I will merely tell the House the gist of it. From 1925-26 to 1931-32 the number of fat cattle exported between December and April, inclusive, averaged between 100,000 and 130,000. From 1931-32 until the outbreak of the recent war the number ranged round about 50,000 to 80,000. From 1939-40 the number was upset in one year, due to the outbreak of foot-and-mouth disease which held up cattle exports. Consequently, they had to go out as best they could. Many of them went out as technically fat cattle. In 1941 there was the inflated figure of 47,000. In most of the war years the number was very moderate indeed. In 1942-43 it was only 7,500, and in 1943-44 only 610. In other words, cattle classified as fat were badly hit after the introduction of the differential price policy in 1942-43. The recent war situation has pretty well killed that whole trade, and killed it stone dead.
Now, may I read this comment which, unfortunately, did not appear in our published report:
"The principle of price discrimination has become in recent years a normal feature of British policy, and ours is not the only country which is affected by it. Accordingly, a general analysis of its economic significance and implications will not be out of place. There are two principal methods by which an importing country may raise the price of home-grown food for the benefit of her own farmers. One is by placing a tariff on all competing imported products. In that case the consumer must pay a higher price with reference to the whole range of food products whether home-grown or imported. The native farmer benefits by being able to command a higher price in the market thus protected. Obviously, of course, by this method the addition to the consumer's expenditure, in the case of a country like the United Kingdom, far exceeds the financial advantage conveyed to the nation's farmers. It is quite intelligible that public policy in the United Kingdom should avoid the use of this method.
"The more usual method is for the State to pay from public funds an addition to the price which the nation's farmers are able to command in the ordinary course of commerce. In that case imported agricultural products continue to come in and are bought at the ‘world price'. The consumer pays no more in respect of any portion of his consumption than he would pay in a free market. The additional gain to the nation's farmers takes the form of a direct transfer from public funds. From the national point of view this is the most economical way of conferring a special advantage on the national agriculture."
I should say, before reading any more, that the principal feature of this British policy is the fact that producers of fat cattle receive a subsidy in Britain direct from the British taxpayer which goes into the pocket of the producer and is not taken out of the pocket of the consumer. The British point of view is that they are quite prepared to subsidise their own producers, but they do not see any particular reason why they should subsidise our producers of fat cattle for export to Britain. Hitherto, they have done their very best to limit the subsidy in the case of forward stores and to deprive us altogether of the element of subsidy in the case of fat cattle which we export finished. Our answer to that should be that it is a matter of indifference to us whether the British choose to pay for their beef as taxpayers or consumers or both, but that what does interest and affect us is the final price that goes into the pocket of the British producer. The circumstances that have arisen in consequence of that British policy, and the operation of that differential price, have thrown a spanner into the works of our agricultural economy. We protest against it and demand and require that they should agree to the principle of the same price for the same quality of animal whether produced in Ireland or in Britain. May I read further:—
"Under war conditions the British Ministry of Food has a monopoly of the import demand for all imported food products. Consequently, there is no such thing as a ‘world price' in the ordinary peace time significance of the term. We do not know whether or how long the British Ministry of Food will continue to exercise its monopolistic functions in the post-war era. Clearly, while it does continue to exercise them, and until other markets in other industrial countries are again available, it can exercise an economic influence on the whole economy not only of our country but of all food exporting countries—most of them members of the British Commonwealth of Nations.
"There is reason to believe that New Zealand has found, during the recent war years, that her export prices have tended to be relatively lower than her import prices, and her economy has been financially embarrassed in consequence. This was recognised by the United Kingdom and a substantial additional payment was made to the New Zealand Government to compensate for this disparity.
