Seanad Éireann debate -
Thursday, 13 Mar 1986

Vol. 111 No. 14

Report of Joint Committee on the Secondary Legislation of the EC—Processing and Marketing of Agricultural Products: Motion.

Mr. McDonald

I move:

That Seanad Éireann takes note of Report No. 18 of the Joint Committee on the Secondary Legislation of the European Communities: Processing and Marketing of Agricultural Products.

This is a very important report and was treated as such by the joint committee who in the first instance charged their sub-committee on agricultural and fisheries matters with the task of preparing an in-depth report on this very important topic. The joint committee in this report considered the efficiency of the Council regulation that is EC No. 355 of 1977, which was amended in 1984 by Regulation No. 1932 on the common measures to improve the conditions under which agricultural products are processed and marketed in view of criticisms which have been made regarding its operation in Ireland over the years.

We on the joint committee on agricultural and fisheries matters are indebted to our colleagues who undertook this examination. They devoted a considerable amount of time to it and I want to compliment all of them on the excellence and the quality of this report which certainly pulls no punches. In addition, the sub-committee had discussions with representatives of the Confederation of Irish Industry, Córas Beostoic agus Feola, the Irish Co-operative Organisation Society Limited, the Industrial Development Authority and the Department of Agriculture. It also took into consideration written submissions from those bodies and also from the Department of Fisheries and Forestry and Údarás na Gaeltachta. We in the joint committee wish to thank all the bodies for their assistance and co-operation.

Regulation No. 355 of 1977 provides grant aid from the European Agricultural and Guidance and Guarantee Fund towards the cost of capital investment projects which are aimed at improving structural efficiency in the processing and marketing of agricultural products, including fish, with a view to improving quality and presentation and thereby opening up new markets and increasing returns, which I suppose is what the entire modernisation of the agricultural industry and the CAP is about. For the purpose of the regulation, a project means any development involving public, semi-public or private material investment relating to building or equipment; for rationalising or developing storage, market preparation, preservation treatment or processing of agricultural and fish products; improving marketing channels and economic feasibility of new processing techniques on an industrial scale and especially the development of new products, by-products and technologies; energy conservation or removing, recovering and recycling industrial residues or waste in relation to facilities for processing and marketing of agricultural products; harvesting equipment subject to certain conditions if it is an essential element of the project and does not reppresent more than 10 per cent of the total project. The type of investments referred to were included in the regulations from 1 January 1985.

While one would think that the country was familiar with the availability of FEOGA grants there are still considerable numbers of family-based enterprises who go to the trouble of modernising and who sometimes may seek IDA help but unless they ask specifically to have their project considered for FEOGA or EC assistance, the grants are not pushed on them. I have always looked closely at the operation of the EC directives and of FEOGA in particular. Our agencies, including the Department of Agriculture and the IDA do not see it as their job to press these services and aids on the ordinary individual or citizen of the State, as compared with the response and modus operandi of some European countries who could be described as being “dab hands” at milking the system. For some peculiar reason, our public servants have a great respect for these European funds. Greater efforts should be made to qualify ordinary Irish entrepreneurs for the 25 per cent FEOGA grant aid on top of the Irish grant, which makes all the difference in establishing a successful project.

I will give a run down on the kind of regulations that people have to conform to when they get this aid. To be eligible for FEOGA aid a project must be consistent with the aims and objectives of the EC Common Agricultural Policy. FEOGA funds are directed primarily towards projects which help to guide production in a direction sought by the Common Agricultural Policy, involve the development of new outlets for agricultural products; improve quality of presentation; make better use of by-products; help lighten the burden of intervention; shorten or improve marketing channels; rationalise the methods of processing and assessing products situated in regions which experience difficulty in adjusting to the consequences of the Common Agricultural Policy. They must relate to agricultural and fish products which are listed in the original regulations of the Treaty. However, from last year, in certain cases the commission may decide that projects involving the processing of an annexed product into non-annexed products may be considered for aid under the scheme provided that such products constitute a new important outlet and increase significantly the prospects for disposing of basic products at Community level.

There was a slight but important change in the administration of FEOGA last year. If people were to read a document two or three months old or if the new regulation, which is not readily available to the ordinary person, was not made available to them, they could miss that. So, the message there is that people who have a development should be encouraged by the IDA and the Department of Agriculture to send in an application form and have it vetted. In most cases the big problem is that we are not even applying and even those who apply do not kill themselves qualifying.

The projects which qualify for grant aid must be designed to contribute to improving structural efficiency in the processing and marketing of agricultural and fish products. There is plenty of room in Ireland for countless numbers of projects to qualify under that heading. Projects should form part of an overall programme for a sector prepared by the Department of Agriculture and the Department of Fisheries and Forestry in relation to the fisheries sector. It should have the approval of the member state which must contribute at least 5 per cent of the cost of the project. A minimum national grant of 8 per cent, or 16 per cent where the projects are located in disadvantaged areas in the west of Ireland, is necessary to attract the maximum level of EC grant aid which may be provided, up to a maximum of 25 per cent in the eastern half of the country and up to 50 per cent in the disadvantaged area.

I would like to put a point to the Minister. There is a great differential, amounting to 50 per cent grant level west of the Shannon, but in the last re-designation of disadvantaged areas there are a number of areas east of the Shannon that are being aided by this Government and by the European Community as being severely disadvantaged. It is my contention that the projects in those disadvantaged areas should qualify for the maximum 50 per cent grant as well. Otherwise it makes a nonsense of the regulations.

West of the Shannon was designated for industrial development purposes by the national Government in 1957 and has had the benefit of greater level of grants. From 1 February 1986 many areas, including the Sliabh Bloom region of Laois-Offaly, the lea marshy area in Laois, Carlow and Kilkenny and areas in Wicklow and Limerick have been included in the severely disadvantaged areas, an additional 400,000 acres. I would like clarification today that those areas qualify for the higher rate of grant. That would make a tremendous difference in those areas by encouraging people to establish industries either specifically to process agricultural produce or to provide service industries for agriculture.

In my experience of the past ten years the only people who can avail of grant aid, especially for the service sector for agriculture, have been the large co-ops. Many large co-ops are not as efficient as private industry is. I do not think the ordinary person is getting the appropriate feed-back from the provision of large grants to the co-ops. There has not been a significant improvement in the spin-off of jobs. That is something we should look at, although I concede that grant-aid from FEOGA should not be considered as just job creating but should reflect the underlying desire to improve the efficiency of agriculture and agricultural industry.

Unfortunately, farm production projects involving modernisation or rationalisation or development of individual farms are not eligible for consideration under this scheme. I find that rather confusing. A farmer with 200 cows who decides that instead of selling his milk to a co-op he will instal a small plant and make yoghourt or perhaps, provide school milk or some by-product of fresh milk, should qualify. I was surprised that the joint committee found that individual farms are not eligible for consideration under the scheme. This raises a question mark in my mind because I have had experience of an individual farm being grant-aided for just such a purpose. The total amount of aid which can be approved in any one year is limited and decisions on whether or not grant aid is given are matters solely for the commission. The commission makes decisions on applications twice yearly, in June and December. Applications have to be submitted to the EC before the end of December for consideration in June of the following year and before 30 April for consideration in December of the same year. Over the years unsuccessful applications can be resubmitted or modified and they can get two run-throughs before being finally rejected.

