Committee Reports > List of Committees > Dáil > 1926 > Special Committee on Home Grown Tobacco Duties > Interim Report and Final Report - Home Grown Tobacco Duties

APPENDIX V.

PRECIS OF EVIDENCE PRESENTED BY MAJOR RICHARD EVERARD.

I have been in close touch with all the experiments in tobacco-growing carried out in Ireland since 1898.

In 1903 I was commissioned by Sir Nugent Everard to go to U.S.A., at his expense, and learn all I could about tobacco-growing there.

I returned in 1904 and designed a tobacco barn suitable for curing all classes of tobacco, as we had had practically no previous experience to guide us as to which variety of tobacco or what method of curing would prove most suitable. Since that date I have acted as Sir Nugent Everard’s head expert in all the experiments conducted.

As a result of this experience my considered opinion is (1) that the soil and climate of Ireland are well suited for growing tobacco; (2) that heavy crops of tobacco of good quality and flavour can be produced in this country; (3) that the present position of the tobacco-growing industry is due to the war, the actions and inactions of our Governments, and to the peculiar position of the trade at present.

Up to 1920 about one and a half million lbs. had been produced and sold, and manufacturers and experts reported very favourably on it on account of its similarity to, and therefore its suitability for blending with, American tobacco.

(4) In view of the fact that the Minister for Lands and Agriculture has arranged for short term loans to small holders for the erection of tobacco-curing barns, and in view of the results of experiments in sugar beet growing, which were conducted under my supervision in 1900 and 1901, and also in 1925, I consider that those two crops would be ideal for the small holder, for the following reasons:—

(a) That both require a large amount of labour to be expended in their production per acre (according to Department figures, 748 hours in the case of tobacco, and 270 hours in the case of beet).

(b) That they both are, or should be, cash crops.

(c) That both return a large gross profit per acre.

(d) That both crops leave the land in good condition and enrich it for the succeeding crop.

(e) That as the process of curing tobacco only lasts about two months (September and October) the barn is available for feeding the “pulp” returned from the sugar beet factory to cattle, thus providing the manure necessary to maintain and increase the fertility of the holding, and also perhaps to put these cattle on the market in such condition that they will command a high price per cwt.

In discussing the question of tobacco-growing, it seems convenient to divide it into three heads—

A. Growing,

B. Rehandling, or preparing for market,

C. Marketing,

and to sub-divide growing into two periods:—

(1) 1904-1915; (2) 1914-1923.

A. GROWING.

It has been abundantly proved (1) that land that can produce good root crops, as also moor and bog-land, is suitable for tobacco provided that it is well sheltered; (2) that any extra care and attention given to the crop is well repaid by the increased yield.

(1) In the period 1904-1913 the experiments carried out under the direct supervision of the Department were confined to about twenty persons in seven counties, who were authorised to grow on their lands a definitely limited acreage. These experimenters from 1904-1908 received a refund of one-third of the duty, i.e., one shilling per lb. From 1909 to 1913 this rebate was changed to a subsidy of £50 per acre.

In addition, from 1910 to 1913 the Department inaugurated a “small growers’ scheme” to ascertain the suitability of the crop to small holders. A grant of £25 was given to the “rehandlers” who provided the grower with equipment and artificial manures, and rehandled and disposed of the tobacco for him. The rehandler usually allowed the grower half of the subsidy to enable him to repay about one-fourth of the value of his equipment, and also the cost of the artificial manures. The grower usually received £20 to £30 in cash per acre for his labour.

The amount of tobacco produced and sold during this period was about 883,000 lbs., on about 1,000 acres.

(2) 1914-1923. Owing, we must presume, to the success of this “small growers” scheme” in 1914, another scheme was inaugurated which, to quote from the Department Journal, “was practically an extension and development on commercial lines of the small growers’ scheme, with the special object of providing the most efficient means for preparing the farmers’ tobacco for market, an operation known as ‘rehandling.”’ This scheme of experiments, covering a period of ten years, was financed out of the Development Fund, a sum of £75,000 being allocated for this purpose.

