Dáil Éireann díospóireacht -
Tuesday, 20 Oct 1981

Vol. 330 No. 1

Private Member's Business. - Tuam Sugar Factory Closure: Motion.

Mr. MacSharry

I move:

That having regard to the deeply serious social and economic repercussions for the West of Ireland which would follow the close of the Tuam sugar factory, Dáil Éireann requests the Government to take whatever steps are necessary to maintain sugar beet processing operations and ancillary activities in Tuam and in particular to promote actively beet growing in neighbouring farming areas in order to ensure adequate future supplies for the sugar factory.

I wish to say at the outset that the amendment which has been put down to the motion by the Minister is disappointing because we had hoped that this debate would lead to his considering further the overall question. The amendment proposes to delete all words after "That" and substitute the following:

Dáil Éireann endorses the Government's decision that Exchequer resources be provided for Comhlucht Siúicre Éireann Teo. to enable it to continue sugar production at Tuam for the 1982/83 beet campaign and that absolute priority would be given to securing new industry in the Tuam area with a view to providing alternative employment opportunities.

Deputies concerned with this area on all sides will see the futility of that amendment and will, I feel, support our motion.

I propose to refer to five different aspects of this matter, namely, the social and economic repercussions, the steps the Government should take to maintain beet processing operations and ancillary activities in Tuam, the promotion of beet growing, the workers' contribution to this exercise and, finally, the handling of the situation by the Minister and the Government. Anybody who knows this area realises the dire social and economic implications if this closure goes ahead. There are 2,200 people unemployed there and the closure of the Sugar Company operations would add substantially to that figure.

The sugar factory was set up in Tuam not solely to make profit but to promote regional development and employment in the west, which is recognised even by the EEC as an under-developed region. The late Seán Lemass said that in no way is sugar beet an economic proposition if we look at it purely from an accountancy point of view but there are other points of view besides that of an accountant. He said that by giving a measure of protection necessary to put the beet industry into existence employment would be provided. It was never intended to be fully economic and there were very important social implications. The unemployment figures in this area are already very serious.

It is important to point out that the figures given by the Government and the Sugar Company regarding the cost of this closure have been refuted by a number of people. The net saving would be roughly £1.8 million but the net loss to the Exchequer by this closure would be of the order of £2.4 million. Instead of saving money the cost of the closure would be of the order of £585,000. The Government cannot have considered their decision carefully enough. As well as the 263 permanent jobs which would be lost there are also 220 temporary, part-time jobs, giving a total of 483 jobs.

We must also take into account the other operations of the Sugar Company in Tuam and it is very doubtful it any of them can survive. The engineering works employing 73 people would be likely to close, as would the turf-cutting operations of the Sugar Company in that area. The value of these jobs, together with the value of the beet crop to growers in the area, is enormous. The economic repercussions cannot be quantified in money terms. The livelihood of small farmers in the area who grow beet is dependent on the part-time work they obtain in the factory and no replacement industry can have the same impact. The very existence of these small farmers is in question because of this decision and the Government must reconsider.

The Tuam factory does not affect only those who work inside it; it affects the entire community in the province. Many facilities there will be affected by the closure of the factory. There will be repercussions on the rail services and for other businesses. I do not believe that these factors have been considered by the Minister and the Government. They must take steps to maintain the beet processing operations and other ancillary activities in Tuam.

I understand from a statement by the Minister that the viability of the entire Sugar Company operation is to be examined by a team of consultants because his Department have not sufficient personnel to examine the proposals made by the Sugar Company. Having spent some time in the Department I doubt very much that the necessary personnel are not available because there are many well qualified people in there who could give an opinion on any proposal from the Sugar Company. If the Government have decided — according to the statements issued they have — that the consultants will examine the future viability of the Sugar Company's operations then they should, and must, include the Tuam operation. They also should consider, if they have not already done so, the proposals — I do not have them to hand, but I am sure the Government do — from the Sugar Company regarding a subsidy towards the maintenance of the Tuam operation. Have the Government considered those proposals? If not, why not? If the Government have considered those proposals on what grounds did they reach the decision announced recently? Has the Minister considered, as I submitted in December last, submitting proposals to the EEC for financial assistance for the Sugar Company operation? Has the Minister considered re-submitting those proposals which would enable the Sugar Company to obtain finance from EEC sources? The Minister is aware that there are many projects in Italy and French overseas countries being financed by the EEC. Why did the Minister not put such a case to the EEC?

I understand that although there are other discussions in progress in the EEC with regard to the overall finances of the agricultural part of the budget, there are, for various reasons, a number of savings in this year's budget. Would the Minister, even at this late stage, consider, because of the availability of some resources in this year's budget, asking the EEC for assistance? Would the Minister be prepared to put forward some ideas for their consideration with a view to maintaining the Tuam factory? I should like to ask the Government to use the Minister of State they appointed for western development——

Mr. Killilea

Where is he?

Mr. MacSharry

I do not know where he is at present but I am aware that while this controversy has gone on for a number of months the Minister of State for western development has not, as yet, to my knowledge, made any statement regarding the Tuam closure. God knows I pity him if he has to be tagged as Minister of State for western development in a Government that in its first weeks in office closes one of the main agricultural developments in the west of Ireland, the Tuam factory. The Government must examine all these possibilities to ensure that the operations of the Sugar Company are continued in the Tuam area.

I should like to put forward ideas regarding the promotion of the grow-more-beet campaign in western counties. Arising from the decision taken by the Government, with a number of Deputies from Connacht I met the BGA and the workers action committee which represents all sections of the community in the Tuam area. Both organisations undertook, and gave a solid commitment, to promote the growing of beet in the western counties. The Government must use whatever resources are at their disposal, particularly ACOT, if they are to succeed. The BGA, who are representative of the farmers of the area, are very anxious to support a grow-more-beet campaign in the area but, naturally, such a body, and rightly so, would need a commitment from the Government to continue the operations of the factory in Tuam. They also need a recognition from the Government of the difficulties of growing beet in that area, at the same time recognising that tillage and sheep producing in Connacht are the most attractive projects for small farmers there. Everybody now realises that dairying and beef enterprises are becoming more costly and that the option for many small farmers, particularly in the west of Ireland, is more tillage and sheep production.

