Dáil Éireann díospóireacht -
Tuesday, 24 May 1932

Vol. 41 No. 17

In Committee on Finance. - Financial Resolutions—Customs Duties (Maize Meal).

Minister for Industry and Commerce (Mr. Lemass)

I move:—

That the Customs Duties (Maize Meal) (Provisional Imposition) Order, 1932, which was made on the 29th day of April, 1932, by the Executive Council under Section 1 of the Customs Duties (Provisional Imposition) Act, 1931 (No. 38 of 1931), and a copy of which was laid on the Table of Dáil Eireann on the 3rd day of May, 1932, be approved.

Some time ago a duty was imposed on maize meal imported into the United Kingdom in consequence of which there was reason to anticipate increased imports of maize meal into this country as well as other undesirable reactions on the industry here. A number of maize mills in certain parts of the Free State which had an export trade to the United Kingdom, averaging over 50,000 cwts. per annum, lost that trade, and in some cases there was reason to anticipate that these mills would go out of business. Under the circumstances, the Executive Council decided to impose a duty on maize meal imported here. The position of the industry is that we have always been able to supply by far the greater part of our requirements from our own mills. Only a very small proportion of them had to be imported. Eleven-twelfths of the requirements of the country were produced at home, and only one-twelfth imported. The existing mills here were and are more than capable of supplying all the requirements of the country. The imposition of the duty has given the industry considerable assistance. It has already resulted in the establishment of a number of new mills in the Saorstát, and has not had any detrimental effects on the farmers who purchase the meal.

In the Dáil last week we had certain allegations made that merchants, particularly in Donegal, had availed of the imposition of the duty for the purpose of charging exorbitant prices. I stated on that occasion that no increase in price on the part of a merchant to a consumer was justified as no increase in wholesale prices had taken place. I have since ascertained that, instead of an increase, the wholesale price of meal in Donegal has been reduced by 5/- per ton. That reduction applies to all mills now operating in Donegal and as, since the imposition of the duty a number of Derry millers have commenced operations in the county, the competition there now is particularly keen. In a few small districts along the Border where the farmers were accustomed to draw their supplies of meal from towns on the Six County side, certain temporary difficulties have been experienced, due in some cases to the absence of merchants selling Saorstát meal, and in other cases to the fact that the Saorstát meal had to be transported a somewhat longer distance. But these difficulties are disappearing now, and will shortly have disappeared altogether.

In one or two areas in the County Monaghan increased prices prevailed for a time. There was no justification for these increases, and when they took place millers from outside the county went in, and competition had the effect of bringing prices down again. Altogether, it can be said that the result of the imposition of the duty has been highly satisfactory. Over a great part of the country which was always supplied from the Saorstát mills the price position is the same. In one part of the country the price has come down. Considerable additional employment is being given, and the danger of an adverse situation arising in connection with the industry has been removed. I confidently recommend the Resolution to the Dáil.

Mr. Dillon

I want to protest most vigorously against the passing of this Resolution. To my mind the frame of mind which drafted this Resolution has proceeded on a basis which is absolutely insane. I do not say that the mind is insane, but I do say that it has proceeded on a basis that is insane. I say that for this reason, that everybody admits that agriculture is the foundation of this whole State. I have never heard anyone to contest the proposition that if you tax the raw material of an industry you must injure that industry. Everyone knows—the Minister for Agriculture must know— that Indian meal is the foundation of the whole pig trade in this country, of a great part of our egg trade, and that it is the foundation largely of the in-feeding of cattle.

The Minister said that the price has not risen. It could not rise because the world cost of maize has fallen, but what I want to know is, has the price of meal fallen as much as it would have fallen if the tariff was not put on? It certainly has not, and our farmers, who are in competition with other farmers who have world supplies and world prices available to them, are paying more for Indian meal now than they would have had to pay if this tariff were not on. As the Minister has said, we import only one-twelfth of our total requirements in a perfectly free trade market for Indian meal. Outside competition kept the Irish mills down to the world competitive price for Indian meal. There was never any necessity to put on a tariff. As a matter of fact, our mills were supplying virtually the entire market, and would continue to do so if a tariff were never put on. But what they will do in the future is, they will deprive our farmers of what our farmers are entitled to, and that is the benefit of world prices for maize meal, because maize milled outside the Twenty-six Counties cannot be brought in here to compete with the maize milled inside the Twenty-six Counties.

