Agricultural Credit Bill, 1965: Second Stage.

I move that the Bill be now read a Second Time.

The Agricultural Credit Act, 1961, marked what might well be called a turning-point in the history of the Agricultural Credit Corporation. The total of all loans advanced by the Company for agricultural credit between 1928, when the Company commenced working, and April, 1961, amounted to £10¼ million. Since April, 1961, lendings have increased dramatically. In the four years from April, 1961 to April, 1965 they amounted to £10.3 million; about £5 million of this amount was lent in the year ended April, 1965. Even allowing for the fall over the years in the value of money, this is a very striking increase.

The increased lendings were partly a symptom and partly a cause of the welcome upsurge of activity in the agricultural industry. It is gratifying to record this evidence of the willingness of farmers to borrow, in the conviction that their enterprises would prove worthwhile, and of the willingness of the Corporation to keep pace with the credit demands of this new and heightened activity in agriculture. I am glad to say that a fairly sizeable amount of the Corporation's lendings have been to co-operative enterprises. I would like to congratulate the Chairman, Directors and staff of the Corporation on this satisfactory increase and on the effective and expeditious way in which they are conducting the affairs of the Corporation.

The Agricultural Credit Act, 1961, was an important instrument in helping these increased lendings to be made. It increased the share capital and borrowing powers of the Corporation, broadened the range of agricultural activities for which the Corporation could make loans and widened the means by which these loans could be made. That Act introduced the system of "charging orders", which enabled the Corporation and the borrower to use a relatively simple procedure when taking a charge on land as security for a loan.

Since 1961 the Corporation have branched out into new types of lendings and I would like in particular to refer to their unsecured loans scheme and to their hire-purchase business which are showing very satisfactory progress.

The Bill which I now present to the House is intended to enable the good work in progress by the Corporation to be continued and expanded. The chief purpose of the Bill is to increase the share capital and borrowing powers of the Corporation. The 1961 Act authorised share capital of £2 million for the Corporation. This amount has been fully subscribed. That Act also increased to £10 million the borrowing powers of the Corporation, and some £9 million of that amount has been used up. The Bill, therefore, proposes to add another £4 million to the authorised share capital and a further £10 million to the borrowing powers of the Corporation. This total of £14 million in new money for the Corporation together with repayments of existing loans should keep the Corporation in funds for some years to come.

The Bill has a number of other provisions which in the main extend the provisions of the 1961 Act. As these are explained in the memorandum circulated with the Bill, I propose to confine myself to some brief comments. The charging order system, which has proved successful, will be extended to enable it to be used by a personal representative of a registered owner of land. In addition I am proposing that a registered owner of land should be able to use a charging order when using his land as security for a loan to another party. The most obvious example of where this could happen is where a farmer acts as guarantor for a son who is starting out to farm on his own. This Bill also proposes to increase from £1,000 to £2,000 the limit for which charges by the Corporation on land will rank prior to equities. The limit was fixed at £400 in 1928 and it remained at this figure until 1961 when it was increased to £1,000. The £2,000 would be well in excess of the majority of loans made by the Corporation. The Corporation assure me that they are not aware of any case where a priority charge in their favour resulted in a loss to an equitable claimant. The limit on borrowings by personal representatives is also being increased from £1,000 to £2,000 and in addition the Corporation will be able to guarantee loans by a third party to a personal representative. The power to guarantee loans was given to the Corporation by the 1961 Act but this power was not specifically extended to guaranteeing loans raised by personal representatives.

So much for the Corporation's authority to lend money. I am also proposing a change as regards their power to sue for defaults in repayment, though I am happy to say that these occur in only a very small proportion of loans. The Bill provides that a certificate by the Corporation of moneys due under hire-purchase agreement may be accepted in Court proceedings as evidence of debt.

The 1961 Act gave the Corporation authority to accept deposits from co-operative societies. I understand from the Corporation that they have from time to time been in a position to obtain deposits from other sources but have been precluded by the terms of the 1961 Act. The Bill provides, therefore, that the Corporation may accept deposits from any source.

