The object of this Bill is to consolidate the Agricultural Credit Acts, 1927 to 1975, and to make some substantive amendments in the existing legislation. The Agricultural Credit Acts deal with the objects, functions, constitution and financing of the Agricultural Credit Corporation (ACC) and with the various charges which may be taken on land and other property as security for loans.
I will at the outset give a brief review of the evolution and development of the ACC. The corporation, one of the first State-sponsored bodies in this country, was established in 1927. The purpose was to provide a specialised credit service for agriculture, particularly long-term credit which many farmers could not readily obtain from the commercial banks. For many years the progress of the corporation was steady though not spectacular. This was due mainly to the general social and economic climate. Farmers retained a traditional reluctance to borrow. Besides, the returns from agriculture and the restricted market outlets did not encourage large-scale investment in the industry.
During the sixties however, conditions changed dramatically. Prices began to improve and markets expanded. The prospect of further price increases and guaranteed markets on entry into the European Economic Community gave a further impetus to investment. These changes were soon reflected in the ACC's business. Their annual lendings, which totalled £5 million in 1965, had increased to £25 million in 1972. They reached £35 million in 1973 and £85 million in 1976 and rose to £107 million in 1977. Total ACC loans outstanding at the end of that year were £210 million.
The corporation themselves did much to promote and to cope with the increased confidence in agriculture. They conducted publicity campaigns in favour of increased investment, they introduced a very successful deposits scheme to help finance their lending, and they established several district offices. They now have 33 such offices, bringing their facilities within easy reach of the farmer and maintaining close contact with the varied problems of the individual customer.
The corporation give loans and hire-purchase for any purpose which, in their opinion, is of benefit to agriculture or horticulture, the main demands being for loans for purchase of livestock, land purchase and improvement, buildings and machinery, seeds, grain and fertiliser, working capital, debt funding and family settlements. They give loans to farmers and to firms in the agricultural processing industries such as creameries, meat factories and grain mills. Of the £107 million lent in 1977, £90 million went to farmers and £17 million to the processing industries. Repayment periods vary from one to two years for seasonal loans to 15 years for land purchase. Current rates of interest range from 8¾ per cent for seasonal loans payable within one year to 10 per cent for their farm development loans, and 11½ per cent for other term loans of ten years and over.
The authorised share capital of the corporation is £10 million, all of which has been taken up by the Minister for Finance. They also have Exchequer loans amounting to £12.5 million and foreign loans totalling £32.0 million. During the past few years they financed most of their business from deposits and repayments on existing loans. The intake of deposits in 1977 was £55 million, which brought the total amount on deposit with the ACC at the end of December to £175 million.
I will now deal with the Bill before the House. It is, as I already stated, mainly a consolidating measure. The immediate need is to increase the statutory limit to which the ACC may borrow, but the Government decided to avail of the opportunity to review all the legislation on agricultural credit and to introduce a single Bill to replace the present nine statutes which span a period of 50 years. In addition, a number of substantive amendments to the existing legislation are being included.
The Bill is divided into five parts Part I—Preliminary and General— consists of definitions and conventional provisions about charges on the Central Fund and the payment into the Exchequer of money paid to the Minister pursuant to the Bill. Part II is devoted to the corporation, its objects, powers, constitution and financing and the appointment and superannuation of staff.
Part III deals with chattel mortgages. It applies to mortgages taken both by the ACC and recognised banks, which in practice means banks holding licences from the Central Bank. It covers the registration of mortgages in Circuit Court Offices, the effect of mortgages in relation to the retention and disposal of mortgaged stock, the procedures and powers for the seizure of stock under execution orders and the penalties for breaches of mortgage agreements.
Part IV relates to various charges taken on land as security for loans from the ACC. The objective is to facilitate the issue of ACC loans in cases where land may be subject to equitable claims or where the occupier is merely a tenant for life or the personal representative of a deceased person. In certain circumstances, the ACC may get a priority charge for their loans but subject to a cash limitation. Part IV also contains provisions whereby the ACC can themselves make charging orders on land, provided that they have the prior consent of the borrower. Part V has provisions to facilitate and protect lending by the ACC to co-operative societies or to members of such societies. The Schedule lists the various enactments which are being repealed.
I now turn to the main amendments to existing legislation which are embodied in the Bill. Sections 8 and 9 empower the ACC to give credit for agriculture and horticulture. It is proposed to extend their powers to enable them to give credit for the fisheries industry also. I should explain that the ACC will not now begin to compete with Bord Iascaigh Mhara and other credit agencies. The intention is to provide for the future. Depending on the rate of expansion in our fishing industry it may become necessary in due course to supplement the credit facilities available from existing agencies. It is desirable that the ACC should have authority to give credit to the fishing industry if the need should arise.
