Seanad Éireann díospóireacht -
Wednesday, 20 Jun 1973

Vol. 75 No. 2

Sugar Manufacture (Amendment) Bill, 1973: Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Finance (Mr. R. Ryan)

The Bill increases the statutory limits on Exchequer participation in Comhlucht Siúicre Éireann Teoranta, it provides that the company may borrow in foreign currencies and that the Minister for Finance may guarantee such borrowings and it provides for a larger board of directors for the company. The opportunity is also being availed of to make administrative changes desirable as a consequence of the integration of the food project with the other activities of CSET and to introduce some minor amendments to the existing legislation which will give the company more flexibility in relation to its managerial structure and to the submission of its annual accounts to the Minister for Finance. A provision relating to directors and staff of the company who may become Members of either House of the Oireachtas is also included.

CSET has begun work on a major programme of modernisation of sugar plant which is estimated to cost in the region of £7 million over the next four years. Primarily because of the heavy demands in recent years on available capital to support the food processing project the renewal of plant and equipment in the sugar factories has been unduly delayed. Some of this plant and equipment is now obsolete and its replacement is an urgent priority. The programme of modernisation will bring about an improvement in conditions and create a more satisfactory working environment at all four factories. The greater part of the investment will be at Carlow and Mallow where existing handling and processing facilities are insufficient to cater adequately for the quantities of beet which they receive. The expectation is that within the EEC the production of Irish beet sugar can be maintained at a level of 170,000 to 190,000 tons. The present EEC arrangements, which remain in effect until July, 1975, provide that this country may produce 150,000 tons of beet sugar for which the full EEC support price will be guaranteed and a supplementary quota of 52,000 tons. Last year CSET processed 154,000 tons of sugar from 83,000 acres of beet. The yield was disappointingly low because of the abnormally poor weather. The company has contracted for 76,000 acres of beet in the current season and, given average weather conditions, this should yield approximately 170,000 tons of sugar. CSET is confident that its growers will continue to favour the beet crop despite the attractions of other farming pursuits within the EEC.

The existing statutory provisions relating to borrowing by CSET have been interpreted as empowering the company to borrow in Irish currency only and it is now essential that the company be empowered to borrow in foreign currencies. The company has recently completed negotiations with the European Investment Bank for a loan of £2.8 million to finance in part its factory modernisation programme. This in fact is the first loan of the European Investment Bank in the new member countries of the EEC. Further suitable opportunities for foreign borrowing by CSET are likely to arise from time to time. Provision is made in section 4 of the Bill to empower the company to borrow by means of debenture in foreign currencies. Borrowing by the company otherwise than by debenture is not governed by legislation. As a consequence of the company's intention to borrow abroad, it is necessary to extend the existing guarantee powers of the Minister for Finance. For instance, the European Investment Bank, to which I have already referred, requires a ministerial guarantee as a condition of making a loan to the company. Sections 2 and 7 of the Bill extend the Minister's powers of guarantee; section 2 relates to debenture borrowing by the company and section 7 relates to borrowing otherwise than by debenture.

At present CSET is required to submit its annual accounts, duly audited, to the Minister for Finance within 90 days after the end of each accounting year. For many years the company has been unable to comply with this requirement because its activities are too diverse to allow for proper completion of audit within the period specified. It is usually up to six months after the end of the accounting year before the accounts are ready for submission to the Minister and it is proposed, therefore, in section 3 of the Bill to extend the time limit to six months. The section also removes a requirement in the 1933 Act that all changes in the format of the CSET accounts shall be prescribed by the Minister for Finance in statutory regulations. This requirement is unnecessary and in fact the Minister has not at any stage issued such regulations.

The existing legislation provides that the board of CSET shall consist of seven members. It is now proposed to provide for a maximum of ten members and the necessary provision is included in section 4 of this Bill. The extension of the board to ten members is desirable because of the wide variety of operations for which they are responsible, particularly now that the food processing project has been fully integrated with the other activities of CSET. In addition to the changes relating to the number of board members and to foreign borrowing, to which I have just referred, the section removes the requirement that the company must have a managing director. This requirement is too restrictive and in fact the company has not had a managing director for some years. Qualifications regarding the financial interest of the Minister for Finance in the company and the duty chargeable on sugar are also being removed as these are no longer relevant.

CSET will require assistance from the Exchequer towards the financing of its sugar factory programme and, as the company's average level of borrowing is already considerably higher than its equity, the company has made clear its preference for share capital. Shares to the existing authorised statutory limit, of £5 million have already been issued—£4½ million to the Minister for Finance and £½ million of preference shares to private sector interests. Section 5 of the Bill proposes an increase in the existing authorised share capital to £10 million. It is intended that the existing £1 million Exchequer loan to the company will be converted to shares, bringing the issued share capital to £6 million, and a provision for a further £4 million should on present indication be more than adequate for a period of at least four to five years ahead.