The Charging Orders introduced by the 1961 Act were under that Act exempted from stamp duty and registration fees in the Land Registry. The Bill proposes to exempt from stamp duty and registration fees all mortgages and charges in favour of the Corporation, also releases from such instruments. This will place borrowers using mortgages or deeds of charges in the same position as borrowers using charging orders in so far as these duties and fees are concerned.

The Bill also makes certain provisions as regards membership of the Houses of the Oireachtas by directors, officers and servants of the Corporation. These provisions are in line with established provisions as regards membership of the Houses of the Oireachtas by directors and staff of State companies.

The Bill will enable the Corporation to continue its vital work of ensuring that agricultural progress is not hampered by lack of credit. I confidently recommend it for the approval of the Dáil.

We regard the provision of credit for agriculture as one of the most important and urgent measures which can be taken in present circumstances to provide for and ensure the development of the country. We are concerned, and very concerned, that in the past 12 months the continued drift from the land has gone on unabated and that in the past 12 months some 10,000 people ceased to work on the land. That indicates that there is a very serious and definite problem in agriculture which requires urgent attention. It is a good thing and a very consoling thing that the provisions for credit referred to by the Minister have been and are being availed of by farmers. Any further credit that can be provided through the Corporation is a well worthwhile investment in the future of the country.

The Credit Corporation was established in the days of the first Cosgrave Government and it has had its ups and downs in the years since but, generally speaking, it has been of assistance to the agricultural industry. It is desirable that now, when through the Corporation further borrowings can be made available, this should be done as a matter of urgency. So far as the Fine Gael Party are concerned, we regard the provision of credit for agriculture as one of the main planks of our policy and while what we would propose would be something slightly different from what is contained in this Bill, nevertheless in so far as the provisions of the Bill will facilitate and make better provision for agricultural credit, it will have our complete support.

I noticed in the Minister's speech that he referred to an enabling provision for the Corporation to obtain deposits and he mentions specifically co-operative societies and other bodies. I do not know exactly what kind of other deposits he has in mind but it appears that under the 1961 Act the Corporation was given power to accept deposits from co-operative societies and I should like to know the extent to which that power was in fact availed of and also what other sources of deposits are likely now to occur which render necessary the further amendment which the Minister proposes.

Perhaps the Minister would also indicate how certain is the information that no equitable interests have in fact suffered in the experience of the Corporation in regard to the priority given to charges as security extended to the Corporation, over and above equities. It would appear to me to be likely that equitable interests might to some extent be affected by this priority, although I observe that the Minister says the experience is to the contrary. There may be other details in the Bill on which information may be sought at a later stage but certainly the Bill in principle will have the support of the Fine Gael Party.

I should also like to welcome this Bill and join with Deputy O'Higgins in saying that it is most important. The whole question of agricultural production has been held up over the years by a lack of capital. Apart from the statistics which are available it must be evident to anybody living in a rural area that lack of capital is a most important deficiency. The flight from the land, about which we hear so much, and the plight of smallholders are in great measure due to a lack of capital. We must remember that until the 1961 Act it was difficult, if not impossible, for a farmer to borrow capital for his requirements in regard to modernisation and development. It has been impossible at all times for the farmer to make the necessary capital investment because he has not got sufficient profit. In general it is true that his dwelling and his out-offices will need capital investment on a very large scale, just as he will require capital to develop the fertility of his land.

