Dáil Éireann díospóireacht -
Tuesday, 30 Apr 1946

Vol. 100 No. 16

Committee on Finance. - Adjournment Debate—Price of Wool.

Mr. Cogan

I regret that my notice to raise this question on the adjournment has compelled the Minister to return to the House after only a very short interval. I intend to be brief on this question. For the past five or six years, there was carried on a world war which was somewhat on the same lines as the war of 1914-18, but on a more extensive scale. We all remember that, after the 1914-18 war, there was an immediate collapse in agricultural prices. The recent war terminated last year and there has been a growing fear amongst farmers that one of the future effects of the termination of that struggle would be a collapse in agricultural prices again. History has an irritating habit of repeating itself, and farmers are inclined to fear that there may be a repetition of the conditions which prevailed after the last war, and it is therefore with great anxiety that farmers have learned that the prices obtainable by producers for wool during the coming season are likely to be substantially lower than they were last year. This anxiety has been increased by the fact that the Government has announced that the maximum prices fixed two years ago have been revoked.

At the time this Maximum Prices Order was made, farmers and sheep raisers generally resented the Order, because they felt it was a deliberate attempt to deprive them of the natural advantage which would accrue to them by reason of the law of supply and demand which would have had the effect, were it not for the Order, of increasing the price of wool. Thus, we have a position in which, when the producer had the prospect of obtaining a satisfactory price for his produce, an Order was made by the Minister fixing maximum prices for wool, so that the farmer would not get the price which the ordinary law of supply and demand would have provided; but now, when there is a prospect of wool prices falling, there is no move on the part of the Government to fix a minimum price in order to protect the producer. It may have been necessary and desirable to protect the consumer two years ago, but I think it is equally necessary and desirable to protect the producer to-day.

This State depends upon the continued activity, energy and enterprise of the producer, and there is no body of producers in the State who have to work harder, who have to face greater difficulties, than those engaged in the sheep raising industry. That industry is conducted extensively in the West of Ireland by the very small land holders and in Leinster to a very great extent by the farmers in the hilly districts on land which is of very inferior quality. These people have to struggle hard against very adverse circumstances in order to make ends meet, and if there is one section of the producing community who ought to be protected it is those engaged in the sheep raising industry.

Some years ago this Party put down a motion which sought to provide guaranteed prices for the chief products of agriculture, and, in advocating that motion we named the principal products for which we sought protection. Dairy produce, bacon pigs, wheat, beet and also wool were included. The Minister for Agriculture adopted a very sympathetic attitude towards that motion and while expressing doubt with regard to the possibility of guaranteeing a price for wool, he did not definitely turn it down. The Minister has a comfortable and perhaps a safe habit of being a little uncertain about matters which are very contentious, and he did not come down definitely for securing a price for the wool producer or against it.

In putting down this question to-day, I was seeking from the Minister an assurance that he is standing firmly for security of prices for the agricultural producer, and particularly in connection with a commodity such as wool which is a commodity which can be controlled and regulated. The Minister for Agriculture and also the Taoiseach announced that agricultural products which are uniform in quality are capable of being protected and guaranteed in regard to price, and I think it will be agreed that wool is a commodity which can be graded and which, in the different grades, is uniform in quality. Therefore, it is a product for which the protection of an assured price can be given.

The Minister may tell us about the interest of the consumer in this matter, but the price of wool forms a very small part of the price which the consumer pays for woollen products. For example, tweed sold by weight would probably be in the region of 22/-, 23/- or 24/- per lb., whereas the price of wool has not exceeded on an average 2/6 per lb., and it is likely, even though it is not demanded by sheep owners, that it should exceed 2/6.

Thus it will be seen that to give a fair price for wool would mean only a very small fraction of the price which the consumer has to pay for the finished product. I think the Minister himself has on a number of occasions suggested the desirability of giving the farmer an assured price and a secure market for his products as far as possible, and wool is certainly one of the products for which that security can be given. The Minister's reply to my question to-day was very unsatisfactory and will cause very grave anxiety and misgiving amongst the humble producers throughout the length and breadth of the country, and I think he should reconsider the matter.

