Dún Laoghaire): By agreement and not withstanding anything in Standing Orders, Members will be called in Private Members' Time this evening as follows: 7-7.25 p.m. a member of the Fianna Fáil Party; 7.25-7.40 p.m. a member of the Fianna Fáil Party; 7.40-8.10 p.m. a Government speaker; 8.10-8.30 p.m. a member of the Fianna Fáil Party.
Private Members' Business. - Mallow (Cork) Factory.
The information before me is that Deputy Michael Noonan of Fianna Fáil will speak from 7 to 7.25 p.m. and Deputy O'Keeffe will speak from 7.25 to 7.40 p.m., while Deputy Albert Reynolds will speak between 8.10 and 8.30 p.m. Are the arrangements agreed?
Agreed.
(Limerick West): I move:
That Dáil Éireann calls on the Government to request the Board of Siúicre Éireann Cpt., to review its decision to close Erin Foods at Mallow, County Cork in view of the loss of employment involved and the serious consequences for the whole horticultural industry and the future of food processing in this country.
The decision of the Government to close the Sugar Company plant in Mallow, County Cork, is a scandal that reflects badly on the Government and on the board of the Sugar Company. Allowing another 164 people unnecessarily to join the dole queue is yet another example of the lame duck approach of this Government. It is typical of their casual approach to employment and agriculture. Money is required to keep the Mallow plant in operation but they say it cannot be found or justified, yet money will be found to keep those workers on the dole, some of them for the rest of their lives. Is it not a damning indictment of this Government that they can find all the time and all the money they require to press forward their liberal crusades, yet they casually allow the livelihood of hundreds of workers to go down the tubes?
It is not just the fault of the Government that the Mallow factory is to close. Much of the blame lies with the board of the Sugar Company who have allowed the plant to become run down. They have stubbornly persisted in producing dehydrated vegetables in Mallow while the consumer is seeking fresh or frozen foods and there is a glut of dehydrated products in Europe. It would not have taken a genius to see the writing on the wall for Mallow and its products. It was obvious for all to see. Why then did the board of the Sugar Company not take action before it was too late? Why did they not move with the times? These are the questions I am posing to the Minister, and which I hope he will answer when replying.
Deputies can get answers to questions at Question Time only.
(Limerick West): The Mallow workforce recognise that the plant is in need of modernisation, rationalisation and investment and that this would more than likely lead to some of their jobs being shed. They would be prepared to go along with this in order to keep the plant in the town. The Sugar Company board and the Government are not responding to this willingness to help the plant to survive.
It is the conventional wisdom that Ireland's agricultural future lies in the processing and added value of our basic farm production, yet the Sugar Company, who pioneered food processing, are being allowed to close their Mallow plant and throw away many years of experience in this sector. Surely it makes more sense for both the Government and the Sugar Company to provide the necessary capital investment to modernise the Mallow plant in order to produce processed foods in the manner sought by the consumer. To start another plant from scratch — and it is inevitable that new plants will be set up as the processing industry gets into its stride — will cost as much or far more than it would cost to revamp the Mallow plant. Why close it? Why throw the workers who have given their lives to the Sugar Company on the scrap heap? It makes very little sense to me but then much of what this Government do makes little sense to me.
What happened in 1982 when Deputy Brian Lenihan was Minister for Agriculture?
(Limerick West): Their priorities are all wrong. What is more important than the right to a job? The answer is obvious yet this Government spend more time deflecting public opinion from the real issues, with predictable results in record unemployment.
Erin Foods' plants provide major employment and a focus for the development of the food industry in the Cork area, particularly in the horticultural sector. The performance of the existing plant could be dramatically improved if a number of initiatives were taken. I hope the Minister will reply to the suggestions I will make and that the plant will be given a reprieve. Firstly, the whole management structure needs to be looked at carefully and greatly improved in efficiency and cost effectiveness. Secondly, I understand that if the plant maintenance was carried out on a joint co-operative basis between the sugar plant and the food processing plant major economies could be realised. From a cost cutting point of view it would be useful to look at the possibility of supplying the plant with natural gas. This would result in significant improvements in energy efficiency and the cost of energy utilisation in the plant.
One has to look also at the possibility of developing new products for a market that is constantly changing. There is no doubt that Erin Foods when started 25 years ago introduced a brand new technology. I give them credit for that. They were then a world leader in accelerated freeze drying of vegetables. Unfortunately, the leading position they held has been eroded over the years by competitors. Erin Foods have not kept up to date and have not introduced the new products necessary to maintain their leading edge in this highly competitive market.
We should also look at the whole area of imports of dehydrated vegetables into the EC. This party call on the Government to look more closely at the regulation of these imports which are causing major cost competitive problems for Erin Foods. It is possible for them, operating within their present parameters, to considerably improve their cost competitiveness. Accordingly, we urge the Government to provide a stay of execution for a year so that Erin Foods can look seriously at this possibility and come up with a plan which would make the operation cost effective and profitable.
I wish to broaden the argument now by looking at the Government's food policy. One of their difficulties is that responsibility for food policy is divided among the Department of Agriculture, the Department of Industry, Trade, Commerce and Tourism, the Department of Health and the Department of the Environment. One of the reasons for cheap vegetable imports from outside the EC is the failure of the Department of Industry, Trade, Commerce and Tourism to liaise effectively with the Department of Agriculture in this context. Two years ago this party suggested that the Government should integrate the various activities of these Departments so that a co-ordinated approach could be adopted towards the development of our greatest natural resource industry. I understand that the food committee under the Minister of State, Deputy Jim O'Keeffe, recently suggested the appointment of a Minister of State for Food who would be responsible to the Department of Industry, Trade, Commerce and Tourism and to the Department of Agriculture. This is a bad idea because the Minister would be ineffective and would not have a good liaison with these Departments or power to implement progressive policies to revolutionise the food industry, which are urgently required. The food committee have now been sitting for nigh on two years and all they have done in that time is to come up with this suggestion while companies like Erin Foods are threatened with closure. The Government are in serious derogation of their duty and commitment to the food industry by failing to implement adequate policies for it. The food committee should be abolished if their only function is to come up with a suggestion which has little chance of implementation.
