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FINAL REPORT.1. The Special Committee have heard evidence from Senator Sir Nugent Everard, Mr. R. H. Goodbody, Senator the Dowager Countess of Desart, Messrs. Caffrey, Markey and Keelan (of the Meath Tobacco Growers’ Association), Mr. Bernard Anderson, Mr. J. Nevin, Major R. Everard, the Very Rev. J. F. Sweetman, O.S.B.; Mr. G. N. Keller, Tobacco Expert of the Department of Lands and Agriculture, and Mr. F. C. Hassell, Superintending Inspector of Customs and Excise. To secure evidence from the manufacturers of tobacco in the Saorstát an invitation was extended to the Tobacco Manufacturers’ Association to send a representative to attend before the Committee. Apart from Mr. R. H. Goodbody, who stated that he only represented his own firm, no other witness attended. The Committee endeavoured to get in touch with the Imperial Tobacco Company for the like purpose, but owing to the short time available for the Committee’s deliberations it has not been possible to have the views of that Company taken on the matters under consideration. Appendix I. (A). The Committee also invited the Dublin Association of Tobacco Retailers to give evidence, but the Association refused to tender any evidence on the ground that they were not interested. Keller, 451, 458-462. Goodbody, 128. Major Everard, 618. 2. From the evidence that has tendered, the Committee are satisfied that tobacco of a fairly good quality can be grown in Ireland, suitable for blending with certain types of American tobacco in roll and plug. It is also suitable for “shag” tobacco, consumed in large quantities in Great Britain. It would likewise appear that types of tobacco suitable for the manufacture of cheap cheroots can be grown with satisfactory results. Appendix II. In this connection it should not be forgotten that prior to its suppression by the British Government in 1830, the tobacco industry in Ireland was in a flourishing condition; and it has been stated that in the years preceding that date, the greater part of the tobacco consumed in Great Britain was grown in Ireland. Keller, 401. 3. Since the revival of tobacco growing in 1898 it cannot be said that the industry has been given a fair opportunity for development on an industrial basis, owing to frequent changes of Government policy. During a period of 22 years, up to 1923, a series of experiments have been carried out under Departmental control and with State assistance. From 1904 there was a bonus of 1s. 0d. per 1b. to the growers. This was changed later to a subsidy of £50 an acre, which was afterwards reduced to £25. The latter subsidy was provided for out of a special grant from the Development Fund amounting to about £70,000. In 1923 the experiments ceased, the acreage grant was withdrawn, and the unspent balance of the grant from the Development Fund was handed over to the Free State as part of the settlement. In the following year Irish-grown tobacco was granted a remission of one-sixth of the total excise duty which, together with 2d. excise allowance, amounts to a preference of 1s. 6d. per lb. over all imported tobaccos. From that date tobacco growing in Ireland may be said to have emerged from the experimental to the industrial stage. Keller, 403. Up to 1919 little difficulty was experienced in finding a market for Irish leaf, but with the introduction of Imperial Preference in that year the industry has rapidly declined almost to the point of extinction. The confining of this preference to home-grown tobacco by the Free State in 1924 has not been sufficient to check this downward movement, as may be seen by the following figures:—
4. This decline in Irish tobacco growing is due to: (1) The refusal of Irish manufacturers to buy home grown leaf at the lowest price which growers can afford to accept, for the reason that such price only offers manufacturers an inducement of about ten per cent. on the total cost, which includes the duty as well as the market price of the leaf; (2) The Operation of Imperial Preference, at the rate of 2s. 0d. per 1b. in Great Britain, which has resulted in flooding that market with cheap Indian and Colonial tobaccos produced by native labour. At the present time the produce of several years’ crops, amounting to about 140,000 lbs., is retained in bond, for which there is no Irish market available, and which could only be sold in Great Britain at a substantial loss to the grower. 