In this country all applications for aid under these regulations and all subsequent correspondence between the EC Commission and the applicant must be made through the Department of Agriculture. The Department of Agriculture are the grant-aiding agency in respect of only a small number of projects — those relating to potatoes, eggs and in some cases grain drying in storage. All non fish projects have to be approved by the Department in order to qualify for grant under the regulation. In the case of most projects this approval is given prior to a decision by the grant-aiding agency on a national grant. Here again, there is room for greater co-operation between the Department of Agriculture and the IDA who are the the grant-aiding agency. The joint committee have produced a table indicating the slow take-up of grant aid in this country. There should be closer co-operation between the IDA and the Department of Agriculture. Files move altogether too slowly. The proof of the pudding is that practically every project which seeks FEOGA grant aid has to be covered by a bridging loan from the banks or the Industrial Credit Company or some other organisations.

While the EC needs only two or three months to process these claims, our outfits here can drag them out for a year or a year and a half, or perhaps more. That is not good enough. I do not say the blame lies entirely with the State but whether they are co-ops or individual firms, people who apply for grant aid should have the application fairly well vetted before it is even submitted. In the West, in the industrially designated disadvantaged areas, there are county development officers and an office to facilitate people who wish to apply for grants. In the rest of the country there are similar officers, perhaps not with the same powers but performing the same function. We still call them county development officers. Those officers could provide a service to ensure that applications should be full and complete going in. If that is the case there should be no delay.

I find fault with both the IDA and the Department of Agriculture who accept applications and just say: "turn them down". There should be a role here for education by the State; there should be an advisory service. Field officers of both the IDA and the Department of Agriculture should be available to assist Irish applicants to qualify for the higher grant aid through FEOGA. The result of a successful application is greater prosperity. It leads to more job opportunity. It leads to higher exports and to a healthier balance of payments. I maintain that more could be done by civil servants and by people working in the IDA. It is difficult to make that criticism and at the same time to have it clearly understood that I want the role of these officers changed. I am not saying they are not doing an excellent job but, as I see it, they perceive their job as vetting the applications. They should be in there helping applicants to fill in the forms just as you would assist an old age pensioner to fill in a form properly in order to ensure that he would qualify for the pension. The Italians, the French, and the Germans are efficient at doing these things. In other countries very few forms are filled in incorrectly, because they have developed a system which ensures better utilisation of this service. The Industrial Development Authority handles the vast majority — the joint committee found as high as 90 per cent, of all FEOGA applications — and the balance are being handled by the Department, Údarás na Gaeltachta and the Shannon Free Airport Development Company. Applications through the IDA are processed in the following manner. When a draft application is received by the IDA, a copy is sent to the Department of Agriculture or, where appropriate, to the Department of Fisheries and Forestry. The IDA scrutinise the application and receive comments from the relevant Government Departments. All suggestions for improvements or modifications of the application are then communicated to the company. The IDA then prepare a project grant application for the board of IDA, using the FEOGA application as the base document and requesting further information, where appropriate. One cannot find fault with that modus operandi but there are three or four different agencies to be consulted there.

My contention is that if a small amount of work was done in the beginning, that procedure of going to at least two Departments and going through a couple of semi-State organisations, could be shortened, so that there would be just one trip through. It would cut out the long delays we have experienced. It is not as if this was new. This has been going on for more than 14 years. We should be able to improve the way we handle these things. No effort has been made to streamline the system. I am convinced that the State needs a greater input into the actual compilation of the application. In any one year there are not that many applications. It should be possible for the relevant Department or for the Industrial Development Authority to provide an extra few people who would fill that void.

The applicant then submits five copies of the finished application. The IDA provide confirmation of member states grant aid and forwards four copies of the application to the Department of Agriculture for transmission to Brussels. The member state's opinion is provided by the appropriate Government Department. The bottleneck seems to be in the initial examination where applications take many months too long. The FEOGA division in Brussels acknowledge a receipt of the application, thereby allowing the applicant to proceed with the project.

IDA personnel travel to Brussels at least twice yearly to discuss the list of applications and to brief FEOGA officials on developments and priorities. Successful applicants will submit claims for payment to the IDA. Normally an applicant will only be allowed to claim the grant in three instalments, with the last application amounting to a minimum of 20 per cent of the total approved. The IDA staff validate the grant claim, carry out an inspection of the relevant assets and transmit the claim to FEOGA for payment.

In the years 1978 to 1984 grants amounting to £67.6 million were awarded to Irish firms in respect of 275 projects which have stimulated investment of approximately £200 million. The yearly figures for grants awarded and drawn down were as follows: in 1978, £4.1 million of grants awarded and £2.6 million paid out; 1979, £4.1 million awarded, £2.1 million paid out; in 1980, £9.4 million awarded, £5.7 million paid out; in 1981, £12.2 million awarded, £7 million paid out. In 1982, £10.9 million awarded, £5.7 million paid out; in 1983, £14.7 million awarded, £2.2 million paid out; in 1984, £12.2 million awarded, £100,000 paid out. That is a total of £67 million in grants awarded and £25 million paid. In this period, grants amounting to £2.9 million were either renounced or cancelled for various reasons, such as projects not being proceeded with or proceeded with on a reduced scale.

Those moneys, we are told were not lost but were recycled and reallocated to other Irish firms. The figures I have just read our highlights one of the main criticisms of Ireland's use of Regulation 355. A slow "draw-down" of grant-aid, which is one of the worst in Europe, lessens the value of grant-aid due to the ravages of inflation and ties up the funds which the joint committee feel could be more usefully allocated to other applicants.

In their memorandum to the joint committee the Department of Agriculture identified some of the reasons for this situation. Grants were cancelled or renounced in the case of 11 projects. However, five of the projects were resubmitted in subsequent years and were awarded grants. Two other firms choose not to claim grants because they did not comply with the terms of the award. Failure to carry out the full investment programme envisaged apparently happens in a large number of cases. The main reason for the delay in proceeding with projects — and this is probably the most important factor — would appear to be changed economic and agricultural conditions, for example, the reduction in cattle numbers in 1980. There was also the high cost of borrowing. Some of the firms who were awarded grant aid subsequently experienced financial difficulties and a number went into receivership. Most of those were bought as ongoing concerns but implementation of the projects was delayed. Most of the projects aided are large scale and require a number of years to complete. It should be noted that firms have had five years in which to complete their projects, although I recall reading somewhere that that has been reduced to four years. It is probable that some firms lodge projects well in advance of the expected date of implementation so that they can plan ahead in the knowledge that a grant will be available. This is particularly the case where a FEOGA grant is crucial to the project.