Mr. Commons

I, too, thought the Minister did not give a satisfactory answer to Deputy Cogan's question because it is only fair that, if he saw fit to fix a maximum price a few years ago, when there was a prospect of wool increasing in price, he should fix a minimum price now, or at least give, so far as possible, an assurance that the price will be reasonable. Wool is produced on most of the large and small farms in the part of the constituency I come from. In Kilmaine, Shrule and Hollymount the people go in for wool production on a pretty large scale. It is regarded there as a very useful sideline. It may not be the main agricultural output in that area, but it is a very useful thing to fall back upon. These people, as well as wool producers in other parts of the country, maintained that 2/6 a lb. was not sufficient to encourage wool production, especially when the price of the finished product, as has been pointed out by Deputy Cogan, was not in keeping with what the wool producer was getting. If there cannot be an assurance given that some price will be fixed for wool, it would be very wrong to try to encourage the people to go in for the production of wool on anything like a large scale. There is no doubt but that once the price of wool starts to come down it definitely can come down in such a way that it may reach the stage it reached ten or 12 years ago. Therefore I say that there should be a minimum price fixed for wool, especially as the Department fixed a maximum price for it at a time when, if the price of wool had been allowed to go ahead, it would have probably reached twice the amount which the Department fixed. Therefore I say that the Minister should reconsider the matter. He gave no assurance in reply to the question put to him to-day. I can assure him that if a minimum price is not fixed he will be taking a good step in the direction of doing away with wool production and the sheep-raising industry.

Mr. Cafferky

I should like to associate myself with Deputy Cogan and Deputy Commons with regard to fixing a price for wool. We all know the importance of sheep-raising in many constituencies in the Twenty-Six Counties. As the previous speaker pointed out, while the Minister took steps to control the price of wool during the emergency, he did not take the same interest in controlling the price of the articles produced from the wool and the people had to pay a high price for these articles, while the producer of the raw material was prevented from getting the market value of the raw material. Wool production is very important. A short time ago I had the pleasure of going through the Foxford Woollen Mills which Deputy Dillon mentioned to-day and I saw what can be produced from Irish wool. The manager of the factory pointed out to me articles that can be produced from Irish wool in competition with imported wool. We know the propaganda there is against the use of Irish wool. To-day we were talking about what industries we could establish to maintain our people at home. If we could establish industries in the Gaeltacht like the one at Foxford it would help to give employment to the people there. There will be no hope of doing that if the Minister will not make some effort to preserve the wool industry in Galway and Mayo, where they specialise in sheep-rearing. If he does not take steps in that direction, I am afraid the result will be that farmers will get out of sheep-rearing, because it would not pay them unless they get some reasonable guarantee as to the price they will get for their wool.

Mr. Halliden

I should like to endorse the views expressed by my colleague, and I hope that the Minister will accede to the request made to him.

Mr. Allen

The withdrawal of the Minimum Price Order will not affect the price of wool. Something else, of course, may affect it and bring down the price other than the withdrawal of the Minimum Price Order. I want to support the other Deputies, however, so far as saying that previous to the emergency there was great discontent amongst farmers owing to the way wool prices ranged. After selling their wool they found that the price was doubled before the end of the season. That was a matter that needed attention even before the emergency, namely, controlling the price right up from the producer to the manufacturer. Everyone is aware that all the wool produced in this country was not used within the country previous to the emergency.

I do not know whether that is so at present. Certainly there was discontent about the way the price ranged from May, June and July during the shearing season, when the farmers generally disposed of their wool, and the end of the season when the price was probably doubled. As a consequence the buyers had an advantage at the expense of the farmers. I ask the Minister to keep that in mind if he is giving consideration to this matter in the future. He should try to keep the price level throughout the season and allow a small margin of profit to the buyer, so that the rich manufacturers will not be reaping a profit of 100 per cent. at the expense of the farmer.