Section 11 increases the authorised share capital of the corporation to £20 million from the existing limit of £10 million. This is also a safeguard for the future. It is not now proposed to increase the State equity in the corporation, but the section would enable the Minister for Finance to do so if, due to circumstances outside their control, the corporation were unable to meet their commitments from their normal sources of funds.
Sections 12 and 14 provide for an increase in the maximum amount which may be borrowed by the corporation and guaranteed by the Minister for Finance. The new maximum of £350 million as against £220 million at present is expected to meet the ACC's requirements over the next three years.
Section 15 increases the ceiling on the amount of ACC lending losses which may be guaranteed by the Minister. The ceiling, which is now £5 million, is being increased to £10 million. Another change is proposed in order to simplify procedures. The guarantees will in future be given directly by the Minister for Finance, rather than by the Minister for Agriculture with the consent of the Minister for Finance as heretofore.
Section 23 which contains various definitions relating to the use of chattel mortgages as security for loans, extends the definitions of floating and specific chattel mortgages. The new definitions will enable a borrower, if he so desires, to give a single charge for both a current advance and future advances. This will mean that separate mortgages and separate registration will not be required in cases where the same borrower is getting a number of loans over a period.
Section 26 extends the period for registration of chattel mortgages in Circuit Court offices to one month from the existing period of 14 days which is considered too short.
Section 37 contains a wider definition of "permanent improvement purposes". There are, for example, a number of provisions in the Agricultural Credit Acts whereby persons with limited tenancies can charge land as security for loans from the ACC provided that such loans are obtained for permanent improvement purposes, the theory being that the benefit of such investments will remain with the land. The existing definition refers to improvements to land and buildings only. It could be argued that this definition is too restrictive, since other improvements, such as investment in extra livestock or machinery, may also be of lasting value to the farm enterprise. It is proposed therefore to extend the definition of "permanent improvement purposes" to include any purpose which will be, or is intended to be, of long-term benefit to the farm business conducted on the land.
Sections 39 and 42 enable the ACC in certain circumstances to acquire priority rights over various equitable claims to the land. At present the corporation's priority is subject to a cash limitation of £10,000. To allow for changes in money values since that limit was fixed the ceiling is being raised now to £25,000.
Section 47, which deals with the manner in which tenants for life may charge land for loans from the ACC, contains a new provision to cater for minor full owners where no trustees have been designated in the original settlement. In the absence of such trustees, who would normally be appointed by the courts, the ACC are unable to advance loans for the benefit of the farms concerned. It is now proposed that in such cases the ACC may, with the consent of the President of the High Court, nominate two suitable persons to receive the loan. Such persons would, however, become trustees solely for the purpose of receiving the loan in question.
Section 48 repeats the existing arrangements whereby the personal representative of a deceased person may charge the land of the deceased as security for a loan from the ACC. Under existing legislation the maximum sum which may be secured in such circumstances is £10,000. It is now proposed to increase the maximum to £25,000.
Section 54 contains more flexible provisions relating to charging orders. At present the corporation may, with the consent of the borrower, make an order charging his land with money advanced by the ACC or liable to be paid by them on foot of a guarantee. The order, which is registered in the Land Registry, has to be made when the loan is being given. The ACC would, however, be prepared on occasions to give loans which were not formally secured at the date of issue if they knew that in the event of default in payment they could proceed to make a charging order in arrear. Section 54 as now drafted gives the corporation this option. The charging order would still be made with the consent of the borrower and it would take effect from the date on which it was made, not from the date on which the loan was originally advanced. Any priority rights acquired by other lenders in the meantime would not be upset.
The Schedule contains the nine Agricultural Credit Acts which are being repealed and replaced by this consolidating measure. Some provisions relating to the Agricultural Co-operative Societies (Debentures) Act, 1934, are being repealed also. The main effect of the repeal of those provisions is to dispense with the prior consent of the Minister for Agriculture to the issue of depentures by agricultural co-operatives. This requirement is no longer deemed necessary. It tends to delay the issue of debentures and to duplicate investigations which lending agencies will have to make in any event to assess the credit standing of their customers.
I have outlined briefly the main amendments proposed. I will, of course, be glad to give further details about these amendmnts and about other provisions in the Bill when we reach Committee Stage.
The Bill, which I am presenting to the House, puts all the legislation on agricultural credit into a single statute. This should be of considerable advantage to the many people who have to consult and operate the legislation from time to time. The changes in the various provisions for charging land and other property are proposed in the interest of flexible administration and the elimination of delays in the issue of loans. The new financial ceilings proposed allow for the big expansion in the ACC's business and the continuing high demand for credit for agriculture.
In conclusion I would like to congratulate the directors and staff of the corporation for their enterprise and initiative and their highly successful operations to date. May I also wish them every success in their future plans for the further development of Irish agriculture. I commend the Bill for the approval of the House.