It is also proposed—in section 8— to increase from £5 million to £10 million the statutory limit on advances and guarantees from the Minister for Finance to CSET. The existing advance of £1 million is, as I have indicated, to be converted to share capital and all that is guaranteed at present by the Minister is a debenture loan of £900,000. The Minister will be called upon to guarantee borrowings by the company from the European Investment Bank and possibly from other sources in future years and in order to cater adequately for this contingency, a new limit of £10 million on advances and guarantees from the Minister is proposed.

In an effort to reduce the very serious losses on food processing this operation has been integrated with the other activities of CSET under the direct responsibility of the CSET board. The advantages to be derived from this integration are an improvement in overall efficiency and the elimination of costs arising from the operation of two separate companies. Sections 9 and 10 of the Bill arise as a consequence of this change. Section 9 enables CSET to take over the Erin Food's investments in associated companies as Erin Foods is now a dormant company. Section 10 removes the obligation on Erin Foods—which is an approved subsidiary company of CSET within the meaning of the 1962 Act—to seek the approval of the Minister for Finance for alterations in its memorandum and articles of association and to submit its accounts to the Houses of the Oireachtas.

The Bill makes certain provisions in section 11 as regards membership of the Houses of the Oireachtas by directors, officers and servants of CSET. Provisions relating to Oireachtas membership have for some time past been included in legislation pertaining to State-sponsored bodies and it is considered that the opportunity afforded by the present Bill should be taken to extend them to CSET.

The position of the food processing project is one of serious concern to the Government. Since its establishment more than 12 years ago there has been a total investment of £25 million in the project and up to £10 million of this investment has been written off as irrecoverable. The main causes of these losses have been overproduction in earlier years, and the continuing inability to achieve export prices sufficient to cover production costs and overheads. The proliferation of small processing units has significantly inflated production costs. Bulk sales to major food manufacturers, particularly in Britain, have accounted for a high proportion of exports and profit margins have been entirely inadequate because of very keen competition. There are no prospects of profitable operation in the bulk export market and in the past 12 months intensive efforts have been made to find new and profitable export markets. In the financial year ended on 30th April last the food project had an operating loss of the order of £660,000 and there is unlikely to be a significant improvement in the current year. This level of performance is unacceptable as it involves a degree of subsidisation from the other operations of the company which they cannot support in the longer term. In addition deliveries of raw materials for processing have fallen short of requirements. The company has had to import potatoes on a limited scale this year to meet essential requirements for the Tuam potato factory, when a large number of growers failed to honour contracts, and this situation cannot be continued as a permanent arrangement. In any event such a development would be contrary to the basic concept of the food project which was designed to assist the development of horticulture in this country.

The board of CSET is committed to taking all steps necessary to reduce food losses short of any steps which might lead to redundancy of full-time employees. The number of production units, however, which operate well below full capacity, adds very considerably to company costs and some rationalisation of these may be inescapable. The board of the company has been asked to give special attention to this problem and the Government will be prepared to consider favourably any constructive proposals which they may submit to improve the situation.

CSET is one of our major industries both in terms of output and employment. In its latest financial year it has achieved an estimated turnover of £34 million, comprising £17½ million on sugar, £9½ million on processed foods and £7 million on associated agricultural activities. Average year-round employment by the company is almost 4,000 and in addition payments exceeding £10 million are made to more than 20,000 farmers. The bulk of the employment given by the company is in provincial centres, in some of which alternative job opportunities are few. Ireland's entry into the EEC presents a strong challenge for the company in that it no longer has a right to a monopoly position on the home market on production and sale of sugar while export opportunities for items such as agricultural machinery and food products should improve. The company must be properly geared to meet this new challenge. The present Bill is designed to aid improvements in company efficiency and to facilitate financing arrangements. These steps are an essential part of the company's adjustment to the new EEC situation and I confidently recommend the Bill for the approval of the House.

Mr. W. Ryan

I welcome this Bill. At the same time, it is regrettable that the Sugar Company—an old established company—find it necessary to borrow money at this stage to replace plant. I can assure the House that it is not the fault of the farmers that this has occurred. It is not because of any great price that they have been given in the past for what they produced.

In connection with the breakdown of the loan investment, I know that Carlow is getting £3.6 million; Mallow is getting almost £3 million; Thurles, in which I am interested, is getting only £.29 million, which is a little over £¼ million; Tuam is getting a little more—£.72 million. The reason given by the Minister for such a small grant for Thurles is that the plant there is in much better condition than in any of the other factories. I live near Thurles and I am inclined to doubt the advice given to him from the Sugar Company with regard to the situation in the Thurles factory. The plant in Thurles is as old as those in Mallow and Tuam. If the company intend to work the four sugar factories, the same type of equipment is needed in each.

It has been said that the beet acreage will not drop. The Sugar Company and others have intimated that they are confident that the farmers will continue to grow beet. I do not altogether agree with that. In the case of the Thurles factory, last year we grew 21,000 acres of beet in the Thurles area. That is just what is needed to run a factory efficiently and without loss. This year the acreage in Thurles is down to 15,000, a reduction of 6,000 acres in one factory alone. That 15,000 acres for the Thurles factory includes beet from Kerry and Waterford, which formerly went to Mallow.