The BGA and the workers action committee in the discussions we had with them, and the action they have taken since, have shown that they have a tremendous commitment to helping in whatever way possible to promote the grow-more-beet campaign. I shall quote from a document issued by the workers' action committee later about the contribution the workers are prepared to make in relation to this matter. The Minister, and the Government, should recognise the commitment and dedication there is there to the maintenance of the operations of the Sugar Company in Tuam. The meeting I had with the various groups in Tuam, resulted in the preparation of certain proposals. I do not propose to delay the proceedings tonight by reading them all but I want to refer to some to give an idea of the contribution they can make towards the viability of the Tuam operation. The first proposals is to increase the acreage growth west of the Shannon to between 8,000 and 10,000 acres over a three-year period and to maintain the acreage growth east of the Shannon at the existing level of 3,000 to 5,000 acres. The present machinery development policy within the Sugar Company is to develop beet harvesters with an in-built facility to make silage from beet tops. Every grower who grows an acre of beet has not alone a valuable cash crop — the crop with the highest gross margin per acre consistently proven in the Agriculture Institute's Farm Management Survey year after year — but is also providing by way of beet tops the equivalent of an acre of the best grass silage in terms of quantity and quality. With machinery developed to efficiently ensile these beet tops with such a value what farmer in the west of Ireland would not be anxious to grow sugar beet where his land was suitable? That is a suggestion that should be seriously considered by the Sugar Company and the Minister.

ACOT, in the annual report of their County Galway Committee stated, when referring to the increased 1,000 acres of beet grown in the area over 1980 to 1981 stated:

We believe that we could grow another 5,000 acres of sugar beet without having an adverse effect on livestock production. In reality this has been proven true in other countries where beef and dairy production increased with an increase in beet acreage. This came about because of the extra income generated by the beet, the improved fertility of the land and the increase in the available winter feed for stock.

A Government agency such as ACOT putting forward such a proposal or suggestion at this time proves the potential for that area with an increased acreage of beet. It is also important to recall that the other three factory areas, Thurles, Mallow and Carlow, will not be capable of growing enough sugar beet in the immediate future to meet our EEC sugar quota of 182,000 tonnes. We need all the sugar beet that can be procured in the Tuam area to do this and we need the sugar factory in Tuam to process it.

Over the last number of years we fought hard enough to maintain our sugar quota and we succeeded in doing that. However, we will not reach this quota this year and we will continue to come under pressure from the EEC if we do not do that. I do not think the way to go about it is to close down one of the operations, as has been suggested by the Government. Another suggestion made by the workers and farming organisations is that a capital investment of £500,000 in sugar extraction equipment would result in an annual saving of £200,000 in respect of the area by increasing the amount of sugar extracted from the beet by 0.3 per cent. The work force also agrees to a reduction of numbers on the sugar staff of up to 50 people over a period of three to five years by natural wastage, early retirement and other schemes agreed with the unions. This would give a saving of £350,000 per annum at 1981 prices. The workers also agreed to co-operate with any schemes such as cost reduction, internal mobility of labour etc. which may be required to reduce costs or facilitate growers or customers. The hours of work are at present being altered by a section of the staff to achieve better services for growers and customers. The effect of these suggestions and proposals by the workers will result in the following cost saving to the Sugar Company in Tuam: the increase in the acreage envisaged over the next three years would reduce the costs by £1.2 million, the capital investment on sugar extraction would give a cost saving of £200,000, and the reduction of staff over the period will give a saving of £350,000. The net saving to the company per annum would emerge at £1.75 million. The actual budgeted loss in sugar production and sugar trading would be £1.8 million. These are the kind of proposals to be examined by the Sugar Company and by the Department. But, as the Minister has decided, the very least that should be done is that they should be examined by this consultant group that he intends to appoint. The Government must recognise the response that has come from both the growers and the workers in this area. Their commitment and dedication and their concern must be accepted by the Government.

The Government, in taking the decision they did, may as well have said that they were closing the factory after this beet campaign because, by extending it for one year, all they have done is ensure that there will not even be the acreage of beet in the coming season that there was this year. That is why it is imperative, as we now move into the beet contract stage by the end of this month, that the Government tell the people in that area that they will examine all these proposals with a more long-term view rather than just saying that at the end of the beet campaign of 1982-83 the factory will close. That is not good enough. It is a retrograde step to have made such a decision. While I sympathise with the Minister who has to fight the case with the Government, he should make an even stronger case because of the interest that there is in this factory in the Tuam area and in the entire province of Connacht and other areas outside Connacht. We can show quite clearly that this factory, in so far as it could ever be made viable when it was set up in 1933, can survive. If one were to make the decisions on economic grounds then one would be able to accept what the Government are trying to do. But that is not why Tuam was ever started. As I said at the outset it was started on the basis of social considerations and job creation. God knows, in this day and age of rising unemployment — and it continues to rise and nobody seems to care — surely the last thing a Government should contemplate is the closure of such an important facet of survival in the province of Connacht and in the north-west and west of Ireland. It is ridiculous that the Government would do this at this time.

I want to come now to the Government's handling of the situation and the fact that the Government gave little or no response that we know of to the request by the Sugar Company for a subsidy to maintain the operations in the Tuam area. I would also like to refer to a statement made by the Minister, Mr. Dukes, when he referred to the Fianna Fáil Government having advance notice of the closure of the Tuam factory from the Sugar Company board. I have already replied to this outside this House and I want to take this opportunity of doing so here as well. When in Government, as Minister for Agriculture, I met the Sugar Company board on numerous occasions regarding their overall financial situation. The board put forward their general views and ideas about what could be done. At no time did the Sugar Company board inform me of a decision by them to close the Tuam sugar factory or that they had requested the IDA to look for alternative industry for the Tuam area. In fact, they told me on numerous occasions in discussions regarding various food operations in Skibbereen and Carlow that the IDA would not get involved in any area where the Sugar Company had operations unless and until the board and the Government had decided finally on the closure. That is reported in many of the minutes of the Sugar Company and, I am sure, in many of the documents that the Minister felt obliged to quote from regarding reports of various meetings and delegations by the Sugar Company with the Minister and his officials. In fact, in the Seanad debate on 11 March 1981 on the joint committee report I stated in vol. 95, col. 1117:

I would like at this stage to refer to the point made by Senator Connaughton in relation to the Tuam factory and to state quite clearly that there are no proposals before me regarding the closure of the Tuam factory. Not only does the commercial life of the town benefit greatly from the presence of a sugar company operation but so, too, does the social environment. Departure of young people to the major cities is greatly stemmed as service industries also grow up in the town, creating employment in all walks of life.