The EC Commission takes two to three months to process claims that do not give rise to queries. Claims which are badly prepared can take much longer. Although the Department of Agriculture and the Department of Fisheries feel that the take-up of grants is not entirely satisfactory, they point out that there has been an improvement in recent years. For example, only 42 per cent of the grants awarded in 1979 were taken up three years later, while 56 per cent of the grants awarded in 1981 were taken up within three years. The Department have assured the joint committee that the vast bulk of projects are being carried out, apart from the cancelled projects. Only ten projects awarded grants in 1983 have not yet been started. It should be noted that firms who do not commence work on projects within two years are liable to forfeit the grant unless adequate assurances that the project will be carried out are furnished.

I have made most of the points that I wanted to make. Over the past ten years or so, Ireland must have gained sufficient experience to improve the situation and to improve the national efficiency in benefiting from grant-aid. I do not think it is sufficient for the Department to be satisfied with a take-up of 56 per cent of grants sanctioned over a three year period. It is inefficient that any project unless, of course, the huge multi-million pound developments, should be dragged on for three, four, five or more years. If the application is designated as being carried out in phases then the grants should be paid accordingly. Our national experience and record are altogether too low for a country which needs the maximum amount of grant aid. Successive Ministers for Agriculture from all parties have fought hard and successfully to have Ireland's share of the FEOGA funds maximised.

When we look at the record, we do not seem to have the capability of utilising and drawing down the funds that are at our disposal. The slowness must be on the part of the IDA and the Department of Agriculture. Even in projects which meet the criteria and are finished, most of the applicants are forced to take on bridging finance from the lending agencies, such as the banks or the Industrial Credit Corporation. That shows a weakness in the entire system. It takes from the efficiency and the real benefit of a grant if one has to pay 16 per cent or 18 per cent bridging finance on that grant.

It has come to my notice in one or two cases that banks foreclosed on the grant itself. Not only that, but they pulled the plug irrespective of whether, after the payment of the grant, the particular project was deemed to be viable. That is an abuse of the system. It must be an acute embarrassment not only to the Department or to the IDA but certainly to FEOGA itself. Steps must be taken to ensure that we do not have a repetition of that kind of development. There is absolutely no reason why any grant cannot be paid in a maximum of six months after the completion of work. If the certificate of completion is in before 30 April, it should be paid in the December tranche, or if it is in before the end of the year it should be paid in April. Therefore, the delay period for the payment after the work is completed should only be a matter of months. People are forced to wait for one and a half or two years. It is important that the Minister should investigate such delays and would ask for the files where there is slow payment.

I want to compliment the Minister of State at the Department of Agriculture, Deputy Hegarty, on his new role because he fits into this particular function ideally with responsibility for food as well as his other portfolio. He may very well be the key to improving the entire situation from here on.

Greater effort should be made to promote the development of projects that cater for important substitution, especially in the food sector. The trend nowadays is for specially prepared and cooked meats. This market seems to be increasing. There is a place for it. In supermarkets the percentage of prepared foods, whether meats or other foodstuffs, seems to be extremely high. Therefore, there must be room for import substitution. I contend that most of those industries should qualify for FEOGA grant aid as well.

I ask the Minister in his new capacity to take a very deep interest in this branch of agricultural development and food manufacturing. Very few people who have moved into that area in the past number of years have got any State aid or encouragement. The only people who reap the benefits are the VAT collectors and their colleagues. While they are very necessary, there should be some agency which would give some sort of encouragement. The day is gone when we can sit back and expect some huge multinational to come in to provide jobs for us. Therefore, I would hedge my bets on the industrial development in this country which will be carried on the backs, once again, of the family or the small entrepreneur. I would hope that it would be clearly the policy of the Department of agriculture and the semi-State organisations to facilitate in every way people who have ideas and who are prepared to put their own money into projects for development, either in the service or the processing sectors. I hope this will be clearly spelled out.

I want to compliment members of the Joint Committee for the excellence of this report and for the depth of study they have put into it and for the amount of very interesting statistics and material this report is highlighting, which is all very relevant. The one underlying factor very clearly emerging from this work is that we are not the most efficient in the Community when it comes to availing of the grant aids that are provided under the Treaty of Rome for the development of our indigenous industries. Great scope remains here. Instead of our civil servants setting themselves up as judges of applications, they should have at least a section of their organisation which would be able to help people to apply in such a manner that the entire applications would go through with the minimum of delay.

Mr. T. Hussey

I should like to congratulate the Minister of State at the Department of Agriculture, Deputy Hegarty, on the new responsibility which he has been given within the Department. It is very important that he is here today, listening to the debate on this report. I know he is a man with vast experience, both as a farmer and as a Deputy representing a rural constituency and also as Minister of State at the Department of Agriculture, and I am sure he will put the vast experience which he has gained over the years to very good use for the benefit of all of us. Food is a very important industry nowadays. It is important that somebody should have responsibility for the proper presentation and marketing of agricultural products. I wish the Minister very well in his new responsibility.

It is a pity that this report is coming here rather late in the day. The report is dated 31 July, 1985 and it is now 13 March 1986. Of course, things have changed very rapidly. It is important that those reports should be discussed as soon as possible after their presentation. There should not be a time lapse of eight or nine months and in some cases even longer, before those reports are brought to the House for discussion.

I should like to thank the Joint Committee for the work they have put into this report and also all the agencies who have made their submissions and whose views are highly valued indeed. Regulation No. 355 of 1977 has made a very important contribution to our food processing industry and the amending regulation No. 32 of 1984 has broadened and improved the content of the regulation in the right way. This regulation, No. 355 of 1977, provides grant aid from the European Agricultural Guidance and Guarantee Fund which is known as FEOGA, towards the cost of capital investment projects which are aimed at improving structural efficiency in the processing and marketing of agricultural products, including fish, with a view to improving quality and presentation and thereby opening up new markets and increasing returns.

In the years 1978 to 1984 grants amounting to £67.6 million were awarded to Irish firms in respect of 275 projects which have stimulated investment in agriculture of approximately £200 million. The yearly value of the figures of the grants has been given in this report. We can see that from 1978 to 1984, as I have said, £67.6 million in grants were awarded of which £25.5 million has been paid out. In this period also grants amounting to £2.9 million were either renounced or cancelled for various reasons. The reasons were that projects were not proceeded with or were reduced in scale. But, of course, these moneys were not lost, but were reallocated to other Irish firms. The figures which I have given highlight one of the main criticisms of Ireland's use of this regulation. This has been referred to by the Joint Committee and it is the slow drawing down of the grant aid which, I believe, is one of the worst in Europe — second only to Italy according to this report. This slow draw down lessens the value of the grant aid due to the ravages of inflation and also ties up funds which could be more usefully allocated to other applicants.

I understand there has been an improvement in the take-up of grants in recent years. For example, only 42 per cent of the grants awarded in 1972 were taken up three years later, while 56 per cent of the grants awarded in 1981 were taken up within three years. The vast bulk of the projects are being carried out. Apart from projects cancelled only ten projects awarded grants up to 1983 have not yet been started. Of course, under the regulations firms have four years in which to complete their projects. There is a fair amount of time there for firms which have applied for grants. It gives them that breathing space in order to plan their projects and to get them off the ground. As long as they do so inside four years they are eligible for the grants.