Lord Dunraven and Sir Nugent Everard were induced to attempt to carry out the scheme, one of the terms of which was that they, as rehandlers, should erect a suitable rehandling plant. It was found that the smallest efficient rehandling plant was capable of dealing with 1,000 acres per year. These gentlemen were limited to 114 acres each, and although it seemed rather like using a steam-hammer to crack a nut, two were erected.

A grant of £25 per acre was given to the rehandlers to enable them to carry out the terms of the scheme.

In Lord Dunraven’s case the scheme was carried out on co-operative lines, whereas Sir Nugent Everard, owing to the action of the Department, was obliged to give the growers £15 out of his acreable grant.

In 1914 and 1915 practically the acreage allotted was grown with satisfactory results to the growers, and only a small loss to the rehandlers.

In 1916, Tagoat dropped out, and the number of growers, owing to appeals to produce food crops, was seriously reduced. In January, 1917, Lord Dunraven’s rehandling station was destroyed by fire. From this year onward the scheme from the rehandler’s point of view became hopelessly uneconomic. The growers, however, were getting a good return for the labour expended until the effect of Imperial Preference imposed in 1919 made itself felt. In 1920, Sir Nugent Everard took over such of Lord Dunraven’s growers as wished to grow.

The effect of the Imperial Preference, which rendered the crops from 1920 onwards unsaleable, will be dealt with under “Marketing.”

From 1914 to 1919 a careful and industrious small holder, after paying instalment on his equipment, cost of artificial manures, and preparing his tobacco for market, towards which he received a grant of £15 per acre, was able to put in his pocket from £15 to £30 per statute acre.

Under the same conditions some careful growers were able to put in their pockets as much as £50 per acre for the 1922 and 1923 crops, which were sold at an average price of one shilling and sixpence per lb.

B. REHANDLING AND PREPARING FOR MARKET.

In the tobacco-growing districts of the U.S.A. this industry is almost as important as the growing, on account of the employment it gives in towns. In Virginia, Carolina, and Kentucky most of the towns have been built on it.

The cost of the machinery for packing is high. The smallest efficient plant, capable of dealing with 1,000 acres, cost, before the war, £3,000 to £4,000.

The processes of rehandling involve receiving, grading, fermenting and packing, at all of which women and children can be employed.

In order to produce such an article as will command a sale in the English and Free State markets, considerable knowledge and technical experience is necessary, as can be shown by taking one operation—packing.

The present duty on imported tobacco is 8s. 2d. per lb. for tobacco exceeding 10% moisture. If the rehandler packs the tobacco at 9.9% the Customs and Excise inform him that it is liable to a duty of 9s. 0½d., which makes it practically unsaleable. On the other hand, the manufacturer being allowed to add water up to 30% in the process of manufacture, says that water costs him nothing, and that each 1% over 10% makes the tobacco worth 1d. per lb. less to him. The amount of wages earned in rehandling is large, and under present conditions would amount to about £15 per acre. In addition, the acreable overhead charges for interest and depreciation of plant, repairs, replacements, coal, etc., and adequate technical supervision would, of course, vary in direct proportion to the amount grown.

It would seem advisable under whatever scheme may be adopted that (1) all tobacco grown should be sent to a rehandler, and (2) that all rehandlers should be licensed and under the supervision of the Customs and Excise and the Department of Lands and Agriculture in order that no tobacco should be sent to any market for which it was not fitted. Furthermore, it is essential that all growers should be paid for their tobacco within, say, one month of its delivery to the rehandler, either as a preliminary payment, or such total sum as the rehandler and the Department of Lands and Agriculture may agree on.

Until the acreage under tobacco is considerably increased, temporary assistance would be necessary in order to enable the tobacco to be rehandled at an economical price.

There should, therefore, be no great difficulty raised in the Department of Lands and Agriculture advancing the rehandler such money as may be mutually agreed is necessary for paying for the tobacco, and after making up the rehandler’s return to the Department, deciding what balance may be due.

C. MARKETING.

The market is, of course, the crux of the whole question. Present conditions of the trade are very different to what they were before and during the war.

From 1904-1919 home-grown tobacco was easily sold to manufacturers in all parts of Ireland, and also to some in England and Scotland, at approximately the same price as a similar grade of American.

About one and a half million lbs. were sold, and manufacturers and experts reported very favourably on it on account of its similarity to, and therefore its suitability for blending with, American tobacco.