Fianna Fáil recently suggested that all the components of the Departments involved in food policy formulation should be brought together in a coherent unit. We suggested the formation of a Department of Agriculture and Food to control and administer all aspects of the food industry from production to processing and marketing. Such a Department would represent a coherent approach to the development of the agri-food industry and would have the potential to increase our food exports, seek new markets and compete effectively with food imports. The import of foods is one of the reasons for the poor performance of Erin Foods and the difficulties in which they now find themselves. If this type of policy had been implemented sooner Erin Foods might not now be experiencing their present difficulties.
I also wish to criticise the Government's policy on horticulture and horticultural foods. Some time ago a horticultural development advisory group were established and they came up with many admirable proposals for the development of horticulture in relation to rapidly expanding imports of horticultural produce, including fresh carrots, onions and so on. Regrettably, the horticultural development group had no power and have now been disbanded. They have not been replaced by any comparable body with the necessary experience and expertise to develop this vital area of the food industry. At present our party are working on a major policy document on the development of horticultural production and the food processing industry. This policy will clearly signpost the future role for the development of companies such as Erin Foods and others involved in horticultural food processing.
If Erin Foods cannot be made viable, even with the improvements which I have suggested, there should be an alternative approach to establishing a major new initiative for them. They initiated accelerated freeze drying for vegetables 25 years ago but that market is now in decline, whereas markets in vegetables, fruits and other horticultural products are expanding.
There are four possible areas I should like to recommend to the Minister and to the board of Erin Foods for their consideration. The first is frozen food products. There is major expansion in this area, both internationally and in Ireland. We are importing a considerable amount of frozen food products and this represents an opportunity for Erin Foods to get into an expanding market that is appropriate for them. The technology is well established.
Another rapidly expanding area is that of convenience, pre-prepared and prepacked foods, including vegetables. Consumers now can buy ready-to-cook potatoes, carrots and onions. Erin Foods should carry out a feasibility study with regard to these products. Controlled atmosphere packaging of vegetables is receiving attention internationally. This ensures a longer shelf life for vegetables, either fresh or pre-prepared. This is proving a major attraction for consumers.
Food aeration has been applied to a variety of foods, including mushrooms and strawberries. Admittedly it is highly capital intensive but it is a possibility worth considering. Other countries are moving in this direction and sooner or later we will have to come to grips with this possibility. I will give the House an example of what I am talking about.
I am advised by experts that coastal Cork is ideal for the production of winter cauliflowers. At the moment we are importing these vegetables at a cost of £500,000 and if we could produce them in coastal areas in Cork, Erin Foods could undertake that project. In north Cork seasonal cauliflowers can be grown. In all, there is a market of approximately £3 million in the Cork area for the fresh and the processed vegetable market. In the processed market I include frozen cauliflower florets, a highly attractive product for consumers. As the Minister of State knows, coastal Cork is suitable also for the growing of early carrots and potatoes and other horticultural products. This is an under-utilised area of the country in so far as horticulture is concerned.
I have made many suggestions that Erin Foods could consider and I ask that they be given a year's reprieve to consider them. The revolution in respect of frozen foods did not take anyone in the food industry by surprise. Yet, companies such as Erin Foods did not rise to the challenge by investing in the required technology. That is why they and so many Irish companies are in trouble today. Food technology does not stand still. What is acceptable to the consumer today may not be acceptable in five years time. The food industry is vital and it should be encouraged with State aid to keep up with the changing times. In that way we can lead the world in food production and processing because no country can match us in raw materials.
I call on the board of Erin Foods to review their decision to close the factory in Mallow in view of the loss of employment, the serious consequences for the entire horticultural industry and the future of the food processing industry. I request the Minister to ask Erin Foods to give the company at least a year's reprieve to look at the suggestions I have put forward.
It is with sadness that I speak to the motion before the House when I consider the excellent record of the Irish Sugar Company in Mallow. It was Eamon de Valera who turned the first sod for that great industry that has given so much employment and generated so much wealth in the area. The development of Erin Foods 25 years ago was a major boost to the area in creating employment and in development at farm level. The reason for failure was that they failed to adjust with the times.
Successive Governments have spoken about the food industry and its development but the attitude of this Government has been one of retreat and they have adopted a defeatist approach. I am glad to see that the Minister of State, Deputy Hegarty, who is responsible for the food section in the Department and also the Minister for Agriculture are present in the House. In my constituency Midleton has gone into oblivion and possibly never again will it return to its former level of prosperity.
In 1982 when Deputy Lenihan was Minister for Agriculture——
Interruptions are not in order.
Mallow is now for the gallows. At least that is the attitude of the Government. The Minister of State, Deputy Hegarty, is continually making speeches about the food industry and its potential. On television he talks about fresh vegetables and potatoes but what he says is fiction so far as the food policy of this Government is concerned. They are failing to develop our greatest natural resource. Over two years ago the Government set up a committee of Ministers and Ministers of State to examine the food industry. The Minister for Industry, Trade, Commerce and Tourism, Deputy Bruton, referred to this in a report dated 12 July 1984 but the report of the committee has not yet come to hand.