The budget provision for 1985 amounts to 242.5 million ECU which represents an increase in the amount of funding available. Of course, Ireland will get its fair share of this increase. The higher level of grant aid for the disadvantaged areas is to be commended. It is a desirable interaction between the common agricultural and social policies of the EC which should act in tandem to maintain the rural social fabric through off-farm processing and marketing employment. In their submission to the Joint Commitee ICOS made the point that grant aid for the dairy sector, which had been ineligible since the 1 January 1984, should be restored. Indeed, I would agree with this recommendation because the dairy sector has been most efficient in drawing down grant aid awarded to it. It also has been very successful in ensuring that the primary producer benefits from the projects, which is one of the fundamental aims of the regulations.

I would also agree with the Department of Agriculture submission that Ireland should be treated as a special case because of the importance of the dairy industry to our economy and also the need to diversify away from intervention type products. Indeed, we went through all this before last year on the debate on the super-levy. Everybody interested in the welfare of the dairy industry was pointing out the importance of this industry to the economy and also, because of the huge stocks of butter and milk products in intervention, that we should be trying to diversify away from those intervention type products.

Sitting suspended at 12.30 p.m. and resumed at 2 p.m.

Mr. T. Hussey

I was discussing the importance of getting grants for the dairy industry under this scheme and recommending that the dairy sector, which has been ineligible for grants since January 1984, should be restored and be again acceptable for grant purposes. I also discussed the importance of the dairy sector diversifying into other areas and the importance of Ireland being treated as a special case because of the significance of the dairy industry to our economy and the great need to diversify from intervention-type products because of the huge stocks that have grown up in intervention over the last few years.

I note also in the report that the joint committee would favour the granting of member state grants to enable livestock marts to qualify for FEOGA grant aid, which can be up to 50 per cent in disadvantaged areas. This would improve the quality and range of services provided by marts and also provide, where necessary, increased penning and extra sales rings. This would be very important particularly in the western region where you have large numbers of cattle being offered for sale at the marts that are available. This causes a certain amount of hardship both to the livestock involved and, indeed, to the sellers and the buyers because of the long hours involved. This is an area where we could avail of this type of grant to enable us to improve on that situation. I hope the Department of Agriculture will pursue that point. The grants could also be used to provide new marts along the western seaboard not previously serviced by livestock marts. I think that would be very important for the farmers and for the people involved in that area.

According to the report, the IDA work very closely with companies receiving aid and give them every assistance they require in formulating claims. This is very important because the IDA are experienced in that area; they are capable of preparing plans and drawing up a proper applications for those companies and it is important that they advise them. There is always a large number of applications on stream. For example, in June 1985 the figure for projects seeking aid amounted to £28 million and these were chasing an actual grant approval figure of just £7 million. This constant surplus of applications means that there is always a sufficient number of good level projects available to take up Ireland's grant application. I think that is very good and it shows that agencies and companies are interested and are prepared to put in their applications and chance their luck even though there is only £7 million available and £28 million worth of applications are submitted. It is better that way rather than not having sufficient applications before Brussels. We must always understand Brussels has the final decision in these applications, not the Government here; Brussels has the final say.

In unclaimed amounts we have a bad track record. The amounts unclaimed seem to be around 24 per cent but this figure is reducing all the time and, of course, the IDA continue to monitor the companies involved. I hope we will be reducing that figure still further. There are many reasons why companies cannot reduce this figure and why they cannot proceed with projects. They cannot proceed with projects due to changed economic and agricultural conditions and so on. Naturally, in the early days of the scheme there were some teething problems and faulty applications gave rise to delays in many cases. I am happy to see that the joint committee are now satisfied that our record is improving although much remains to be done and the committee are hopeful that we will soon be able to equal the performance of the more successful member states in this regard. That is the way all of us want to see it going. I am confident that our people here, the firms involved and the agencies such as the IDA and the Department of Agriculture, all the co-ops and so on involved in those applications will become more efficient in dealing with their applications and that we will get our fair share from this fund.

Mr. Hourigan

I would like to compliment the committee on the production of this report. It is a very comprehensive document raising as it does many aspects of the processing and marketing of agricultural products and related areas as well. It is appropriate also that we should compliment the outside bodies who contributed so that this report could be compiled, the CII, CBF, the Irish Co-operative Organisation Society, the Industrial Development Authority and the Department of Agriculture. With various oral and written submissions from these different bodies it was possible for the committee to put this report together. It deals with the extremely vital area of the agricultural scene at present and that is the processing and marketing of agricultural produce. For too long we have seen agriculture as something that finished at the farm gate and too many farmers saw it in that light and, unfortunately, some still see it in that way. It is, in my view, extremely urgent that at this time everybody concerned, whether those involved at self-employment production level, that is at farm level, or people indirectly or directly involved in the processing and marketing side should view the scene of agriculture in its totality taking production, procesing and marketing together. It is only if enough emphasis is laid on marketing and enough attention is paid to the entire area of marketing that we are ever going to achieve the sort of results that are so much required in agriculture. In this House in the past and in other places also the importance of the marketing side of the agricultural business has been stressed. I believe that while we have made substantial progress with regard to centralised marketing in certain areas of agriculture — one great example being the marketing of dairy products through An Bord Bainne — there are vast areas where we have too much fragmentation, too many individual approaches by various bodies and agencies and as a result we are not getting the best advantage from the situation.

Again on a general point with regard to marketing, I feel that in recent times we have seen intervention as a place to market agricultural produce rather than a place for surplus supplies. It is very, very important that intervention for whatever product is not seen as anything else but a place for excesses, surpluses and the like. If we approach marketing in that manner it will make a great difference.

This report is very comprehensive. It deals in great detail with the various proposals put forward by the different organisations involved, the farming organisations and others. I suggest to anybody who has not had an opportunity to do so that they should read the report in depth because there is a lot of extremely useful information in it and it is an informative document and sets out the position very very clearly. There are a few points in the document that could be very usefully emphasised. For example, persons who are involved in the agribusiness are not always clear about eligibility for grant purposes. That is set out quite clearly in that document and one could glean much from it.

The Common Agricultural Policy, as we have mostly perceived it up to now, has been something directly benefiting farmers. There is the other extremely important dimension to it and that is the grant aid that it provides for off-farm projects, in other words, for the various areas of processing and marketing that are dealt with and catered for through the FEOGA grant scheme. For that reason I believe, in fact, that it is very important that we as a nation should take full advantage and avail to the fullest degree possible of the grants that are available to us for the development of our processing and marketing sectors in conjunction with the various aids that our industry and agriculture will get through headage payments and other forms of grants from the EC. For the project to qualify for a FEOGA grant it must be concerned, of course, with a building or with equipment for improving or developing storage, marketing preparation, preservation, treatment or processing of agricultural products or it may be concerned with improving marketing channels or providing a better knowledge of the facts relating to prices and markets. This is not always fully realised or fully perceived by people.

