the intention of the ACC to sell out any farms, but we all know they must get money somewhere because the Government cannot keep on giving them increases in their borrowing power year by year. I agree with Senator McDonald's comments on short-term loans at 10 per cent. In that regard the ACC should be different from banks, the rate of interest should be lower because I am sure a lot of the money they have in investments is farmers' money: I do not believe many business people invest money in the ACC. At the same time I suggest that farmers might invest more in the ACC. However, I repeat that the interest rates charged by the ACC should be lower than contemporary bank rates.

I thank the Seanad for its reception of this short Bill. I also thank the individual Senators who offered congratulations to the Minister and me on our appointments.

Senator McDonald referred to farmers' difficulties in recent years. The Government are fully aware of the problem and fully committed to bringing the inflation rate down. That is the most essential requirement for the recovery of farming. The ACC have been doing their utmost to give advice to farmers in difficulties. The 5 per cent interest subsidy scheme for developing and non-developing farmers and the scheme for farmers in severe financial difficulties together provide a substantial amount of aid for farmers. However, the primary responsibility rests with the farmers themselves. They must face up to the difficulties, cooperate with the Agricultural Credit Corporation and other lending institutions in sorting out their difficulties. There have been many problems encountered in the implementation of the interest subsidy for farmers finding themselves in severe financial difficulty. I should say that these difficulties are being sorted out. Recently the Agricultural Credit Corporation sent their first batch of applications to the Department of Agriculture, thereby placing themselves ahead of the commercial banks who have not yet supplied their applications. The delay in processing applications will not affect farmers' benefit because, in all cases, the benefit will be back-dated to spring 1981.

Senator W. Ryan referred to the efforts of the Agricultural Credit Corporation to collect repayments and said that this was a necessary exercise. The Agricultural Credit Corporation do receive deposits from all sectors of the community, whether agricultural or otherwise. This indicates the confidence felt in them by the public in general.

I thank the House for their helpfulness in the passage of this Bill and for having given it such a welcome. We shall have an opportunity, in a couple of years time, to review the situation.

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