The decision of the Irish Sugar Company to close the factory at Mallow is a major defeat for the Irish food processing industry. It is a serious indictment of a semi-State body to go in this direction. The closure of Erin Foods at Mallow will mean there will be no semi-State involvement in the manufacturing of food products. Some 160 jobs will be lost and the factory at Thurles will have to import carrots, peas and swedes for the manufacture of soups. It will be a strange scene in shops to find under the Erin Foods brand products such as carrots from Israel and cabbages from Cyprus. We never thought we would see Erin Foods importing products when these commodities could be grown in Mallow where there is the finest agricultural land. We will spend £1 million in importing foodstuffs to add to the shameful food bill of £800 million and foreign vegetables will be sold under the Irish brand name.
Erin Foods were outstanding and were far-seeing when established. However, they failed to modernise. Air dried foods were on the way out because the procedure was expensive in energy consumption and from the point of view of housewives. They preferred canned or frozen products. There is a good market in Europe for the right kind of product. Frozen and tinned foods seem to be the order of the day, with canned foods reasonably acceptable. Dried foods are at the bottom of the European consumption rate.
Vegetable consumption across Europe is on the increase but acreage will decline further in Ireland if the Government do not take a serious look at the state of our food industry. If the food industry can expand on the European mainland it is hard to understand why we cannot have a growing food industry here. We have one of the mildest climates in Western Europe. We could compete with the best in north France, Brittany, one of the finest food producing areas in western Europe. It is a disgrace that we have let our food industry decline to such a level. The technology is available in County Cork within 20 miles of Mallow. We have the expertise of UCC. We have bio-technology, we have Moore Park, a vast area of development in the chemical field. We have failed to exploit that technology. We have the best graduates coming on stream and the best educated workforce in western Europe.
Erin Foods have failed to use the technology that is available. That is the cause of the present problem. I do not know whether there is lack of finance or of Government commitment, or a vested interest by the board of the Sugar Company to try to get rid of that industry. If this motion is defeated our food industry will be eroded and its development potential lost for all time. There will be lack of confidence among people to get involved. The private sector will shy away: because they see a semi-State enterprise failing they will lose confidence in investment in the industry.
I appeal to the Minister to invest in Erin Foods substantially in order to enable the industry to modernise in the interests of our greatest natural resource. This failure will make 160 people redundant in Mallow at a cost of £2 million in redundancy payments. The Exchequer will have further loss because £1.5 million will be lost in social welfare payments and there will be a loss of contributions in PAYE and PRSI which I am not able to quantify. If that money were reinvested in this industry the Mallow undertaking would be viable and be there for all time, a model for generations to come.
The workforce at Mallow are blameless. They have been dedicated, hardworking and forthcoming. The factory has been strike-free for 25 years, further proof of their great commitment to the industry. Mallow has a history of food processing and if we are to lose this fine industry it will be a sad scene. Many of the people who work there have given a lifetime of service. I know the Minister will vote with us tomorrow night because I know of his deep commitment to the food industry. He has always spoken of the potential of that industry because as a farmer, like myself, he has given a lifetime to it. I believe he will walk into the Opposition lobby tomorrow night and vote to keep this factory in operation.
What happens to Fianna Fáil Deputies if they vote against the party?
The Deputy will be welcome over here.
We cannot have interruptions.
Did the Deputy go to Limerick?
(Interruptions.)
I am glad we have such a fine audience on the Government benches. It is obvious that they will support our motion. The Labour benches apparently have gone into decay. The cost of this closure will be £5 million. Even £2 million for a start would give us an opportunity to save this industry, to modernise it technologically. We have an industry there which is 25 years out of date and it was never updated. The machinery would fall apart if it were moved out of there.
I had the privilege to meet the four worker directors and I have nothing but praise for them, for their knowledge, their outlook and the concern they have shown. They were treated shabbily by the board of management. They were told at 10 o'clock in the morning that there was a proposal to phase out Erin Foods in Mallow.
The farming community who have been benefiting were always helpful. They will be at a loss of about £1 million. Approximately 100 farmers will be affected. They supplied peas, carrots, cabbages and other vegetables for the production of which they had to develop an expertise. I have been told that about one and a half acres of peas at maximum output would give employment to one and a half workers in processing for a 12 month period. We must look at the consequences for the north Cork farmers. Already they are seriously affected by the milk super-levy because they were paying in the region of 60p per gallon produced over and above the quota. Prices for cereals have been reduced because of over supply. Farmers now find themselves without a means or an outlet for their produce that would maintain their income. They invested heavily in new machinery for vegetable and fruit production. All that capital will go to waste. All they can do with that machinery is to put it in sheds and let it rot, because there is no hope. Garages, hardware shops, the entire service side will be affected seriously. Hauliers will be affected.
Mallow has now the highest unemployment rate in its history with one in three young people under 25 years of age out of work. There is serious unemployment in Cork. The three employment offices in the region have 3,500 signing on. That is alarming.
Natural gas is coming on stream and it is regrettable that the Minister for Energy took so long to make up his mind in regard to supplies, which would have been helpful in food production.
I sincerely appeal to Deputy Hegarty to vote with the Opposition. He will be voting to reverse the decision at Mallow. He will be voting for the continuation of Erin Foods and he knows he will be doing what is right because he has seen the fair at Midleton. The food section of the IDA are openly committed to the development of our food industry.
(Interruptions.)
The Chair is anxious that everyone be given a hearing.
The NDC, the greatest load of codology ever to come before the House, will do nothing for the development of the food industry. The food industry at Mallow is in difficulty but this is because of the attitude of the Government, their austere approach and their failure to give a commitment. Erin Foods carry an unfair burden in terms of costs. Head office structure in Dublin must be taken account of in this regard because the costs are appallingly high. That imposes a further burden on Erin Foods. Perhaps the time has come for a decentralisation programme that would result in the head office of the Sugar Company being located in Mallow.
I move amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann notes the reasons why Siúicre Éireann Cpt., has found it necessary to terminate its food processing operation at Mallow and supports the efforts being made to obtain an alternative activity for the area."