The beet which at present comes from Kerry to Thurles passes by rail through Mallow on its way to Thurles. Therefore, unless something is done about the Thurles and the Tuam factories, they will go. If Thurles closes it will be said by the Sugar Company that it was not their fault it closed but because the farmers will not grow the beet. It is very hard to expect farmers to take the same price today for a commodity which they received almost five years ago. The increase which we beet growers have received in the last five years is 47p. I understand that we will get an extra 7p this year as a result of an increase in EEC prices. The cost of the production of beet has risen by 50 per cent, so in effect the farmer today is getting less for his beet than what he got five years ago. The only other section of the community that did not get an increase during that time is the Members of this House although I noticed that when this Bill was being discussed in the other House, some Member thought Senators were receiving £1,860. If one compares the price of beet with the price of other farm products during that time, the price of milk has gone up by 100 per cent and of cattle by 100 per cent. It is very difficult to expect farmers to continue growing beet at a loss, if they can make money easier in some other way. We, in County Tipperary, were a milk-producing county but were growing beet down through the years until this year, when there was a decline of almost 3,000 acres. Wexford was a tillage county until now and this year the beet acreage there has declined by 3,000 acres. This means that in Wexford the farmers must be finding another way of making money apart from the growing of beet.

I have heard members of the Sugar Company say that there is no danger that the Thurles factory will close, and I am sure that the Minister will agree. However, I have grave doubts. If the acreage of beet declines any further in the Thurles area, Thurles and Tuam will be out as regards beet-growing. The only other factory in Thurles is Erin Foods where are packaged all the foods manufactured in the other plants, but a number of those plants will close down, resulting in disemployment in the Erin Foods factory in Thurles also.

It would be disastrous for us if we were to lose that factory in County Tipperary. It has been in operation since 1933. It is giving good employment; both the workers and farmers benefit from it. Some effort will have to be made to keep it open. I believe the only way we can do that is to increase the price of beet.

Under EEC conditions this country may produce 150,000 tons at the full EEC price and then we can have a supplementary quota of 52,000 tons. The Sugar Company say we will be able to produce 170,000 to 190,000 tons, but it is not going to happen. Our production last year was 154,000 tons from 83,000 acres. Admittedly, last year was a bad one for beet due to weather conditions, but this year, the overall drop is 9,000 acres leaving us with 76,000 acres. It appears from that we will not come up with the quota allowed by the EEC.

Tuam, I understand, is down almost 100 per cent in beet growing this year, and were it not for what beet is grown east of the Shannon, the factory in Tuam would not be needed at all. The beet which is grown east of the Shannon in Offaly and Laois could be very easily diverted. I am sure what the Sugar Company has in mind is to divert that beet to Carlow.

There has been a slight increase in acreage in Carlow and Mallow. I feel one of the reasons for the increase in Carlow is that beet has been diverted from Thurles. Part of the beet grown in Laois and South Kilkenny has been diverted to Carlow and I cannot understand why. As far as the increase in Mallow is concerned, I imagine it is because people have given up growing vegetables and had to get beet contracts instead.

I am convinced that the farmers will grow beet if they get a proper price for it. I know it will be said that we are tied to the EEC price and we cannot give higher than that. When we were not tied to the EEC prices we did not give it either. There must be some way of getting around this EEC price. I understand that in the EEC countries—none of the factories are State-sponsored; they are owned by co-ops. or privately—they have different ways and different prices. Some of them give the beet pulp free to the farmer which means quite an increase in his price. I feel that the Sugar Company will have to find some way of giving the increase to the farmers.

The Minister might ask: Have you not got an organisation which looks after beet prices for you? We have. That organisation has been doing a very good job through the years, but it is a difficult job every year to get the Sugar Company to give you a fair price for your beet. We were never satisfied with the price we got, but we had no option but to take it.

The Minister said in his speech that the annual accounts of the Sugar Company should be in his Department within 90 days but that it usually takes six months. I imagine the very same applies to the fixing of the price for beet because the growers always maintain that the price of beet should be fixed on 1st September each year for the following year, and we are never able to get an answer from the Sugar Company until about 1st February of the year in which the beet is sown. By that time farmers have their minds made up what kind of crop they will grow, and they might not grow beet at all that year. We feel this is a decision which should be made well in advance.

The Sugar Company have lost quite a lot of money in the past few years. I believe it is due to the formation of Erin Foods and the growing of vegetables. I am not against the growing of vegetables, but I feel that the two companies should have been kept separate and the profits made from sugar should not have been ploughed back into vegetables. That is one of the reasons why the beet grower lost money. The Sugar Company were not able to pay the price because they had to subsidise Erin Foods.

