As Section 1 covers everything I propose to deal now with the point that I intend to raise. I want to direct the attention of the House to a matter arising out of the subsidy in respect to beet sugar. When last I had an opportunity of dealing with this question I had not had an opportunity of seeing the agreement that had been entered upon between the Ministry and M. Lippens. Since that time the agreement has been laid upon the Table, and it is now available for Deputies. I think it requires a certain amount of attention and consideration in view of the liabilities that it involves which are greater than the liabilities of which the House was informed when the Beet Sugar Bill was being passed. There are two sections of the agreement to which I want to direct special attention. The agreement is dated the 15th October 1925 and it provides "that the company shall be granted a licence or licences for the production of sugar for a period of ten years at least from the 1st October 1926. The amount of sugar manufactured by the company on which the subsidy under Section 1 (1) (a) of the Beet Sugar (Subsidy) Act, 1925, will be paid shall be the total amount of sugar manufactured by the company in the three years commencing on the 1st day of October 1926, and shall not exceed ten thousand tons per annum in the two years commencing on the first day of October nineteen hundred and twenty-nine nor fifteen thousand tons per annum in the five years commencing on the first day of October nineteen hundred and thirty-one, provided always the total amount of sugar on which the subsidy will be paid shall not exceed one hundred and twenty-five thousand tons in all in the period during which the subsidy is payable under the Beet Sugar (Subsidy) Act, 1925." There is a further clause in the agreement which is important: "The Minister hereby undertakes and agrees with the company not to agree without the company's consent to the grant of a licence for the manufacture of beet sugar from home-grown beet within the area South 53º 25' and East 7º 40'."
I want to direct special attention to the paragraph which speaks of the total amount of sugar manufactured by the company within the three years commencing 1st October, 1926. Note that there is no maximum fixed in this agreement in respect to those first three years. There is a maximum fixed for the subsequent two years of ten thousand tons per annum, and for the following five years of fifteen thousand tons per annum. But there is no maximum fixed in respect to the first three years.
When this matter was first dealt with in the House, in the Budget speech of 1925 (April 22nd), we had a statement from the Minister for Finance telling us what the temporary provisional agreement that had been arrived at with M. Lippens contained. The House, at that time, was given certain information, including the estimate upon which the whole scheme was based. The estimate was a ten-year estimate, with a total of 86,000 tons, at a total cost to the State of £1,961,000. That estimate was built up on the assumption that for the first three years the tonnage of sugar on which the subsidy would be paid would be five, six, or seven thousand tons respectively. "It is not proposed," the Minister said, "to subsidise more than one factory at the present time. This first factory is experimental.... I hope that, after a very short experience of the running of the first experimental factory, it may be possible to obtain much better terms...." The Minister also told us, in dealing with the question of the cost of this experiment: "If it is a success, and leads to new and improved methods of tillage, improvement in dairy farming, and the finding of useful employment in the fields and in the new factories... the price is not too high, and the cost is not greatly in excess of the cost of the experiment at Kelham, in Great Britain, if capital losses there are taken into account."
April, 1925, was the date of these assurances. Then the Bill came, and was under discussion, and certain criticism was levelled at the proposal of the Bill on the score that the promise was over-generous to the company. Again, in June of that year, the Minister re-stated the figures upon which the scheme was based—eighty-six thousand tons over the ten years' period, and an estimated subsidy cost of £1,961,000. The President, in the Seanad, pointed out in reply to Senator Barrington, who was urging a longer period of guarantee to the farmers than three years: "It is impossible to spoon-feed every single contributor towards the success of this particular experiment. It is one of a very expensive character, and everything was done to make it as cheap as possible. An extension in the direction mentioned by Senator Barrington would mean still a further price, and that price we are not advised it would be wise for us to pay." As I told you, the price in mind by way of subsidy was £1,961,000, or round about that sum.