First, I should like to refer to a point raised by Deputy Noonan when he castigated the Government for devoting so much time to liberal crusades and for deflecting public attention from real issues such as employment. The Government have never been guilty of backing away from the problem of unemployment.
They are not doing anything about it, either.
I take issue with Deputy Noonan on his reference to liberal crusades. The Taoiseach and the Government give great priority to such matters as resolving the problem of Northern Ireland and they should not be criticised for that.
What relevance has this to the debate?
Deputy Noonan referred to it in the debate and used it as a comparison. He ought to be ashamed of himself. We are doing what we think is right and what the whole country considers right with the exception of a few cowboys like some of those on the other side of the House.
The Minister does not think the agreement is right.
Perhaps the Chair would interpret for us the relevance of what the Minister is saying.
The Minister is replying to a point made earlier in the debate by way of passing reference.
If such a point was made——
The Deputy is out of order.
On a point of order, this is a Private Members' debate on the closure of Erin Foods and I should like the Chair to tell us the relevance of the Minister, who is supposed to be talking about the food industry, proceeding to tell us about something totally different.
The Deputy should not waste the time of the House.
The Chair should be a litle more attentive to running the affairs of the House and then, perhaps, we would not have so many irrelevancies.
If Deputy Reynolds does not conduct himself, he will have to leave the House.
Deputy Reynolds and his fellow bullyboys on the other side are so used to dictating to people within their own party that they think they can do the same to us but they will not succeed in that.
Will the Minister deal with Erin Foods?
Deputy Noonan went out of his way to make reference to other issues.
(Limerick West): That is not true.
Is the Minister for Agriculture still the dissenting voice in Fine Gael?
I have no intention of presiding over a bear garden. If Deputies do not behave themselves, I shall adjourn the House.
Deputy O'Keeffe stated that we import foodstuffs in the form of vegetables and fruit to the value of £800 million.
That information was given last week by the Minister of State at the Department of Foreign Affairs.
I am not yet contradicting what the Deputy said. As we have pointed out repeatedly, foodstuffs to the value of £200 million of that £800 million, could be replaced by growing similar products here. It is totally erroneous that most of the imports could be produced here because the bulk of them are tropical or semi-tropical. There has never been more processed food exported from this country as is the case this year and last year was a record year. The value of our exports of processed foods is well in excess of £1 billion.
The greater the better.
This represents a huge increase over previous years especially those years when Fianna Fáil were in office. There are difficulties in some sectors but other sectors, such as the beef sector, are thriving. Increasing numbers of people are being employed in the beef sector in particular. In addition, tremendous work is being done in the milk processing sector. There are difficulties associated with the horticultural industry. Deputy Noonan accepted that the problem in regard to Erin Foods goes back to the inception, 25 years ago, of the company. Erin Foods have never been a total success. There have been some difficulties always and those difficulties have been present, regardless of what party or parties were in power though Fianna Fáil were in office for the greater part of that time. During their terms in office they have seen fit to close down Erin Food plants in places such as Fastnet at Skibbereen, Glencolumbkille in County Donegal, the potato processing plant in Tuam and more recently the vegetable processing plant at Carlow. It was the Fianna Fáil proposal at the end of 1982 which led to the closure of the plant at Midleton and also to the closure of the Mattersons plant in Limerick. The then Minister for Agriculture, Deputy Lenihan, said that if the Sugar Company were to retain viability and were not to endanger their whole structure and financing future, those plants would have to be closed. We all regret the proposal from the Sugar Company regarding the plant at Mallow but that operation has been a very heavy lossmaker.
As far back as 1980 the Oireachtas Joint Committee on State-Sponsored Bodies, comprising Members from all sides of this House and including Seanad representatives, pointed out that it was no longer possible for the company's sugar activities to carry losses on their food activities. The sugar activities are increasingly vulnerable to the pressures of the relatively high overheads and the competitive threat of more efficient continental production. The committee pointed out also that many industrial food producers had gone out of business and they saw the need for the Sugar Company to reduce their food operations. The committee indicated that if financial targets were not met, the food operations should be disposed of. That committee which consisted of 11 Members of the Dáil and Seanad had a majority of Fianna Fáil members. It is pertinent to remember their words.
It is worth drawing attention to the observation in the committee's report that they had serious doubts that the company would be able to achieve an economic return in the near future from their food division as at present constituted. The committee recognised clearly the many difficulties facing the company in the food area and emphasised the need to regain commercial viability. Continuous efforts to achieve that viability have been made in the five years since then but, unfortunately, instead of an improvement there has been a deterioration.
In the industrial foods area a competitive market position is vital to survival, especially at a time when profit margins on the world markets are pared to a minimal level. The situation internationally in the food processing business, and particularly in the industrial food processing sector, is one of intense competition. Profit margins are being constantly squeezed and companies in the business have been forced to turn to third countries as sources of cheaper supply.
The vegetable dehydration industry suffers under a further disability in that it must pay growers prices which make the production of vegetables competitive with other commodities protected by the Common Agricultural Policy whereas the final output of the industry does not benefit from CAP protection or support. In fact, the price of dehydrated output is determined by the level of competition from external suppliers whose supply to the Community is virtually free of levies and taxes, whose input costs are far lower and whose level of production is geared to a far wider international market. No food processing industry in Ireland or in the Community has protection from outside imports.
The Sugar Company have been getting the best price available for the Mallow product whose quality was excellent and dependable. However, the outlets have been limited. With the level of competition and the level of losses, and with no hope of an improvement in the foreseeable future, it has to be accepted that there is no realistic way in which the plant could continue to operate at anything approaching an economic level. The Mallow operation has never been profitable and the possibility of closure has already loomed very large on a number of occasions. Since 1982, the company's involvement in the food business has undergone major rationalisation, and they have made great efforts to achieve viability. However, in 1983 Mallow losses were in excess of £800,000. Nevertheless, the board of the company reviewed the situation again and despite the high losses decided that the rationalised business should be given an opportunity to progress towards profitability. There was a slight improvement in 1984 in that Mallow losses came down to slightly over the half million pounds mark.