The potato plant in Tuam was mentioned and the fact that farmers did not honour their contracts last year. I feel very strongly about this matter. A contract should be honoured. It was very hard to blame the farmers in the Tuam area last year when they got such a high price on the open market. In a case of that kind there should be a percentage increase if the price goes up and if the price decreases on the open market it should work the other way. There should be a percentage one way or the other. That would help the Sugar Company to get the extra potatoes. I do not know what was paid for the potatoes in England or wherever they got them, but I am sure that by the time they got them here they were nearly as dear as the Irish potato.

The Sugar Company have other enterprises. In Thurles they have a pig fattening unit which was never a success. I do not know why, because there are co-ops starting from scratch, having to collect money from farmers, and making a success of pig fattening units. Thurles has never got off the ground. We must give credit where credit is due: they have made a success of Gowla Bog in Galway and they have two very successful lime works in Mallow and near Thurles. Their greatest achievement is their engineering section in Carlow where they manufacture the "Armer" harvester. This harvester is known all over the world. At the moment they have got a very big order for harvesters in Spain. That is something I am very proud of. I hope that the engineering section of the company will go further afield than even the harvesters. If a success can be made of one machine there must be numerous other machines that can also be made a success of.

A computer was installed a few years ago to expedite the making up of accounts. I am sorry to say that instead of expediting it it slowed down matters. Farmers now complain that after sending their beet to the factory it takes a month before they hear what the beet weighed et cetera. This is most unfair to the farmer who should know within seven or eight days what his beet weighed and what the sugar content was.

The number of directors on a board does not mean very much to me. A small board can do more work than a large one. A board with the three right men could be much more successful than a board with ten members. It has been stated that different sections of the community, such as farming, trade unions and others should be represented on a board and that certain areas should be represented, that the area west of the Shannon should be represented by three or four. I do not entirely agree with this. It does not matter where the man comes from or to what organisation he belongs. If he has made a success of other industries or of his own business he is the type who should be director of the Sugar Company.

It was stated in the other House that Members of the Dáil could not be directors of the board but there was nothing wrong with Members of this House being appointed directors if the Minister considered there was a suitable candidate. I agree with that. We are not elected in the same way as the Members of the Dáil. We are known as a vocational body and there are nominating bodies to the Seanad. If there is a Member of this House capable of being a director of the Sugar Company his membership of the Seanad should not prevent this.

Mr. Halligan

I very much regret that because of the exigencies of the time situation we cannot speak for as long as we might wish on this important Bill. As a former employee of the company I have some personal interest and some knowledge. Many of Senator Ryan's arguments were all too familiar to me as a former member of the planning department, particularly the rivalry between various areas regarding beet acreage and suspicion that a factory was on the point of being closed down. It is an inescapable fact that the price of our sugar beet is a matter for the EEC. Nothing will alter substantially the return the farmer will get. That is part of the benefit of being members of the EEC. The House should recognise too that the sugar beet industry is one which will come under great pressure in Brussels because of the responsibility that the Community as a whole has towards the Third World. In fact one would find one particular commissioner looking askance at any development of the sugar beet industry in any part of the Community. We will have to fight a tough corner for the enlargement and modernisation of our sugar industry, as is evident from the money which will be expended on the programme and the loan we have recently obtained from EIB.

Before hurling all the criticism we can at the Sugar Company, we should recognise that it trail-blazed to the extent that it undertook the developmenal role that the former Taoiseach, Mr. Lemass, wished to see various State bodies take on themselves and which so few of them did. The imagination and energy of the former general manager was responsible for the development of the company in so many fields. Senator Ryan mentioned machinery, Gowla bog, fertilisers and lime. All of these were areas in which he pioneered and the most important development of all was food. It was a far-sighted and courageous decision, one which has faulted in the meantime and which is of great concern to the Government and the trade unions, the farmers and the various business interests in the towns where the plants are situated. Initial marketing mistakes were made, particularly in regard to the UK market. Mistakes were made in the early sixties, through failure on the part of the then Minister for Finance to set out proper comprehensive criteria whereby one could evaluate the role of the semi-State body. The criterion for success was confined simply to the balance sheet. If one made a profit one was doing well; if one made a loss one was doing badly. There was no attempt to develop a criterion that would look upon the total impact of the company within the community. This was a matter of great concern to the company at the time and I personally was involved in an internal company attempt to develop criteria, for instance, that we should take into account the farmer's income in relation to vegetable growing; that one should take into account the new employment in the various areas and the impact of that employment in areas where no other industries existed and therefore the demographic payoffs in terms of stabilisation of the population. In many areas it would be impossible to sustain even small factories, because the rural population had been run down below the point of re-generation.

There is the question of import substitution to which I referred briefly on the Fóir Teoranta Bill. There was an attempt to evaluate the multiplier effect. It was interesting that at that time the Economic and Social Research Institute had done work on an aspect of the Irish economy showing that the processed food industry would be the biggest pay-off in terms of national investment. This should all have been done by the previous administration. The restraints which were imposed on the company at the beginning should not have been put there. The company could not sell on the home market more than a certain proportion of its output on the grounds that it was competing with private enterprise. Often the same private enterprise was an Irish subsidiary of a foreign company. So we were protecting the home market for a foreign interest against ourselves.