The Minister has entirely overlooked the question of freight charges on Indian meal. He does not seem to realise the possibility that the difference in freight rates on Indian meal may result in the price of Indian meal rising appreciably in certain areas. That is a very complicated question and one that it would be very difficult to go into fully here. I mentioned it here a couple of days ago, and if the Minister looks into it he will find that with the new distribution of these small mills that have sprung up since the tariff was put on it will result in Indian meal getting dearer as a consequence of less favourable freight rates being available to the small mills than were available to the large mills formerly. I oppose most strongly the motion to approve of this Order, because I am convinced that it is based on a most disastrous policy for the agricultural industry of this country.

Mr. O'Neill

I think Deputy Dillon has the sow by the wrong ear when he refers to Indian meal as the raw product. I think that the raw product in this case is maize and not maize meal. I know that a considerable amount of employment, ranging from £1 to £2 a ton, will be given in milling the maize in this country. I think most Deputies will agree that a tax on maize meal will redound to the advantage of the home mills. Of the one twelfth of our total requirements that we import, could the Minister say what proportion of that comes across the land frontier of the country, and how much of it is sea borne?

Mr. McGilligan

I want to question the full meaning of Paragraph 4 of the Order. It states:—

The duties imposed by this Order shall not be charged or levied on any goods which are shown to the satisfaction of the Revenue Commissioners to have been consigned from a country within the British Commonwealth of Nations, and produced entirely in a country or countries within the British Commonwealth of Nations.

I am assuming that the last phrase is designed to get at the grain grown in the Argentine or the Danubian countries, and that meal made from grain grown in either the Argentine or the Danubian countries would be subject to the tax. If that is the case, I would like to have some indication from the Minister as to what he considers the likely difficulty of those who have to deal with this Order, in identifying meal when it comes in, as most of it does come in, across the land frontier in the country.

There is the further point which arose here at an earlier stage, and to which Deputy Dillon referred to-day— the question of price. The Minister states that the position is now entirely satisfactory for a reason that did not commend itself as entirely satisfactory to Deputy Dillon, and will not commend itself as entirely satisfactory to anybody who knows the trend of prices for the raw material, that is, the grain itself, in recent months. The Minister, however, appears to be satisfied on that, but he appears not to be satisfied on the other point raised by Deputy Dillon that freight charges would make a difference, and if the Minister is going to take these drastic powers he spoke of, of even putting people in jail where there is an increase in price, will he take such things as the freight question into his consideration?

The other day we mentioned this by way of supplementaries to questions asked. It did not appear as if the Minister had clearly before him the ordinary charging methods of railway companies, that is to say, that you cannot take a freight charge, examine it and declare it to be reasonable or otherwise, simply on the mileage over which a particular thing has to be drawn. It did not appear to be clear that the Minister understood that railway companies, in general, favour the long haul, and consequently give a correspondingly lower rate, and that even where there is a short haul it will often have, over the same distance in different parts of the country, quite different rates, dependent on whether, or not, there is competition. In the old days it was entirely of the sea type, and now it will be either sea or road. I mention these points because they show the difficulty of getting a clear view as to the effect on prices of any tariff. The Minister appears to think it is clear, but I do not regard it as entirely clear, on that point. The Minister appears to think he will have no difficulty in checking prices, but, on the other point, I agree with Deputy Dillon that an increase is bound to occur.

Mr. Anthony

Has the Minister satisfied himself that the powers sought in this Order will not increase the cost of maize meal to such people as pig producers and others? Within a few miles radius of Cork City there are numbers of cottiers, market gardeners and others who feed and produce pigs. They are a very industrious section of the community, and I want to know if the Minister has satisfied himself that the cost of production for these people will not be increased, and that, consequently, the cost of the ultimate product, namely, bacon or pork, will not be increased to the consumer.

Mr. Brasier

I would like to ask the Minister if there is any possibility of exercising any stop to the control of the distribution of the raw material, maize. I understand that combines, more or less, control the market in the raw material, and will only distribute it on condition that certain prices are maintained. The Minister is probably aware that such a condition exists and I think it is far more important to stop that particular side of the evil.

Mr. Anthony

Is the Minister aware also, apart altogether from the question of foreign combines referred to by Deputy Brasier, that there are within our own country, persons who are prepared to exploit the position? A whole lot is said about the foreiger——

Mr. Brasier

Those are the people to whom I am referring.