Unfortunately, however, this upturn was due to temporary factors such as a favourable sterling exchange rate at the time and the adjustment and revaluation of stock. The upturn was not sustained unfortunately. This year the situation for the plant has greatly deteriorated and losses of about £1 million are projected. The level of these losses is turning out to be even higher than the company's most pessimistic projections, and there is simply no way that any company, irrespective of whether it be a State company or not, could continue to sustain an activity which generated continued and increasing losses of this level, with no propect of viability.
As I have said, the company made every effort to keep the plant operating and to get it viable. Their decision now must also be seen within the context of their other operations and the knock-on effects which such substantial losses in Mallow could impose on their total viability. That is terribly important for everybody to understand. We must look at the total viability of the Sugar Company. The main activity of the company remains, of course, in the area of sugar manufacture, which accounts for the bulk of the 2,400 workforce and which has not been without its own difficulties. Because of our sugar industry's small size relative to the position of other processors within the EC, we have to be always vigilant in regard to the sugar sector and its vulnerability from outside influences.
The company's responsibility to their thousands of beet growers must also figure largely in their concerns. This indigenous industry manufactures £150 million worth of product each year. Up to a third of this is exported to Northern Ireland, to Britain and to third countries. It is an industry which is of vital national importance and we cannot afford to take the risk of placing it in jeopardy. We must at all times keep this in mind and make it very clear that the overriding priority activity for the company is still their beet sugar operation. The company must be continuously protective of their hard-won achievements and must be concerned at all times to see that this main activity is not exposed to serious risks.
Circumstances have changed very much since the period when profit in sugar activities could be utilised for investment in other areas of activity. In other words, the sugar side of the company has been sustaining and subsidising the vegetable side of the business.
The pressures on the sugar sector worldwide are now enormous. Several countries, many of them less developed Third World countries, but also including, for example, Australia, which traditionally has had a very strong sugar industry, have been forced to retrench and reorganise their native sugar industries — in some cases with very considerable structural repercussions. Within Europe the sugar industry has effectively been reorganised over the past decade and competition is razor sharp. The Irish sugar industry must remain competitive if it is to survive. The Sugar Company no longer have the flexibility to divert excess sugar earnings to other activities. Indeed, they no longer have excess earnings of any kind.
Capital requirements for sugar beet processing are extremely high and are measured in millions of pounds annually. The company have already had to reduce their planned capital investment in the light of their real financial circumstances. They must, however, continue to invest in their sugar operation if that is to continue. For any operation to be economically viable it must generate sufficient profit to cope with its capital requirements. These requirements apply not only to sugar but also and independently to food. It has been alleged that the lack of capital investment in Mallow prevented that factory from keeping up-to-date in its technological operations. The fact is that failure to generate profit on the food side inevitably resulted in an inadequate capital base with the result that the food division did not have the financial capacity for any necessary re-equipment.
I must point out that at the present time sugar is once again a subject for consideration at the European Community level. I am at present engaged in the renegotiation of the Community's sugar régime in which the Commission have proposed leaving the sugar quotas at their present levels while increasing the production levies so that the sizeable deficit in the régime can be cleared over the next five years. Negotiations are still in progress and it is not yet possible to indicate the likely outcome. However, given the scenario on the international sugar market where very low prices obtain, given the need to meet the definite deficit which has built up since the principle of financial neutrality was set in the 1981 negotiations, and given the scale and climatic and other factors under which the Irish sugar industry operates, there are considerable difficulties for their company, even within their main sector of interest. What I am saying is that if the Sugar Company were dealing solely with sugar production, they would find it difficult to keep their heads above water, but when they have other activities which are losing money hand over fist then the viability and the future of the Sugar Company are gravely at risk.
That is recognised by this Government, it was recognised by the previous Government, and also by previous Governments, many of them Fianna Fáil, when they chose to trim the extent of the activities of the Sugar Company, particularly the extent of their activities in the food processing sector. It is no good coming here tonight saying that this Government are to blame for the closing down of this or that factory. There has been a very steady reduction in the level of food processing, other than sugar beet, by the Sugar Company over the past 15 or 20 years. As I pointed out, since Fianna Fáil Governments were instrumental in closing six plants throughout the country, they can hardly come in here and start pointing their fingers when the future viability of the Sugar Company is threatened by operations such as that referred to now.
It should therefore be apparent to all that the company are facing pressures on a number of fronts which force them to protect their place in the sugar market and to seek greater efficiency from all their activities. The hard fact of the matter is that Comhlacht Siúicre Éireann cannot be expected to operate the sugar division successfully and commercially or to hold their markets against stiff competition from other countries if they are forced to keep in production uneconomic activities which are uncompetitive and a constant drain on the total performance.
As everyone knows and appreciates, economic barriers to trade are not permitted within the European Community and in this context a Common Agricultural Policy is vital for us since it provides unrestricted access for agricultural exports to the large Community markets. But trade involves free movement in both directions. We have Deputies from the Opposition benches who occasionally — not so much lately, because the message is getting home — come in here and declare that we should stop vegetables coming into this country, that we should not allow them to be imported. We import them because overall we are huge net importers of food and we are a member of the EC and operate by the rules of the EC.
Are we hearing properly?
Yes, Deputy Lyons, but your assimilation is so poor you would not be capable of understanding.
What an admission.
Order, please, order.