Due to certain surpluses within the EC at present, there are restrictions on the availability of grant aid for certain products notably in the dairying sector and, indeed, also there are possibilities and probabilities of certain changes that may take place in other sectors of over supply. As a general qualification all projects, no matter what they are, must help to improve the situation for the commodity concerned. This must be proved by the applicant who must also show that the operations will be profitable and will have a lasting economic effect, while not distorting competition. The selection of projects for investment by the guidance section of FEOGA is based on the basic principle that it must be viable, it must have a lasting effect and it will not be a once off operation. Then there are various other criteria laid down.

There is no doubt that the joint committee prsented us with a very in-depth document. I do not intend to go through the various observations of the bodies that contributed to it but there are a few points I wish to refer to. Before I do so there is one extremely important point which I should make in the context of marketing and, that is, that to my understanding ACOT, which is the body involved in the whole development of agriculture in this country, advising and assisting people in the development of the industry, does not have — with just one exception — any marketing specialists. There are five regions and there are approximatley eight specialists in each region. The only area covered by marketing specialists is the area of horticulture which includes potatoes and general horticulture.

I submit to the Minister that ACOT, being the agency it is and having regard to its particular role in the development of agriculture, should have at least one marketing specialist in each of the regions throughout the country. I believe that many of the personnel making up the service that ACOT provides are not market-orientated. We must change that situation and make sure that the adviser going out to the farm has more of a marketing mentality than he now has. At present the adviser going out to the farm generally speaking, is more production orientated and to a certain degree perhaps processing-orientated. Orientation, shall we say, does not in many, many cases extend beyond that and I feel it is absolutely vital that we should have these marketing specialists who would bring about a change in that position. I recognise that horticulture is being dealt with thus far but I do not think that is sufficient. I urge that point for the consideration of the Minister and I should like to think that it will be taken on board and that something will be done about it.

The committee say in their report that the EC Regulations 355/77 have made a very vital contribution to the food processing industry and the amending Regulation 1932/84 has broadened and improved the content of the regulation in the right way. Certain changes have been brought into effect and they are essentially on the following lines: the introduction of the possibility, in connection with projects for the processing of agricultural products, of granting aid for the purchase of certain equipment for the harvesting of basic products provided that such purchases are profitable to agricultural producers and the costs involved represent only a limited proportion of the investment under the projects concerned and also confirmation of the need to create new and additional outlets for agricultural products by placing particular emphasis on programmes and projects relating to new processing techiques, pilot projects for the development of new products and by products, and for energy-saving and recycling residues. These are some of the vital matters touched on.

Reference was made earlier to the slow take-off of the grants. It is disappointing that there has not been a greater take up of the grants. The committee said that there are certain improvements in this area but yet we have a long way to go. Sometimes figures do not give a true picture, they can give a distorted image of what is happening. More can be done if there is a greater rapidity with regard to the development of certain projects. People developing these projects are themselves often responsible for some of these delays. We know that the IDA are working very closely with the various agencies involved and are trying to expedite the taking up of the various grants and make sure that they cover as many areas as possible. We know from information the Minister gave to Dáil Éireann on 16 May 1985 that grants amounting to £87 million were awarded to Irish firms under the FEOGA grant scheme in relation to the processing and marketing of agricultural products Regulation 17/64 and 355/77 since 1973. That is a substantial figure. On that occasion the Minister also informed the other House that £42 million was taken up by Irish firms so far. Grants amounting to £8 million had either been renounced or cancelled for various reasons and most of these had been reallocated to Irish firms. That is extremely encouraging to know—while they had not been taken up they had been reallocated to other Irish firms.

Claims for a further £7 million have been lodged recently with the IDA and the EC Commission and should be paid out shortly. That left £30 million to be claimed. There was a large proportion of this related to grants awarded in 1983 and 1984. The Minister gave these figures in the other House on 16 May 1985; they show that there is a fair uptake in the agricultural sectors of FEOGA grants. There is a long way to go and the potential has not been fully realised.

There is one specific area of grant which is very much in the minds of the owners and operators of livestock marts and that is the grant aid for livestock mart development. The necessary prerequisite for qualifying for this grant is 8 per cent of the cost to be supplied by the national Exchequer. In return, mart enterprises in the western or disadvantaged areas will receive a grant of up to 50 per cent while those outside the disadvantaged areas will receive grants of up to 25 per cent. I would submit that it is very good business for us to make certain that that grant is not impeded, that it is promoted. I am satisfied that it is presently being examined by the Department of Agriculture and in due course will be submitted to Brussels. I believe that this will be of enormous help to the development of livestock marts and in so doing will contribute to the whole area of better hygiene, better control of disease and will have been extremely worth while.

We must bear in mind that there are still some areas of the country not serviced by livestock marts. The project in Cahirciveen in south-west Kerry will depend wholly and exclusively on whether grant aid is available or not. I am satisfied from talking to various persons involved that in due course — not too long — the various steps will have been taken and that grant aid will be available for the development of a livestock mart in Cahirciveen which will cost approximately £220,000 or £230,000 and which can be grant-aided to the tune of 50 per cent, a very significant contribution. There are other areas throughout the country that need this grant aid, not necessarily for the building of livestock marts but for the re-equipping of them, perhaps the replacing of them, their structures or whatever. It is an area where aid is much needed. Livestock marts are approximately 30 years in existence and could do with a certain amount of improving. For that reason I hope that these grants will come on stream as quickly as possible.

There are various areas where grants will apply. We know that there has been an effort to extend grant aid for dairying even though in spite of present circumstances it may be very difficult to get this but one would like to think that it would be possible with certain conditions and for certain specific purposes. That would lead one to the whole question of diversification of production whether it is in the dairying world or elsewhere. If we can gear ourselves more correctly for the marketplace we can then get a better hearing for various proposals in Brussels. In the case of the various schemes for grant-aiding under the FEOGA scheme, it is not just a matter of the Government or the Department of Agriculture submitting proposals to Brussels and automatically getting approval. It is scrutinised in very great depth at Brussels level and, unless the scheme can stand on its own two feet, it will not be grant aided. I am confident that the various schemes which are at present being prepared and will be presented in due course by the Department will meet with success. It would make a great difference because there is nothing that our agricultural industry requires so violently — violently is the only way to express it — as finance.

The agricultural industry is very much undercapitalised and any way that finance, in the form of grants or in the form of reasonably priced credit can be made available, it should be provided, because there is not a fraction of the money in agriculture in the way of capital investment that there ought to be. We know that there are very positive restrictions on our advancing on the dairying front. There are very positive restrictions on the horizon with regard to cereals. There are very positive restrictions, unfortunately, appearing on the horizon with regard to beef and sheep meat, the only other major area of production of field enterprise which has a good prospect at the moment but of those four major field operations it is of the least importance. Unfortunately, we are then left in the position in that, within the framework that exists for us and is available to us, we must get the best possible result, whether it is from dairying, beef, cereals, sheep or whatever else. If we do not do that, we will not be in the market place at all.