5. The Committee have carefully considered the relative importance of tobacco-growing as compared with other crops, and its value to the agricultural community if it can be grown on an economic basis. They have noted that:— (1) the amount of labour required for the cultivation of tobacco is far greater proportionately than that required for any other crop commonly grown in this country. This aspect of the question has been dealt with in Par. 1 of the First Interim Report of the Commission on Agriculture, 1923; Caffrey, 226. (2) the crop is one eminently suitable for the small farmer, seeing that much of the labour required is of a nature which can be supplied by the members of his family, particularly in the slack season; Sen. Everard, 23. (3) it necessitates the breaking up of a considerable area for other crops, in order to provide for rotation, and is a consequent stimulus to tillage; (4) being a crop requiring intensive cultivation, tobacco enriches the land and in consequence better yields of subsequent crops result; at the same time its growth improves the agricultural methods of the producer. The small growers who appeared before the Committee laid stress on the educational value of tobacco culture. It is obvious that these advantages cannot be accurately translated into terms of cash; but the Committee are of opinion that some temporary sacrifice of State revenue would be justified in order to keep alive an industry which might in the future be particularly useful in promoting tillage and increasing employment. Appendix II. This opinion has been reinforced by the fact that over 200 growers in different parts of Ireland have acquired experience and practical knowledge of tobacco cultivation, and that the results of 25 years of costly experiments attended by marked success in improving the quality of the leaf grown, would inevitably be lost to the community, if steps were not taken to keep the industry in existence. Any future effort to re-start the industry, were it to go out of existence now, would be handicapped not merely by the loss of the tradition, but still more by the difficulty of overcoming the distrust and apathy which always follow failure. 6. The task of the Committee was greatly hampered by the absence of any evidence from manufacturers as to what remission of excise duty would be sufficient to induce them to buy the home-grown product. The Committee, however, with the information at their disposal, have been able to arrive at a figure which should give reasonable hope of providing a fair market for the Irish grower, without involving too serious a loss of revenue to the State. 7. The Committee recommend that the duty on Irish tobacco be reduced from 6s. 8d. (or 5/6ths of the full excise duty) to 5s. 0d. (or 5/8ths) as compared with 8s. 2d. Customs duty payable on foreign leaf. The Committee are satisfied that such reduction would secure a market which at present does not exist for home-grown tobacco, at an average price of about 1s. 6d. per 1b., and would make it possible for Irish manufacturers to provide the consumer with a cheap blend, which, if composed of 50 per cent. Irish could eventually be sold at a reduction of 1d. per oz. on present retail prices, or, if only 25 per cent. Irish were used, at a reduction of ½d. Only by such substantial remission of duty, the benefits of which could be passed on to the consumer, would it be possible to popularise home-grown tobacco and secure for the grower a reasonable price covering his costs of production. 8. In arriving at this conclusion the Committee did not lose sight of the effect on the revenue of such a proposal. Accepting 800 lbs. as the average yield per acre, and allowing 10 per cent. for waste, and assuming that home-grown tobacco would displace a corresponding amount of imported leaf, the additional loss to the revenue, over and above the present rate of preference would be approximately £116 for every acre of tobacco grown and marketed. Although this would appear to be a substantial sum, it is improbable that the loss to the revenue would become serious for several years. Opinion as to the growth in the demand for Irish tobacco in the event of such remission of duty, must remain largely speculative, as the matter depends on the extent to which Irish manufacturers would avail themselves of this cheap source of supply, a question on which the Committee has received no direct evidence. Major Everard, 617-8. 9. The Committee desire to point out that they make this recommendation as a provisional measure in order to save the tobacco-growing industry from extinction. They are precluded by the terms of reference from considering any alternative methods of dealing with the matter. It has been strongly represented to them that, in view of the restricted nature of the Irish market as compared with the almost unlimited market in Great Britain, in view of the Imperial Preference of 2s. 0d. per lb. granted to Irish tobacco by the British Government and in view of the suitability of Irish leaf for the manufacture of “shag” tobacco, a more economical method of developing the industry would be by increasing the export allowance on home grown tobacco, with State supervision of export, if necessary. 10. Other suggestions have been brought to the notice of the Committee which are not within the terms of reference. For that reason, in making the above-mentioned recommendation for a remission of Excise duty, they would strongly urge that the present condition of tobacco growing should be investigated by a Committee having wider terms of reference which could enter into the whole question of developing the industry in relation to both the Irish and British markets. (Signed) O. GRATTAN ESMONDE, Chairman of the Committee. 25th March, 1926. |
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