Mr. Anthony

The Deputy means the foreigner within our country. I will hand to the Minister sufficient evidence to convince him that, when this tariff is put on, the ordinary producer will be exploited, and, ultimately, the consumer will be exploited, because when the tariff was put on oatenmeal, invoices, which I have here, prove that oatenmeal ordered before the tariff was put on was quoted at 17/6 per cwt. for flaked and pinhead oatenmeal. These prices were not quoted by the foreigner, or by any person alien to this country, but by some of our own people who are both saints and scholars. Immediately after the tariff was imposed, the same merchants, or the same producer, if you like, said that all previous orders were cancelled, and he immediately raised the price to 20/6 per cwt. That is a difference of 3/-, and it was not inflicted by the foreigner, the Sassenach or anybody else, but by our own Irish people, and I want to know if the Minister would be able to safeguard the position in that respect.

Mr. Lemass

What tariff is the Deputy referring to?

Mr. Anthony

The oatenmeal tariff.

Mr. Lemass

What is the date?

Mr. Anthony

The date is 20th October, 1931, when a Cork firm sent an order to a Free State firm. I will hand the document to the Minister if he requires it. This firm stated "We quote flaked and pinhead oatenmeal at 17/6 per cwt. railway carriage paid," and subsequent to that, on 24/10/31, we had the order cancelled, and on 30/10/31, the communication reads as follows:

Dear Sirs,—Yours received; the present price of flaked and pinhead oatenmeal is 20/6 per cwt., railway carriage paid. All previous prices cancelled.

I will hand the document to the Minister.

Mr. Brasier

Lest there be any misunderstanding as to the point I raised, it is the importers who control prices I am referring to.

Mr. Lemass

Deputy Anthony possibly remembers that the duty on oatenmeal was imposed a considerable number of years ago by the late administration, and it did not result in an increase in price. Quite the contrary. As a result of the imposition of the duty, the oat millers of this country were able to build up, and did build up, a very substantial export trade. Last year the duty on oatmeal was increased, but the increase in price to which Deputy Anthony has referred, I suggest, took place because, at the same time, a duty was placed on oats, which raised the price of oats, and which was designed to raise the price of oats.

Mr. Anthony

Would that represent 3/- in the cwt. of a difference?

Mr. Lemass

I am not questioning the figures. On the other questions that have been raised, Deputy Dillon has given some valuable contributions to various debates in this House from time to time, but to-day, I think, is one of his off-days. He talked about taxing the raw material of the farming industry. We are not taxing the raw material of the farming industry. We are stopping the imports of maize meal manufactured outside the State. There is no tax on maize meal bought by the farmers of this State and available for them. The Deputy also talked about outside competition keeping down prices which Irish millers secured for their products. I suggest to the Deputy that if that were the situation, then the maize millers would not have built up and maintained over a long period of years a considerable export trade in maize meal, and an export trade which was taken from them when the British Government decided to impose the duty.

Mr. Dillon

Does the Minister realise that no meal has the same price in two districts?

Mr. Lemass

I realise nothing of the kind.

Mr. Dillon

It is the truth.

Mr. Smith

It is the quality of the meal.

Mr. Lemass

The fact is that there is milling capacity in this country much more than adequate to supply our requirements. There is competition, and very keen competition, between the different producers for the available market, and so long as that competition exists prices will be kept down to the minimum. The complaint of some millers is that because of that competition they are not getting an economic return. That competition has, in fact, been increased, because a number of new mills have been established since the tariff was imposed and because of the desirability of maintaining competition we took no action which would have hindered these people establishing mills.

Mr. Dillon

If the Minister will inquire where these new small mills are getting their corn, he will find that they are getting it from the big mills, and if they turn nasty the big mills will stop supplies.

Mr. Lemass

I shall say a word about the corn situation in a few minutes. It is true what Deputy Brasier has referred to. There is some evidence in certain quarters of an attempt to corner the trade in the supply of maize to this country. If that attempt is persisted in, it may be necessary to take action to deal with it.

Mr. Brasier

Will the Minister take action?

Mr. Lemass

If necessary.

Mr. McGilligan

What action?

Mr. Lemass

If necessary the action of taking the trade of the importation of corn into the hands of the Government as a last resort.

Mr. McGilligan

Short of that, what action is proposed?

Mr. Lemass

We are not going to take up the attitude adopted by the Deputy of lying down when the responsibility was his and letting anybody who wanted to exploit our people come in and do it.

Mr. McGilligan

But short of taking over by the State, what can you do?

Mr. Lemass

Quite a number of things when any such situation arises.

Mr. Jordan

Start a mill and commit yourself and he will tell you what he will do.