In the context of our membership of the European Economic Community it is essential that we are regarded in a different light from our other partners in Europe. If not there is little hope for our economic survival within the framework of the EC. There is no doubt that when we became a Member of the EC in 1972 we were clearly and positively of the view that we would have unrestricted, unlimited room for the development of our agricultural industry. Unfortunately, in the first instance with regard to the superlevy of 1983, we have seen the brakes being applied and there are indications of further halting signs. This, against the background that we joined the EC in the knowledge that our industry would be in severe hardship and was unlikely to be in a position to compete against the various other industrial countries. We were prepared to a degree to make that sacrifice in the expectation that we would have unlimited potential in our main industry which is agriculture.

Now, only 14 years later, practically all of our main agricultural enterprises are being put on quota or are threatened to be put on quota. We must resist any question of quota imposition to the bitter end, to whatever extremes are necessary. We require a derogation in these various areas, whether it is milk, cereals or whatever else. When we talk about marketing, it is appropriate to mention in regard to the proposed milk cessation scheme, which the EC are planning to implement in the very near future that we must use every influence, power and strength we can command to ensure that does not apply to us. The proposition to take 3 per cent of our milk production away — the equivalent of approximately 37 million gallons — would be lunacy. It would be very serious for us as a nation economically and socially because the whole dairying scene is based on farm families. The farm family constitutes the basis of the whole milk supply industry. For that reason, any erosion of the hard won superlevy concession we got a few years ago through the good efforts of the Minister, Deputy Deasy, the Ministers of State, Deputy Connaughton and Deputy Hegarty and the Minister for Foreign Affairs, Deputy Barry, with the help of the Taoiseach, would be very serious. It would be very serious if we were to lose 3 per cent of that 4.6 per cent which we gained at that time.

When one talks about percentages in this regard it is important to acknowledge that in 1983 we got a 4.6 per cent concession and we succeeded in having 1981 established as the base year for production as against 1983 which applied to all the other countries. Taking into account that our production for 1983 was about 15 per cent higher than in 1981 effectively we gained an increase of 20 per cent. One could ask was that not enough and what is there to complain about, but that was achieved against a background of great underdevelopment. We were, comparatively speaking, a developing economy and we had a long distance to go and still have a long distance to go in order to develop our agriculture to anything like its full potential. For that reason, no erosion in that direction can be tolerated.

We talk a great deal about added value but, unfortunately, we have not done a great deal about it. Added value in many of our commodities would provide much needed employment and would also help enormously in our balance of payments deficit. Coupled with that, we must strive to have import substitution. As far as we can we must produce whatever is possible here at home rather than relying on imports. This is true in respect of animal feed and food for human consumption. It is hard to quantify figures precisely but one is talking about a sizeable percentage. With the figures at in excess of £800 million for total food imports more than a quarter of that could be replaced by diversification of production here at home and by producing precisely what the market-place wants, what the housewife wants. Quite frankly, as I said at the commencement of my remarks, we must never forget in marketing, production or processing that at all times we must be conscious of what the housewife wants.

We must start at the marketing end and do intensive and extensive market research, ascertaining to the fullest and to the correct degree what preceisely is required and then setting the strands in motion through the processing and production sectors to produce that product, whether is is food for consumption or whether it is some other item or product that is going to be purchased by the housewives whether it is in Dublin, Bonn, London or wherever.

We must at all times make sure that we gear our whole situation for the market-place and produce to the market-place requirements rather than do it the other way around — producing products and then making vigorous attempts to sell them to people who have absolutely no interest in buying these products. We should learn from bitter experience over the years that there is no way that you will sell something on a long term ongoing basis to people, whether it is in the home market or in the foreign markets, unless those people want that particular product. One example we can take is in Saudi Arabia where the McGuckian enterprise went out there and started producing different dairy products. They ascertained as the time progressed that various products that they produced were not acceptable to the people who were buying them. They eventually geared their production to meet the needs of the customer. That is the kind of thing that I advocate here. That is the kind of thing a lot of research must go into.

I will stress again the point I made with regard to ACOT in the context of marketing specialists. I would say to the Minister that it would be very beneficial to the whole effort of better marketing if we could have the appropriate number of specialists in ACOT, specialists in the marketing world. I acknowledge very fully that we have specialists in the areas of horticulture and potatoes, but we do not have any specialists in the other areas. That is an area that would give fantastic results. It would give this orientation towards marketing which I referred to earlier into the whole situation.

I should like to commend the committee on an excellent report. I should like to pay tribute to the various industrial groups and farming organisations that contributed by way of discussion and otherwise to making this report possible. It is, in my view, a document that is well worth everybody's full and complete study.

Mr. Fitzsimons

I want to make a brief contribution. I come from County Meath, an area which rightly has a reputation in agriculture and in farming. In an agricultural country this is a very important report. While it is an agricultural country, and I suppose will always retain that base, there are many factors which mitigate against farming, particularly the climate. This is one aspect I feel it is very difficult to overcome and which will always be a problem.

Last week this House discussed the report on the crisis in farming and paid tribute to the efforts of the Government to help in that regard. The importance of farming was rightly realised by the people outside farming and was on other occasions too — I recall that in 1947 and 1948, when we had the bad harvest, people from the city came down on buses and lorries to help out. Everybody understands the importance of farming. With regard to that crisis last summer, I see farms being sold in County Meath which may not be directly attributed to the summer but it may have been the last straw that broke the camel's back.

Various reports have told us that in 1928 the proportion of people employed in agriculture compared to the number in industry was 80:20. This year 1986, it is the reverse, for every 20 in agriculture there are 80 in industry. This is something that is unacceptable and I believe by incorporating the recommendation in reports such as these we will tend to correct that imbalance.

I was impressed the last day here when Senator Quealy complimented my party on the recent report on horticultural development. Even though the Minister later had some criticisms of that report, I felt that they were constructive. I felt overall there was a general tendency, as there should be, to approach this in an all-party way. I would have to endorse what Senator Hourigan has said with regard to the low base at which we started and plead for a special case. There are 300 million people in the extended European Community. It opens up other avenues for us. Nevertheless, I feel that, having started from that low base, we still have this disadvantage. I would agree with the sentiments expressed by Senator Hourigan in that regard.

It is important to realise that farmers are the foundation in all these situations. They have the expertise, the commitment, the dedication. They have everything that is necessary. Without that foundation it is impossible to build an edifice. More could be done in that regard to help the individual farmers at that level. I understand that this EC directive does not help.

I also see problems with regard to intensive farming which I believe is around the corner if not with us already. From the recent report on food and research, it seems that, with the advent of intensive farming and certainly with the development of intensive farming, we can do with far less land and I suppose fewer farmers. In that sense it seems to me that, far from providing more employment in this area, we are moving into a phase where we will have less employment. I feel at least it would be the creation of wealth which is of primary importance to the country.

I would also like to say in passing that it seems to me that the co-operatives in this country have expanded very much in recent years. I have no doubt that this expansion was planned and was necessary in modern times. The importance of equity capital should be realised with regard to the co-operatives because borrowing charges are too high, money is too expensive. When I say this, I am thinking of Bailieboro Co-Op which has problems. I come from that area and it seems to me that in that situation equity capital is important, or the provision of finance in some other way rather than at the high interest rate which has to be paid at the moment.

