Dáil Éireann díospóireacht -
Friday, 14 Jul 1950

Vol. 122 No. 10

Committee on Finance. - Sugar (Prohibition of Import) Order, 1950—Motion of Approval.

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Cosgrave)

I move:—

That Dáil Éireann hereby approves of the Sugar (Prohibition of Import) Order, 1950.

The Sugar (Control of Import) Act, 1936, empowers the Government to prohibit by Order the importation of sugar except under licence. Import licences may be granted to the sugar company only. The first Prohibition Order on the importation of sugar was made in May, 1936, and, since that time, the importation of sugar has been regulated by an annual Prohibition Order. The current Prohibition Order, which is the 15th Order of the series, prohibits the importation of sugar during the period from the 1st May, 1950, to the 30th April, 1951.

Section 3 of the Sugar (Control) of Import) Act, 1936, provides that every Prohibition Order shall cease to have effect at the expiration of six months from the date thereof unless the Order has been approved by resolution of the Oireachtas passed before the expiration of the said six months. The current Order was made on the 21st April, 1950, and consequently it will require to be confirmed not later than the 20th October, 1950.

There is exemption from the prohibition in the case of:—

(a) sugar not exceeding 14lbs. in weight which is intended for the personal use of the importer or of his household; and

(b) samples of sugar.

It is provided under Section 7 (4) of the Sugar (Control of Import) Act, 1936, that a fee at the rate appointed by the Minister with the consent of the Minister for Finance, shall be paid in respect of every licence which is issued authorising the importation of sugar. The object of this provision is to ensure that the sugar company, which is the sole licensee, shall not make any profit on the sale of imported sugar. Accordingly, the aim has been to appoint a fee which would be equal to the difference between (a) the amount realised by the company on the sale of imported sugar, and (b) the amount expended by the company on the purchase and handling of the sugar.

In normal times, when sugar was freely available in the world markets, it was necessary to restrict imports in the interests of the sugar factories. The annual demand is at the rate of about 100,000 tons, and our factories produced 88,700 tons in 1949. It is necessary, therefore, in the ordinary way to import sugar, and the arrangement under which it may be imported only by the sugar company enables a uniform price to be maintained.

Mr. Lemass

The purpose of this Order is to confine the import of sugar to the sugar company. That has been the practice for a number of years. It is probably desirable that that practice should continue but last year somebody made a terrific muddle of the business of importing sugar and I should like to find out who it was. It was either the sugar company or the Government. I suspect it was the Government. If that is so, I think it is unfair to leave the sugar company under the onus of responsibility in that matter. According to reports, the muddle affecting last year's sugar imports was due to unnecessary delays in the Department of Industry and Commerce and the Department of Finance. As early as October last, the sugar company must have been in a position to calculate to a ton the quantity of sugar required to be imported to supplement home production. Apparently they were unable to get from the Department of Finance the necessary sanction to expend dollars on the purchase of sugar in Cuba or any part of the dollar area. As the delay continued, the price of sugar had risen against them and when ultimately sanction was obtainable a position had been created in which the sugar company were forced to search the world for a supply of sugar that was obtainable for sterling. They bought sugar in Formosa.

I have already described that as a gamble which, fortunately, came off but which might not have come off. I do not think the sugar company should be put into the position that, in order to obtain supplies of sugar, they are forced to take gambles of that kind. At the time they purchased the sugar in Formosa, it was anybody's guess whether the Chinese Communist armies would be in Formosa before they got the sugar out. As it turned out, they got the sugar and apparently got much more than was required to meet our own needs, because we were informed that a substantial proportion of the sugar upon which the company took that gamble was ultimately resold to Egypt at a profit. I hope that this year there will be a more intelligent arrangement between the Government and the company in respect of the purchase of whatever sugar supplies are required.

What does the Parliamentary Secretary mean by telling the House that there are arrangements to ensure that the company does not make profits on imported sugar? They are making colossal profits on this sugar because it is being sold at 7½d. a lb. and, at that price, the company must be making huge profits. It is because of these huge profits on the resale of this sugar at 7½d. a lb. that the Government is able to maintain the subsidised price of sugar at the sugar company's expense instead of at the Exchequer's expense. There is no frankness in the statement that the company does not make a profit on sugar when everybody knows that, not merely is it making substantial profits, but it is making such large profits that the Exchequer was able to raid them this year to the extent of at least £500,000 and avoid what would otherwise have been a commitment. Although we agreed to the approval of this Order, we should like to express our considerable dissatisfaction with the extraordinary mismanagement associated with the import of sugar in the past.

Mr. Cosgrave

I do not think there has been any mismanagement in regard to the importation of sugar. It is a normal commercial transaction, if a body such as the sugar company finds that it has more than a sufficient supply, to endeavour to dispose of the surplus supplies to the best advantage. The sale of the Formosan sugar was a case in point. I do not think there were any delays in either the Department of Industry and Commerce or the Department of Finance in connection with the authorisation of the E.C.A. procedure to purchase sugar. The sugar company were notified as far back as August, 1949, that, under E.C.A. procedure, certain formalities had to be complied with. They were informed that, under that procedure, dollars would be made available. Some time later, the company informed the Department of Industry and Commerce that the price had hardened against them and they recommended against purchasing at that time. That is a matter for the sugar company, but it is the responsibility of the Minister for Industry and Commerce to see that there is an adequate supply to meet the ration.

Subsequently the sugar company found, owing to the increased demand for the use of sugar in manufacturing purposes, in jams, etc., resulting in a larger drain on the supply of sugar than was anticipated, that about the end of November or December, 1949, they had to purchase sugar urgently elsewhere. They then bought the Formosan sugar. I know of no delay which took place either in the Department of Finance or in the Department of Industry and Commerce making dollars available to the company.

In the sugar market just as in any other market, circumstances change and fluctuations take place. It was reasonable probably for the company to take the view that they should have held off at a particular time, but it was the responsibility of the Minister for Industry and Commerce to see that adequate supplies of sugar would be available to meet the ration. When the sugar company found that the Formosan sugar was not necessary because of a falling off in demand in the early months of this year, they decided to sell it. The demand for manufacturing purposes fluctuates from month to month, and certainly from quarter to quarter. Operating on a basis of a certain demand for a limited period with a changing external market the sugar company had no alternative but to buy the Formosan sugar, and I think in the circumstances that it was a satisfactory outcome that the company was able to dispose of it without any loss.

Question put and agreed to.