One can see by that as late as March this year there were no proposals before me, and it was stated quite clearly by me as Minister for Agriculture in March of this year in the Seanad debate. That was in reply to a debate on the joint committee report which did have as one of its suggestions the closure of Tuam.

In September 1980, arising from a request for Government finances, I asked the Sugar Company to prepare a comprehensive plan of their future operations to restore viability to the company and in the same debate in the Seanad at col. 1123 I said:

subject to the company coming forward with a suitable programme for restoring full viability the Government will not be found wanting.

I understand that that report arrived in the Department of Agriculture during the general election campaign and no decisions were taken on it by me or the Fianna Fáil Government at that time. I want to say quite clearly that the Minister has tried to put forward the idea that I or the Fianna Fáil Government had already decided on the closure of the Tuam factory. That is not so; it is totally untrue and the Minister knows it and he should say so here tonight.

Deputies

Hear, hear.

Mr. MacSharry

The unfortunate position the Minister finds himself in is that he, as Minister, and his Government are the people who decided to close the Tuam factory and nobody else.

Deputies

Hear, hear.

(Interruptions.)

Mr. MacSharry

The question of the closure of the Tuam factory and its future has been discussed before either I or the Minister were born. That is a long time. I may be around a bit longer than the Minister, but it is a long time. If the Minister wants to dig up various documents and reports of meetings either in the Sugar Company minutes or in relation to various discussions which took place between them and Department officials or various Ministers, he will find on numerous occasions the question of the Tuam factory. I want to emphasise quite clearly here that at no time did I or the Fianna Fáil Government concur in any way with such a decision by the board. We could not because the board had not even decided. The Government I was a part of did not get involved in decisions of semi-States bodies. The Sugar Company are the people who are entitled to make a decision but they did not make that decision.

In the minutes of their meeting of 21 May, when they discussed the proposals they put to the Department, the Minister and the Government, they said quite clearly that the targets exclude the continuation of beet processing in Tuam after 1981 and the alternative to the discontinuation of beet processing in Tuam would be for subsidisation by the Government of the social costs involved. The board were aware of the social commitment they had over the years to the Tuam area. The minutes go on to say that the matter is more appropriately a decision for the shareholder. The Minister knows who the shareholders is.

At a meeting between officials of the Department and representatives of the Sugar Company the secretary of the Department is quoted in the minutes as saying that the company had not decided to close the Tuam factory, as far as he could see. That was on 8 June 1981. I am sorry to be labouring those points but it is important because the Minister tried to create the impression that the decision had been taken long before he was even elected to the Dáil. This is totally untrue. I made it my business to contract a member of the board who was at a number of meetings when I met the board. I want to read this letter for the benefit of the Minister and for the benefit of the House:

Dear Mr. MacSharry,

Thank you for your query regarding the closure of the Tuam Sugar Factory. Since I joined the Board in 1978 plans and corporate plans were discussed regularly at meetings, the status of Tuam was inevitably included. The object of these plans was to provide a basis for the company's request to the Government for an injection of capital. One of these plans was presented to you in September 1980 when you met the Board of CSET.

At that time the Board had not made a decision to close Tuam. The first time Tuam closure appeared on my Agenda was 9 September 1981 for decision the following day. The result of that meeting is now well known.

I believe, judging from the handling of this whole affair, that the Government panicked in regard to the decision they made about the closure of Tuam. The board of the Sugar Company in good faith put forward their ideas about the future of Tuam. They said to the Minister that without subsidisation they would not be able to continue. I understand that the Sugar Company requested the Department and the Minister to give them a reply. No such reply came until this hurried item on the agenda on 9 September last for consideration on 10 September. The worst thing of all in the mishandling of this situation was that when it became known that this item was to appear on the agenda for the board meeting of the Sugar Company on 10 September — Deputies, Senators and the community at large were interested in it and obviously tried to do something about it — the Minister met Deputy Connaughton and, according to the report furnished at that time by Deputy Connaughton to the community at large in the Tuam area, the Minister had informed the Deputy that the item would not be included on the agenda. The item appeared on the agenda and the people in the area were completely misled by the Minister and his Deputy. That confirms my belief that this matter was hurriedly dealt with by the Minister or by his Government and insufficient examination was made of the proposals put forward by the board. It is an indictment of the Minister and the Government that he did not carefully examine the proposals put forward in the interests of the Tuam operation and in the interests of all the people affected by the Sugar Company operation in Tuam. The Minister has let the west of Ireland down.

There have been various suggestions from a Labour element in the Government about various bodies which are to be set up to create employment. Those sort of statements rings very hollow when one sees the decision made by the Government in relation to Tuam. This area is very dependent on employment from that factory. There are many small farmers in that area who cannot survive without the temporary employment they get in the Tuam factory. All those things must be taken into consideration by the Government or else they are not worthy of the name of a Government.

The Minister and the Government should reconsider this matter. The Minister should tell us tonight that he is prepared to have all the alternatives and all the options examined by him and his Department and ultimately by the Government and that whatever money is required will be given by the Government. Any replacement can never have the same impact as the Tuam operation. The future of Tuam has been talked about over the years — in fact, during my entire lifetime. Successive Fianna Fáil Governments made sure that no decision was taken to close the Tuam factory. No Fianna Fáil Government would agree with such a decision. They would examine all the possibilities and would ensure that this operation continued. I want to say quite clearly on behalf of the Fianna Fáil Party that will be in Government in the near future — let us hope we will be back before the Government have damaged Tuam and the Sugar Company operation beyond repair — that as far as we are concerned when we get back into Government we will keep the Tuam Sugar factory open.

Minister for Agriculture (Mr. Dukes)

I move amendment No. 1:

To delete all the words after"That" and substitute the following:——

"Dáil Éireann endorses the Government's decision that Exchequer resources be provided for Comhlucht Siúicre Éireann Teo. to enable it to continue sugar production at Tuam for the 1982/83 beet campaign and that absolute priority would be given to securing new industry in the Tuam area with a view to providing alternative employment opportunities."