Mr. Lemass

Deputy Dillon also referred to the fact that farmers had to compete in the English market, although he wrongly assumed that their competitive power would be lessened by the duty. He also forgot the fact that the English farmers are in the same position as the Irish farmers.

Mr. Dillon

I did not say the English markets; I said foreign markets. You are putting a lodestone around the farmer. You are trying to develop foreign markets.

Mr. Moore

What foreign markets are there besides the English market?

Mr. Lemass

As far as the freight rates are concerned, my information is that the prices quoted by the millers are for meal delivered. Consequently, the matter of the freight is one which concerns the miller and not the purchaser.

Mr. Dillon

Very little meal is sold in the West of Ireland except ex-mill and f.o.r.

Mr. Lemass

My information is to the contrary. Deputy O'Neill asked what percentage of the total imports of maize meal came across the land frontier. I think there was a very considerable percentage, but there are no figures available to show what the exact percentage is.

Major Myles

Is the Minister aware that a considerable quantity of meal was being exported into Northern Ireland, and in the case of Donegal alone that one balances the other at the present moment? You impose a greater hardship on the farmer in the North-East portion of Donegal. The millers, who have gained, are in the South. At the same time they have lost their total export trade, as I have pointed out already.

An Ceann Comhairle

The Deputy cannot make a speech now. Of course, if the Minister gives way, he can ask a question.

Mr. Lemass

The situation is as described. Certain mills in South Donegal which had a considerable portion of their trade, if not more than half of it, over the Six-County Border, have their position worsened. In the Northern part of Donegal the meal was mainly supplied from Derry.

Major Myles

The question of freight does not arise. The farmers carried it in their own carts.

Mr. Lemass

We had to deal with that situation. Some mills have been started in the northern part of Donegal, and in due course the situation will right itself, and the existing mills will supply the market. The point raised by Deputy McGilligan concerning Imperial preference is one that I do not think will concern us very much. It is a fact that there are no means of identifying maize meal produced out of South African meal from maize meal produced out of South American meal. It is not anticipated that there will be any substantial import free of duty on account of the preference given. The same preference exists in the British duty. It is there in any case. If any such situation did arise, it would be a matter of the reliance which the Customs authorities were prepared to place on the certificate of origin produced.

Major Myles

Does the Minister agree with the statement made by Deputy O'Neill that the gain to the millers of the country was £2 or £2/10 per ton?

Mr. Lemass

I would not like to answer that question now. Raw maize has increased in price by more than £2 per ton.

Major Myles

The question is, what is gained by grinding meal in the Free State? What is the cost of turning Indian corn into meal?

Mr. Lemass

The miller has about £2 per ton.

Major Myles

If he will get £2 10s. per ton, the question I put to the Minister recently would have been solved more easily, because it would be more than 25 per cent. of the cost of the article, and it would therefore be free of the 10 per cent. duty in Northern Ireland.

Mr. Dillon

Is this the last occasion on which we shall have an opportunity of discussing the tariff?

An Ceann Comhairle

No, it will come before the House again in the Finance (Customs Duties) Bill, the First Reading of which will be asked for to-day.

Mr. Dillon

Then we will have an opportunity of dividing the House.

Mr. O'Neill

I think I was misunderstood. I mentioned that over and above the cost of the maize, when it comes to be finished meal, there is a difference of 30/- or £2, and a good deal of that is spent in the form of the labour attached to the milling.

Mr. Moore

Might I suggest that when the Finance Bill comes to be discussed Deputies who criticised the tariff should explain why it is that competition from outside is always effective and can never be countered— no arrangement to check it can ever be made—but internal competition is always different, and never counts as a factor in the price at all?

Mr. McGilligan

Where did the Deputy get the idea that there was ever the contention in this House that internal competition, if it went to a sufficiently far point, would not be a benefit? The point is that there is not sufficient home competition to make sellers keen about cutting prices. Until you get to the point that there is sufficient home production to meet home requirements, then there is not sufficient room, there is not a sufficient chance of getting prices reduced. There is also the further point that in a small country like this there is always a likelihood of rings and of zone arrangements. We know that there have been several of these ring arrangements made even in tariffed industries when established.

Mr. Moore

Are there not rings constantly being made by people dealing in corn in the Argentine? Is not the whole tendency of modern trade towards rings and arrangements by people who supply such an article as maize?

Mr. McGilligan

The Deputy has not apparently realised that there are items that fall for consideration: (1) the raw material, and (2) the cost incurred in manufacturing after the raw material is brought in. If the manufacturing firms are not sufficiently numerous there may be an increase there.

Question put and agreed to.