Deputy Hughes has given notice that he intends to raise the subject matter of Question No. 1 on the Order Paper of 13th November.
Committee on Finance. - Adjournment—Dublin Meat Prices.
I want to make it perfectly clear that I am 100 per cent. with the Minister if his aim is to ensure the efficient handling of meat from the time it leaves the farm until it reaches the consumer, and minimum cost. If that is his aim, I am with him 100 per cent. But, if his intention is to compel those engaged in the business to try to buy stuff below the present market value, then I am critical of what he is doing. I have no personal experience of the retail trade here. Neither have I gone into close calculations of a fair margin. I do not claim to be competent to do that because I would not be able to value the offal, skin and so on. I want to point out to the Minister that the particular fancy cut that the City of Dublin is interested in is obtained from a medium weight heifer of about nine cwts. and that if he tries to batten down the price of that below the export level, he will compel butchers to kill lower grade cattle. At the present time I think that is almost in operation.
As the Minister must remember, when he first introduced this Order, we had no outlet for cattle of that type because they were graded very low in Great Britain for immediate slaughter. But, since that time, the price has gone up by 5d. a lb. dead and it means they will realise 7/10 a cwt. live weight. That is still 9/- below the British price for animals from Northern Ireland and Great Britain, that make a price of 96/10. The particular animals supplied to the City of Dublin are, in my opinion, animals that would definitely qualify for the quality grade and that would mean a subsidy of 2/6, bringing the price up to 90/4. If you add the cost of shipping to that, which is about 50/-, the Minister must begin to realise that the competition for export purposes will deny the butchers or victuallers an opportunity of buying first-grade animals for the Dublin trade. I have not discussed the matter with anyone in the trade. I have not had an opportunity and I am expressing my personal views.
So far as a reduction in price to the primary producer is concerned, the Minister must bear in mind that the producer is still getting, as a result of the London talks, 9/- under the price that is paid to the Northern Ireland or British producer, both of whom have the further advantage of a subsidy of £6 for rearing the calf, so that there is a considerable margin as between our producers and Northern Ireland and British producers. I do not think the Minister is wise in suggesting that the people in the trade should buy cattle below the market level. Our people are definitely entitled to get for their cattle the level that beef is realising to-day. I have given figures to show that it is substantially below the price realised in Northern Ireland and Great Britain.
The Minister is making this Order at a time when country people are prepared for winter feeding. People whose land is not suitable for the carrying of cattle up to the time winter feeding comes into operation—mainly tillage land I am thinking of—in order to produce farmyard manure, must have stock to be in-fed and they buy their stock at this time of the year, to go into stall. If the Minister fixes a price that will batten down or copper-fasten the price those animals will realise coming out of stall, he will certainly injure in-feeding which should be encouraged if you believe in a tillage policy. In any case, all must agree that the man who produces an animal during the winter and spring months spends substantial sums on feeding stuffs in order to produce beef at that period, and that beef will cost him far more than the cost to the man who sits back and looks at the animal growing fat on grass. I am not casting any reflection on grass-produced beef but I am pointing this out as something that the Minister should take cognisance of. When the Minister put this price into operation, he ignored grade. He indicated to me that it would be difficult to operate different maximum prices because it means an elaborate system of grading.
I have a further grouse and an even greater one about sheep prices. The Minister introduced his Order at a time when most feeders have prepared for winter feeding. Again, Deputy Allen can give him information on this matter. On farms where roots and grain crops are produced and where oats is fed, they buy the sheep in store condition and they have bought it at a very high premium this year in store condition—substantially higher than any other year.
Before the Minister made this Order, people who went in for winter feeding had bought in stocks at premium prices and he is not allowing them a fair margin under the fixed prices in operation at the present time. The Minister has seen the reactions of his Order in the fact that sheep are not coming on the Dublin market at present because these people are not prepared to sell at a loss. The margin accruing to the winter feeder has always been very narrow. He must produce roots to feed the sheep and occasionally give them oats and that is too costly. The Minister ignored the fact that during last summer sheep and lambs were commanding very high prices, even though the cost of feeding then was not so high, and he brought this Order into operation at a time which is going to strike the man who is prepared to produce mutton during the severest period of the year.
There is another aspect to which I should like to direct the attention of the Minister. There has been in operation in the City of Dublin, as well as throughout the country, a system by which victuallers have tried to stabilise prices over a period of 12 months. There is a good half-year and a bad half-year. During the good half-year there are plenty of animals available but during the bad half-year the victuallers have to work on a very narrow margin and even at times suffer a loss. That is from Christmas on to April and the late spring. If the Minister throws his mind back to the conditions which prevailed last spring, when peak prices obtained, he will remember that the very inclement weather conditions had a prejudicial effect on supplies and prices soared. The victuallers suffered losses during that period and, to balance out these losses, prices were kept a bit high during the later half of the year when supplies were more plentiful. If the Minister is going to control prices, he must take cognisance of the fact that the people in the trade were attempting to stabilise prices over the whole year and were not desirous that prices should fluctuate too much over the whole year.