"In our case the export price of all our agricultural exports is definitely much less than the price plus subsidy obtained by the producers of similar products in the United Kingdom. The export price obtainable for our agricultural products is a principal element in the determination of agricultural incomes here, including the incomes of agricultural labourers. Agricultural wages here have risen in recent years, but are less than the current level of wages in the United Kingdom by at least 20/- per week. Labour and capital move freely from our country to Great Britain—in which respect we differ from the other nations in the Commonwealth. Consequently, lower prices for our agricultural exports than are, in fact, commanded by producers of exactly similar products in the United Kingdom constitute a strong economic inducement to us to export agricultural labourers to Great Britain instead of agricultural products. We have, in fact, done so to an extent that now embarrasses our agricultural effort. This is a matter which concerns the United Kingdom as well as ourselves. We can see the reasonableness from a British point of view of the price discrimination policy followed in recent years. But its economic implications and repercussions have, perhaps, not been fully realised by those responsible for it. We are strongly of opinion that equal prices for equal qualities of produce, sold in the United Kingdom, is the policy which would best facilitate agricultural production in and export from our country. We recommend that a joint conference be held to see if the problem can be solved in a manner that will be compatible with the national interests of both countries."
Now, another point which came out in the course of our investigation was that if we wanted at a later stage to go on to a policy of processing our own beef cattle and sending them out as dead beef rather than as live cattle, we just could not do it so long as the present price differentiation principle exists, because any factory established for the processing of beef, in the case of high-class store cattle, would have to buy the store cattle at the relatively high price which store cattle for export demands, and, presumably, sell the finished beef on the basis of the relatively low price that the British Ministry of Food gives for cattle ready for slaughter. That would mean either bankruptcy for the organisation or highly subsidising your factory here. Let me quote from some of these memoranda:
"For example, under present conditions forward stores sell in the British market at a higher price than the price appointed by the Ministry of Food for fat cattle exported for immediate slaughter. It has been recommended to us that we should transform our live cattle export trade into an export trade in dead meat as soon as may be. Under present conditions it would be financially impossible for an Irish dead meat industry to buy its raw material in competition with the relatively higher price obtainable for forward stores and sell its finished product in the British market at the equivalent of the price paid by the Ministry of Food for fat cattle exported for immediate slaughter."
That brings me to another point which, perhaps, may indicate some loophole of escape from this very difficult situation. The person that made that recommendation to us was Mr. Thomas Shaw, an Englishman, who is an expert in the dead meat trade. Looking at it from the point of view of an expert, he has been a strong advocate that we should develop the dead meat trade. He recently wrote an article in Studies advocating that policy. He has been at it now for quite a long time. We have been doing our best to restrain him because we felt that so long as the differential price system exists what he was advocating was not practical politics. Here is a letter I had from him on the 12th October, 1944:
"Dear Mr. Johnston,
I am wondering if the time has not come when I ought to do something to bring the matters of the report I made some years ago into discussion. On this side, as you will be aware, a good deal of consideration is being given to post-war agricultural problems. I myself am actively engaged on the meat and live-stock side in this connection, and I am finding increasing agricultural and political support for the principle that efficiency in production must be allied to efficiency in processing and distribution.
"A year ago I published a report on the re-organisation of the meat industry in this country and I am not unhopeful that as a result of the discussions that have ensued from it there will evolve on this side a rationalised processing and distributive trade allied to and integrated with organised producers. This carries a stage further the concept that I outlined in my report on an Irish meat industry and some day I hope to have a discussion with you on it.
"In the meantime, it would seem to me that useful purpose would be served if the organisation of a homemeat industry in Éire, with its attendant centralised factory abattoir and the ancillary manufacturing trades arising therefrom, were brought to discussion by an intelligent public. I, of course, have no idea what may be the intentions of the powers that be regarding agricultural policy, but Éire has so much to lose by the continuing export of live, fat stock, and so much to gain in the national economy by processing at home, that official policy may be influenced if this matter were now brought to the forefront. If you agree that the time is now opportune, how can action best be taken? Would, for instance, useful purpose be served if I contributed a reasoned article on this matter to some such publication as Studies? I would do this either on my own or jointly with somebody whom you might care to suggest. The main point is, that at some stage the policy suggested in my report will be opportune for discussion. I think you know that my interest in this matter, in so far as Éire is concerned, arises from what I believe to be a well-founded belief that only by the export of well-graded Éire produce through orderly and efficient marketing channels can there be any real hope of a secure agricultural industry. The continuing export of raw material is an impoverishing factor, and only by processing at home under rational and modernised methods can the best interests of Éire's economy be served. My own background, as you know, has been that of agriculture and the marketing of its produce, and I am sufficiently immodest in this particular matter to believe that I can make some small contribution. However that may be, it constitutes my reason for this letter and I would be most grateful if you would consider the matters I have raised and, as soon as you are able, be good enough to give me your views.”