It is common knowledge that the Sugar Company are currently faced with serious financial difficulties which have not risen this year alone but have been building up for some time. I intend to go over that point in a little more detail. My concern this evening is to explain the background to the issue now before us, that is, the closure of the company's plant at Tuam. I also want to set the record straight as regards the Government's position about which there has been some misrepresentation and inaccurate comment in recent weeks, and not only in recent weeks but I submit also this evening.

The total losses of Comhlucht Siúicre Éireann Teoranta for the year ended 30 September 1980 were £11.27 million and the estimated losses for the year to the end of last month are expected to be even higher. The deterioration in the company's finances, although relatively sudden, were signalled for some time past by falling profits. For example, a profit of £1 million in 1978-79 must be seen against a total turnover of £126 million. In the period from 1973 to 1980 there was only one year where the company's profits amounted to a little short of 3 per cent of total turnover. In no other year did they exceed 1.7 per cent of total turnover. Given the kind of operation involved, the diversity of their activities and the amount of resources involved in the company's operations, a profit level at that point in relation to turnover is obviously a cause for some worry, to say the least, about the financial situation of the company.

There are many reasons why the problems experienced by the company, some of which existed already, should have become more acute in recent times. These include factors common to other sectors of the economy such as steep increase in energy, wage and other production costs, high interest rates and the overall recession in agricultural trade. I want to make the point that, given the nature of the company's operations, quite a part from sugar production, an overall recession in agricultural trade was bound to have its effects on the company's non-sugar operations also.

The factors leading to the difficulties also include a number of factors specific to the company, such as the heavy losses incurred by Erin Foods in every year since their establishment, high costs of processing relative to competitors in other EEC member states, the recent Erin Foods irregularities and the industrial dispute last year at Carlow.

The continued production of sugar at Tuam is a major factor in the company's difficulties. Many of the long term problems which have affected the company's finances for a period of years are now, in a period of economic recession, seriously aggravating the position by pushing the company into serious losses.

In August 1980, some months after Deputy MacSharry took over responsibility for the company from the Minister for Finance, who remained a shareholder of the company, the company sent him a memorandum informing him of the serious state of their finances. This memorandum outlined the company's plans for rationalisation and referred to the need for increased State equity. The main elements in the rationalisation plans suggested, not decided, were the closure of the Erin Foods plant in Carlow, the withdrawal of the company from the Fastnet Co-Op in Skibbereen and the ceasing of sugar production at Tuam after the current year's campaign.

Mr. Killilea

That is not so.

Mr. Dukes

In September 1980 the then Minister for Agriculture, Deputy MacSharry, met the board of the company to discuss their financial position and their rationalisation plans. He indicated to them that the whole situation needed careful consideration in the light of the prevailing unemployment problem. He suggested immediate contact with the IDA in order to bring about a timed co-incidence of job replacement in the case of the three factories mentioned for closure together with discussions with the growers and the unions with a view to putting together a package upon which the board's decisions could be made, which could then be put to the Government.

Following that meeting, the Government were informed of the company's financial position and their plans for a return to profitability, including the planned closures to which I have referred at Carlow, Skibbereen and Tuam.

Mr. Killilea

That is not so.

Mr. Dukes

It is on the record.

Mr. Killilea

It is not mentioned in any of the company's information.

Mr. Dukes

For the Deputy's information I have the record of a meeting between the Minister for Agriculture and the board of CSET on 8 September 1980 in which the matters to which I have just referred are clearly set out.

Mr. MacSharry

Read paragraph 5.

Mr. Dukes

The point I am making——

Mr. Reynolds

He is afraid.

Mr. Killilea

Tell the truth.

Mr. Dukes

At that time the board of the company——

Mr. Killilea

Read the paragraph.

Mr. Dukes

——said clearly to the Minister that among the things they were considering in their rationalisation programme was the closure of the Tuam plant. At the time Deputy MacSharry's reply — and I think it was a wise reply — was to ask the Company to get in touch with the IDA in order to bring about a timed co-incidence of job replacement in the case of the three factories mentioned for closure.

Mr. MacSharry

Read paragraph 5.

Mr. Dukes

The Minister of the day knew that the company, being in financial difficulties were looking at this as one of the measures of rationalisation open to them. They took a particular view at that time which I understand perfectly and which is very much in keeping with the present Government's view.

Mr. MacSharry

No decision was taken.

Mr. Dukes

I am not prepared to engage in semantics with the Deputy. I have said that the company informed him that among the options they were considering was the closure of the Tuam plant. The Deputy responded in the way I have just indicated.

Mr. Killilea

The Minister said the Government were informed.

An Leas-Cheann Comhairle

I must ask Deputies to allow the Minister to proceed. Other speakers will have an opportunity to comment on paragraph 5 or any other document which might be considered appropriate.

Mr. MacSharry

It is an internal departmental document.

An Leas-Cheann Comhairle

Please allow the Minister to proceed without interruption.

Mr. Leyden

Will the Minister lay the document before the House?

Mr. Dukes

In November 1980 the board of the company took the decision to proceed, as part of their rationalisation plans, with the closure of the Carlow Erin Foods Plant and the withdrawal from the Fastnet Co-Operative in Skibbereen after the 1980-81 processing season. In their public announcement the company undertook to do everything possible in conjuction with the IDA and other State agencies towards securing alternative productive employment for those concerned. Operations at both centres have since ceased in accordance with the board's decision.

The Joint Oireachtas Committee on State-Sponsored Bodies published their report on the Sugar Company last February. Deputy MacSharry referred to that report a few minutes ago. This all-party committee recognised the need for the company to regain commercial viability. They appreciated the reasons for the board's decision with regard to the two food plants and recognised also that the closure of the Tuam sugar factory was inevitable. I quote from the report of the committee:

The closure of Tuam, when all factors including the need to extend the other factories to make up for the loss of its capacity are taken into account, would result in considerable savings for the company. The Committee believes that the closure of Tuam is inevitable and that there is a strong case for doing it now rather than later.

That was the conclusion of the Joint Oireachtas Committee on this matter.

The company's recently announced decision to close the Tuam sugar factory, therefore, must be seen as an element in their plan for a return to profitability. This plan was communicated both to the former Minister for Agriculture and to the Government of the time and was discussed and accepted by the Joint Oireachtas Committee.