It is true that people in the trade have at times taken very high margins but I have no hesitation in saying that quite recently no high profits were made in the trade. The margins allowed them were very small. As a matter of fact, people in the trade were suffering losses. I feel that is the position. I have already said that I would welcome any intervention by the Minister that would ensure that a more efficient system of handling meat as between the farmer and the consumer was introduced and that a narrow margin would be allowed for that particular service. I am opposed, however, to the Minister's intervention if it is going to have the effect of reducing prices to the primary producer.
We have been discussing the effect of the London talks and the agreement arrived at in the last few days, and we have all lamented the fact that our stocks are falling and that there is no sign of any improvement in the numbers for export purposes because the number of one-year-olds we have to-day is substantially less than we have had for the past two or three years. The Minister should bear that in mind in his anxiety for increased exports and remember that any further reduction in prices is likely to cause a further diminution in live-stock production here.
I have been wondering whether it was wise to fix the price of mutton at all. Sheep are very scarce and the mutton trade has become more or less a luxury business to a great extent. It will be a luxury business from now on. There is no doubt that sheep are bringing exorbitant prices.
As a luxury article for consumption.
Yes, for consumption. Mutton has become a luxury commodity and it is beyond the reach of the ordinary person. There is no doubt that the farmers had stocked up with sheep before this Order was made. Three-fourths of the sheep change hands in autumn and they changed hands this year at very high prices to the feeders. At present fixed prices these feeders stand to lose. That is a fairly serious aspect of the matter. The fixed prices come into operation at a time of the year when two-thirds of the sheep had gone into the hands of the feeders at a very high figure. The number of sheep operating on the market would be in the ratio of four to seven as compared with 12 months ago. The Minister should keep that in mind. If he could keep beef at a reasonable price to meet the needs of the ordinary household, he could then allow mutton to be sold as a luxury article, which it really is. It has become so because of the scarcity of sheep.
With regard to beef, there is no doubt that it was generally felt over the summer months that people in the trade were taking good margins of profit. There were periods last spring when they had thin margins but for some months afterwards it was generally recognised that they were probably taking too high a margin. Last spring, in the months of April and May there was a great scarcity of beef and I think indications are that you will have even a greater scarcity next May. You will have less stall-feeding this winter owing to the scarcity of grain and its high cost. Barley and oats are selling at very high prices. Oats is changing hands at about 50/- per barrel, a price that was never heard of before in this country. You will therefore find that there will not be much stall-feeding this winter and that you are likely to have a great scarcity of beef in April. All these things should be kept in mind. It will need very careful watching to prevent a scarcity of beef in the late spring and anything that would lead to farmers switching over from stall-feeding would not be for the general good. I can foresee just as big a scarcity of meat next spring as we had last spring, even though we may have a mild winter.
I think it is necessary to get clear the basis on which prices have been fixed. Until this Order was made, the maximum prices chargeable for beef and mutton in Dublin were regulated on the basis of an informal agreement made by me with the Dublin Master Victuallers' Association. I was not very much concerned about enforcing maximum prices for meat, particularly for beef, because I assumed that competition would be keen in so far as there was a full supply of cattle and that consequently there was not that element of scarcity which affects prices of other commodities.
I think the informal agreement arrangement worked well enough. The last time I made an agreement with the Dublin Master Victuallers' Association was in February on the basis of the prevailing prices in the Dublin market in January. The Dublin master victuallers agreed with me as to the prices they would charge for beef and mutton in Dublin. Subsequently market prices began to fluctuate so violently that the agreement could not be maintained. Prices rose considerably, but when they fell again the retail prices of beef and mutton did not fall with them and I have now made an Order fixing maximum prices for beef and mutton on a basis which is more favourable to the victuallers than the basis they agreed to accept last February. I think I was justified in giving them a somewhat wider margin because their costs, including the wages of operatives, have increased in the meantime.
I want to emphasise that the maximum prices now fixed are related to the market prices in October and provide for the victuallers, even allowing for increased costs, the same margin as they agreed to be reasonable in February of this year. I think that the price of meat was too high. It is true, as Deputy Hughes said, that it is the normal practice in the trade to work on low margins during the spring of the year when the market prices of stock are high, and to recover in the autumn of the year when the market prices tend to fall. But there can, I think, be little justification for the prices which were prevailing at the time I made the Order.
In the 12 months from August, 1946, to August, 1947, prime beef costs on the Dublin market advanced by 2.13 pence per lb. of meat, dead weight. In the same period the retail prices of beef in shops, as shown by the inquiry conducted in preparing the cost-of-living index number, advanced on the average by 5.3 pence per lb. In the same period prime mutton costs advanced by 4.64 pence per lb., dead weight, while the average retail prices of mutton in the shops advanced by 7½d. per lb. It is obvious that the advance in retail prices was out of relation to the advance in market prices.