We export and import within the EC. There are no trade barriers within the EC, but overall we export much more than we import in the food sector. This applies to sugar as to other products and so imposes limits on the price which the Sugar Company may charge here for their sugar. The limit is not fixed by the Government but by the price at which sugar may be imported into Ireland from other members states of the Community. Under these conditions the company must keep a constant watch on their overheads, production and employment costs and the limitations laid down in the sugar regime itself or suffer the consequences of being unable to compete on the home market with imported sugar. It is clearly no longer possible for the company's sugar activities, which are themselves increasingly vulnerable to the pressures of relatively high overheads and to the competitive threat of more efficient continental production, to carry the losses being incurred on their food activities. The company have been facing up to their difficulties but survival ultimately depends on their ability to compete successfully with sugar producers in other member states. That is the essential element in this entire issue. Unless we can produce and market our goods competitively, then obviously we will be in danger of losing out heavily to the more efficient producers.
As a measure of commitment to Siúicre Éireann from this Government and the previous Government — equity investment amounting to some £50 million has been made in the company in recent years. One of the conditions attaching to that equity was that the company would undertake necessary rationalisation and reorganisation to improve profitability and efficiency. A capital injection of public funds on such a scale has to show results and must be accompanied by a strengthening of the company's operational base. This has been going on and there has been a reduction in the numbers employed by Siúicre Éireann in recent years. Food plants have closed and redundancies have taken place. The decisions to close operations were harsh ones for the Government to go along with but it does mean that we have a company who, if they are able to put into effect essential rationalisation plans, are in with a chance for survival. In regard to the decision to close the Mallow factory, I would like to emphasise again the importance of Siúicre Éireann being restored to full health. They are one of our most important national industries and the efforts they are making for a balanced future development must not be impeded.
Lest there be any apprehension that closure of Mallow poses any threat to the Erin Foods branded operation at Thurles, I can assure Deputies that the company are satisfied that the fall-out effect will not be such as to interfere with the viability of the Thurles food operations.
To make the position clearer I believe it will be helpful if I spell out the precise nature of the involvement of the Mallow production in the branded end of the company's food division. At the present time some £900,000 worth of product is supplied by Mallow to the Thurles activity. The breakdown of these figures is important and will help dispel many of the exaggerated claims made to me since the company's decision was announced. Of this total £300,000 represents meat products which will continue to be supplied by Irish manufacturers; a further £350,000 represents no-cook rice and marrowfat products which are already imported by the Mallow plant and the remaining £250,000 comprises raw material, which will have to be met by imports following the closure. It goes without saying that we all support the use of native raw materials instead of imported products but it is also necessary for us to examine the type and quality of the home-based supplies, together with their suitability and cost. Import substitution cannot be considered in a vacuum without any regard to the costs of replacing the imports by domestic production. The company are satisfied that they can supply the Thurles end of the business, without any further cost penalty to the company.
It is desirable that Deputies should be aware of the efforts of all concerned to avoid this closure becoming necessary. Following their review of the industrial food situation and while they were undergoing rationalisation, the company sought additional activities which might have helped to bring the plant to profitability. The Industrial Development Authority were asked to assist and they continue to be active in the search for another enterprise for the factory.
The Minister has five minutes to conclude.
While, unfortunately, nothing concrete has emerged from all these efforts as yet, we are continuing and, indeed, intensifying, the search. I have been in touch with the Minister for Industry, Trade, Commerce, and Tourism regarding the possible involvement of the NDC in a project based in Mallow. I would not decry the value of the NDC. They are capable of doing wonderful work in areas like this. With their assistance we may be able to find a substitute industry for Mallow in the present factory. The criteria have already been devised for the corporation's activities and once a suitable enterprise is identified there should be nothing to prevent the NDC from considering it.
We will hold the Minister to that.
I am convinced that as soon as the corporation are properly established they could have a role to play in getting an appropriate undertaking for Mallow. I know the Minister for Labour, who is concerned with the NDC, is working to ensure that we can use that corporation to help projects such as the one needed for Mallow. I readily appreciate and understand that my comments do not alleviate the hardship and worries which closure involves for the workers and their families. Nevertheless, I hope that what I have said has helped to put the unfortunate situation into better perspective. I fully appreciate the reality of the situation and again wish to assure all concerned that every relevant agency will be involved in our attempts to get an alternative enterprise for Mallow. The difficulty is that the plant has been a very heavy loss maker in recent years. The machinery has not been modernised over a 25 year period. That applies to all of the Erin Food plants. Machinery of that age is obviously using techniques not really suited to modern conditions, particularly if one is to be competitive.
While we would all like to see the food industry thriving, if sections of it are ailing, we need new and better plants and not just to keep the existing ones running at a loss. The losses, when the company are attached to the State, accumulate at an enormous rate and jeopardise the future of the parent company. A Government who did not take action in those circumstances would be failing in their duty. The board have recommended the action. They are the people closest to what is happening. They see that the whole activity in Mallow is in jeopardy unless remedial action takes place.
The Minister can advise them to continue.
The Sugar Company——
You are the boss.
Deputy, please.
The Sugar Company are the people in a position to know what is happening and they make recommendations based on their experience——
The Minister should close down the whole country.
(Interruptions.)
Deputy Reynolds, without interruption please.
(Interruptions.)
Would Deputies please allow Deputy Reynolds to make his contribution? Order, please.