Mr. MacSharry

It was never accepted by the Minister or the Government.

Mr. Dukes

I have just read the passage from the report of the Joint Oireachtas Committee. I have also given the House the Deputy's reaction to the Sugar Company in September 1980. The reasons for the company's decision to close the Tuam factory were based mainly on the size, location and efficiency of the plant. The factory is situated in an area which, despite the best endeavours of the company and of bodies such as An Foras Talúntais and the Beet and Vegetable Producers' Association has not responded by producing sufficient quantities of beet. The yield of beet in the western area is low, is some two tons per acre less than that in the Carlow area. The small acreages grown — which are also a feature of western beet cultivation — result in higher production costs since optimum use cannot be made of machinery. These factors, along with the more traditional reluctance to engage in tillage have led to a steady decline over the years in sugar beet acreage west of the Shannon. Over the past ten years the acreage grown west of the Shannon declined from 4,800 acres in 1970-71——

Mr. Flynn

If the Government had their way there would be no beet west of the Shannon.

Mr. Dukes

——to 2,430 acres in 1980-81, a drop of 50 per cent. The acreage increased to 3,300 tons in the current season but that figure includes 650 acres grown on land specially leased by the company for growing beet.

Mr. Killilea

That was there last year.

Mr. Dukes

Therefore the acreage has changed in the way I have said between 1970-1971 and 1980-81. The increase in the current season was due largely to the fact that land was being leased. The Sugar Company have done everything in their power to bring western acreage to a level that would keep the Tuam factory operating at full capacity. Nothwithstanding the efforts of the company large quantities of beet have had to be transported in recent years to the Tuam factory from as far away as Cork and Wexford, at the company's expense, and indeed at the expense of growers generally.

I want now to refer to the overall situation of the company and this Government's commitment to bringing about its return to financial health. In May of this year the previous Government received an urgent request from the company for a £75 million capital injection to help them over their financial difficulties. That request was accompanied by a plan setting out the company's objectives and strategy for the period to September 1983, including a clear indication that the Tuam factory should be closed at the end of the current campaign unless an annual subsidy was provided by the Government towards the costs of their operations. Despite the urgency of the request for a capital injection the company received no response from the Government at the time. In July the present Government, immediately after taking office — having been made aware of the extent of the company's problems, decided in principle to make a substantial increase in the State's capital investment in the company, the amount, timing and nature of this capital injection to be decided later as soon as consultants appointed by the Government, in consultation with the company, were appointed to make a fundamental examination of the company's affairs and as soon as they had finalised their report. These consultants have begun their work and I hope to have their final report to hand early in the New Year. The Government will then be in a position to decide the methods by which the company can be restored to its position of financial strength.

Early last month it came to my notice that the company was about to take a formal decision to close the Tuam factory. In accordance with the Government's wishes and because of their concern for the social well-being of the area, I asked the company to defer a decision in order to allow time to enable the possibilities of providing alternative employment to be fully explored.

Mr. MacSharry

That is not what the company say.

Mr. Dukes

That is what I am saying and this is a fact. I asked the company to defer a decision so that we would have time to explore the possibilities of providing alternative employment.

Mr. MacSharry

The Minister merely asked them not to announce it. That is all he asked.

Mr. Dukes

I am getting to that if the Deputy will have a little patience. This request was very much in line with the recommendation of the Joint Oireachtas Committee, that final closure should await the establishment of an alternative industry. On learning that the board had actually taken their decision on 10 September I met the Chairman, Managing Director and worker directors of the company and requested that an announcement be deferred so that the possibilities of providing alternative employment could be reviewed before an announcement was made. The board, for reasons which I understand, felt they could not defer an announcement of their decision. In view of the effects of the closure on the town of Tuam and its surroundings and in line with their concern to ensure the provision of alternative employment, a concern shared by the Oireachtas Joint Committee, the Government decided to make Exchequer moneys available to enable the company to continue the operation of the Tuam factory for a further year during which time the IDA would give absolute priority to securing new industry in the Tuam area. I can say now that the IDA have already intensified their promotional efforts to attract new industry to Tuam and propose to build a 24,000 square feet advance factory which will be available in June of next year. In addition the IDA hope to have completed by December of this year a cluster unit for small industry comprising five 3,000 square feet units. In addition there are two sites totalling 50 acres available for green field projects in the Tuam area.

Apart from the decline in beet acreage in the western area the small size of the Tuam factory itself places it in a very difficult position in relation to the other factories. Its daily throughout of 2,000 tonnes of beet is less than half that of the Carlow factory and less than one-third of the average for factories in the United Kingdom and on the continent of Europe, a comparison which has become very relevant for reasons I shall come to later. It costs £40 per tonne more to produce sugar in Tuam than in Carlow. Even operating at full capacity the Tuam factory would be uneconomic by EEC standards and indeed by comparison with the other three factories in this country. To maintain sugar production at Tuam costs the company, on their estimates submitted to me, £2,500,000 per annum.

As far as the capacity question is concerned — and it is an important one in this discussion — the position is that to keep the Tuam factory operating at full capacity throughout a normal campaign we would require the growing of four times more beet than was produced in the region this year, that is, we would require something in the region of 13,000 to 14,000 acres of sugar beet to keep the plant operating at full capacity through a normal campaign. Even at this throughput the factory would still be uneconomic.

I want to make it perfectly clear that I am not suggesting that farmers in the west should not produce beet; they should. Indeed for some of the reason to which Deputy MacSharry referred himself in relation to the gross margin per acre and the other benefits to be derived from growing sugar beet, it is a very economic and worthwhile crop for farmers who wish to become involved in tillage. The company have given an assurance that they will provide an outlet for all of the sugar beet grown west of the Shannon. What I am talking about is the broader issue of the economic viability of the Tuam Sugar Factory. The company have long been aware of the economic problems surrounding the production of sugar at Tuam. The workers and growers involved cannot have been unaware of them and I am quite sure they were not unaware of them. The Joint Oireachtas Committee recognised these problems as well as the consequent need to close the factory if the Sugar Company operation is to return to financial health. The previous Government were well aware of these problems but chose to ignore them. The plain fact is that Comhlacht Siúicre Éireann cannot be expected to run a sugar enterprise successfully or to hold their markets against competitors from other countries if they are forced to maintain in production uneconomic units which are commercially not competitive. In this connection I would point out that economic barriers to trade are not permitted within the European Community. In the context of the common agricultural policy this is important for us, as Deputy MacSharry well knows, since it ensures unrestricted access for our agricultural exports to the large EEC community markets.