We should ask ourselves what are the capital requirements of the farmer. What does he require capital and credit for? First of all, he must have the fertility of his land brought up to the required standard; he must have sufficient stock; he must have buildings in keeping with the size of farm he occupies; and he must have a dwelling in keeping with the size of his farm. A great deal of capital is required for all these purposes. We must also have what I might call current credit available to enable the farmer to pay cash for his requirements. We hear a good deal about the cost of credit but I believe the cheapest form of it is to borrow money. A farmer at present, in order to have a fair margin of profit, cannot afford to go on credit for his needs, seeds, manures, and necessaries of life and in addition to his requirements for capital investments, he needs current credit. The picture in rural Ireland is very difficult to understand. Take a holding of £50 or £60 valuation and on average it is worth between £6,000 and £7,000 and on it a man produces £3,000 to £3,500 each year. On average, that man's indebtedness does not run to £2,000, and yet he finds it impossible to borrow.

The activities of the Credit Corporation were referred to by Deputy O'Higgins and it seems that until the 1961 Act, it was very difficult, if not impossible, for the average farmer to borrow. Strange as it may seem, the man who could use capital to increase production and who could use it best did not come along; whether it was because of difficulty in obtaining credit or perhaps lack of confidence, I do not know. Since that time there has been a spectacular improvement and I would say the Corporation has only begun to move. If the money that is now made available, £14 million, is not used up within the next two years, in my opinion, the Corporation would not be fulfilling its duty. There must be a dynamic approach to this question. The land of Ireland is surely our greatest factory, with employment at every level, and unless it is utilised to the full, we cannot make the progress we all desire.

We cannot move on without credit and, as an example, I shall cite the 1964 report of the Wexford County Committee of Agriculture which shows that we surpassed the national target under every heading of agricultural expansion—cattle, sheep and pigs and acreages of root crops and grain also. We did all that and in a county of approximately 6,000 farmers the number of people who moved from the land since 1949 was 4,000. Nobody will disagree, I think, when I say that more than half the farmers of Wexford could easily carry another full-time man. If we had the necessary capital to put into agriculture to get production up to the level it could and should reach, I think there would be no drift from the land.

I do not wish to detain the House very long. As has already been said, the Fine Gael Party welcome anything that will improve the availibility of credit to the agricultural community. This Bill makes certain improvements and perhaps makes it easier for farmers to obtain the credit they require. While there may be improvements, I feel the Bill does not go far enough to cater for the present day needs of Irish farmers. When we compare our credit facilities with those available to farmers in other European countries, we find ourselves lagging very far behind. As far as I know, our agricultural credit is the dearest in western Europe, and—I have mentioned this before—I think the only hope of the improved agricultural output that is so vital to our economy is to improve credit facilities.

I am convinced that the present rate of interest is entirely too high but I am not being in any way critical, in saying that, of the work of the Agricultural Credit Corporation of which I have had considerable experience in the past three or four years. I am glad to say that I have found the officers of the Corporation most helpful and quite realistic and logical in their approach to every application. One of the great advantages of the system operated by the Corporation is that, despite what I have said about the high rate of interest, the repayments system encourages farmers to be more methodical and more businesslike. I have seen a considerable number of examples of farmers who have been in rather a mess, owing money here and there, and who by applying for a loan to the Corporation, have been able to clear up their commitments knowing in advance what their half-yearly instalments are.

Coming from a dairying area, as I do, where the co-operative movement exists, I welcome the entry of the Credit Corporation into the field of co-operative effort. The financing of co-operatives by the Corporation is a very good development and I hope in future to see considerable expansion in co-operative enterprise financed by the Corporation.

I welcome this Bill which aims at increasing the borrowing powers of the Agricultural Credit Corporation. The activities of the Corporation may be judged by the dramatic increase over the last decade in the amount of loans made available by them. We had a twenty-fold increase in ten years from a sum of £250,000 in 1954-55 to £5 million in the year just ended. Such an increase in low cost credit to farmers is something the Corporation should be proud of. Since the reconstitution of the Board after the 1961 Act, it has played a big part in making credit available to our farmers and making money available for every project that could be remotely connected with agriculture or tied up with agricultural activities.