The Minister for Lands and Agriculture, who might be presumed to have a clearer knowledge of the position and prospects of this experiment than the Minister for Finance or the President, said: "... No one expects you will get 10 tons here in the first years, or exactly what they get in Holland. If you did, the thing would be a gift. There would be a small fortune in it. When I say a small fortune, I mean a real good thing in it. If you could get the same yield and the same sugar content as they get in Sweden, Denmark and Holland, and in England to a lesser extent, then of course it would be preposterous to enter into this arrangement with M. Lippens." This was the June proposition, the estimate of five, six, or seven thousand tons per annum for the first three years reaching the estimated maximum of ten thousand tons at the end of the ten years' period. The Minister for Lands and Agriculture hoped that they would be able to work up to six thousand tons in the first three years.
Then the agreement was made in October and for some unaccountable reason, while there was a maximum fixed for the two years beginning in October, 1929, upon which a subsidy would be payable, and in the subsequent five years beginning 1931, there was a blank—no maximum whatever fixed for the first three years. It is under that agreement we are working. Following the agreement the plans in regard to the factory changed. A bigger factory was decided upon and, as against the factory which was declared to be the most economical by Ministers, the factory of ten to twelve thousand tons capacity, there was built a factory which, admittedly, has a fifteen thousand tons capacity and I have a shrewd suspicion that it has a capacity for a good deal more than fifteen thousand tons.
On the 8th February, this year, the Minister for Finance said: "When the original estimate was being prepared twelve months ago it was anticipate that the area under beet would be about 7,000 acres, and the quantity of sugar manufactured would be about ten thousand tons. The area actually planted was 9,500 acres, and the amount of sugar which will be manufactured this year will be about 13,000 tons." There is a slight difference in the ultimate result. As the Minister told us yesterday, the quantity of sugar manufactured was 12,000 tons. Then the Minister went on:—"It does not really make any difference in the long run that the estimate has been exceeded as to the quantity of sugar manufactured. We thought that during the first two or three years a lesser quantity of sugar would have been manufactured this year than has been the case, but our arrangement with manufacturing companies was that the subsidy would be payable on 125,000 tons during the ten years period." I do not know what the Minister thinks about it not making any difference, but when this year it is found that you have to pay a subsidy of £24 10s. per ton on 12,000 tons and that in the last years of the ten-year period the subsidy will be at the rate of £22 per ton —if he thinks that would not make any difference, then I am afraid his watch over financial conduct in the State is not just as satisfactory as it should be.
There are other consequences. I think in formulating this agreement in the circumstances there was serious negligence, first in the omission to fix a maximum sum on which the subsidy would be paid during the first three years, and, secondly, in the neglect to give information to the Dáil and the country that the original project was being greatly increased. The cost of this experiment to the State, by way of subsidy, instead of being anywhere near the estimate of £1,961,000—let us speak of two million pounds—may be up to four millions. It is almost certain to be over three millions. I say it may be up to four millions and I say that because there is no limit to what might be produced in the two years to come.
The 9,200 acres on which beet was grown last year are to be increased for this current year to 15,000 acres. So far so good. The subsidy will be paid upon the produce of that 15,000 acres. If it happened that there was as good a year in yield this year as there was last year the factory might require to turn out 18,000 tons of sugar. While it may be said that there is not much likelihood of as good a year as last year, I think one might take into account the whether and climatic risks together with increased experience and knowledge of the requirements of the crop, and on the whole there is every possibility of the crop being as successful in 1927 as in 1926. It may be a very good thing, and I am quite willing to admit at once that it will be a very good thing indeed, if the acreage is raised to 15,000 acres as compared with 9,200 acres last year, and that the yield is still greater. Let us bear in mind that that involves greatly added cost upon the State. The essence of my complaint is that this agreement was entered into, throwing upon the State this unlimited liability, without informing the Dáil of the fact.