That freedom of trade which is so vital for our main agricultural exports, applies equally to sugar. Trade is a two-way matter and there has to be free movement in both directions. This means that there is a limit to the price which the Sugar Company may charge here for sugar — a limit which is set not by the Government action but by the price at which sugar may be landed in Ireland by sugar manufacturers from other member states of the Community. In those circumstances there is clear necessity for the company to keep a very close watch on its production costs or suffer the consequences of being unable to compete even on its home market with imported sugar. The company's margin for manoeuvre has been diminishing sharply in recent years with rapidly rising costs which cannot always be recovered in its sales. This problem has been particularly acute in terms of the competitive capacity of other EEC sugar producers on our market since 1980.

It is misleading then for anyone to try to create the impression that the company can continue in the future, as was possible a decade ago, producing sugar at any cost as if its market were completely insulated and protected. That day is gone and it is time that we all recognised that — beet growers, factory workers, unions and management. For my part I shall endeavour at the annual price fixing in Brussels to secure the best possible price for growers and for the Sugar Company when we fix the EEC prices for sugar and sugar beet. In addition when the production quotas fall due for review in a few years time it will be my aim to ensure that we get the largest quota possible. In this I am in complete agreement with Deputy MacSharry who suggested that if we do not continue to expand sugar production and produce up to our quota we will obviously be in danger of coming under pressure to accept quotas less than our present figure.

I cannot too strongly emphasise, however, the need for us to produce sugar competitively and efficiently. We must rid ourselves of any feeling that because the industry is run by a State company costs do not matter. We should remember that there is a large surplus of sugar in the EEC, up to six million tonnes this year. Our total sugar requirements amount to only 10 per cent of the surplus sugar produced by France. Transport from France to Ireland would present few difficulties and so the risk of imports, if we do not get our costs right and are not competitive given the price levels we now have to reach on the market, is a very real one and we could lose market shares.

It will be clear from what I have said that the company have serious problems. The annual penalty, that is, extra costs incurred annually — currently £2½ million a year — of continuing to produce sugar in Tuam is one of the larger problems. Rationalisation is necessary if the company is to survive. That survival ultimately depends on its ability to compete successfully with competitors in other member states. That is a factor we cannot lose sight of in this argument because that is what the production business is about. Unless we can market our products competitively then we are not using our resources to the benefit of the nation as a whole.

The company is facing up to its problems and will receive every assistance from the Government in doing so. I have already indicated that the Government have given their agreement in principle to invest more money in the company. They must be prudent in their approach to this and have regard not only to the cost to taxpayers but also to the provision of jobs with long-term prospects of survival. That is why I engaged a team of consultants to make an independent appraisal of the company's position and prospects. Deputy MacSharry referred to his belief that within the Department of Agriculture and the Government services generally there are ample staff to do the job. The problem has nothing to do with the number of staff. It is quite different.

Mr. MacSharry

I did not say "number of staff". I said "qualified staff".

Mr. Dukes

The company put forward a plan to rationalise its operations between now and the end of 1983. I do not consider it is the job of experienced civil servants in the Department of Agriculture or any other Department to sit in judgment on a plan drawn up by the financial experts of a company. I would much prefer, and it is only fair that it be done——

Mr. MacSharry

Why not? They are as good as any the Minister will get outside.

Mr. Dukes

——to get the advice of people who are doing the same job every day of the week.

Mr. MacSharry

That is an indictment of the Minister's staff.

Mr. Dukes

In addition we have the benefit of having advice which will be regarded by everyone as being impartial expert advice.

Mr. Killilea

Is Tuam included in that?

Mr. MacSharry

Civil servants would be impartial.

Mr. Dukes

Of course civil servants would be impartial, but we have appointed consultants so that we will have the views of people who are involved in that kind of operation as part of their normal business.

Mr. Reynolds

More "wise men".

Mr. Killilea

Is Tuam included in that?

Mr. Dukes

I will come to the Deputy in a moment. The consultants have been asked to do their work with all speed and when their report comes to hand I shall not delay in putting forward my recommendation to the Government as to the amount, manner and time of the injection of Exchequer money.

The decision taken by the company in relation to Tuam was a difficult one even if all of the figures pointed in that direction and if the closure was accepted by the Oireachtas Committee, for whose thorough and painstaking examination of the company's affairs we must all be grateful. The company must have been well aware of the likely reactions, both genuine and contrived, to its decision.

At the same time the Government have faced the issue squarely and honestly and because of their social concern they have acted rapidly in deciding to extend their aid further to enable production at Tuam to continue for 1982-83. They have done this despite the many calls on the Exchequer at present. The breathing space gained by the decision to maintain the factory for another season is valuable in that it affords an opportunity to seek and find alternative industry for the area. This, I would repeat, is very much in line with the view taken by the Oireachtas Joint Committee.

I have set out the problems fairly and squarely because I believe that the issue is a vital one for a very important industry. We must be realistic in our approach. The reality of the present situation has been highlighted by the Joint Oireachtas Committee and by the Sugar Company; it was brought to the notice of the last Government by my predecessor. It will take hard work and the co-operation of all concerned to overcome the problems facing the company.

While we must act to ensure the necessary conditions for the future development of the company, we must have regard to the pressing interests of those people now employed in the Tuam factory. It is on the basis of that concern that the Government have decided to make the necessary funds available to the company, so that the Tuam factory can continue in operation for a further season. This in turn gives us time to tackle the problem of seeking alternative employment for the people concerned.

Deputy MacSharry mentioned the question of EEC aid for the company specifically to keep the Tuam factory in operation. He mentioned the fact that he put proposals to the Community. Those proposals were not received with any great enthusiasm.

Mr. MacSharry

They were put.

Mr. Dukes

They did not evoke a response in any positive terms and it would not be possible to except that the response would be any different now.

Mr. MacSharry

Why does the Minister not try?