The farmers appreciate the wide variety of services now made available by the Corporation. In particular, the most welcome additional activity of the Corporation is their hire purchase scheme. The terms offered to farmers for the purchase of new and secondhand agricultural machinery are very attractive indeed, as compared with the terms offered by the hire purchase companies but this scheme is being held up by the reluctance of the dealers to make the terms known to would-be purchasers of agricultural machinery. That is prompted by a selfish motive. They get more commission from the hire purchase companies and, of course, it is the farmer who has to pay this extra commission. The Agricultural Credit Corporation should engage in a better form of propaganda. Apart from appointing the dealers their agents, if they want to get this new scheme better publicised in rural Ireland they should move into the field by taking on ordinary insurance agents and giving them the right to make the facilities available to farmers who want to purchase tractors and machinery of one kind or another.

The appointment of agents in the various counties, particularly in my county, has greatly improved the image of the Corporation and has introduced a humanising element into it because these agents, as far as I can discover, are most helpful and co-operative. They come to the farmer and advise him, in conjunction with the local agricultural officer, on the best way to prepare his application for submission to the Board and when we consider that over 75 per cent—I have heard the figure of 80 per cent mentioned—of the applications are succesful it shows that the Agricultural Credit Corporation is most helpful and, compared with the commercial banks, has a far better record. But, of course, Deputies and others are approached only when difficult cases arise. The run of the mill application goes through the Agricultural Credit Corporation very expeditiously. We hear only about the hard cases. By the time the farmer comes to us to make representations or to ask us to write on his behalf, the case has been carefully examined by the appropriate section of the Agricultural Credit Corporation and a decision made and the Corporation sticks to its decision.

I welcome the system introduced by the Corporation of giving unsecured loans. The Irish farmer is rather diffident about getting his neighbour or fellow farmer in the locality to go security for him. Oftentimes a farmer may need £200, £300 or £400 to tide him over a short period when he wants to replenish his stock. He wants to borrow the money quietly and unobtrusively. The decision of the Agricultural Credit Corporation to introduce a scheme of this kind whereby loans of up to £400 can be secured on the personal signature of the applicant is novel and has been very well received in rural Ireland.

It is a pity that farmers do not take more advantage of the Farm Credit Bonds scheme which the Corporation has in operation. Farmers should realise that when they lend money to the Agricultural Credit Corporation their investment is guarded and guaranteed by the State and that they are lending money to the Corporation for the purpose of making money available for their own people, the farming community of which they are members, and the less well off section.

I feel sure that the Bill produced by the Minister will not be opposed in this House.

I welcome the changes made by this Bill, changes which have been to a large extent necessitated by the falling value of money and the greater use of money by farmers.

The Agricultural Credit Corporation has provided over the years a very wonderful service for farmers. It would be quite idle and wrong to say that it did not have its teething troubles in the beginning, that it has not had criticism. There have been criticisms because of the fact that members of the Garda at one time were asked to verify the position of applicants for loans, and that sort of thing. What must be remembered is that a far more difficult thing than finding the money for loans to farmers and a far more difficult thing than interviewing an applicant is the setting up of the organisation whereby all this can be done.

It must be remembered that commercial banks have offices in every large town and branch offices in every small town and village whereas the Agricultural Credit Corporation up to quite recently has been operated from one office in Dublin. The Corporation has done a marvellous job. Its troubles came from the fact of its great expansion and the necessity to keep the organisation well oiled and in line with that expansion. It may seem to some farmers that all this is easy for those in office jobs but anyone who has experience of business as well as of farming will agree that the volume of business that has gone through the office of the Agricultural Credit Corporation over the years has been surprising and that it has been handled in a most efficient way.

I welcome the fact that the Corporation has set up a system of area offices whereby a particular person resides in the country and is responsible for an area and with whom inspectors who have no local knowledge can work. This will help things to go through in a freer and better way, which is most important.