The Minister told us yesterday that the amount of subsidy paid was £181,000 for last year's crop. The estimate, it will be noted, was £194,000 It must be also taken into account that there should be added to the £181,000 a sum of £112,000 if we are to arrive at the actual cost of this subsidy from the State. That is the amount of the Excise duty, or the Customs duty, which is remitted on home manufactured sugar, so that the cost of this experiment in the year 1926-7 was £293,000, against an estimated cost of £122,000. That is a very serious departure from the position as laid before the Dáil, and I think it is of the utmost importance that the Dáil should impress upon Ministers that when a statement of the probable cost of any service is laid before the Dáil, if there is any departure from that original statement Ministers are in duty bound to inform the Dáil of the new commitments, and that they have failed to do in this case. They entered into this agreement which raised the figure from 86,000 tons, as a general estimate presented to the Dáil, to a maximum of 135,000 tons. But what is the effect of this unlimited tonnage on which a subsidy is to be paid for the first three years? We have the maximum fixed for 1929-30, and for each subsequent year, but no maximum fixed for 1926-27, 1927-8, or 1928-9. We paid £293,000 for the year 1926-7. It is not at all improbable that the subsidy cost to the State for the next year will be £450,000, and the year following, if the company decides that it is desirable still further to try the capacity of the plant, that £450,000 may even be increased.
But there is another aspect of this agreement that I think is of even greater importance for the Dáil to take note of. What I have said so far may be countered by the statement that agriculture is in a bad way, that this is a crop that is going to relieve agriculture, and that even though we have over-stepped the mark in not taking the Dáil into our confidence and are paying away double the amount we announced that we were willing to pay for these three years, it is worth the cost. That may be the line of defence taken by the Minister. But the end of this agreement and this policy of concentrating upon the extra large factory in the one area, is to make much less likely the building and the equipment of a new factory in any other area for the next three or four years. The area that has been given over as a monopoly to the present company covers half of the fair quality arable land of the Free State. If one were to take a map and draw a line on it from, say, Swords to some few miles north of Tullamore and a little beyond Tullamore, and then go right South, just touching Clonmel, he would get an idea of the area that is monopolised to this company within which no other factory can be built in the ten years' period without the consent of this company.
I have read recently appealing notices of meetings to be held in Tullamore with a view to having a factory set up there. I am sorry Deputy Patrick Egan is not here, but he probably, as a Deputy in the Dáil, was unaware, or allowed his constituents in Tullamore to be unaware, of the fact that as a director of the Irish company he had entered into an agreement which would, in effect, prevent a new factory being set up in Tullamore. When we have given this privilege to the company to turn out up to 20,000 tons of sugar per annum—I am taking that in accord with the capacity of the plant—an agreement which will cost the State so large a sum as I have mentioned — probably £450,000—the chances of a second factory are very much minimised. Tipperary, Cork, Kerry, Limerick, or even Meath and Westmeath, are almost closed up for quite a few years as places which might expect a subsidised factory, and that as a consequence of allowing this agreement to be signed with the unlimited provisions for the first three years and with this very big area practically monopolised by the existing company.
I think it will be found that the company's policy will be to make the most of the first three years, when the rate of subsidy is £24 10s. a ton, that the total 125,000 tons will be absorbed in the first five or six years, and then no subsidy will be payable according to the present agreement. The question will then arise as to what is to become of the farmers and what are they to look forward to in respect of the price for beet. The company will be in a position to say: "We are now clear with our subsidy; we have written off the cost of the factory; we have done well for the first few years of its existence, and you, the farmer, must accept a much lower price for your beet." There will be no other factory in existence to act as a check upon the existing company, and the effect of this agreement, coupled with the policy of the company to have a big centralised factory with a monopoly at the unlimited tonnage, will be to preclude the chances of any other factories being established for the first five or six years, and then the existing company will have the farmers in a cleft stick. I say that the Government are entitled to condemnation for two things in this business: first, their failure to acquaint the Dáil with the fact that they had entered into a formal agreement which increased by 50 per cent. the liabilities of the State, as explained in the plans for the sugar beet experiment, and, secondly, that in making the agreement of October, 1925, they were seriously negligent in allowing the first three years' subsidy to be unlimited in amount and in granting to this existing company so wide an area of monopoly. I think it is a matter that ought to be the subject of close criticism by the Dáil and that a warning should be given to Ministers that they ought not to enter into new agreements which in effect add to the charge upon the State without disclosing the new facts to the House and to the public.