The Imperial Preference of 1s. 4d. per lb. imposed in 1919 had the effect of bringing Irish tobacco into direct competition with the surplus tobacco grown practically duty free in other parts of the British Empire, by coolie labour at 2d. per day. These people were content to sell their tobacco as low as 4d. per lb. and give to the manufacturers the benefit of the preference of 1s. 4d.

In 1923, the Free State Government abolished preference on all imported tobacco while retaining 1s. 6d. preference on the home-grown article. This has deprived Free State manufacturers of a supply of tobacco, which taking the preference into account, they could obtain for nothing, and were also given a portion of the preference by the seller to induce them to buy.

Believing that the Government’s action was taken to help the home-grown article, the manufacturers are not inclined to view it with any favour.

In order to appreciate the conditions obtaining at present, it seems necessary to examine the policy now being pursued by Free State manufacturers.

The annual trade of the Free State amounts to about 7,500,000 lbs., of which 80% to 90% is in the hands of the Imperial Tobacco Co. The other manufacturers are trying to maintain their trade by turning out a better article. In consequence, none but the better grades of American leaf now find a market in Ireland.

Enormous sums of money have been expended in advertising brands in the Press and in supplying shopkeepers in every village with highly artistic showcards.

A proposal to give our tobacco a home market practically free of duty, as is done in other parts of the Empire, would, apart from the loss to the Treasury, probably meet with strenuous opposition from all sections of the trade.

The conditions in the English market are absolutely different. The annual import is about 229,000,000 lbs. and the market is therefore practically unlimited. The English Government has given all Empire-grown tobacco a preference of 2/- per lb., and the surplus produce of British Dependencies is being offered freely in this market. The Imperial Tobacco Co. is using large quantities of Empire-grown tobacco in their new brands, and numerous manufacturers are competing with them by turning out cheaper brands largely composed of Empire-grown tobacco.

The prices for these tobaccos vary from 4d. to 2/- per lb., and it is my belief that a ready and assured market is obtainable in England at prices at least equal to those for other Empire tobacco of the same grade and type.

It also seems probable that English manufacturers would view with favour the establishment of a fresh source of supply so near them.

Irish tobacco, however, is handicapped by the fact that other Empire tobaccos enjoy a duty-free home market, that only their surplus consisting mostly of their better grades, is exported, and also by the fact that those tobaccos have had six years start of us in the experiment as to what type commands the best price.

It seems economically sound that the Government should grant 1/-per lb. on all tobacco exported (thereby saving 33% as compared with tobacco sold in this country) in order to establish an export trade which will bring at least 2/- per lb. back to this country, and create a ready and assured market for all tobacco grown here.

If this proposal is entertained, it should be made to include all tobacco which is at present unsaleable except at a sacrifice price owing to Government action.

It would seem well to examine what the cumulative effect of this proposal might mean to the country. Ireland is essentially an agricultural country, and our policy should be to extract the maximum amount of wealth from each acre of the soil. Except our Department of Lands and Agriculture, most farmers think in Irish acres, so the following figures are based on them.

On purely grazing farms the profit per acre would not exceed £3 with, at the outside, 12/6 spent on labour.

There is an outcry for more tillage at present, but it must be remembered that tillage must be conducted in a rotation, which, to be continued, means that for every acre ploughed the farmer must have 4 to 5 acres under tillage crops.

The whole trouble seems to be that except in the barley districts, the farmer grows no crop giving him a big cash return per acre within, say, nine months of date of putting in. Tobacco and beet are two crops which do this. An average crop of tobacco should give a gross return of £130 per acre before Christmas, which would enable the farmer to carry on and market his other crops to the best advantage, probably in the hoof. If any considerable average of tobacco were grown the production of this wealth from the soil, and the amount of employment given thereby, should have an immense effect on the prosperity of the country.

It must be noted that the Irish tobacco manufacturer is not disposed to look with favour on the growing of tobacco in this country, and by refusing to buy the product fancies he can prevent the continuation of the industry.

The position in Britain is that the manufacturer there has the choice of Colonial tobacco, which is simply the surplus exported after supplying the home market, and, therefore, there is no likelihood that the manufacturer would endeavour to restrict the production in any way.