Minister for Industry and Commerce (Mr. Lemass)

Let us consider this suggestion that there should be a fixed minimum price for wool as a practical proposition, leaving aside all suggestions of propaganda. What are the Deputies putting forward as a serious and practical proposition? They propose that there should be a minimum price fixed for wool. I presume they realise what that means. It means that we fix a price to be paid and make it an offence for any person to sell or to buy wool below that price. I wonder have they given that matter full consideration. Do they think they are conferring a benefit on the wool producers by making that suggestion? We can fix the minimum price for wool on the basis of the world price or we can fix it above the world price. There is obviously no sense in fixing a price equivalent to the world price of wool because the farmers will get that price anyway. Their wool will not be sold at less than the world price. Supposing we fix a minimum price above the world price and make it an offence for the farmer to sell wool below that price, what guarantee have you that he will be able to sell his wool at all? Imported wool is becoming available now. The manufacturers will buy the wool available to them at the lowest price.

Mr. Cafferky

Do not allow imported wool in.

Mr. Lemass

That is a suggestion that we should have a permanent scarcity of cloth. Am I to understand that it is suggested that we should continue with a scarcity of cloth indefinitely in order to keep up wool prices? The Deputy says: "Do not allow imported wool in."

Mr. Cafferky

Bring in the quota we require.

Mr. Lemass

In other words, we are to have rigid control of wool in order to ensure that a higher price will prevail than the world price and deliberately to restrict the production of cloth and the supplies of clothing to our people in order to ensure that some price above the world price will be available for wool here.

Mr. Cafferky

You should maintain the price as an encouragement to production.

Mr. Lemass

I want to put it to Deputies opposite: have they considered this matter at all? It is clear from what Deputy Cafferky has said in his attempt to answer my question that you must do more than fix a minimum price for wool—you must compel people to buy at that price. There is no good in fixing a minimum price if nobody is going to pay that price and if the farmer has no sale for his wool. You have got to create a situation in which people must buy wool at that price. Is that not so?

Mr. Cafferky

He can pay more but he must not pay less.

Mr. Lemass

It is not sufficient to fix a minimum price. You must compel manufacturers to buy the wool if you fix a price above the world price. The suggestion is made that we did the farmers an injustice when we fixed a maximum price. What maximum price did we fix? We fixed for 1944 the actual price that was paid in 1943. That was not merely double the pre-war price but it was 30 per cent. above the world price. In 1944, they got the maximum price but they did not get it in 1945. The situation in 1945 had changed and the maximum price was not realised for the whole of the wool crop.

Mr. Cafferky

Had the fixing of the maximum price during the emergency any effect on reducing the price of the material manufactured from that wool?

Mr. Lemass

The maximum price was fixed not to deprive the producers of any benefit but to prevent certain racketeers making a profit on the wool. The effect of fixing the price was to get for the farmers in 1944 the same price as they got in 1943 and to eliminate the racketeering that had developed in 1943.

Mr. Cogan

Why was the maximum price revoked?

Mr. Lemass

Because the maximum price was not paid in 1945. There is no point in fixing a maximum price if people are not prepared to pay that maximum price. The maximum price was fixed in 1944 on the basis of the actual price paid for wool in 1943—that is double the pre-war price and 30 per cent. above the world price. As I say, the maximum price was not realised for the whole of the wool crop for 1945. A substantial part of our wool crop is exported because it is a type of wool that is not used here. We have no machinery to use that wool. Are you going to fix a minimum price for the wool which you must export?

Mr. Cafferky

The Foxford mills use a very substantial quantity of native wool.

Mr. Lemass

In fact a large part of our wool crop, what we call black-faced wool, is not used here. Its main commercial use is the manufacture of carpets. Some carpets are manufactured in this country but the bulk of the wool crop is exported. You cannot get for that wool a price above the world prices. You cannot compel a buyer in other countries to observe any minimum price which is above the world price. He will buy our wool, if he thinks he is getting it at a price which gives him equal value as wool which he can get from other countries. Our woollen industry is an important one. It is one of the industries in which we did a substantial export trade in the past, and it is one of the industries on which we must rely to develop an export trade in the future. To some extent we are allowing the export of specialised types of cloth at present in order to develop that future export trade. The prospects of developing that export trade are very good but we cannot look for any expansion in that trade unless we are prepared to permit our woollen manufacturers to acquire wool at the same price at which their competitors in other countries can acquire wool.