Mr. Dukes

The Deputy should know what the problems are in relation to subsidising a sugar plant in the present context of EEC operations. I am sure he knows as well as I that the operation of increasing the State equity in the Sugar Company is one which we must approach very carefully as to the manner of its presentation. The Deputy is well aware of what I mean by that.

Mr. MacSharry

Did the Italians not get it?

Mr. Dukes

The Italian and the French, the two derogations that he mentioned, were negotiated at the beginning of the common organisation of the market for sugar. They have been under attack every single year since then and the Deputy, when he was Minister, also attacked them. Putting this forward now is putting forward a smokescreen.

Mr. Killilea

He got 35,000 acres.

Mr. MacSharry

The Minister is not prepared to try at home or abroad.

Mr. Dukes

The consultants will be looking at the whole operation of the company.

Mr. MacSharry

Including Tuam?

Mr. Dukes

Yes.

Mr. MacSharry

That is a step forward.

Mr. Dukes

They will make their advice available to the Government on the company's plan for rationalisation. When we have this advice I will come forward with recommendations as to how we can help them to sort out their financial situation.

The Deputy made a point which has been a source of some confusion. He seemed to be somewhat proud of it and said that Fianna Fáil did not get involved in the decisions of semi-State bodies. I do not know if there was an underlying implication in that statement. This Government do not get involved in the decision making of semi-State bodies. I wish to make it clear to the Deputy and everybody opposite that this Government did not at any time instruct the board of the Sugar Company to take any decision.

Mr. MacSharry

The Minister asked them to defer it.

Mr. Dukes

Boards of semi-State companies are appointed to do a particular job. In this case the board are endeavouring to get the company back to health. It is not my business to become involved in the decision-making process of the company but it is the Government's business to ensure that semi-State companies make the maximum possible contribution to the economy.

Mr. Kitt rose.

Mr. Sherlock

I should like the right to speak.

An Leas-Cheann Comhairle

Will Deputy Sherlock please resume his seat and allow Deputy Kitt to proceed?

Mr. Sherlock

I have the right to be heard. When will I be allowed make my speech?

An Leas-Cheann Comhairle

Will Deputy Sherlock please resume his seat?

Mr. Sherlock

When will I be allowed to speak?

An Leas-Cheann Comhairle

When the Chair rises the Deputy is expected to resume his seat. It is customary that in business of this kind Deputies whose names appear on the motion have some priority in terms of speaking. That is the custom I am following and I am asking the Deputy not to be disorderly and to allow Deputy Kitt to proceed.

Mr. Kitt

I wish to support this motion. Though it is in the names of Fianna Fáil Deputies I am confident that it will be accepted by all other Members, including Deputy Sherlock. We are asking simply that Dáil Eireann requests the Government to take whatever steps are necessary to keep open the sugar factory at Tuam and also the ancillary activities there as well as playing the very important role of promoting sugar beet growing in the neighbouring farming areas. It was necessary for us to table this motion because of the cruel decision to announce the closure of the factory, a factory which is so vital to the social and economic welfare not only of County Galway but of the west as a whole.

The Minister is aware of the deep concern that has been expressed by people in the west and by the various organisations there — the farming organisations, the trade union movement and chambers of commerce. At a special meeting of Galway County Council a call was made for the continuation of operations at the Tuam factory. One of the more memorable comments was that made by the Archbishop of Tuam, who said that the decision to close the factory was cruel and heartless and showed total indifference for the workers who have worked there for so many years. It was hoped that a deputation to the Taoiseach might lead to a long-term commitment by the Government to preserve the Tuam factory as part of the overall plan of the Sugar Company, but after three hours of discussions between the Taoiseach and the 26-man delegation we heard that the factory was being given a 12-month reprieve. The Minister for Agriculture was present also at that meeting.

Mr. Killilea

On a point of order, would it not be fitting for the Minister for western development to sit on the Front Bench instead of sitting on the back steps?

An Leas-Cheann Comhairle

That is not a point of order.

Deputy Kitt

All of us here should realise that a one-year reprieve is of no benefit to this operation. There has been deep disappointment at the failure of the Government to make a long-term commitment to preserve the factory as an integral part of the Sugar Company. The people of the west will not accept this decision. The reprieve that has been granted is merely a stay of execution. It is only a matter of putting off from today until another day the axing of the Tuam factory or, in other words, to make merely a formality of the closure in a year's time.

Mr. Sherlock

Perhaps the Deputy would say something that has not been said before.

Mr. Gene Fitzgerald

Deputy Sherlock was the only other person to say that. Give Deputy Kitt his chance to speak. Deputy Sherlock is now a Coalition man.

Mr. Sherlock

It is the waste of time that concerns me.

An Leas-Cheann Comhairle

I would ask Deputies to proceed with this important debate in a manner befitting the House.

Mr. Gene Fitzgerald

I would advise Deputy Sherlock that he is on the wrong side.

Mr. Kitt

The Government had adequate time in which to make a response. They were notified by various bodies regarding the position of the Tuam factory but they failed to take action. Indeed, it appeared that when the Minister for Agriculture heard about the closure he decided to keep the news a secret for a while. He asked the board to postpone the decision. I deplore the manner in which the intention to close the factory was announced. The matter was to be on the agenda of the board meeting of 10 September. Then it was supposed to be removed from that agenda but we discovered that all that was postponed was the announcement regarding the closure.

I recall hearing Deputy Connaughton on radio giving us one version of what happened while the Minister for Agriculture gave us another version. On the weekend after the board meeting a headline in the Connaught Tribune read that the Tuam factory closure was averted by the Minister for Agriculture but that the battle was just beginning. The battle was just beginning but it goes on. We know now that the closure of the factory was not averted by the Minister. In the article that followed that heading it was stated that an assurance was given by the Minister to Deputy Connaughton regarding the factory. I do not know what the Minister said to the Deputy but there was a different account from each of them as to what was said. However, what is certain is that the local community in Tuam were misled by the blundering and the contradictory statements of these two people. This matter was raised at the deputation to the Taoiseach but no clarification was offered. Neither did the Minister in his statement throw any light on the matter. I am told that when Mr. Sheehy, the CEO of the Sugar Company met workers in Tuam, he was asked whether the Minister had specifically requested the board to defer a decision and said that at no time was there any special request. This evening we hear about consultants. Did the Minister not say that he would be taken aback if the consultants had produced findings different from those of the Government? Is that not the position?