If there was ever a case for an Oireachtas Committee for the examination of the roles, functions and results of semi-State bodies, here was a case in point. We are now in the situation that in the food industry there has been over-investment, leading to over-capacity. The Minister states the Government is correctly trying to get out of the situation where all the steps necessary to reduce food losses have to be taken, short of any steps which might lead to redundancy in full-time employment. This is a very tricky operation. We are in a situation of over-investment, over-capacity and at the same time without a proper brand image in the foreign market through a management decision of some time past which in retrospect is open to a new evaluation.

Senator Ryan correctly hit the point that perhaps the way out of the problems of over-capacity in the food sector would be to give the company a clear-cut developmental mandate; to say to it: "Yes, go ahead and develop in different areas in which you have the expertise." Senator Ryan mentioned—I endorse what he said—the machinery enterprise in Carlow. One could also suggest that the food side of the enterprise might deal in foods other than vegetables. For example, the Errigal Co-Op, which was formerly a very sick child of the whole group, is now a profitable enterprise in fish processing. There is no need for any of us to deny the fact that a very serious financial situation exists in terms of the food operation and of the resulting serious drag on the whole sugar operation.

I mentioned at the beginning of my speech that there is a problem with sugar quotas within the Community. It is essential that in the renegotiations we establish two things: first, the need for sugar quotas to be established by the Community. I know that some countries within the Community do not wish sugar quotas to be established. Secondly, that we get a sufficient sugar quota for the farmers. The future financial viability of the company, the support of the food subsidiary and also for regional considerations, particularly in regard to the Tuam factory, a substantial increase on our existing quota of 150,000 tons is essential.

As I understand the situation, national consumption is 240,000 tons. One might say that this should be the target for a 32-county market. Reason would suggest that we are not likely to get that quota in the very tough bargaining arena of Brussels. We could, with justification, expect what the Minister has indicated, a figure between 170,000 and 190,000 tons. That figure would give us a solid basis for the continued development of the company, but we should not leave out of consideration the considerable difficulties which face us in Brussels. Some of the discussion in respect of the EIB loan is a case in point and a danger to us all.

Concern has been expressed about Tuam. That is a valid concern. I always had the impression that Tuam was the cinderella of the operation. One must take into account the fact that the area did not generate sufficient beet from within itself. Senator Ryan correctly referred to the sugar beet east of the Shannon which had to be taken west in order to keep the plant up to the requisite capacity. Last year we had the situation of the shortfall in the potato crop through the breaking of contracts.

We must look at the problem not only as a company one but one of development within the community. Perhaps greater community involvement in the company might be a way out. For example, in terms of the potato contract, there might be co-operative growing between the company and growers within the context of a national potato market because the absence of such is the basic problem. A more determined effort to get greater numbers of beet growers in the west should be made. General Costello, in particular, was very much to the fore in attempting that effort at a certain stage. Perhaps the time has now come to revive such an effort.

Lastly, may I repeat the plea that this company, which has shown more management expertise than the rest of the semi-State sector, a commendable initiative and commercial expertise, should be given a clear developmental mandate. It should be allowed to develop in other areas, particularly in the engineering and chemical fields. I was associated with such an abortive attempt to develop in the chemical field in the early 1960s which, had it succeeded then, would have been of great benefit for our economy.

The Minister has pointed out the danger signals which are there for us all in respect of the food operation and of the consequences existing in terms of the overall financial structure of the company. The danger signals exist and therefore it behoves all of us, farmers, trade unionists, and commercial interests where the factories are situated, to come together and attempt to chart out a more secure future for this company.

Mr. Killilea

First of all, I should like to take this opportunity to welcome the Minister to the Seanad and to wish him well in his new post.

Reluctantly, I cannot welcome this Bill to the House because it is a shame that such a company as the Irish Sugar Company, which had for many years with a complete monopoly in its own industry and complete protection, should be the first public company seeking legislation to allow them to borrow money in order to become a viable unit. As I say, I do not welcome this Bill; however, its provisions may represent an investment for the future and give us an opportunity of examining the workings of the Sugar Company. The Minister has a very onerous task in asking the Sugar Company to get down to business. I have always been and probably will be classed as an agitator against the Sugar Company.

There are three reasons why, I think, the Sugar Company are seeking this legislation. The first one is its bad management. There has been bad management by the Sugar Company. I contradict Senator Halligan on that point. Secondly, while the diversification programme of the Sugar Company was achieved in a small way, the diversification section did not have enough foresight to allow it to become a viable unit. Thirdly, over the years, the Sugar Company, despite all the popular people on its management board, always had a very weak liaison between the farmers and themselves.

It is sad to hear Senator W. Ryan from Tipperary make his case for the Thurles factory against a West of Ireland venture in Tuam. Obviously, the writing is on the wall for both of those factories. I am afraid it will be a sad state of affairs when either Tuam or Thurles will have to fight to see which of them will remain open. But whichever remains open will be the next to go.