These traders ordinarily work upon a low profit on turnover. Deputies, no doubt, have seen in the Press a statement by some victualler to the effect that these prices yield him a margin of profit of something over 3 per cent. on sales, but ordinarily, from the information available to me, victuallers work on a margin of about 4 per cent. on sales. When you consider that the present percentage is related to very considerably inflated money values, it is quite obvious that a lower percentage on sales is justified, having regard to the fact that no other section of the community can get the same percentage return on turnover as operated before the war.
Let us consider the effect of fixing meat prices upon stock prices in relation to cattle and sheep separately. The British made an agreement with us and the higher prices which the British are going to pay for fat cattle under that agreement do not affect this issue at all. I tried to explain that to Deputy Hughes before, but apparently he has not fully grasped it. The prices for prime bullocks and heifers on the Dublin market during five dates in October were as follows: 84/8¾ per cwt., 83/2 per cwt., 82/2 per cwt., 81/7¾ per cwt. and 82/8½ per cwt. Even the increased prices which the British propose to pay will not bring their price to anything around these figures.
At the prices the British are prepared to pay, even with the increases, they will not get this class of animal. The class of cattle which the Dublin butcher ordinarily buys is selling at these prices in the Dublin market, whereas the British will buy around 75/- or 76/-. It is clear, therefore, that they are going to get the second grade of fat cattle, the type which have not been moved heretofore because the British did not pay enough and the type butchers buy only in times of scarcity.
There is no conflict between the buyers of cattle for export—cattle sold at the prices the British and continental buyers pay—and the Dublin butchers, because the Dublin butchers buy these prime bullocks and heifers, while the buyers for export purchase the other animals. At some seasons, when there is a scarcity of these cattle, the Dublin butchers may be in competition for the other types, but there is no competition at the price the British are paying for the heavier and older cattle they are obtaining. Such competition does not enter into this picture and will not unless and until there emerges a time of scarcity of fat cattle which will require the butchers to go into the market for the other types.
It is recognised that cattle prices are subject to seasonal fluctuations and normally, from the end of January on, prices tend to rise and meat prices rise with them. I have intimated that the maximum retail prices for meat will be related to the current market prices for cattle. I recognise that that may not be altogether practicable. If circumstances arise in which there is a considerable reduction in the supply of this type of cattle and there is undue competition between the butchers themselves to obtain supplies, it may force prices unduly high. Our aim must be to keep meat prices as low as practicable in the interests of the consumers, but obviously there is in the present maximum prices for beef no element of unfairness to the victuallers, having regard to the margins they obtained in the past. Neither does any problem arise at present because of the higher moneys the British pay for fat cattle for export.
The position is different concerning sheep. There is no one buying sheep except the victuallers. There are no sheep available for export and the rise in the prices of sheep was due entirely to butchers competing with one another for the limited supply.
Not entirely—there is a shortage of supply.
That is so, but because of the scarcity, and because that scarcity produced the competition to which I have referred, the prices of sheep on the Dublin market have increased since last year by about 40 per cent. That is a substantial increase, but the present prices which I have fixed for sheep bear the same relationship to the prices which prevailed in the Dublin market during October as the prices which the butchers agreed last February to maintain having regard to the prices which prevailed in January, again with a slight advantage to the butcher to offset the increased cost which he has incurred in the meantime. I think sheep prices have gone high enough. It may be some people have speculated on the possibility of a further increase and have bought sheep to hold them for that.
That is not so.
I do not think we should be concerned about these people.
That is ordinary farming practice.
There is nobody who will not agree with me that the present prices of sheep are high enough. Some people think they are fantastically high and that they will have to come down in any event. The position concerning sheep prices is peculiar, because you have that very substantial rise since last year.
I think the Minister misunderstands me. Even if he had brought his Order in two months earlier in anticipation of the winter season he would allow the feeder to buy at a premium.
If I had brought the Order in earlier—so far as sheep are concerned the prices moved upwards slightly since August but went back as compared with May last—the prices fixed for mutton would have been higher and we would now be reducing the prices of mutton because of the fall in the market prices of sheep. If we fixed prices in July or August last we would now be increasing those prices.
Deputy Allen talked about what store sheep made in August and September for winter feeding purposes and now the Minister is trying to relate the prices of fat sheep.
I am relating the maximum prices for mutton to the market prices of fat sheep in Dublin in October. On what other basis could they be fixed? The Deputy apparently has in mind that people have bought sheep in the expectation that the market prices would go higher still.
I do not know anyone who would have done it; most of them have lower winter stocks.
If they bought these sheep at a price which was, in their minds, related to the prevailing market price for fat sheep, they would have no reason for anxiety.
The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 26th November, 1947.