The last few words by the Minister sums up his attitude. The Minister, as the Minister responsible for the development of our food industry, has blandly accepted those figures. The figures put out here tonight would not convince me or anybody else that the Erin Foods Company in Mallow are endangering the whole operation and viability of the Irish Sugar Company. If they were I would be the first to say that the Minister is abolutely right to let events take their course. It is quite clear from the very few facts that he has thrown out here tonight that, first of all, he is not interested. Secondly, I never thought that I would see the day when any Minister for Agriculture would stand up in this House and declare openly to the people that because we are exporting more food than we are importing we should not bother to do anything about the imports. Any stupid fool would know——
I did not say that. I said——
——that the agricultural exports of this country of meat, beef, and pork will always outweigh by far the imports of vegetables and other areas of food with which Erin Foods are concerned. Do not come with that bloody nonsense here. It is purely a demonstration of what the Minister said on the night he was made Minister for Agriculture. He said on a radio programme late at night, with me present, that he could not understand why the Taoiseach in the first instance put him into the Department of Agriculture, that he knew something about health because he was a member of a health board, he knew something about education because he was a teacher, that his family had never any connection with agriculture—
(Interruptions.)
There would be nothing wrong with that if three years later the same Minister had learned something after being in the Department of Agriculture for that time. But from listening here tonight it is obvious that the same Minister for Agriculture has not a bull's notion of what the food industry is all about. The north Cork region and the farmers down there have a long tradition of growing vegetables for contract, which we would love to have in our part of the country and have not got, and we would be delighted with a commitment of the farming community to that. That is the first asset the north Cork region have in relation to it. If the Minister does not want to listen to something about the food industry. I am giving him and the Government compliments if he wants to wait for them.
The Deputy can tell us about petrol, I suppose.
I am well aware that in many areas of agriculture progress is being made. The beef industry is starting on value added processing down the line. I am glad to say in this House tonight that I welcome the decision of Pascal Phelan and Master Meats to set up a further link in this chain of value added food processing in Ballymahon, County Longford, to employ 166 people. I welcome his decision to do that only this week.
A Deputy
No doubt you helped them along.
My industry there, which is also involved in value added processing, will link in to the same industry that is being established in Ballymahon which is only 14 miles away.
(Interruptions.)
Do you want to hear what the food industry is all about? I did not come in here to call the pot black or to say that we are whiter than the Government. I thought this Government were going to do something about it. I was there for only ten months in 1982 and my record will show that I did better than the Minister has done in three years in relation to the food industry. Apparently those gentlemen know nothing about it and are not prepared to listen and learn something about it.
Deputy Carey knows a great deal about closures. He has a number in his constituency.
If the Deputy would please be quiet perhaps some people on the opposite side would be quiet also. They should attend one little short lecture on the food industry from somebody who knows a little about it. Nobody over there knows anything about it.
You were able to get your money out of the EC to do it.
I am proud to say that I was the recipient of £1 million in FEOGA grants in Brussels. I was the first Irish industrialist who was able to break down the barriers of bureaucracy in Brussels and open the door for future food processing in this country and to avail of the FEOGA grants which had been denied to this country since we entered the EC.
You did not lose £1 million last year.
I got £1,000,029.
(Limerick West): Are you ashamed to give it to an Irishman?
If this Government want to continue with the nonsense, that is fine. I know that it annoyed John Taylor intensely in the North that the Irish food processor was able to make that breakthrough. I am surprised that a rural Deputy from Clare would deny any Irishman, even though he might not be of the same politics as himself, the opportunity to develop and make a start in developing a value-added food processing industry.
A Deputy
That is the narrow thinking of this Government.
When I see that £38 million would be committed——
(Interruptions.)
I thought that this was an important debate and I appeal to both sides to allow Deputy Reynolds to contribute.
It should be an important debate because our greatest national asset is green fields and nobody seems to realise that.
(Interruptions.)
He will not get on the Munster team tonight.
I will play against the Munster lads any day of the week. If I cannot have the opportunity of saying a few words it is a poor day for this country. I am talking about what should be our prime national industry. As I said to the Minister and the House, progress is being made in value-added beef processing. There is a long way to go to get at the bottom of all the opportunities that exist there, but I am glad that it is taking place and that my constituency is playing a role in that. I will say no more about that except there are many other areas in which progress can be made. If this House, especially the Deputies opposite, do not want to listen and hear a little about the developments that are taking place in the marketplace — that is what it is all about — for a food industry, then they are closing their eyes to reality. In Building on Reality, 1985-1987 their answer to the food industry was to establish an international marketing consultancy. This Government seem to be obsessed with committees, task forces, consultants and international consultants. We do not need them. We have only to go to Superquinn, Quinnsworth, Tesco and Gold Cross and spend a day around Sainsburys, ASDA and all the major groups to see the opportunities that exist there for convenience foods and new type products. A whole change is taking place in the marketplace.
I will not accept defeatism in relation to the food industry in Ireland any more than I accept the basis for this decision. But if this was to threaten viability and it was not possible to make it right, I would be the first to recognise that. All the Fianna Fáil Front Bench are saying here tonight is that the Government should evaluate that decision over a year. Their losses have been £500,000. Strangely enough, the workers in Mallow produce a different figure for what the losses this year will be. Which is right? I am also aware that there is a head office transfer of £0.25 million from that lovely building we have up here in Dublin back to a small plant in Mallow. Will the Minister justify that? He should. I do not think on the basis of a set of figures presented to him any Minister should write off a factory without satisfying himself, especially in the food industry, as to the viability of the concern.
I am not looking back 25 years. The decision to open the factory 25 years ago was an imaginative and creative step but, looking at the Erin Foods operation, it is clear what has happened in the meantime. Successive Governments have not given the industry the capital injections required to help it modernise its plant. Technology in the food industry today is a very expensive commodity despite what my colleague from Clare thinks. It is his belief that if one gets £1 million it is the end of the story. For his information I should like to state that my total investment in that plant was almost £4 million and unlike him, I do not think it was overpaid with an investment of £1 million.
I applaud the Deputy. He is being constructive now.