This £7 million is being given to the two major factories, Mallow and Carlow. These two factories are surrounded by large hinterlands and could never be in trouble. It is a completely different situation in the West of Ireland. The Tuam factory was situated there as a social aid to the West. It is now said it will be maintained on an economic basis. There can never be any justification for the maintenance of the Tuam Sugar Factory on an economic basis, particularly when one takes into account the development of the West of Ireland.

I accept that there have been difficulties at Tuam. Maybe the farmers were not up to the required standard or may not have been honest enough. There is, however, a third cause.

Some of the reasons why the Tuam Sugar Factory has been consistently in trouble must lie with the Sugar Company. I have been associated with the Sugar Company for many years. I was for many years the secretary of the glucose association in Tuam and I knew the intimacies of the stop-go policies of the company with the farmers. The result of it appeared last year when, for the first time in the history of agriculture here, the farmers found an alternative. The farmers who were supplying to them from outside the West said: "No, we have an alternative and we are going to accept it." They told the Sugar Company what to do with their price of £12 per ton for potatoes which they had continued to give over the four or five previous years. I asked the previous Minister and the Sugar Company if they were so naive as to think that £12 per ton was a just price to offer for potatoes with the rising costs in farming.

I now ask the Minister and the Sugar Company if £7.10 per ton for beet is a realistic price in this day and age? It is not and never will be. Unless some positive action is taken now, none of the four factories can continue with that humiliation of a price for a commodity produced on a farm.

I listened last Friday to the Minister when on his official visit there for the opening of another plant he said the State were putting close to £1 million into Tuam. He forgot to tell them that it would be spread over seven years, four years or three years——

Mr. R. Ryan

Four years.

Mr. Killilea

He did not say that. When I went home that night and made up my calculations I found that if we took account of the depreciation of the Tuam plant over the last five years, there would not be very much difference in the sum invested over the last four years and the amount invested over the next four years. My figures may be a little out, but there will not be £100,000 between us. That is not a lot of money when we are talking about a plant that is maintaining a work force in the town in which I live. I can say without hesitation that town survives on that plant.

I have already said there was not a lot of foresight. We talked about machinery and the achievements of the machinery section in Carlow. Three years ago, when discussing the Appropriations Bill in this House, I suggested to the then Minister for Finance that there should be an extension of the agricultural machinery section to the Tuam factory. I felt they had the manpower, engineering staff and the qualified technical staff to move into the farm machinery business. I was told that the chairman of the Sugar Company at that stage was also the chairman of the work study group set up by the Department to look into the importation of farm machinery. At that stage, the figure for this was £10 million; God knows what it is today. I raised the matter the following year and again last year, but all I got was a deaf ear to the situation. The new Minister may not turn a deaf ear to this situation and the Sugar Company may lend a hand in the development of other articles of farm machinery. They could have gone into this field, particularly in Tuam, where the sales force and technical staff were available. It could have been a very viable and sound industry for the town.

The farmers in the West of Ireland have now other alternatives. While those other alternatives are far more lucrative than growing beet, the skilled workers in the plant in Tuam must be taken into account. Unless the Minister can give us an assurance today, they must have worries about being declared redundant in the future.

Much work could be undertaken by the Sugar Company themselves. They made a start, but they did not go far enough. Senator Halligan raised the point that they had not got a mandate to diversify. In this field of farm machinery they have had that mandate to diversify over the last four, five or six years. I cannot pinpoint the particular time but if the Minister refers to his files he will find that the Chairman of the Sugar Company also chaired a national work study committee on farm machinery. If that was not a mandate for them to move, then I do not know what a mandate is. I would urge the Minister to ask the Sugar Company to get down to business and to see what can be done in the lucrative field of farm machinery.

One could attack the management of the Sugar Company. About this time last year there was great worry among the committed young men in Erin Foods. Word was received that Erin Foods would be thrown into the back-yard of the Sugar Company and amalgamated with it This has now happened. To be fair, it was not the suggestion of the present Minister but his predecessor, Deputy Colley, who agreed to the amalgamation of Erin Foods and the Sugar Company. I do not think this was a very wise decision. I have not been given any proof that the management, board and staff of the Sugar Company will be able to handle the affairs of Erin Foods better than the fine young men who were handling it at that stage. I know a lot of people who were in Erin Foods at that time who bolted from St. Stephen's Green House and were never seen since. These were young committed men. We are back again to the old "sugar daddies" in St. Stephen's Green House pumping out their usual stuff. The result is the Bill before us today. As I said at the start, this reflects back management at the top of the Sugar Company which has brought them to the situation in which they have to go to Europe to beg for a few bob for survival.

