I move:
"That the Bill be now read a Second Time."
The main purpose for which An Bord Bainne Co-operative Ltd. were established was to take over from the statutory Bord Bainne on a voluntary basis, as from 1st February, 1973, the central purchasing and marketing of Irish dairy products. With the support of the milk processing industry generally in Ireland the board have since that date been purchasing the vast bulk of our output of dairy products and marketing it to best advantage.
As the production of milk, and consequently of milk products, is largely concentrated in Ireland in the months of April to August each year and as, on the other hand, marketing by the board takes place, fairly evently throughout the year, expenditure by the board on purchasing by far exceeds income from sales during the peak production months. As a result the board are obliged to borrow on short term vast amounts of working capital from banks and other lending institutions the borrowing to be repaid in the valley period of production when income from sales exceeds expenditure on purchases. When the board were established they had very little capital of their own and were consequently not in a position to depend solely on their own resources to borrow the vast amounts of working capital they required. It was for this reason that in 1973 I sought and obtained in section 6 of the Dairy Produce (Miscellaneous Provisions) Act, 1973, power to guarantee borrowings by the board for the purchase of dairy products up to a maximum, of £20 million at any one time. With the aid of this State guarantee the board have up to recently been in a position to borrow their full requirements each year, which at maximum have been well in excess of the £20 million guaranteed.
Now with the increasing volume of milk being produced and with the substantial increases which have taken place in the price payable to farmers for their milk and, consequently, for the products manufactured from the milk, the peak borrowing requirements of the board have increased to such an extent that the State guarantee of £20 million is no longer sufficient to induce the banks and lending institutions to advance the board's peak capital needs, which this year are expected to exceed £90 million. The Board have in the meantime been endeavouring to build up their own capital reserves so as to enable them to operate free of State guarantee as soon as possible. However, to enable them to borrow sufficient capital this year and next to meet their needs a State guarantee of borrowings up to a maximum of £40 million is needed. Section 2 of the Bill before the House in effect increases from £20 million, as specified in section 6 of the 1973 Act, to £40 million the maximum amount of the State guarantee of borrowings by the board. This increased maximum will apply until 31st December, 1977, when, as laid down in the 1973 Act, the period over which the guarantee is available is due to expire.
In this Bill the Government are demonstrating their continued confidence in the marketing arrangements which the dairying industry itself have drawn up and which are operated by An Bord Bainne Co-operative Ltd. I trust that the House will readily approve of its terms.