We must have more investment in the food industry if we are to avail of the markets in the EC. In the Mallow area farmers are accustomed to supplying the factory on a contract basis. That is not an easy system to find in other parts of the country, as Deputy Paul Connaughton will appreciate. If I tried to get that type of commitment in my area tomorrow morning, I would find it very difficult and that is why I consider it very foolish of anybody on being presented with a set of figures deciding to destroy a factory.
It is worth analysing the figures. As a member of the Joint Committee on Commercial State-sponsored Bodies I would be prepared to request the management of the sugar company to appear before us to evaluate their decision. A cost-benefit analysis should be undertaken with a view to continuing the operation for a further 12 months. We should not blandly accept the defeatist attitude that we cannot do anything here. Our technology in regard to the food industry is as good as in any other country. That did not exist some years ago. In the sixties Irish agriculture did not have an opportunity to break out of the strait jacket in which it found itself in regard to the London market. We are in a marketplace of 250 million people with Spain and Portugal yet to join. Is it realised that when Spain and Portugal join the EC that market will be greater than that of the United States? Why is it that we have a defeatist attitude in regard to the food industry?
I hate to think the Minister accepts that we cannot do the job better than others. We have proved our ability in other areas. We should make use of the technologists who are leaving our thrid level institutions annually. They are the brightest young people available. We need product development and a recognition of what the market wants. Within Erin Foods there is a mass of expertise, people with food processing technology, something that is very scarce here. We should not destroy that or scatter it to the four winds. Management have not been able to produce a way forward for the food industry. For far too long they have concentrated on the area of dehydrated foods. The market moved away from that area a long time ago.
I cannot understand why the mushroom operation in Mallow closed down some years ago. I do not know what Minister was in power at the time and I am not interested, but the decision was a bad one. In my county mushroom growing is a good source of income to many small farmers. Those people do not have any other opportunity to supplement their income and must now cope with no extra production in the milk or cereal areas. Indeed, I would welcome the introduction of a scheme to increase the national herd. Mushroom growing started in Monaghan, spread to Cavan and is now very popular in Longford. Market research has shown that we cannot satisfy the demand for that product, even in the next 20 years. Why is it that we cannot take a radical decision in regard to the food industry? That industry will never prosper until some Minister decides to get rid of all the bureaucracy that has riddled our food industry.
In the short time I was a Minister I suggested that SFADCo should be taken out of the mid-western region where they have done a marvellous job and be engaged full time on a three year pilot scheme in the food industry. Were I in charge of the Department today I would have implemented that suggestion. One of the best compliments I can pay to SFADCo is that they have little regard for bureaucracy. I take off my hat to them for that.
I am sure the Joint Committee on Commercial State-sponsored Bodies would be delighted to have a look at the facts and figures involved in the Mallow factory. The basis of a food industry should not be thrown to the four winds — the livelihoods of 167 people are also being done away with — on the basis of information on a few sheets of paper. It is unlikely that many of the people involved will find alternative employment because of their age. They have a big contribution to make in the development of a food industry but not in the area of dehydrated foods.
The food industry will change dramatically in the next ten years and those in the marketplace can verify that. The buyers of the hypermarkets and supermarkets will confirm that there is a move back to fresh foods and nothing symbolises fresh foods more than green fields. We have the best marketing tool to launch our fresh vegetables into the German or UK markets. The most quality conscious people buying on the UK market are now moving back towards fresh vegetables. Thankfully, we have not totally destroyed our environment and we should stop any steps in that direction because in the long term our best national asset will be an environment free of pollution.
The future in the food area will be in small units specialising in the growing of high quality products. If the Minister is serious about developing the food industry he should get involved in product development. We have the expertise in third level institutions and elsewhere and we should start producing the products that the marketplace wants. Rather than being a production orientated food industry we should be market orientated. That represents the real way forward. I cannot understand why the Government decided to disband the Irish Land Commission because thousands of acres of land owned by the State remain undistributed. At the same time we have young people leaving third level institutions and agricultural colleges looking for land to try to earn a living for themselves. Should we not decide to give them 70 or 100 acres, or whatever is considered a viable unit, to give them a start? Those young people should be given an opportunity to work the land. Why do we permit 700 graduates to go abroad when their expertise is needed at home? We will be looking for such people in the near future if we are to develop our economy. We have a growing population and we must do something about creating employment for them.
There are many opportunities for development in the food industry. When I was Minister I had occasion to have a conversation with the Prime Minister of New Zealand and I asked him what his strategy was in regard to industry. He told me they were involved in various industries they could not hope to survive in, but the one area they should be involved in — as far as he was concerned all national resources would go in this direction — was agriculture. The New Zealand economy is built solely on agriculture and they have to survive in a tough area. Here we are looking for the easy way out, as usual. There is nothing simple about establishing a food industry but, until we take the first radical decisions at administrative level, we will not get anywhere.
Let the Minister not mind the various pressure groups that will build up from various Departments. I know from my short experience in that area that everybody sees himself as his own little republic. This country cannot afford that type of insular republicanism which exists within Departments at present. We have a national job to do to build the food industry. I hope the Government will do it, but if they do not, it will not be too long before they are making their confession to the electorate. I can tell the Government that I am prepared to do the job if given the opportunity. I know it can be done. The important thing is, first, that you convince yourself that it can be done and then you can bring people along with you and anything is possible. There is too much defeatism about.
(Interruptions.)
Would the Deputy please move the adjournment of the debate?
It is not going to bankrupt the Sugar Company and we cannot accept the figures that are given. Let us have an opportunity of looking at the figures to prove whether management are right or wrong. The Minister owes that to the workforce. He owes them at least the chance to set up a co-operative. I believe they can make it, if given the wherewithal to do it. The Minister should remember that they are still owed £18 million for further development, an amount which was never handed over to them. He is talking here about £250,000 that might bankrupt the company. I cannot accept that.
Debate adjourned.