We must remember in Dáil Éireann that, apart from hire purchase which the Corporation has now entered, the whole basis of lending by the Agricultural Credit Corporation is on a half-yearly annuity basis and is as far removed from ordinary commercial banking and as far out, as we say in Louth, as the "Cow and Calf" which happens to be the Rockabill. While a man may feel that he can go into the local branch of an ordinary commercial bank and secure a loan, there is always a danger that the commercial bank will take the umbrella away when the rain is falling and leave it over you when the sun is shining. It is the great solidity of the Agricultural Credit Corporation that if a man can produce a farm plan and show that he can repay and that there will be capital and interest sums available to the Corporation, then he is on a sound basis and, if God grants him luck, health and strength and a firm market, he has no trouble in repaying these half-yearly payments and at the same time leaving himself with greatly increased profit on his farm.

I welcome, also, the fact that the Corporation can now borrow from any source. The two sources which have been available to it were the Government and, lately, the Farm Credit Bonds, which were a great step forward. Anybody who had funds for a short period of time could avail of these bonds and was at the same time swelling the coffers of the Corporation. The Corporation probably had a problem here because the Farm Credit Bonds scheme was short-term lending and the Corporation's loans are long-term, repayable on the half-yearly annuity basis.

The late Paddy Hogan, Minister for Agriculture, when he set up the Corporation, did a wonderful job for Ireland. It is only now the results of his work are being seen. The whole basis of a revolving fund is that what is lent comes back and can be lent then to another borrower. In regard to the Agricultural Credit Corporation, it is not too hard to see, in the light of this usage on a long-term basis, that a man would be able to repay his principal and interest and leave the money there to be used by his neighbour at a later date.

I welcome this Bill. It is something that shows the success of a real commercial enterprise connected entirely with farmers and agriculture. It proves that the dearth of capital that now strikes at the advancement of Irish agriculture can be met by such a revolving fund. I also welcome the Government's faith in it. We on this side of the House have the same faith, if not greater faith, in the Agricultural Credit Corporation. I hope the expansion that has been evident will continue and that the immense amount of work that this sort of expansion brings with it will find, as it has always found in the officers of the Agricultural Credit Corporation, willing servants who are proud to do their best.

I do not think there is much I can say in reply to what we have just heard because the speeches have been mainly in praise of the activities, especially the recent activities, of the Agricultural Credit Corporation and by way of welcome for this new capital provision. There were just a few questions asked and I shall answer them very quickly.

Deputy O'Higgins asked if as a result of the priority of the charge of the old £1,000 and the new £2,000 which may be borrowed over equities in relation to charges on land has upset any equitable interests in the past. I have made inquiries about that and, as far as the Agricultural Credit Corporation can make out, little, if any, damage has been done to equitable interests in land which would normally rank higher than most other charges on land. If any equities have been disturbed, certainly no complaints have come to the Agricultural Credit Corporation about them.

Deputy O'Higgins also asked from what other sources it was intended that the new provision would be made available to the Agricultural Credit Corporation for borrowing purposes. I cannot specify what other sources there might be, but, as the House is aware, most of the Corporation's capital is made up by way of share capital, by the Exchequer or Exchequer advances, as well as the Credit Bonds Scheme. Under the Credit Bonds Scheme, it is not possible to deposit with the Corporation more than £10,000 and there have been some cases where certain groups, corporations, or other bodies, sought more than £10,000. The new provision will give the Corporation power to take deposits from these other sources, sources other than the co-operative societies.

I share Deputy Kennedy's hopes that the Corporation will be able to dispose of or use up this new capital in a short time. He assumes that unless it does so within two years the Corporation will not be doing its job adequately. While I share the hope that it will be able to lend effectively the new capital now being made available in the space of time he mentions, two years, I also hope it will be possible to provide it with still more money in two years' time, and I expect it will.

There do not seem to be any other points. I do not think Deputy Donegan asked any questions but made general observations. In any event, the Committee Stage will provide another opportunity in case there are any points I have missed.

Question put and agreed to.
Committee Stage ordered for Wednesday, 2nd June, 1965.