Mr. Dukes

The Deputy will be given replies to his questions later.

Mr. Kitt

The Minister tells us now that a large amount of money is to be invested by the Government in the Sugar Company. The Joint Committee on State-Sponsored Bodies recommended an immediate injection of £25 million and a long-term additional investment of £40 million. Now we are told that the Sugar Company have requested £75 million. The question must be asked if taxpayers' money to the tune of £75 million is to be given to this company, and this includes the taxpayers in the west of Ireland. If this large amount of money is to be given, surely some notice would be taken of Government priorities and this Government must have a priority of creating employment in the west of Ireland.

Mr. MacSharry

They do not. They are closing it down.

Mr. Kitt

It seems that this is not the case. I am mentioning the word "policy" because it is important to point out that even though the Sugar Company have the day-to-day responsibility of running the company, it is the Government who control the policy. I have no better authority for that than the present Taoiseach who in 1963 in an article on State-Sponsored Bodies, published by the Institute of Public Administration said that the Minister and the officials of his Department are responsible for preparing the basic policies which guide the operations of these bodies, for securing the approval of the Government for these policies, and for communicating them to the boards of the State-Sponsored Bodies concerned. They also hold a general watching brief in the public interest and keep an eye on the activities of the bodies for which they are responsible in order to ensure that their operations conform to the policies laid down. The Taoiseach said also: "The Dáil itself has the right to debate the policies of these undertakings and to direct the Minister to modify these policies should this appear desirable in the public interest". That is what we are doing here tonight. We would like to direct the Minister to modify his policies, especially the policies as regards the Tuam factory.

The Minister should realise the socioeconomic reasons which decided that the factory would be built in the first place. Deputy MacSharry quoted the late Deputy Seán Lemass who said that we were going to provide employment there. Deputy Paddy Belton said that it was realised by us, even by those outside Government who urged the Government of the day in 1924 and 1925 to experiment in sugar production, in the growing of beet, that money was never going to be made on the production of sugar and that other considerations would compensate for any monetary loss in the production of the sugar beet crop. The other considerations are very important, as Deputy MacSharry has pointed out.

Why is there such a hurry to close the Tuam factory? If a strictly economic yardstick is to be applied to all our State and semi-State companies which provide employment, how many of them would survive? Can we go on as we are for example with CIE or Aer Lingus? How many jobs will we have to get rid of in these enterprises if the economics of Tuam are to become the general rule? These other considerations which were mentioned by the late Deputy Lemass and by Deputy Belton are very important, but we are talking about employment, about 586 jobs in the factory, 483 of which will be lost if this factory closes. How can new industry be secured in one year for the hundreds who will lose their jobs? How can this be done when already over 2,000 people are on the live register in the Tuam area including 600 unemployed in the town of Tuam? For that reason the amendment which the Government have moved this evening which talks about the absolute priority given to securing new industry in Tuam is just pie in the sky because certainly this cannot be done in 12 months.

As well as losing these jobs in the west of Ireland we will also be losing skills, expertise and knowledge, all of which have been learned in the factory and have resulted in spin-off employment in small industries being set up. I am talking particularly of the apprentices whom the Sugar Company sponsored. Already I see lack of confidence in that sponsorship. For example, last year 14 apprentices were sponsored by the Sugar Company and this year only five apprentices are being sponsored by them in the AnCO training centre in Galway. The closure of the Tuam factory will result in no training opportunity for these young people, fewer employment opportunities and, of course, unemployment for the skilled people in the factory.

The engineering works at Tuam which are to remain will find it difficult to survive in the event of the sugar factory closing. These engineering works are now in their second year and they depend on the sugar factory for support through mobility of labour, maintenance work for the sugar factory itself and so on. The turf-cutting operation also would encounter similar difficulties as this is a seasonal job only.

The workers action committee have recommended a national plan covering the entire Sugar Company with particular emphasis on procuring beet, and that this plan would be drawn up by the Government Departments, the growers, the company and worker representatives as soon as possible to ensure that Comhlucht Siúicre Éireann Teo will once again become a major force in the economic and farming life of our country as they were previously. If this is not done as an urgent priority the situation now facing Tuam will shortly be a real threat to the other factories and eventually could result in CSET becoming a mere distributor of sugar produced on the mainland of Europe.

The action committee also have produced figures comparing the losses of the Tuam factory which are claimed to be £2.5 million. The action committee have pointed out that this figure does not take into account the loss to the Exchequer with regard to the PAYE element, social insurance, unemployment assistance and also the redundancy cost. What is it going to cost the Exchequer to provide alternative employment to the workers in the Tuam sugar factory? In fact, the closure would result not in saving but in a net financial loss to the nation for some years.

The grower is, of course, the most important person as regards the sugar factory. The primary producer is the farmer. If beet is not grown we have no processing and no factory. The first encouraging sign is that there is an increase in acreage of 39 per cent over the previous year and there is credit due to all involved for that increase, to the farmers, the Sugar Company, the farming organisations, the advisers, the field men in the factory and ACOT who have been promoting the growing of beet. ACOT have stated in their annual report for County Galway that they believe an increase of 500,000 acres of sugar beet could be grown without affecting adversely the livestock population.

Mr. Sherlock

A group of factories.

Mr. Kitt

Five thousand acres of sugar beet——

Mr. Sherlock

Sorry, I thought the Deputy said 500,000.

Mr. Kitt

The difficulty is in talking about the future of the sugar beet industry in the west of Ireland when we are getting only a 12 months reprieve. A meeting of the Fianna Fáil Oireachtas Members in the west took place recently with the Beet and Vegetable Growers Association and the BVGA were committed to getting the beet grown. The first thing they pointed out was that it was difficult to make a commitment when there was just a year left for the factory. Their priority was to drop this 12 months reprieve and to have a long-term plan for the beet industry. In a situation like that you could talk about planning, investment of machinery and modernisation of plant. They stated also that companies in Italy and France can get national adaptation aids, and why not a special case for Ireland, especially for Tuam? The yields per acre are low in the west of Ireland. In 1979 the yield of beet in the Tuam factory area was 12 tons per acre compared with 15.5 tons per acre in the rest of the country. This could mean up to £100 an acre less for a farmer in the west of Ireland.

Debate adjourned.

The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Wednesday, 21 October 1981.