I have questioned this on numerous occasions. I remember last December one instance of where the old "sugar daddies" discovered that there were two commodities on sale in this country, namely Fry-Cadbury's "Smash" and Knorr "Instant Potato". These came on the market here. The old "sugar daddies" got upset and wrote a long letter to the Minister for Finance, who sent it to the Minister for Agriculture and Fisheries, who sent it to An Bord Dumpála. I questioned in this House what would be done regarding the protection of the Erin "Supermash" on sale here. I was informed that An Bord Dumpála were looking into the matter. The Department of Finance had passed the buck to the Department of Agriculture and Fisheries and it rested between this Department and An Bord Dumpála. I have never heard what happened to the document which was sent to An Bord Dumpála. I have never seen the reply that was sent back from An Bord Dumpála. I do not think any reply was sent back.

In any event, in my home town. Tuam, Knorr "Instant Potato", Fry-Cadbury's "Smash" and Erin "Supermash" are on sale on the one shelf in the one supermarket. I think it is a public disgrace that something was not done to stop the vultures from outside coming to this country and completely annihilating our processed food industry, and they will because their prices are lower. In case the Minister for Finance does not already know it, the price of the other two commodities is cheaper on the Irish market than is Erin "Supermash". It is something that at this late stage should be looked into. We must face this matter squarely and have a close look at the whole situation.

The point I am making is that, if it were the other staff of Erin Foods who were handling that situation, instead of the "sugar daddies" of the Sugar Company who now seem to hold the reins, they would have done something; but the lads in the top stories of the building in St. Stephen's Green House seem to have forgotten that Fry-Cadbury and Knorr are selling more instant potato mash than Erin are and I think that is a disgrace. One should have a good look around and see who is honest.

Lastly, the Minister pointed out that it does not matter whether the board of the Sugar Company have three, ten or 23 members. He said it does not matter if we in the West of Ireland have only three members on the board. I wish that were true. I would be satisfied at this stage to say that I would hope the Minister for Finance when he is appointing three extra men—I do not know if he is appointing the ten or the three extra—will see to it that the West of Ireland is represented on the Sugar Company board.

We had a fine man, and a non-political man, who is dead and gone now, God rest him. That was Tom Naughton, who was new on the board of Erin Foods and who had progressed to the board of the Sugar Company when a tragic accident took his life. I do not think he can be replaced on the Sugar Company board. I would hope that the Minister would have a good look around the West of Ireland. Whether the man he chooses is political or non-political is immaterial to me provided he knows what the West of Ireland wants from the Sugar Company and that he fights his cause on the board to get what the West of Ireland wants.

I would ask the Minister seriously to think—he can put whomever he likes in the nine other seats, it makes no difference to me—and give us one honest non-political or political person so long as he is a man who knows what the people of the West of Ireland want from the Sugar Company and knows how to fight their cause. I not alone ask but plead to give it very special consideration. What I have said may not sound very realistic to a lot of people but I have read the Dáil Reports on this Bill and have not seen a lot of enthusiasm from western people about it.

The Sugar Company could be a great organisation if some of the deadwood that are there now could be extricated from it. It could be replaced with some of the fine young men who work with Erin Foods, who staked their claim with Erin Foods and who, in my opinion, were sold down the drain. There were a lot of fine young men who were committed, particularly those who worked with us in the West of Ireland, to the betterment of the workers in the plants, the farmers who supplied, and the company itself.

Mr. M.J. O'Higgins

I do not wish to interrupt the Senator. I take it that he realises that we want to finish this, if possible, by 7.15 p.m. because it is vital for the Minister to get it through.

Mr. Killilea

I am just winding up. I could, in a passionate kind of way, keep talking all night about the Sugar Company and the West of Ireland and the company's commitment. They have a lot to offer. They were always a success. There is just one final point which I want to make. We have heard that Erin Foods are a unit of the Sugar Company that have lost a lot of money. Could somebody tell the people in the West of Ireland if the potato plant in Tuam, as a section of Erin Foods, has lost a lot of money? That is a good question, because, with all the millions that have been given to Mallow and Carlow, I think there is an odd rude clod down there causing great worry to the people in Erin Foods who are compelled to produce their figures on all commodities produced by Erin Foods. I should like to know from the Department of Finance who are the bosses in that place, if the figures for the Tuam Potato Factory, both in production and sales, have shown a loss over the last four or five years. I do not think they have. I am awaiting that reply and I hope the Minister might dig it up for me and let me know.

Mr. M. Higgins

My comments on this Bill will be very brief and I think I can finish within the time. Senator Killilea speaks with deep pessimism of his home town, Tuam. He sees no great hope in this Bill for providing any great development for Tuam itself. I know he is concerned. He has made many criticisms of the previous Minister for Finance, his Fianna Fáil colleague, Deputy Colley, for decisions concerning Comhlucht Siúicre Éireann Teo.

I want to make a point which I hope I can develop on another occasion when we come to discuss developments in the European Community.

There is mention in this Bill of a loan from the European Investment Bank. I think a number of the difficulties mentioned here today could be met if we were clear on a few simple points. When a loan is sought from the European Investment Bank it has either a social criteria or a marketing criteria. This is very important. Senator Killilea mentioned that the factory is important for social reasons in the area.