Now, as Senators may be aware, that gentleman, Mr. Thomas Shaw, recently printed an article on the Irish meat and live-stock industry in the current number of Studies, to which I direct the attention of Senators. The Editor of Studies submitted it to former members of the agricultural committee, including myself, for comment beforehand, and I had to comment in a way which was both optimistic and pessimistic. I had to say this with reference to his article:—
"I have read, with mixed feelings, Mr. Shaw's able exposition of the need for replacing our export of beef cattle on the hoof by a properly organised and developed dead meat export trade. If it could be accomplished, nothing could contribute more effectively to the growth of our agricultural prosperity and to the establishment of a sound industrialism closely integrated with our major agricultural activity. Unfortunately, under the conditions which have existed since 1932and which still exist, the thing is impossible. In that year Great Britain began a price policy which stimulates, in fact subsidises, the export of forward stores and discriminates heavily against the export of cattle ready for immediate slaughter. The policy has had different forms at different times, but in substance its effect has always been the same. To take a typical illustration: if the price fixed by the British Ministry of Food for an imported animal ready for immediate slaughter is 60/- per cwt. live weight, the corresponding price for an animal of equal merit, reared and finished in Great Britain, is of the order of 74/-, while the price obtainable for a forward Irish store with two months' expectation of life in Great Britain would be 69/-. During most months of the year the latter price governs the price payable by Irish butchers for beef or near-beef animals. The crucial system is: if we had a dead meat factory processing the type of animal now exported on the hoof, would it get a price for the exported meat no higher than the equivalent of the 60/- price now payable for animals exported for immediate slaughter, or what price would it get? On the answer to this question by Mr. Strachey depends the feasibility or otherwise of Mr. Shaw's very attractive proposition. It is quite certain that the dead meat factory—if operating under present conditions—would have to pay the 69/- price for its cattle. To buy at 69/- and sell at 60/- would, from the outset, condemn the proposed venture to bankruptcy—or heavy subsidisation by the national Government.”
Now Mr. Shaw is a very persistent person and I hope sooner or later he will get away with his big idea. If he does he will have established something in the long-term interest of Britain as well as ourselves and it would be very much in our agricultural and other interests. He tells me in a more recent letter that he is quite hopeful that this British policy of encouraging the export of forward stores and discouraging the export of fat cattle is essentially temporary, and as soon as there is less straw in Britain to trample into manure—in other words, as soon as the area under cereal production is diminished to normal in Britain—they will be less keen on importing our store cattle to trample their straw into manure and they may be more disposed to discuss on a new basis the whole question of the export of cattle live or dead to Britain. I hope he is right—I do not know.
He has, on his own suggestion, and assisted by Professor Smiddy, arranged to read a paper on the general problem of the marketing of Irish agricultural products, with special reference to the feasibility of the development of a dead meat trade, before the Dublin University Commerce Society in Trinity College, Dublin, on Tuesday, 3rd December, at 8 o'clock. The Minister has very kindly agreed to speak to the paper and Deputy Hughes and one or two other prominent speakers will be present. I hope to have tickets available for distribution and if any Senator is interested in the subject, I will be only too pleased if he will turn up to hear Mr. Shaw, who is out to achieve something of permanent advantage to both countries. In our own interest we ought to give him every possible encouragement.
I am glad this matter has been discussed in an atmosphere fairly free from recrimination. It was unfortunate this differential price policy began about the same time as the economic war, but the British were careful to explain at the time that their subsidising of beef and their discrimination against the price of Irish cattle was no part of their economic reprisals. In a way that was satisfactory, but in another way it would have been more satisfactory if it had been part of the economic war, because it would have come to an end in 1938, whereas the British cattle policy has been, from our point of view, one of the most economically hostile things that they did to us at that time and it would have been highly desirable that that part of the economic war which still continues should have come to an end in 1938.