I am putting this issue first. I am not discussing this question on the basis of agricultural policy. I am discussing it on the basis of general economic policy. My concern during the war was to ensure that there were maximum supplies of goods available for the people at the lowest price at which they could reasonably be made available. It is a complete fallacy to argue from the particular case of wool to the general issues of agricultural policy. There is a Government decision already announced to proceed on the basis of fixed prices for various agricultural products but that policy cannot apply to wool.

Deputy Cogan is completely wrong in his history. Agricultural prices did not fall after the last war. After the last war agricultural prices rose to a much higher point than they had reached during the war. After the last war, the various controls that were imposed on prices and supplies were repealed. They were repealed too soon and the inflationary forces which war always releases came into operation. The price of commodities rose in 1919, 1920 and 1921 to a far higher level than they had during the war. The cost-of-living index reached its highest point in 1921 and the collapse in prices did not take place until 1929.

Mr. Cogan

In 1922.

Mr. Lemass

There was an alteration of money values. Shall I put it this way—there was an alteration in money values in 1925 following the restoration of the gold standard in Britain. Britain adopted that policy which reacted upon us here. The value of money appreciated and prices fell but the collapse in agricultural values, in relation to the values of other commodities, was a consequence of the world depression which began in 1929. I think the Governments of the world have learned a lot since. The mistakes made after the last war are not being made now. The action that is being taken now may be mistaken also but at least they are not making the same mistakes that were made after the last war. What the consequences of the present controls or the maintenance of the policy that is being operated by individual States now may be, no one can forecast but I think it is a reasonably fair assumption that because they are not making the same mistakes as were made after the last war the results will be different, and there is no likelihood of a collapse in agricultural prices generally as far ahead as one can see. I do not think that that applies in the case of wool. There is a large supply of wool in the world and the restricted output of clothing is not due to scarcity of wool. There is, in fact, several years' wool crop stored in all parts of the world, but there is a deficiency in spinning and weaving capacity. Our problem in disposing of the supplies of wool we have is due to the absence of adequate spinning and combing plant. It was not possible to use the whole of the native wool crop or indeed some special qualities of wool which were imported. We had to make an arrangement by which some proportion was exported to Britain to be combed into wool tops which are the raw material of the spinning mills. We had more weaving capacity than spinning capacity so that there were a number of bottle-necks which reduced the total output of cloth here.

I suggest to Deputies that they should consider this matter more fully than they appear to have done. I am not by any means satisfied that any benefit would accrue to farmers by fixing a minimum price. Certainly the fixing of a minimum price alone will not mean that they will be able to sell all the wool they have at that price. If you want to make a minimum price effective, you must create an artificial scarcity of wool so that people will be prepared to pay that price. I do not think that the circumstances require that we should create an artificial scarcity of woollen garments. On the contrary, national economic policy requires that we should develop not only our woollen cloth production capacity but, if possible, develop it to the stage where we shall be able to build up an export trade because it is one of the few industrial commodities for which we have a reasonable prospect of getting into the export market on a big scale.

Mr. Cogan

Is there not a danger of the Irish wool producer being exploited by the exporters?

Mr. Lemass

I do not think so. It is at least certain that the Irish wool producer will get the world price for his wool. Arrangements are being made internationally to prevent the marketing of wool supplies in such a manner as to depress the price because clearly a rapid fall in world prices would have an effect on production. The great wool producing countries are themselves taking measures in order to ensure that there will not be any rapid fall in prices which would curtail future production.

The Dáil adjourned at 10.30 p.m. until Wednesday, 1st May, at 3 p.m.