Research is very important for marketing. The position, heretofore, was that farmers produced willy-nilly. They assumed that there would be a market. As regards corn and other major crops there was always a market. I gave details before of many instances, particularly in regard to horticulture, where a market was nonexistent when produce, such as cabbage, peas and tomatoes, were available. There have always been gluts in the market at a time of high production. Certainly, there is more required than production. Processing and marketing are of paramount importance.

All of us in the Oireachtas received literature from Quinnsworth, Power Supermarkets Limited, pointing out steps they had taken in the recent past to improve the position with regard to the sale of Irish produce. I think I am in order in complimenting that firm and, indeed all firms, individuals, and organisations, who have done anything in that regard. Sometimes the initial effort may not bring the success that is hoped for. I hope all involved will persevere. With regard to fresh vegetables that firm has made a great improvement. For example, with regard to tomatoes the import dependence was reduced from 42 per cent to 29 per cent and for cauliflowers it was reduced from 41 per cent to 19 per cent. Only 2 per cent of potatoes sold were imported and carrots and onions showed no improvement. The proportion of carrots and onions imported was 17 per cent and 100 per cent respectively. It is very difficult to understand why it is necessary to import 100 per cent of onions. With regard to cooking apples, the import level remained at 58 per cent, which seems very high. In this area, there are many firms trying to improve the situation and they should be complimented and their efforts recognised.

With regard to report No. 18 on the processing and marketing of agricultural products, I should like to join with other Members in complimenting the committee. A number of Members from this House, seven in all, were on that committee and the report was signed by the Acting Chairperson, Senator Mary Robinson. I would like to have seen in the report a synopsis of the regulation which is a fairly lengthy and complicated one. I would have liked to have seen the committee include, in the space of a few paragraphs, the important aspects of the regulation. However, they did that in various ways.

In the conclusion to the report the Joint Committee, while acknowledging the benefits this country has received under the regulation, feel, nevertheless, that its full potential has not yet been exploited. It seems to me that this is an indictment of the Government. While we hear criticisms of milking the system, nevertheless, there is an onus on the Government to ensure that we get 100 per cent of what we are entitled to. This conclusion states, in my view, that we did not get that 100 per cent. I suppose it is easy to lay blame but I am doing it in a constructive sense. It is very easy to point the finger. I hope this report will ensure that the Government from now on will take every step and make every effort to see that we get our entitlements. In fairness to the farmers and to everybody else this should be done. In so far as we fail, the finger must be pointed clearly at the Government. I know there are procedures which applicants have to go through but it is the responsibility of the Government to bring all those details to the notice of firms and people who might qualify, to give them every opportunity and to help, where necessary, with the processing of applications. The IDA deal with 90 per cent of these applications and do a wonderful job. Like other Senators, it is only right that I should pay tribute to them and to the other organisations involved. However, when there is finance available at EC level we are certainly failing if we do not avail of it.

Various views were put forward by a number of bodies and it would take a long time to put all of them across. However, I should like to mention one of them, what is referred to in the report as the opposite to the CAP inspired approach, that of consumer oriented marketing. The report says that whereas the CAP approach is not, in fact, market management but price management, such price management is totally directed to the price of the raw material to the primary producer with less attention given to the resultant price of the end product to the consumer. While I would agree basically with that, I believe that the price of the end product is most important and by and large it is going to determine the success of any project.

There are many other matters which we could develop and, perhaps, be critical of and make suggestions in regard to them. This is a very good and comprehensive report, like all the other reports we have got. Once again, I should like to pay tribute to those responsible for the report, not forgetting those who made contributions.

I hope the Minister in the near future will take cognisance of all these suggestions and do whatever is necessary to fall in line with the recommendations of the committee.

Minister for State at the Department of Agriculture (Mr. Hegarty)

I have found this report to be extremely interesting and timely. It deals with an EC Regulation that makes very considerable amounts of aid available twice each year to assist in improving the processing and marketing of our agricultural products. In 1985 the total amount of aid allocated to Irish food processing and marketing projects under the regulation amounted to £17.8 million. This is a very considerable amount of aid. It is vitally important that we have a sufficient number of good projects with the EC Commission for each half-yearly allocation so as to ensure that we obtain the full amount of aid available to us and that the aid goes to the most worthwhile projects.

With the Joint Committee, I welcome the changes in the regulation which came into effect in 1985 removing the rigid application of its benfits to annex II products. I hope that we will have an adequate response to this change from the food processing sector itself in the form of projects for more down stream processing. This is extremely important not alone in the development of more sophisticated and consumer orientated processing but also in relieving pressure on the CAP at this juncture by greater diversification away from intervention commodities. With the constraints now on CAP expenditure the future development of our food processing must lie in this direction in the interests of both the processing and producer sectors.

I am glad too to see that the persistent question of the low level of take-up of these grants by the Irish processing sector has been thoroughly examined in the report. It is worth while noting that the real position in this regard is not nearly quite as bad as it has been portrayed and that it is also showing considerable improvement in the most recent years.

I too share the hopes expressed in the report that the Commission will find itself able to accede to my Department's request to them to permit the admission of dairy projects under the regulation once again. I believe we have made a good case to them for this and we await the outcome.

In so far as the report refers to suggestions that Government administration in relation to the food processing sector should be more centralised, you will be aware no doubt that the Government have recently given me a special role to play as a focal point for the industry as between my own Department and the Department of Industry and Commerce. This measure is further evidence of the importance which the Government attach to the development of our food processing industry in the interests of the economy as a whole and in the interest of our farming community. I look forward to performing this new role and will strive, with the help of and in consultation with the industry itself and the other bodies involved, to bring a new vitality and urgency to the work of developing this industry towards attaining in so far as possible its full potential.

As to the position in relation to the grant aiding of livestock marts under the regulation, I can assure the House that this matter is under very active examination in my Department at the moment. It is a prerequisite under this EC regulation that there must be member state investment in all projects before they can be considered for FEOGA aid.

Senator McDonald mentioned a number of points. First, he noted the small family type enterprise which might not be aware of the grant aid available from FEOGA. I find it difficult to understand this because obviously they go to the IDA and the IDA will put them in touch with FEOGA. On the point of the lapse of time dealing with FEOGA requests, it is a pretty long drawn out process by its very nature and the House can be quite sure that delays in grants are not as real as was indicated. In fact they are paid on a stage by stage basis and nothing could be fairer than that.

With regard to the EC grants whether or not the 50 per cent higher rate of grants, are payable in the Shannon areas, the Commission say they would only consider this in the context of the review of the western package. Our report has gone to the Commission and a formal submission will be made next week. It is understood that the Commission are prepared to extend the 50 per cent grants to the newly designated western areas only. This would include some eastern areas where they join western areas, that is, Westmeath, Galway and parts of Louth bordering Monaghan. Isolated eastern areas which were mentioned by Senator McDonald would not be covered.