The negotiating of a loan from the European Investment Bank is a matter for congratulations to Comhlucht Siúicre Éireann—someone has already congratulated them in this regard— for having been so quickly off the mark. It is, however, a matter of very grave concern that we have negotiated a loan before we have formulated an adequate regional policy which would specify investment criteria in an area such as the West of Ireland. It does not make sense to the people of Carlow who have received £3.7 million, the people of Mallow who have received £2.8 million, the people of Tuam who have received £0.72 million or the people of Thurles who have received £0.29 million, that they are entering into competition with each other in a slagging match in the public Press. What is important is that we know what we are about. What we are about is the marketing criteria. A company has negotiated a loan. This is no replacement for social planning and we have to be clear about the assumptions upon which such economic thinking is based. They are market economy assumptions. Let us all be clear on that point.

When this Bill was discussed in the Dáil Deputy Hussey pointed out that representation of the West of Ireland people on the board might enable better control. This, to my mind, is an insufficient opinion. In a body such as Comhlucht Siúicre Éireann Teoranta, it is important that all the people involved in any stage of production or processing be also involved in decision-making. It would be a more fruitful contribution if somebody spoke about the necessity, for example, of developing industrial democracy within this company. It is an ideal company within which to develop it.

Senator Killilea was generous in apportioning blame. He blamed the farmers of the area and said some blame accrued also to other people and then was critical of the management of Comhlucht Siúicre Éireann Teoranta. When we are discussing this Bill we are just looking at the tip of the iceberg. We are talking of a company that have plants in different parts of this country and that have sought, in order to make themselves more efficient and to modernise themselves as a commercial enterprise, a particular kind of loan. That loan has no regional component as far as I can see. I should be glad if the Minister could give us an assurance that in future negotiations with the European Investment Bank the regional component of such loans— where the economic and social criteria commence and stop—would be taken into account.

In conclusion, I should like to draw attention to one of the problems of the Tuam plant. One of the finest examinations of West of Ireland agriculture has been that carried out by Dr. John Scully. That report was published—one of the most interesting sentences in it is the first one—without commitment by the Minister for Agriculture of the day. It was one of those true discussion documents we have had in the history of the State from civil servants. It was published without commitment.

The last sentence is probably the second most important one. Dr. Scully pointed out that the problems of western agriculture could not be considered without viewing agriculture as a competent part of regional policy in general, that is, that industrial development, agricultural development, the useful services sector had to be considered together. Certainly, it is welcome if a company takes a good decision to modernise itself but it is a matter of concern—and some confusion—that we are not clear as to whether the loan was used as something to gear up the company or whether it was used for social purposes. These are all matters which we can discuss at greater length when we come to discuss developments in the European Communities.

Minister for Finance (Mr. R. Ryan)

I am most grateful to Senators for their contributions and for their co-operation. The difficulty we find ourselves in is that one of the conditions for taking up the loan, which is not £7.5 million but only £2.8 million, is that there may be a penalty clause attaching to it if it is not taken up by 27th of this month. The Bill is substantially the same as a Bill which the previous administration had intended to introduce. It is one which anticipates the future commercial success of the Sugar Company.

Senator Higgins and others wanted to know what is the test of the European Investment Bank investment of £2.8 million. It is proper to say that they require that any project be a viable project so that that in itself is a recognition by the European Investment Bank that the Sugar Company is a successful enterprise and one with great potential. It is as much a vote of confidence in Tuam and Thurles as in Mallow and Carlow.

On the question of the distribution of the investment, the Sugar Company have the responsibility of deciding where the money is to be invested, not the Government of the day, be it the last Administration or this one. The Thurles factory has by far the most efficient equipment of the four. It has had the greatest amount of investment over the years and that is why at this stage it is not necessary to put money into it. So far as the Tuam plant is concerned, it is at present more than capable of processing everything that is offered to it. We have had deputations of workers from other areas complaining that sugar beet and other produce are being taken from their areas across the Shannon to Tuam resulting in workers in those areas being placed on short time.

I do not wish to fault anybody for not producing because they find the price unattractive. What we have to do is to find markets and we cannot find markets unless we put our produce on the market at a price which the market is prepared to pay. I would ask everybody to put that priority above party or local politics. It is a fact of life from which we cannot escape. I believe the board are now making a genuine effort to meet the hope we all have that Ireland, which is in a special position to produce the best food in the world, will avail of the opportunity which is now open to it.

I would welcome the co-operation of the House—I know I am asking a great deal—to give me all Stages of this Bill now in order that we can avoid the penalty clause which might otherwise be applicable and which would work to the disadvantage of Thurles, Mallow and Carlow.

Mr. Killilea

Could the Minister, in the next week, investigate what has happened regarding the complaint by the Sugar Company to An Bord Dumpála regarding the importation of processed foods?

Mr. R. Ryan

I should like to give this undertaking to the House: there were several points raised in the course of the debate, I am not proposing to deal with them now but I will write to the Senators to answer their specific questions.

Bill put through Committee, reported without amendment, received for final consideration and passed.