On the food processing side of it, very briefly, points were made about imports. Of course, we are fully aware of the difficulties of import substitution when it comes to horticultural produce. I must say, as somebody who has grown horticultural produce all my life, I have no difficulty in understanding the problem. While we hear a lot about our wonderful climate and the benign situation that we have for all the year round horticultural production, it is not as benign as that of some of our competitors. That is the problem. I happen to be in a fortunate area which is relatively frost free but I still have had crops of carrots wiped out due to inordinately heavy frost.

One of the difficulties that we have nowadays with regard to horticultural produce is that it has to be fresh. In other words, the buyer looks for the leaves on it. Long ago you would get away with storing carrots and other produce in turf mould. Nowadays buyers look for something straight out of the ground, and I suppose they are entitled to it. The House may be interested to know that, in conjunction with some vegetable importers, we are working on a few growers in the peninsula areas which are definitely frost free. We have about 200 acres in the Ballyferriter area at the moment, producing potatoes, carrots and a few other crops, the idea being that there is enough of that land available to satisfy our needs, but it has to be in a particular area.

Another difficulty that I am experiencing is that, apart from a few supermarkets in Dublin, our market is pitiably small. The danger of involving growers in growing willy-nilly is that existing growers might be wiped out of business. This is something that has to be done in an orderly way. We have decided, through the IFA, first of all to set up a potato co-operative with a limited number of growers. At this stage they are even reluctant to take on too many new growers. With a limited number of growers they now have formed a marketing company with a major fruit importer and Sugar Company involvement. I believe they will be setting up shop in Carlow for the assembling and packaging of potatoes mostly for the Dublin market. We are doing something similar in the horticultural scene. We have grant aided Mr. Colm Warren, Chairman of the IFA Horticultural Committee, in setting up a horticultural co-operative. That co-operative has to start somewhere, starting small for the Dublin, Meath, Louth area. They have agreed, in writing, to put a percentage of their produce into the co-operative. At the moment, in the case of the potatoes the Department are subventing payment of the manager in the case of the horticultural co-operative, a marketing man. All I can say at this stage is that it is progressing nicely. There is nothing too exciting about it yet.

We would hope that other growers would see the advantages of discipline. This is one of the things I find very difficult at times. For instance, I get a crowd of people cribbing about potato imports. I ask them a simple question: are they members of the co-operative? I find that they have not even joined the co-operative. I even ask them are they registered as growers. We brought in a Bill last year to register all potato growers so that we would be able to keep an eye on what they were doing, to keep tabs on who they were, so that we could identify them if they had bad produce. The response to advertising in the press and on the radio has been pretty dismal to date. I make this point in the House, that any grower who is not registered and who will be offering his produce for sale in the coming seasons will be liable to severe penalties. He has been warned often enough. Politicians on both sides of the House — it was no different when Senator Hussey was Minister — have to face the flak of these people. We are giving them an opportunity to discipline themselves and we are begging them to avail of this opportunity. If we fail this time, I say quite frankly, and with respect to any boards we might set up, that any effort in future will be down the tubes because it was so hard to get this one going that I doubt if ever again this kind of thing could be attempted.

What is encouraging, however, is that farmers by and large, despite a bad year in 1985, have not lost heart. Anyone driving around the country at the moment will see fertilisation, liming, ploughing and tilling and that sort of thing. Farmers have that entrepreneurial quality which is so necessary. They are prepared to take chances. For instance a group of farmers in the Cork area are prepared to grow flax. That is a big gamble for them. They are prepred to put their land and money at risk and take a gamble and they do not know if they will make a profit. We are having some difficulties getting that launched but it is not the farmers fault.

In my time as Minister there were two massive closures in my constituency at East Cork Foods and Erin Foods in Mallow and we had many problems getting the Midleton plant going. The House will be glad to know that it is now making a small amount of money and is growing about 2,000 acres of crops. We have finalised a company which will take over Erin Foods in Mallow and for the benefit of everybody, growers included, we will be growing the full range of crops in Mallow. That is not the end of it; that is only the beginning. There is a hard battle ahead for any type of horticultural produce even though we have some advantages this time in so far as two of the people involved in this company have entry both to the the Irish and the English markets.

Our big weakness over the years was that Erin Foods did not have a real tie-in with the British supermarkets. Whatever may be said about dairy products or meat products, certainly horticultural produce was a closed shop. In a year of scarcity they bought everything you could produce. In a year of plenty you had to stack it at home. When you consider that you are stacking tons of frozen products you realise the sort of costs involved. General Costello's dream is getting a second chance and hopefully the scheme will expand as quickly as it did in the old days. We must not overlook the problems and difficulties. Everybody will have to be prepared to row in to make it successful, workers, farmers and anybody involved in it. We have something going for us that we did not have in the past.

The Irish housewife is aware that, if she does not buy Irish produce, she is in some way jeopardising her husband's job. We should cash in on that. It is a food from Ireland campaign and most of the major supermarkets tell me that this is beginning to work and I believe that. As the Minister and other Senators mentioned, we should endeavour as far as feasible to supply the needs of Irish housewives on an all the year round basis. Where that is not feasible I would be totally happy to see products coming in here if the people want them. I never worry about new products coming in from abroad if we can produce them here. It gives the housewife an appetite for them and gives us a challenge to compete. We crib about that expensive strip of water between here and the Continent, but it works both ways and maybe it could work to our advantage.

We are working very hard on the processed food side. Probably the biggest scandal in vegetable imports is potato chips. That is the greatest challenge at the moment. We are looking at two overseas processors and trying to encourage them through IDA grants and all the State aids conceivably possible to come here and set up a processing operation. That is a must. Two years ago we had great difficulty in convincing them that we could grow potatoes suitable for processing. As a result of two years with ACOT and AFT and the Department and plots all over the country, we have satisfied them that we can grow the type of potato necessary for processing. The ball is back in their court and we are annoying them on a daily basis to get on with it and I hope we will have good news on that in the near future.

I should like to mention one more point concerning horticulture. The glasshouse industry is an area worth looking at and worthy of a lot more discussion. In so far as natural gas could be made available at a cheaper rate, I commended that suggestion in the Fianna Fáil document but, unfortunately, it is not on, whether we like it or not. The Dutch worked it for a number of years and they are before the courts now on that one. With some success, we are now grant aiding solid fuel heating for all glasshouses. The big advantage is that there will not be a gas line near most glasshouses as quite a lot of them are in the west and in the Kerry area and northern Border areas. This grant is being taken up very substantially by glasshouse owners. I would like to see the grant a little higher and I would also like to see grants for double planning. Basically that is a grant for insulating, which we do not have as yet. I am convinced that this is one area where we could lengthen the season both at the beginning and at the end.

Finally, I commend the House for their interest in this debate. It is just as relevant now as it was when the report was produced, unlike the farm crisis. It is very relevant at this time. Festina lente. We must proceed with caution when it comes to horticulture bearing in mind that we have a small market here and it is very difficult to get into markets abroad. That is not to say we should not try. We should never delude ourselves that we have a perfect climate for horticulture. As I said earlier, last year some of my friends lost a lot of money due to heavy rainfall. All their carrot crop split. That is a problem that some of our competitors do not have.

Question put and agreed to.